(The Center Square) – President Joe Biden on Wednesday touted a federal program to delay insolvency for private unions’ pension funds, but critics say taxpayer dollars should not be used to “bail out” pensions negotiated by unions.
Biden spoke in Cleveland, Ohio, about the American Rescue Plan’s Special Financial Assistance program, which will protect more than 10 million Americans in multi-employer plans from seeing their benefits slashed when their plan becomes insolvent, which many are projected to do in the next few years.
Biden called the plan “historic.”
“This was $90 billion, O.K.?” Biden said in his remarks. “But it is small in comparison to the bailouts of businesses and major corporations and banks…”
Multi-employer pensions are those negotiated across an entire industry, like mining or construction, with private unions and employers running the plans. The Biden administration announced a final rule this week regarding the rates of return and kinds of investments these pensions can utilize.
“The backbone of the country are the working women and men, the middle class, and you know there’s a middle class for one reason: American unions,” Biden said.
Critics, though, say it will be regular Americans who foot the bill.
“[Biden] is saving private union pensions by making ordinary Americans pay for them,” said Rachel Greszler, an expert at the Heritage Foundation. “And 6% of private sector workers are unionized so many of the blue collar workers that aren’t part of a union, or maybe they are part of a union that no longer has a pension plan, they are the ones who are going to bear the burden.”
Democrats praised Biden’s decision, saying it will help millions of Americans keep their benefits.
“Today’s action by the Biden-Harris Administration establishes the final rules for the multi-employer pension rescue program that will protect millions of Americans’ retirement security and save tens of thousands of businesses,” said U.S. Rep. Robert C. “Bobby” Scott, D-Va., who chairs the House Committee on Education and Labor. “For years, workers, retirees, businesses, and taxpayers sought a solution to the multi-employer pension crisis. In response, Congressional Democrats delivered a historic victory through the American Rescue Plan that keeps the promises made to retirees, saves businesses from going under, and shields taxpayers from the even greater cost of a multi-employer pension collapse.”
When some employers who originally were in the pension negotiations went out of business, their unfunded pension liabilities remained and were absorbed by other employers, worsening the problem.
“[Unions] have consistently promised more than they have set aside to pay,” Greszler said. “The incentives are all wrong here because the union can say to their members, ‘see we got you a higher pension benefit. We weren’t able to get you increased wages, but we were able to get you the pension benefit,’ and they can tell the employer, ‘we know you can’t afford higher wages, and we are not going to have you contribute more to the pension. We are just going to tweak our interest rate assumptions so that we can promise more but you don’t have to pay anything more.’
“So that’s the problem, that historically they have assumed very high rates of return like 8% where all financial economists will say if you have a guaranteed benefit like a pension, you should be using a riskless rate of return or at best a conservative bond rate. … instead they used stock market rates that translate into being able to make good on your promises only 50% of the time, and when their returns fell short, plans consistently failed to make adjustments,” she said. “The promises were decades into the future, so they got away with it until recently when plans started failing and the entire system is on track to pay only 42 cents on the dollar in promised benefits.”
Critics also say the federal funds are a true bailout because the federal funds are not requiring any major reforms from the unions. The funds are also only enough to delay the insolvency of a fraction of the funds, critics say, and not fix the problem.
“It actually makes it worse because it creates incentives in the short term for plans to promise more and to make worse assumptions than they already were so they can qualify under this short window to get bailouts, and there are no consequences going forward,” Greszler said. “And now that the federal government established that we are going to bail out these plans, plan administrators know that the sooner their plans become insolvent, the higher the likelihood they have of getting that bailout.”
So, how much of that was used for Chicago ‘s Police Pension fund that the Democrat controlled city has failed to pay it’s State of Illinois required Share into that account over the past several years. Zero.
AND of course THIS IS WHY the unions continually support commucrats like Joe.. THEY KNOW THE GOVT will bend over backwards to coddle the unions.
Another one of thos “paid for” things, huh, Joe?
According to the Constitution the power of the purse lies with Congress, not a desperate President bent on buying himself out of his own failed party’s self-destruction. THE PEOPLE understand when the government gives you a dollar, you have to pay $2 back in disguised ways like inflation or bought elections later. No corrupt union that buys favors with bought votes is too big to fail, just like the corrupt banks and corporations these socialist so readily try to diminish. The backbone of this country are people that work beyond what is expected of them by their bosses, start businesses and advance in success, not feather-bedded Union workers unable to even meet the basic requirements of the jobs who have to hide within the collective Union herd for protection, redistributing the fruits and life forces of the exceptional performers for a woke wage, where those who just show up at the table with just appetites, get the same wage and benefits of those who bring nourishment and company growth. Joe knows that those corrupt union bosses who invested their retirement money in Chinese companies who cook the books, and payoff the Union bosses and the investment companies run by crooks like Joe’s drugged out son negotiator who uses the Biden name to make Biden laundered money clean, when caught and shutdown, have to be taxpayer supported, or the Biden Crime family goes out of business, and maybe into jail. Joe turns honest taxes into filthy lucre.
Oh you mean the congress that is essentially in his court?
Speaking of “not fixing the problem”, these union workers need to shift to 401K plans like the rest of the working world. Instead of putting other peoples money into pension funds, which then get mismanaged or looted by inept, crooked union bosses, they should be putting a portion of their own paycheck into a real retirement plan. Even if you put away a small amount each month, if you start early you have lots of your own savings come retirement time. And most decent employers match contributions. Of course, union bosses hate this notion because they lose some control over the rank and file.
THis is why for years, i’ve said ABOLISH ALL unions.. ANd have everyone pay into a 401k, of THEIR OWN, with say 5% of their paycheck each month…
i do believe president trump tried to warn the american people about this among other things that have come to pass.
This is all bull manure! This is really a money laundering scheme to give union money to the dummycrat’s buddies in the Mafia.
This is F’ing Crazy!
I will guarandamntee you that you will never hear it stated that these same pension plans cost helped considerably toward sending American jobs overseas. That would be like Joe Biden waking up and admitting that he has done nothing but harm to America since his first day in office.
This is a gigantic payoff to the union bosses so they can continue to donate billions of dollars to the democrat election funds. Unions do not help employees, the dues that employees pay simply go to the union bosses to line their pockets and donate money to the democrats. Unions are not the reason we have a middle class, hard working people are the reason we have a middle class. I would rather be dead than belong to a union because they are run by corrupt people who line their pockets at the expense of the workers who pay dues. Unions are just like the mobsters who collect money from businesses for PROTECTION! What a scam the unions are.
WAKE UP AMERICA AND IF YOU BELONG TO A UNION, FEEL FREE TO REPLY TO THIS COMMENT AND TELL US WHEN THE LAST TIME WAS WHEN THE UNION ACTUALLY DID SOMETHING FOR YOU!!
I forgot where i read it, but i remember hearing in 2016, about one union, literally ORDERING THEIR workers “Vote for hillary or we will punish you” or something like that.
Hell, this is no worse than Biden paying off student loans from taxpayer money. Biden will pay off everybody’s loans except the taxpayers actually footing the bill. If we don’t purge all these left wing democrats from our government we won’t have much of a country left by the time they are finished making themselves rich. Our best chance is by voting against every democrat running for office this November, then do it again in November 2024. That will at least be a start.
Unions should be eliminated, period.
We just need to make sure our votes are properly counted at next elections with no “mules” getting into the picture.
Remember, its not whom you vote for, that matters. ITS who counts them that do!