By Rick Manning
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.