not become a federal bailout.
The Pension Benefit Guaranty Corporation (PBGC) is a federal insurance agency that protects certain retirement benefits in private-sector defined benefit pensions when an employer’s plan fails. PBGC operates two insurance programs—single-employer and multiemployer—and it pays benefits up to legal limits when a covered plan is terminated without enough assets. PBGC is funded primarily by insurance premiums paid by plan sponsors and investment income, not by regular appropriations from general federal tax revenue. PBGC does not insure 401(k), 403(b), or other defined contribution plans because those accounts are owned by workers and depend on contributions and investment results, not a fixed lifetime promise from an employer.
Equally important, PBGC coverage does not extend to government plans. Federal civil service pensions, as well as state, county, and municipal pensions, are outside PBGC’s jurisdiction. Those systems are the legal and financial responsibility of their sponsoring governments and, ultimately, their taxpayers. Church plans are generally exempt as well unless they have elected coverage. In short, PBGC is a safety net for private-sector defined benefit promises. It is not a rescue line for public pension systems.
That distinction matters right now. Chicago’s fiscal problems are well known, but the city’s pension funds are approaching a breaking point. A recent incident made that clear: a computer-related delay in property-tax collections left the Firemen’s Annuity & Benefit Fund of Chicago without cash to meet current retirement checks. To plug the hole, Mayor Brandon Johnson advanced $28 million in short-term city loans to prevent forced asset sales. This was not a market crisis. It was a cash-flow failure in a chronically underfunded system.
The broader picture is worse. Chicago’s four public pension funds rank among the most underfunded in the nation and carry more pension debt than most states. The city’s pension liabilities exceed $35 billion, and its credit rating sits barely above junk. Despite this, Springfield recently expanded benefits for police and firefighters, increasing liabilities and lowering funding ratios. The city’s chief financial officer warned state leaders that the changes would push the police and firefighter funds below a 20 percent funded ratio, a level many actuaries view as technical insolvency. She also projected roughly $60 million in added contributions in the first year and an estimated $6.6 billion over 30 years, with no dedicated funding source. The Governor signed the bill anyway.
Chicago’s fallback has been more borrowing and higher property taxes. When the administration floated the idea of the school district taking a short-term, high-interest loan to cover a pension payment, even a school board appointed by the mayor refused. The mayor has since ruled out another property-tax hike, but the arithmetic remains unforgiving. The city faces a projected budget shortfall of about $1.15 billion on top of its pension burden. Ideas now on the table range from taxes on bottled water and plastic bags to symbolic cuts like eliminating the mounted police unit. None of this addresses the structural problem: promises that far exceed reliable funding.
My position is straightforward. Enough is enough. There should never be a federal bailout for local pension mismanagement. PBGC was not created to shield governments from the consequences of weak discipline, rosy assumptions, or political deals that ignore actuarial reality. Public workers—especially police and firefighters—serve with courage, but the pension promise they accepted was tied to a specific employer: the city. That choice carried risk. Many could have evaluated that risk earlier, diversified their retirement exposure where possible, or pushed for reforms before the crisis deepened. The hard truth is that taxpayers in other states should not subsidize Chicago’s past decisions.
A bailout would reward malfeasance and encourage other jurisdictions to defer tough choices. It would also undermine the moral hazard discipline that distinguishes PBGC’s private-sector insurance model from public pension politics. PBGC sets premiums, enforces rules, and caps guarantees. Struggling public systems often increase benefits without funding, defer contributions, and rely on optimistic investment returns. Merging these worlds by rescuing public plans with federal funds would blur a necessary line.
I have read and heard spendthrifts in Chicago call for a PBGC type bailout. Well folks, it’s illegal and nobody in the Trump administration is coming to save you from your reckless spending. 
The path forward is clarity and accountability. Public pensions are the responsibility of the sponsoring government and its taxpayers. Fixing them requires honest funding, realistic assumptions, shared sacrifice, and governance reforms that prevent repeat behavior. The federal government should not, under any circumstances, bail out Chicago. PBGC cannot and should not be used as a backdoor precedent. So get that out of your head right now. 
Draw the line now, and force real solutions where they belong. Chicago. You made your mess, now clean your mess up.