Taxpayers to Bailout Union Pensions

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Union Pension Bailouts are Coming

By Rick Manning – GetLiberty.org – May 19, 2010
Just when you thought that Congress might have run out of bailout ideas for politically-favored groups along comes Senator Robert Casey’s (D-PA) bill to bailout union pension funds.
Operating under the benign sounding title, “Create Jobs and Save Benefits Act of 2010”, Casey’s bill is actually nothing more than a transfer of approximately $165 billion in Big Labor’s pension debt over to the U.S. taxpayer.
For decades, one of the primary organizing tools used by labor unions has been the promise that their members will enjoy secure pensions upon retirement. Most of these union pensions are held in what are known as multi-employer pension funds. Created in 1974 as part of the Employee Retirement Income Security Act, these funds are an agreement between a union and two or more employers to fund the pensions of workers and retirees.
The rub is that if a company goes out of business, their employees remain in the system, and become the remaining company’s responsibility. As these multi-employer pension plans become more and more insolvent, the unions that run many of them do not take the fiscally responsible step of cutting benefits, raising the retirement age, asking the members to contribute to the fund, or, gasp, contributing to the fund using union dues money. Instead, many have just wished that the problem would go away.
Now, the piper is demanding to be paid.
Moody’s rating service has found that large multi-employer pension funds are underfunded by $165 billion. This includes funds that either pay or secure the retirement for many Teamsters, AFL-CIO and SEIU members and other large, politically connected unions. Not surprisingly these unions are using the clout gained from spending their cash on politics rather than pensions to demand a taxpayer bailout.
Enter Senator Casey and his House cohorts in crime, Earl Pomeroy (D-ND) and Pat Tiberi (R-OH), who have a solution. Keep the benefits for the members of the Multi-Employer Pension Funds the same, but have them guaranteed by the Pension Benefits Guaranty Corporation (PBGC).
Who guarantees the PBGC? You guessed it, you and I, the American taxpayer. Just another proposal pushing one set of favored constituents over the rest that ensures the dizzying growth of our nation’s deficit continues unabated.
At a time when our nation’s debt is projected by the Congressional Budget Office to match our gross domestic product as early as 2013 threatening our nation’s AAA bond rating.
Incredibly, among the eight House Republicans who have joined Pat Tiberi in supporting adding $165 billion to our national debt to bail out the irresponsible management of these pension funds are: John Linder (GA), Peter Roskam (IL), Thaddeus McCotter (MN), Steven LaTourette (OH), Jo-Ann Emerson (MO), and Aaron Schock (IL).
It always sounds good to say that you are helping preserve people’s pensions, unfortunately in this instance, Casey, Pomeroy and Tiberi would ask the vast majority of working American’s without a defined pension to put less into their personal retirement account in order to preserve the status quo of union member retirees. This is a perfect example of the government playing backward Robin Hood, taking from those who are mostly without fixed pensions, in order to preserve the comfort level of those who have union pensions, while allowing unions to continue to organize across the U.S. claiming that paid pensions are a benefit that their members can expect to receive.
This is a seemingly elegant solution that instead could be the tipping point that our debt-stressed economy from which our debt ridden economy is never able to recover.
The Senate Health, Education, Labor and Pensions Committee will be holding a hearing on the Casey bill on Thursday, May 27th.
Rick Manning is the Director of Communications for Americans for Limited Government, and the former Public Affairs Chief of Staff for the U.S. Department of Labor.

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0 responses to “Taxpayers to Bailout Union Pensions

  1. this is criminal.

     
  2. Dave from Atlanta

    Apparently John Linder is retiring. I doubt he would be supporting this action were he running for another term. Of course the next thought is to wonder what sort of deal he has made behind the scenes that will somehow benefit him in his post-congress existence. Very sad. I had such respect for the man.

     
  3. We just hit $13 trillion yesterday in national debt and these fools want to add more. What part of UNSUSTAINABLE do they not understand?

     
  4. First, this is not “big labor’s pension debt.” The unions do not and, by law, cannot fund or run these plans. The plans are administered by a board of trustees which are appointed by the employers and the union (50% union, 50% employer). They are fiduciaries of the funds and MUST do with the money they hold in trust what a prudent man would do. If they are found to be imprudent then their own personal assets are at risk.
    Also, you forgot to mention that the PBGC is paid a premium (like insurance premiums) from the funds.
    Additionally, the Taft-Hartley Act prohibits the funds from carrying a surplus (they were worried that the unions would use the money as a strike fund–even though the funds are run by 50% employer trustees that would never release funds that would be used against them in a strike). So in good economic times when the funds were 100% + funded the employers and the unions were prohibited from setting aside that surplus against hard times.
    It is the companies and retired employees that the law would be helping: not the unions.

     
    • “It is the companies and retired employees that the law [you really mean TAXPAYERS] would be helping: not the unions.”
      So?
      The result is the still the same, isn’t it? — TAXPAYERS who haven’t worked for those companies, TAXPAYERS who don’t belong to the unions, TAXPAYERS who had NOTHING to do with the irresponsible non-prudent way both companies and labor unions behaved (unions contributed by insisting on ever-increasing “benefits”) — would have to, as you put it so nicely, “HELP.”
      Help my ass. We are broke. We don’t have the money for city and state government pensions, and we certainly don’t have any more in our pockets to “help” private corporations’ retirees.

       
  5. This comment is so I can receive email alerts

     
  6. Very well said Eowyn!

     
  7. Just so you understand that it is NOT a union bailout.
    Taxpayers are a;ways paying for things from which they do not personally benefit. I have no kids in school, yet I pay school tax. I do not use public transportatio0n, yet my taxes go to support it.
    Now you want to tell some 70 or 80 year old retiree that he will lose his pension because of public policy that allowed his pension plan to go insolvent.
    I get that you probably didn’t like the bank and auto bailouts, but this is a horse of a different color.
    As to unions insisting on ever increasing benefits:
    The company and the union sit and negotiate those benefits. If the company agrees to pay the union makes the assumption that the company can afford it; they don’t get to look at the books. The union can insist all it wants but if the company says, “We won’t pay ,” then the union either gives up the negotiating position or takes whatever legal action is allowed (including a strike). On the other hand, If the company says, “We can’t pay,” then the union will ask to see the books. If it is so that the company can’t afford to pay then the union will work with them. The members are not stupid; they do mot want to put themselves out of work. It is common for union members to vote to cut their pay and benefits to keep a company afloat.

     
    • Bail this, bail that. Rescue this, rescue that. At a time when even our Social Security non-existent “trust fund” is bankrupt, and Medicare along with it, you are asking TAXPAYERS to bail out private company pensions.
      Why don’t you just get it over with and re-name our country to what it is becoming:
      the Communist States of Amerika.

       
    • It is common for union members to vote to cut their pay and benefits to keep a company afloat
      hahahahaha….yeah, that’s why King County justed approved a raise for ALL employees across the board even though we are BROKE. That’s why NJ teachers are whining about not getting raises while their state is BROKE. Give me a break…Wake up people, we are heading to Greece and Spain status once these unions break us and we lose our AAA bond rating…

       
  8. Union Workers at St. Vincent’s Vote to Accept Pay Cuts – Gothamist
    Feb 17, 2010 … After a week’s deliberation union workers at the twice-bailed out St. Vincent’s voted to take a ten percent pay cut while the hospital tries…
    Warwick, RI city union workers agree to pay cuts
    Late Friday night, city workers agreed to take a pay cut instead of layoffs. … State of the Union: Loss Masks McInerney’s Milestone Recommended (3) …
    Vermont state workers ratify new contract with pay cuts
    Dec 31, 2009 … Kraus says union members agreed to the pay cut in light of Vermont’s economic …. meryl333 Never take freedom of the press for granted. …

     

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