The Gateway Pundit Jim Hoff on May 24 posted: "The unions blew billions working to get Democrats elected. Now it's payback time."]
Sen. Bob Casey, D-Pa., had already stepped into the breach on March 22 with the introduction of the Create Jobs and Save Benefits Act of 2010, now dubbed "the Bailout of Irresponsible Unions Act."
Union-mandated multi-employer pension funds, after years of denial that the funds were in trouble, are now reported to be in disastrous condition.
Moody's Investor Services has estimated that the multi-employer pensions were found in 2009 to be underfunded by some $165 billion. Millions of current and former workers' retirements have been placed in real danger.
The Manhattan Institute finds that 94 percent of multi-employer pensions are underfunded by the same figure established by Moody's of some $165 billion.
The Pension Benefit Guaranty Corporation (PBGC), established to guarantee private union pensions, is likewise underfunded.
The Washington Times reporters F. Vincent Vernuccio and Jeremy Lott reported that the Teamsters' Central States Fund has been "woefully underfunded for years. It had only 47 cents on every dollar owed in 2007 and likely is much worse today in light of the recent economic turndown."
United Parcel Service, a participant in the Teamsters' Central States Fund, recognizing the severity of the Teamsters' fund problems, paid an exorbitant $6.1 billion in withdrawal fees to back out of what it considered "a ticking time bomb."
Teamster President James Hoffa Jr. blamed the Pension Protection Act (PPA) of 2006 for "greatly and unnecessarily accelerated funding requirements for many plans," which "hastened the pension crisis."
In reality, the PPA finally forced the unions "to come clean about the crisis."
The PPA required the Teamsters' Union to send letters to thousands of union members advising them their "pensions were in critical status — less than 65 percent funded — meaning that future retirees might not get as much as promised and even current retirees could be in trouble."
Union leaders had taken positions against the PPA because it meant they could no longer tell members that their pensions were in good shape.
Investment losses of state pension plans in 2008 ranged from 13.1 percent in Georgia to 28.7 percent in Pennsylvania. Of the 13 states reporting, nine were reporting losses of 20 percent or greater.
In the event that pension funds, generally, cannot pay their obligations, the Pension Benefit Guaranty Corporation (PBGC) is brought in to provide relief for the workers.
PBGC is financed by insurance premiums on private pension plans. Union pension plans pay a much lower premium rate than retirees in single-employer plans. Retirees in union plans are insured only up to $12,810 per year.
The House and Senate bills would increase this coverage to $21,000 and pass along the total costs for the union workers to the U.S. taxpayers.
This blatant insult to the intelligence of the average American gets worse.
The bills would create a special "fifth" fund to help pre-emptively to bail out struggling multi-employer pension funds. The fund would apply to so-called "orphans" — workers of companies that had to leave the plan because of bankruptcy — in union funds that have twice as many retirees as workers and owe two times the amount of benefits that they receive in contributions. PBGC would take retirees in the plans that worked for bankrupt companies and put them in special segregated plans.
The legislation, according to Sen. Casey, would be tagged to the Teamsters' Central States Pension Fund, a few other Teamster-based funds, and one other union-based large multi-employer plan.
If ever there was a case of placing the fox in charge of the hen house, this is it.
Sen. Casey’s bill would reward unions for past bad behavior by leaving them in charge.
Furthermore, retirees in partitioned plans would receive full benefits paid in full by U.S. taxpayers. The bill further states that obligations of the “fifth” fund will be likewise paid in full by the U.S. taxpayer and no longer just by PBGC insurance premiums.
A provision in both bills would allow the fifth fund to transfer money to other parts of PBGC, making the fifth fund “the camel’s nose under the tent,” using taxpayer dollars to shore up the “deficit ridden” PBGC.
The PBGC, according to its own records, had a deficit of $22 billion in September 2009. The deficit is expected to grow to $34 billion over the next 10 years. The bill was to come up for debate before the Senate Committee on Health, Education, Labor, and Pension on May 27.
If the bill passes both Houses of Congress, it will most certainly be willingly signed by the President.
Both businesses and individual taxpayers will be paying billions for union mismanagement of these pension funds for the foreseeable future.
E. Ralph Hostetter, a prominent businessman and agricultural publisher, also is a national and local award-winning columnist. He welcomes comments by e-mail sent to firstname.lastname@example.org.
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