Tremors before the Earthquake

One of the arguments Social Security reform advocates utilize is the one that makes the case that the current structure is designed to over-promise defined benefits.

If reform opponents would take a moment to pull their collective heads out of the sand, they would see being played out in front of them a preview to the looming crisis; specifically the collapse of private pensions (United gets approvalto shift pension plans) and the burdens being placed on the Pension Benefit Guaranty Corporation (PBGC).

Blogger Kip Esquire offered a good analysis back in November (PBGC Continues to Foreshadow the Social Security Crisis):

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...The mechanics, economics and demographics of the Social Security crisis are essentially identical to the PBGC crisis. In essence, too much was promised and too little put away, with a mountain of paper-pushing sleight-of-hand in the meantime to give the illusion of solidity. It's unfortunate that some are trying to downplay the latter as an aberration triggered by two dysfunctional industries (airlines and steel). That's simply not true -- the flaws in the schemes are structural and not exogenous. The PBGC crisis is a perfect opportunity to analyze, experiment and educate about the much larger crisis looming on the horizon.

Private contracts, negotiated pension plans between workers and companies, should be honored and enforced. Companies and workers benefit/benefited from the generous provisions in the contracts and must also be prepared to accept the risk in them as well. If a company committed fraud or did anything illegal to undermine the provisions of the contract, that company and its principals should be prosecuted. That being said, Porkopolis shares the sentiment that taxpayers should not bail out the PBGC; the quasi-government institution set up to provide back-up benefits if a private pension collapsed.

Social Security reform opponents would argue that Social Security is a contract. Porkopolis would counter that Social Security is a social contract. The system was structured more than a generation ago and, like all social contracts, subject to change by the needs of the times and the citizens the contract serves.

Update: Michael Barone's Future Shock. Hat Tip: Social Security Choice