March 2021 Big Labor Bailout Already Flailing

Less than 12 months ago, Big Labor D.C. Beltway politicians like Senate Budget Chairman Bernie Sanders (Vermont) transferred $86 billion from taxpayers to Big Labor pension plans and set the stage for future bailouts. (Credit: Jackson Lanier/Wikimedia Commons)

Beltway Didn’t Hold Union Dons Accountable; Put Onus on Taxpayers

A year ago next month, Big Labor President Joe Biden signed into law a gargantuan COVID-19 “relief” package featuring a host of provisions that had nothing to do with COVID-19 or its economic impact.

Perhaps the most outrageous component of the so-called “COVID-19 Relief and Response” package was an $86 billion down payment on a long-standing objective of top union bosses in the transportation, construction, grocery, music, and certain other industries.

For years leading up to the enactment of this boondoggle, union kingpins had been trying to come up with a politically acceptable way to foist on taxpayers hundreds of billions of dollars in unfunded promises that Big Labor and its designees had made to private-sector employees.

Union-Label Democrats: Hand MEPP’s Even More Money Than Congress Authorized

According to the latest available Pension Benefit Guarantee Corporation (PBGC) data, the total underfunding of Big Labor “multi-employer” pension plans (MEPP’s) had skyrocketed to $757 billion as of 2018. 

More than 95% of the 10.9 million participants in MEPP schemes are in plans that are less than 60% funded, as pension specialist Aharon Friedman pointed out in a November 2021 commentary for the Hill.

And the primary reason for rampant underfunding is that MEPP’s have wielded their political influence with Big Labor-“friendly” politicians and bureaucrats in Washington, D.C., to get away with basing their pension promises to employees on wildly optimistic hypothetical investment returns.

“The monstrous $1.9 trillion spending bill President Joe Biden signed into law last March 11 featured an $86 billion giveaway to notoriously mismanaged MEPP’s like the Teamsters Central States fund,” said National Right to Work Committee President Mark Mix.

“And union officials and the businesses who colluded with them for years and years to underfund worker pensions won’t ever be required to pay back a dime.

“Worst of all, far from being the ‘solution’ to the MEPP morass that Joe Biden, Senate Budget Chairman Bernie Sanders [Vermont], and other union-label politicians claimed it would be, this massive bailout has set the stage for even bigger bailouts in the future.”

Mr. Mix explained:  “$86 billion is a lot of money. But it represents just 11% of the $757 billion MEPP’s have promised in excess of what they are able to pay, based on the contributions they are taking in and reasonable expected returns on their investments.”

Big Labor politicians lowballed the cost to taxpayers of bailing out MEPP’s in several ways.

One way they did this was by excluding many severely underfunded plans that were not in imminent danger of going bust from the bailout.

A second was to pretend that, after pouring taxpayer money into failing MEPP’s for decades, Congress would take away the piggy bank and not give them any additional funding after 2051.

Yet another was to assume a high rate of return on investments that MEPP’s could not achieve without taking substantial risks with taxpayer money that are impermissible under normal PBGC guidelines.

Last August, Majority Leader Charles Schumer (New York) and other Senate Democrats fired off an angry letter to the PBGC, demanding that even more money be funneled to insolvent MEPP’s than the $86 billion Congress had authorized to enable them to stay afloat without taking unacceptable risks! 

Legitimate Retiree Rescue Would Have Included Putting Failing Plans in Receivership

“Before it is over, union boss-owned politicians’ scheme to bail out MEPP’s with taxpayer money will cost hundreds of billions of dollars more than the originally advertised figure of $86 billion,” predicted Mr. Mix.

“Since MEPP-covered workers, whether they are voluntary union members or not, are not culpable for the misdeeds of Big Labor pension managers, a federal bailout of MEPP’s may have been unavoidable.

“But a legitimate rescue would have incorporated real reforms, like putting failing plans in receivership and ending the pro-union monopoly federal labor policies that are largely culpable for spawning the MEPP debacle.

“Instead, thanks to President Biden and his allies in Congress, American taxpayers are getting the worst of both worlds:  an extraordinarily costly bailout, combined with zero reform of how MEPP’s operate.” 

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