Another in a long list of "turn your grandchild upside down and shake out his pockets" - no price is too much to buy votes. (in this case 10 million of 'em!) Plus the all important "business interests" are gleeful if they can pass the costs to the taxpayer, so more political contributions from their ilk. 3 years ago we'd be outraged... now it has all just become a big laugh aka "business as usual" in Cramerica.
- U.S. lawmakers are laying the groundwork for a possible federal bailout of some faltering pension plans that are jointly run by companies and unions. The effort reflects a worrisome new problem in the nation's troubled retirement-savings system: the grim financial condition of such pension plans, known as multi-employer plans. They are common in the hotel, construction, trucking and other industries, and cover about 10 million workers, or almost one in four workers who have a private pension.
- Many multi-employer plans are struggling after years of financial hits and relatively light regulation. In the past two years, almost 400 plans have announced they are in bad condition, according to lawmakers.
- In response, some lawmakers are pushing a plan that would provide federal aid to a few of the ailing pension funds. But some conservatives and anti-union groups oppose the aid effort, arguing it could lead to a broader taxpayer bailout of the whole class of pensions, costing tens of billions of dollars. (don't even bother protesting - we already know it is inevitable in Bailout Nation)
- A 2009 study from ratings firm Moody's Investors Service estimated that the country's largest multi-employer plans have long-term deficits of about $165 billion.
- Legislation sponsored by Sen. Bob Casey (D., Pa.) would provide federal financial assistance to a few of the more troubled multi-employer plans, including a Teamsters Central States fund and another Teamsters pension plan in western Pennsylvania.
- Mr. Casey said his approach is not a federal bailout. (uuuhhh) His bill would make a federal agency, the Pension Benefit Guaranty Corp., responsible for the longer-term costs, and would cost taxpayers an estimated $8 billion over the next decade. He said troubled plans taking advantage would have to pay the first five years' worth of retiree benefits themselves.
- The Moody's study estimated that multi-employer plans in the construction industry are only about 60% funded, with long-term liabilities of $158 billion versus assets of $85.5 billion. In the transportation industry, including many Teamsters plans, the overall funded status was 58.6%.
Long time readers will know in all the pieces I've written on pensions the past 3 years, that the solution thus far has been to change the math. That fixes everything... or at least kicks the can - and what states, cities, private business has been doing for years. If there is not enough money, it's the fault of accounting. Looks like Congress agrees!
- A separate provision moving through Congress would buy time for struggling private pension plans through accounting changes that would let them spread recent losses over longer periods. That provision is part of a bigger economic-relief package sitting in Congress.
Surprise, surprise - employers are thrilled with anything that shifts costs from them to the taxpayer!
- Many employer groups are supporting lawmakers' efforts. A letter on Thursday from a wide array of employer groups, including the U.S. Chamber of Commerce and a number of construction and transportation groups, encouraged lawmakers to "continue to work…to find appropriate solutions. …
The surreal life continues... and shall only grow from here.
- A number of conservative groups, including the Alliance for Worker Freedom and the Competitive Enterprise Institute, wrote in a letter to lawmakers this week: "Using taxpayer funds to pay for private pensions would be a first" for the federal government.