The Daily Caller examines the Casey-Pomeroy bailout bill to give union pension funds $165 billion in taxpayer money by tucking it into an “emergency” spending bill making its way through Congress. Anti-tax groups have weighed in with a letter signed by over 30 organizations opposing the bailout:
Two recently introduced bills fit that description: the Preserve Benefits and Jobs Act of 2009 (H.R. 3936) and the Create Jobs and Save Benefits Act of 2010 (S. 3157). If enacted, they would jeopardize billions of taxpayer dollars to shore up massively underfunded union pension plans.
These two bills mark a stark departure from traditional pension insurance. The Pension Benefit Guarantee Corporation (PBGC) insures the pensions of more than 44 million American workers and retirees in over 29,000 private, company-run single-employer and union-run multiemployer defined benefit pension plans. PBGC receives no funds from general tax revenues. Its operations are supported by insurance premiums—set by Congress—paid for by sponsors of defined benefits plans.
The two bills propose to use taxpayer dollars to bail out several multiemployer plans. Using taxpayer funds to pay for private pensions would be a first in PBGC history. That would be patently unjust. Most of the funds that would be eligible for this bailout were severely underfunded well before the financial crisis hit. That underfunding is largely due to mismanagement by the plan sponsors, who would now get a pass, at taxpayer expense.
In 2009, Moody’s Global Corporate Finance estimated that the nation’s largest 126 multiemployer plans had a collective funding shortfall of $165 billion. In 2006, well before the financial crisis, only 59 percent of multiemployer plans had 80 percent or more—what the Department of Labor considers healthy—of the assets required to pay for their obligations. By comparison, 86 percent of non-union plans were funded above that level.
One bailed-out plan would be the Teamsters Central States Plan, which in 2007 was underfunded by over $23 billion, and had only 46 percent of the funding necessary to pay its retires. Taxpayers could be forced to pay much of that if these two bills are enacted.
We ask you oppose the bailouts in H.R. 3936 and S. 3157 and instead consider more sensible pension reform that will protect both workers and taxpayers.