Who has the money?

I fear I may have been a little insensitive towards workers at United who have seen a good chunk of their pensions disappear when I launched into a Social Security post yesterday. I understand that these workers put their faith into a pension program and (probably) could not have foreseen this event. My point was that workers and retirees cannot count on pension programs or Social Security since they can disappear due to the vagaries of corporate mismanagement and legislative fiat, respectively. Let’s face facts: the workers at United would have been better off if the money channeled into pension funds was instead placed into personal 401(k)s. Which is why this paragraph from today’s NY Times is so baffling:

The United debacle also holds a broader lesson about retirement security. The level of risk that exists in pensions and other retirement savings plans has no place in the core tier of retirement savings, Social Security. If lawmakers and policy makers are not yet convinced of that, they should talk to the people at United.

Huh?!? Social Security is already well past a “level of risk” – it’s on course to go bankrupt in the exact same manner as the United pension fund. That’s the opinion of both the Social Security trustees and the Congressional Budget Office. Investors Business Daily has this issue dead to rights:

Another lesson pertains to Social Security reform. With $13 trillion in unfunded liabilities, Social Security's problems dwarf PBGC's. Yet, it's pretty much the same deal: Workers have been promised everything, but there's not enough money to pay for it all. Key Democrats in Congress argued Wednesday this underscores the need to keep Social Security as it is. Just the opposite, we think.

Workers whose retirement plans are taken over by the PBGC see retirement benefits slashed by as much as 50%. The same thing will happen to today's workers in Social Security.

Letting workers invest Social Security taxes in private accounts — ones they actually own, with real money in them — would guarantee they don't end up like the unfortunate employees of United.

Indeed.