A
coal miner pension bailout could set the stage for a multi-trillion-dollar
taxpayer bailout. Don't do it, by Rachel Greszler, 10/5/17 FoxNews
A bipartisan group of federal lawmakers from coal country
have introduced an updated bill to use federal taxpayer dollars to pay for the
broken promises of one particular coal mining union—the United Mine Workers of
America, or UMWA.
If passed, this bill could be the tip of a multi-trillion dollar
taxpayer bailout. President Trump, whose sympathy for the miners is well known,
should beware, along with Congress.
That’s
because the UMWA is not the only pension plan that has made promises to its
workers and failed to set aside the funds to keep those promises. Out of nearly
1,400 union-run or “multiemployer” pension plans across the U.S., 85 percent of them are less
than 70 percent funded, and they have promised $500 billion more than they can
pay.
The second proposed “funding” mechanism
is a taxpayer loan to the insolvent pension plan—which is no different than a
straight-up bailout. When there’s virtually no chance of repayment, that’s not
a “secure loan.”
State and
local public pension plans, such as those for teachers and firefighters, have
promised another $5 trillion more than they set
aside to pay.
Proponents
of a UMWA bailout claim that the costs will be covered in part by existing government
funds, especially the Abandoned Mine Land Reclamation Fund, but that’s simply
not true. A Congressional Research Service report confirms that there’s
no money left in the fund, as the
UMWA has already
tapped every
last available cent to cover its unfunded health care promises.
The second
proposed “funding” mechanism is a taxpayer loan to the insolvent
pension plan—which is no different than a straight-up bailout. This is like a
bank providing a 30-year loan to homeowners who are
in foreclosure and whose incomes cover only 10 percent of their mortgage costs. When
there’s virtually no chance of repayment, that’s not a “secure loan.”
Overall,
the UMWA has racked up $5.6
billion in
unfunded pension promises. It has only one person paying into the pension fund
for every seven retirees receiving benefits, and for every dollar that leaves
its pension fund, it collects less than 16 cents in new contributions.
How can
taxpayers expect that the UMWA will be able to repay its loans with an income
and balance sheet like that?
Although
the decline in the coal industry—due in no small part to excessive Obama-era
regulations—exacerbated the UMWA’s pension problem, it is in no way the cause.
After all, if private companies go out of business, their workers’ 401(k)
accounts don’t lose value or disappear completely.
The
problem with the UMWA and many other union-run and public sector pension plans
across the country is that those who promised future retirement benefits didn’t set
aside the funds necessary to pay them.
When the
UMWA fund was first established in 1946, the UMWA
fought vehemently to pay out pension benefits the very next year, to workers
who never earned them. And in the seven decades since, the UMWA has
consistently failed to set aside the money needed to make good on the promises it
made to hard-working coalminers.
So what
happens if Congress doesn’t step in to bail out the UMWA’s unfunded pension
promises? The same thing that has and continues to happen to all other
union-run pension plans that become insolvent.
The
government’s Pension Benefit Guaranty Corporation (PBGC)—not a
taxpayer-financed government entity—steps in and begins paying workers their
insured benefits. Those are typically less than workers would have
received if their union plans had been able to keep their promises. The average
UMWA pensioner who receives about $530 per month would have their check reduced
by about 10 percent, or $50
per month.
The PBGC
is already paying benefits to retirees of more than 50 failed union-run pension
plans, with another 60 plans “booked” within the PBGC because of their near
certain short-term failure. Politicians didn’t seek taxpayer bailouts on behalf
of any of these pension plans, perhaps because they weren’t as big or
politically powerful as the UMWA.
Never
before in history has the U.S. government bailed out a private or public sector
pension plan. Unless Congress is prepared to force taxpayers to bail out
trillions of dollars in unfunded pension promises across the country—and set
the precedent that employers can promise whatever they want in future pension
benefits without having to make good on those promises—this is a line
policymakers should not cross, even for an iconic, beleaguered industry like
coal.
Rachel Greszler is a
Research Fellow in Economics, Budget and Entitlements at the Heritage
Foundation.
Comments
Conor
Lamb was elected to Congress in Pennsylvania by 100 votes by these minors to
fight for this bailout. That’s how Democrats play “Lucy” with the football.
Norb
Leahy, Dunwoody GA Tea Party Leader
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