The union bailout bill was passed in the House on May 28th according to the legislation's author, Rep. Earl Pomeroy (D-ND). Thaddeus McCotter (R-Mich-11th) says this is not a bailout. The Senate is still considering the legislation. See a video below.
According to Pomeroy, the bill will "give relief" to employers "who are struggling to make payments to their employees' pension plans...."
On May 28th I wrote this article decrying the fact that Republican Congressmen Thaddeus McCotter and Fair-Tax-Guy John Linder (R-GA-7th) both supported the bill. That article had a few very polite comments from a reader disagreeing with my assertions that taxpayers will be on the line for union bailouts.
Thaddeus McCotter, in his own words:
It is not a bailout. Taxpayer funds are not involved unless, of course, these institutions -- these unions and their pension plans - fail.More from McCotter:
What it does is good government. It allows employers the space they need to make sure they meet the pension obligations that they have to their workers.
It is not a bailout. Taxpayer funds are not involved unless, of course, these institutions -- these unions and their pension plans - fail.
It is a wonderful idea from my colleague [GOP Congressman] Pat Tiberi. It is endorsed by many, many, business groups, and I would hope that over the course of the coming house the truth will out. Again, you can always believe what you see on TV...So we have a Republican congressman telling us we can't read. Here's what the bill says:
Section 204 of the bill says a new U.S. Treasury fund, officially on the Treasury books will "finance obligations" guaranteed by the multi-employer pension guarantor, known as PBGC.
The bailouts in question are only about 60% funded. When a company closes it's doors, or fails to fund it's own pension program, or files bankruptcy, all the other companies in the multi-employer pension fund must pick-up the payment for each individual now unfunded. When a worker loses a job because the employer shuts its doors or files for bankruptcy, other member of the plan [other employers] pay for him or her. It is a last-man-standing situation. One-by-one, as companies cannot comply, those still complying pick up the cost for every unfunded worker no longer working, every baseball player unfunded, every hotel worker unfunded, etc. The unfunded are considered "orphans," and are placed in a segregated plan.
The new "fund" on Treasury's books is known as "the fifth fund," and it is the fail-safe (you and I are the fail-safe):
Section 204 says:
...obligations of the corporation [PBGC] that are financed by the fund created by this subsection shall be obligations of the United States.Today, the Wall Street Journal said this, speaking of the Senate legislation for the bailouts:
...the bill would transfer tens of billions of dollars worth of retiree liabilities to the Pension Benefit Guaranty Corporation [PBGC], i.e., to taxpayers.The subtitle for the WSJ article is: A scheme for taxpayers to cover mismanaged multi-employer plans.
There is no plan in the House legislation to hold anyone responsible. There is no plan to do things differently as new plan-members are added. There is no plan to use any union funds to supplement what they have failed to fund. Nothing changes, except the taxpayer bails them out, allowing them to start all over again.
The Washington Times says: Look for the union fable. Uh huh! From writers F. Vincent Vernuccio and Jeremy Lott :
To start, it would reward unions for past bad behavior by leaving them in charge. When a PBGC has to fund an insolvent plan, it controls the benefits and payments. The segregated plans in the fifth fund - known as a partition - would be controlled by the same trustees who failed to adequately fund the original plan. According to Mr. Casey's own office [Senator Bob Casey R-PA], "PBGC [would] not provide notices, calculate benefits or in any other form administer the plan."
Retirees in partitioned plans would receive their full benefits courtesy of the U.S. taxpayer. The bill states that obligations of this "fifth" fund would be "obligations of the United States" - and no longer just by PBGC insurance premiums.
Taxpayers could be on the hook for even more, too. A provision in both bills would allow the fifth fund to transfer money too other parts of PBGC. That means the fifth fund could be the camel's nose under the tent, using taxpayer dollars to shore up the deficit-ridden PBGC.The article claims PBGC had a $22 billion deficit in 2009, expected to be $34 billion by 2019.
Jimmy Hoffa, Jr., Teamster head, crowed to his union's members of the "thousands of hours" spent at the White House and on Capitol Hill to try to gain a bailout. Their efforts worked.
I have a suggestion for Thaddeus McCotter, John Linder and the other Republicans supporting this shameful [should be criminal] legislation: we'll accept your support for union bailouts if you guarantee every "funder" not properly "funding" is guaranteed a prison sentence of 20 years, including the President and CEO of every company. That obliterates their salaries, obliterates their non or poor-management, and sends a message: screw with pension funds and you go to the Big House.