United Airlines is defaulting on its pensions.

United Airlines is defaulting on its pensions. Its workers will now receive a reduced pension from the Pension Benefit Guaranty Corporation, part of the federal government. Like United, however, the PBGC doesn't have the money to back its promises. It is funded by taxes on the companies that rely on its guarantee of their pensions. But the companies' lobbying keeps those taxes lower than a private insurance firm would charge for the same service. So the public is potentially on the hook for hundreds of billions of dollars. The problem will get worse if United's competitors follow its lead in defaulting, or if other companies take reckless risks with their investments knowing that they have a federal backstop. The long-term solution here is to wind down this federal guarantee, which is a form of corporate welfare, and require that companies adequately fund their pensions going forward. Liberals have instead taken a perverse lesson from the episode. "Defined benefit" pensions such as United's have lost ground in the corporate world to "defined contribution" pensions such as 401(k)s. Bush's plan for Social Security would move it in the same direction. Liberals think that these shifts are bad for workers. Yet United demonstrates the pitfalls of "defined benefits." They turn out not to be as secure as advertised, and workers have little control over them. So, too, with Social Security's "guaranteed" benefits. What's more, in both cases American taxpayers are exposed to a great deal of risk. United's workers surely wish that they had had a modern, defined-contribution pension where their benefits were funded with each paycheck. United's pension fund, like Social Security, was supposedly a "solemn commitment." But nothing says "solemn commitment" like cash up front.