The economic bubble of the late nineties, and the subsequent bust, had a devastating effect on America's corporate pension plans. Absurdly optimistic projections of the plans' future returns led companies to bleed them dry to boost profit numbers, banking on continued spectacular market conditions to make up the difference. Now that the bubble has collapsed, plan managers are faced with a choice between restoring the funds to solvency with huge infusions of costly contributions, to avoid reneging on future commitments, or continuing the charade of implausible Pollyanna projections until the burden of meeting those commitments drives the company into bankruptcy.

One would think the choice to be obvious--but then, one would not be former National Economic Council chair Lawrence Lindsey. He's just co-written a Washington Post op-ed arguing for temporarily easing up on the rules that would otherwise force corporations to fund their employee pension plans properly. His reasoning is that requiring the plans to be properly funded would reinforce, rather than counteract, the business cycle. During boom times, he claims, projections of investment returns inevitably rise, and pension investments decline correspondingly (effectively increasing the amount of money left over for spending, thereby reinforcing the boom). Conversely, when times are tough, estimates of future returns on pension savings are much lower, and cash contributions to those savings are therefore higher. These contributions are subtracted from overall spending, thus exacerbating the economic downturn.

This is all complete nonsense, of course. There is nothing that forces a pension fund manager to get caught up in the insanity of a bubble and naively predict double-digit annual investment returns for his or her fund in perpetuity. That many such managers did so a few years ago is grounds for requiring them to correct their mistake now, in the hope that they will learn a painful lesson and avoid the same error in the future. It is not a good argument, however, for cutting them some slack and letting them wait a few years until their pension funds--and hence their pensionnaires' prospects for not being destitute--are completely demolished.