And the hits just keep coming. Fresh off the $26 billion BigGovJobs union bailout, the Dems are pushing another labor-backed rescue for beleaguered pension funds. Estimated initial cost: $8 to $10 billion, with as much as $165 billion in potential taxpayer-funded liabilities on the horizon.
The WSJ spotlights:
Congress is gone for August—heaven be praised—but that hasn’t stopped unions from quietly mobilizing to push through a big new priority this fall: a pension bailout. Big Labor is going Code Red on the issue, in the face of a looming accounting change that would force companies to confront the Ponzi-style nature of multi-employer pension plans.
We wrote in June about this class of some 1,500 union-run retirement vehicles, in which companies across an entire industry pay into a single pension pool. Hundreds of these multi-employer pools are badly underfunded, thanks to years of labor funneling money into new pay and benefits, rather than into the funds for retirees.
The big problem with these plans is that when one company in the pool goes out of business, the other companies remain on the hook for the cost of the plan. These spiraling liabilities inspired Pennsylvania Senator and Big Labor favorite Bob Casey to introduce legislation to cordon off “orphaned” pensions—those for which an employer has stopped contributing or withdrawn from the plan—and drop them on the federal Pension Benefit Guaranty Corporation.
The PBGC is already significantly underfunded and taxpayers are its ultimate backstop. Yet the Casey bailout could dump as much as $165 billion in new liabilities on the PBGC, while multi-employer plans would get a clean bill of health. What a deal…
Vincent Vernuccio at CEI explains what’s driving Dems:
In order to save the Democratic Party, they must save the unions (or more specifically, the unionized companies) from failing.
While Democrats will tout the union pension bailout bill as another way to “create or save jobs,” it is misleading. The union pension bailout bill will save Democrat politicians’ jobs and it may also temporarily save some union jobs, but at what expense?
…Failing to bailout the union pensions would likely cause the failure of a fairly high number of unionized employers. If unionized employers fail, unions will lose members. Without union members, unions would have no union dues with which they can fund Democrats’ political campaigns and would not be able to mobilize effective Get Out the Vote (GOTV) efforts.
There are a couple of reasons Democrats and their union handlers are pushing this poisonous bill now: Union bosses and Democrats know there is likely going to be a major upheaval in November. As a result, what they have not been able to accomplish in the last 18 months in Washington will presumably be stalled for another few years (at least until 2013). They cannot survive that long. The union pension bailout bill is the lifeline to ensure their survival until they can regain dominance again.
Political self-preservation above all else — all on your dime.