Get Ready

In the grand tradtition of self-referential posts here, let me point out that last month, when discussing the United Airlines debacle, I wrote:

Which is when things get really nasty. The other major airlines will be charged higher premiums to make up for the slack created by the PBGC assuming United’s debt, and they in turn will then be ‘forced’ to apply for protection and will walk away from their pension plans, shouldering the PBGC with even more payments and debt.

Not that it took a rocket scientistst to predict this, because it was pretty clear that would be the outcome. Here comes the outcome:

Saracini was among about 2,000 United pensioners and employees who e-mailed their stories to Rep. George Miller (D-Calif.) in recent days for what he called an online hearing on the human impact of the default. “We have been overwhelmed — both numerically and emotionally — by the response,” said Miller, one of several politicians in both parties warning that a wider crisis will loom if the nation’s pension security laws are not revised.

More than 20 other companies have defaulted on pension funds of more than $100 million in the past three years, and last week, executives of troubled Delta and Northwest airlines said they may be next. Miller has proposed a six-month moratorium on defaults, as Congress debates how to fix what many lawmakers call “broken” pension protection laws.

This is going to cost a pretty penny, and the anger at Executives, which may or may not be misplaced, is completely understandable:

Last week, United Chief Executive Officer Glenn Tilton testified to the Senate Finance Committee about $4.5 million he is receiving from United to replace benefits he had accrued over a 32-year career at Texaco, his previous employer. Tilton said that the default will not affect the payment, and that he has $1.5 million left to collect. He said this does not represent a double standard because United promised him the money in his contract.

“He is saying, ‘United guaranteed that to me,’ ” said retired pilot John D. Clark of Charlottesville, who flew United planes for 36 years out of Dulles and whose $125,000 annual pension is to be reduced by more than 70 percent. “Why is the promise made to him understandable, and the one made to me can go by the wayside?”

Clark said he is more enraged at the injustice of the pension default than at his own situation. “The company is at fault, the Congress is at fault, the president is at fault, past presidents are at fault. There’s plenty of fault to go around, but we live in a time when nobody takes responsibility,” he said.

Now, the tricky part. Other than a bailout, what is the solution? Is there one?