From Arnold Kling at
EconLog (quoting the
Wall Street Journal):
Congress and the White House produced a big, fat bailout for the most financially shaky companies, and some of those same companies are now joining the queue to dump their liabilities on the feds. Meanwhile, PBGC's [Pension Benefit Guaranty Corporation] deficit was left to balloon, as it now has -- by $12 billion with 155 company plans terminating.
Kling adds:
A friend who once did consulting for the PBGC says that its policies are completely irrational. It tells companies with overfunded pension plans that they can take every dollar of overfunding out the plans, and it tells companies with underfunded plans that it will bail them out. There is no risk-based pricing or other incentive mechanism to make companies want to maintain sound plans. He says that it makes the pre-S&L-crisis FSLIC seem well-run by comparison.
Will politicians never learn that the best way to help individuals and businesses avoid poverty and financial ruin is to make them responsible for the consequences of their own decisions? Apparently not.
