Beware America! The Next $165 billion Bailout to Unions!

When you dance with the devil, you gotta pay the price!  This bill is moving stealthily through the chambers of the Capitol building.  If one is not vigilant, it will pass without anyone knowing it. In all fairness, this is a biggy!  It is a bill that will benefit a small majority and reward them for poor performance.   Is this starting to sound familiar? 

The Free Enterprise Alliance’s Halt The Assault campaign has been raising red flags about Sen. Bob Casey’s dangerous bill granting the full faith and credit of the United States Treasury to bail out multi-employer pensions (a favorite of unions). Thankfully, the issue is getting more and more attention — most recently from today’s Wall Street Journal.[1]   We have the following video thanks to http://biggovernment.com/bjacobson/2010/06/01/bob-caseys-union-bailout/:




For those of you who are interested, Sen. Robert Casey (PA-D) spoke at a hearing held on the legislation by the Senate Committee on Health, Education, Labor and Pensions on Thursday, May 27, 2010, on his bill S 3157 to “Create Jobs and Save Benefits Act of 2010;” a “bill [that] would transfer tens of billions of dollars worth of retiree liabilities to the Pension Benefit Guaranty Corporation, i.e., to taxpayers.”[2] This is a taxpayer bailout of underfunded, multiemployer union pension plans. For Democrats … “not content with a one-time bailout of these failed multiemployer pension plans, Casey’s bill would make a line item on the federal budget through the Pension Benefit Guaranty Corporation (PBGC) to fund these union pension bailouts annually “right now taxpayers could possibly be on the hook for $165 billion, the liability could essentially be unlimited because these pensions have to be paid out until the workers die.”[3]

“[t]he latest in Orwellian-named Democratic bills—the “Create Jobs and Save Benefits Act of 2010”[4] is basically “[M]ulti-employer plans … designed to let union members move from union job to union job and keep the same pension plan. But if a company participating in the plan as part of its collective bargaining agreement were to go bankrupt, the other participating companies in the plan are forced to fully fund these Cadillac union pensions.

The vested members with no participating company are called “orphans.”  Casey’s bill seeks to partition out these “orphaned” union members, putting taxpayers on the hook for their full retirement benefit funding.”[4]

“Currently when one of these funds is in distress, the PBGC has the power to partition out these orphans and pay a guaranteed benefit of $12,870 at taxpayer expense, similar to what the Federal Deposit Insurance Corporation (FDIC) does when a bank goes belly up.

At a recent Senate Health, Education, Labor and Pensions Committee (HELP) hearing, Charles Jeszeck, an acting director at the Government Accountability Office (GAO), said that union multiemployer pension plans are in deep financial trouble.

A chart found on page 12 of Jaszeck’s written testimony clearly illustrates that by 1998, there was only one active worker in the multiemployer pension plans for every retiree.

‘In 1998, the multiemployer plans overall got to one worker for every retiree,” Brett McMahon of the Associated Builders and Contractors (ABC), a national trade association, told HUMAN EVENTS. “They’re much worse now. The Teamsters in particular right now are about four retirees for every worker. The coal miners are about 12 retirees to every worker. When you hit one to one it is impossible—actually even earlier than that—it’s impossible to recover.

Jeszeck testified at the hearing that unless union membership grows exponentially, the multiemployer pension funds are headed for collapse.”[5]

So why is overpromise of pensions and mismanagement of these pension funds the problem of taxpayers?

“‘The future growth of multiemployer plans is largely predicated on growth of collective bargaining …
[W]ithout a new stream of contributions, plans will increasingly have to tap into assets to meet benefit obligations and, everything else being equal, will generally lower the plans’ funded status.’

One of the largest of these multiemployer funds, Central States Funds, is in such bad shape that UPS paid $6 billion in penalties to extricate itself from employee participation in the fund.

‘All that got them was the right to leave the plan. It transferred no benefits to their employees,” McMahon said. “They now have their own plan, though, which is doing great because it’s properly funded and they’re not responsible for everyone else’s employees.’

According to the financial and analytical report compiled for a January 2009 trustee meeting, by the end of 2008, Central States had approximately 80,000 current participating workers and over 200,000 retirees.

The fund … headed for an implosion … of this sort of Ponzi scheme was foreseeable 25 years ago. … A “bailout the union plans on the taxpayer dime to give unions more leverage to drive up membership … with a Ponzi scheme”[6] and “expanding it with taxpayer dollars.”[7]

"With the union priority of 'card check' stalled, word is that the Casey bailout is Big Labor's consolation prize."[8]

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[1] http://biggovernment.com/bjacobson/2010/06/01/bob-caseys-union-bailout/
[2] http://online.wsj.com/article/SB10001424052702303491304575188263180553530.html
[3] http://www.foxbusiness.com/personal-finance/2010/05/24/lawmaker-introduces-b-union-pension-bailout/
[4] http://www.humanevents.com/article.php?id=37491
[5] Id.
[6] Id.
[7] Id.
[8] http://online.wsj.com/article/SB10001424052702303491304575188263180553530.html]