Wednesday, May 20, 2009

Government Pension Insurance: Busted

Many retired Americans have defined-benefit retirement plans. In the post-WW2 years many large employers provided these plans for their workers. In 1974 the federal government started the Pension Benefit Guarantee Corp. to "insure" these pensions. They did this in response to a tepid economy-- essentially putting the taxpayers on the hook for paying benefits to other people. There's no limit to the checks that can be written out of someone else's checkbook.

Now we stand at the abyss. The PBGC is running a deficit of $33.5 Billion. This deficit has TRIPLED in just the past 6 months. And, remember, the Big UAW defined-benefit plans aren't even in there-- yet.

This quick story gives the bad news but you have to laugh when they talk of the PBGC possibly needing a government bailout. Bailing out a failed, bankrupt government program would be a bit easier if the federal government wasn't bankrupt itself. Hey, the PBGC is only down $33.5 Billion while the feds are in the red for Trillions and Trillions of dollars.

Shake the handle. The toilet won't stop flushing.