Congress works on bailout of union pension funds, using taxpayer money.
(Hat tip Market Ticker)
When I read this steam shot out of both ears. Here we are again with the prospects of another bailout with the taxpayer being the source of funds.
New rules expected from the Financial Accounting Standards Board (FASB) are causing massive heartburn for Big Labor and fueling a new backroom push in Congress for a taxpayer bailout of underwater union pensions.
With nine Republican co-sponsors of the House bill, Big Labor is pushing for passage during a lame duck session after the November elections.
The proposed FASB rules would require a company to report as a liability on its books the amount of the withdrawal penalty from its union multiemployer pension plan.
The penalties are pricey. One of the largest of these multiemployer funds, Central States Funds, is in such bad shape that UPS paid a $6.1 billion penalty to extricate itself from employee participation in the fund. {…}
The current unreported liability has long been cause for concern as in some cases the amount of the withdrawal penalty exceeds the value of company assets.
A bill introduced by Sen. Bob Casey (D-Penn.), and a bill from Rep. Earl Pomeroy (D-N.D.) in the House, would for the first time put taxpayers on the hook for these underwater union pension plans.
The union multiemployer pension distress was not caused by the recent economic woes but by mismanagement. The economic downturn has only exacerbated the problem.
The proposed bailout would create a new fund at the Pension Benefit Guarantee Corporation (PBGC). The PBGC is a government entity currently using premiums paid by private pension funds to insure a minimum pension benefit guarantee ($12,870 annually) to participants should a plan become insolvent. The PBGC itself already sports a reported $21 billion deficit.
The Casey and Pomeroy bills would inaugurate the use of taxpayer dollars to guarantee the minimum benefits — which Casey’s bill ups to $21,000 annually — creating incentives for the multiemployer union pension fund trustees to dump the plans on taxpayers. {…} (emphasis mine) (HumanEvents)
Irresponsible action on the part of companies should not be the responsibility of the taxpayers to fix, period. If a pension fund is underwater then it must be the company and/or union to resolve the funding short comings by whatever means necessary. But leave the taxpayers out of it!
tailspin, Wall Street CEOs squandered what little trust was left when they accepted taxpayer bailouts. As the economy stabilized and it seemed like we would change the rules that got us into this crisis—including the rules that let big banks trick their customers for so many years—it looked like things might come out all right.
