Anybody who thinks the multiple trillions of federal tax dollars spent by President Barack Obama and the Democratic Congress on the TARP bailouts for Wall Street and the auto industry, the economic stimulus bill, and Obamacare were excessive better get a good grip.
The mother of all taxpayer bailouts is right around the corner.
Union bosses want taxpayers to foot the cost for bailing out the labor organizations’ many failing pension plans that millions of their members are counting on to “be there” when they retire. Unfortunately, the average union pension plan has only enough money to cover 62 percent of its financial obligations.
Such a low level of funding puts those plans on the government’s critical list. Pension plans funded below 80 percent are considered “endangered” by the government. Below 65 percent is “critical.” With union membership declining, that puts these funds into a tailspin from which they’ll likely never pull out.
The government’s Pension Benefit Guaranty Corporation only guarantees pensioners $12,000 a year, should their pension plan fail. Good luck retiring on that.
But as the economy sours, there’s increasing pressure to bail out workers from failing unions. Last July, for example, the PBGC agreed to take on $6.2 billion in pension liabilities from bankrupt auto parts manufacturer Delphi. And that’s just one company. In 2007, the PBGC was already running a deficit of nearly a billion dollars. Things will only get worse as the PBGC is expected to assume $86 billion in liabilities by 2015.
Concern over underfunded pensions is the real reason behind nearly every legislative item for which unions are currently agitating. One of the top union priorities is “card check” legislation — which would eliminate secret ballots in workplace representation elections, marking a return to the union thuggery of yesteryear. Without secret ballots, unions could identify and bully workers who don’t support recognizing the union.
But unions don’t want card check just so they can organize more workplaces and collect more dues — that’s chump change. They want to organize more workplaces so they can then use mandatory binding arbitration to force more businesses into multi-employer pension plans.
Under “last man standing” accounting rules, if you have five companies in a multi-employer pension plan and four of them go bankrupt, the last company standing has to pay for the pension plans of all five companies.
Multi-employer pension liabilities kill companies. Even if your business is fiscally sound, the liability of other companies you’re linked with can severely damage your ability to get a loan or raise capital.
No wonder the unionized United Parcel Service recently shelled out a whopping $6.1 billion to get out of the multi-employer pension plan in which it was formally enrolled. Prior to UPS shelling out the money, the company’s pension liabilities were estimated to be in the neighborhood of $4 billion, but turned out to be much higher.
That’s because unions are trying to hide the severity of the problem from their own workers. The union officers know this. That’s why the Service Employees International Union has a separate pension plan for its officers — from 2002 to 2005 that plan was on average funded at 123 percent.
Meanwhile, the pension plan of rank-and-file union members was near the “endangered” status at 82 percent, or assets of only $19,025 per employee. (Given the downturn in the economy in the last five years, it’s almost certainly much worse now.)
Rather than acknowledge their pension plans have been mismanaged, unions are counting on Democrats to bail them out. Rep. Earl Pomeroy, D-N.D., has introduced legislation to explicitly put taxpayers on the hook for failing union plans. Not surprisingly, many of Pomeroy’s biggest campaign donors are organized labor.
And after $400 million in campaign donations in 2008, if unions want a bailout it’s going to be hard for Democrats to say no.
Mark Hemingway is an editorial staff writer for The Washington Examiner.