Yet another proposed union pension bailout

If you were upset with the government’s bailout (with your tax dollars) of the UAW in the GM and Chrysler bankruptcies, you may not want to read what follows. GM and Chrysler will be a “drop in the bucket” compared to what Senator Bob Casey (D. Pa.) is now proposing.

What we’re talking about here are multi-employer pension plans, which coincidentally, are used mostly by unions.  These are plans where many smaller companies across an industry will pool their pension contributions into a single pension plan.  And, as you might imagine, most of these plans are terribly underfunded. The problem arises when a company in one of these plans goes out of business, leaving the rest of the companies to pay the benefits guaranteed to the retirees of the “out of business” company.

Senator Casey wants to change all that.  He proposes to:

cordon off ‘orphaned’ pensions–those for which an employer has stopped contributing or withdrawn from a multi-employer fund–and put them in a separate account.  Surviving companies [in the multi-employer plan] would then pay benefits to these to these orphans for five years, after which [the orphans would] get kicked into the PBGC, which would shoulder the benefits until the last retiree or beneficiary dies.

What is the PBGC, you ask?  It stands for the Pension Benefit Guarantee Corporation, and, is run by, you guessed it,  the federal government.  As of last September, the PBGC was running a deficit of some $21 billion, and even without Senator Casey’s proposal, the deficit is expected to climb to about $34 billion by 2019.  Senator Casey claims that:

his multi-employer-bailout scheme will cost [you, the taxpayer] a mere $8 billion, but Moody’s estimated last year that multi-employer plans were $165 billion underfunded.

Personally, both estimated numbers are not even close.  Any company in one of these plans, in order to avoid even paying for the orphans for five years, will simply file for bankruptcy, and, once discharged from bankruptcy, will “open for business” under a new corporate identity, thus dumping most, if not all, of the obligations of these multi-employer plans on the shoulders of the American taxpayers.

Assuming, of course, that after paying to bailout underfunded state pension plans, paying for Obamacare, paying the interest on our ever increasing debt, paying to bail out Medicare and Social Security, etc., there will be any American taxpayers left.