Why Democrats are Pushing the $165 Billion Union Pension Bailout

Somewhere lurking in the hot, putrid halls of Congress this summer is a union bailout bill of epic proportions and long-term ramifications. Whether or not Democrats can ultimately push it (or something like it) into passage is yet to be determined. However, with rumors that Sen. Dick Durbin (D-IL) signed on as a co-sponsor on Thursday, it would appear that the union bailout is quietly creeping along. If it passes, though, its ramifications surpass the mere $165 billion-plus price tag, as it will influence the political landscape for decades to come. In sum, Democrats need the bailout desperately and Republicans should shun it like the plague.


Likely to surpass the touted $165 billion it is estimated to cost, Create Jobs and Save Benefits Act (S. 3157) was introduced on March 23rd by Sen. Bob Casey (D-PA) and is designed to bailout unions’ underfunded pension funds by transferring the liability of those funds onto the backs of the taxpayers.

Under these bills, the Pension Benefit Guaranty Corporation (PBGC) would, at the request of the plans, have the authority to take over the pension obligations of employers who have withdrawn from the plans, and pay the benefits out of taxpayer dollars, says Furchtgott-Roth:

  • Once the PBGC shoulders that obligation, it would keep making payments until the last retiree or designated survivor dies.
  • Since many multiemployer plans are in financial difficulty, this legislation, if enacted, could dramatically increase the federal deficit, putting even more pressure on the American taxpayer and the economy.
  • Depending on events, it might add billions to government spending — current underfunding levels are estimated at $165 billion-bumping up future deficits.

According to a June 24th article published in the Bureau of National Affairs Construction Labor Report (subscription required):

If enacted into law, the bill would convert a private funding shortfall for collectively bargained multi-employer plans into a public obligation, said Brett McMahon, vice president of Miller and Long Concrete Construction and an ABC member.

The legislation would transfer a portion of multiemployer pension funding obligations to a new insurance program that would be operated by the PBGC and paid for with taxpayer dollars instead of employer-paid premiums, F. Vincent Vernuccio, a spokesman for the trade group’s advocacy organization, the Competitive Enterprise Institute, said during the call.

At the heart of the union pension problem are companies that, in many cases, agreed to put retirement money for union workers into “multi-employer plans” but have since gone out of business. As the unionized workers in multi-employer plans are still entitled to a pension, the remaining employers are left funding the pensions of workers who, in many cases, they never employed.

Over the past few decades, as more and more unionized companies have gone out of business, this ponzi-scheme has only grown, leaving many union pensions severely underfunded–an estimated $165 billion underfunded. Now, with so many plans in critical status, many companies that remain in union multi-employer plans are facing an insurmountable burden that may eventually drive many of them out of business.

What’s Really Behind the Democrats’ Push for the Union Pension Bailout

Liberal talk-show host Ed Schultz proclaimed last weekend that America is in an ideological fight for the country. The problem for many on the Right is that they are only beginning to understand that the Left’s vision for America is a long-range vision–and it is a fight where the Left is playing for keeps.

Democrats need unions to be their foot soldiers on the march to a socialized progressive America which is why the entire Left establishment has been pushing for the horrifically-misnamed Employee Free Choice Act (EFCA) for the better part of a decade.

In fact, at 2009’s Netroots Nation (the left-wing blog event for socialist progressive bloggers), one of the panel discussions held was The Secret Plan to Defeat the Right Forever and how EFCA was key to the plan’s success.

Modernizing the nation’s labor law is critical to expanding union membership–which in turn, will ensure conservatives become a permanent minority, as newly-empowered workers actively engage in political action and demand a new way of doing the nation’s business, like creating an economy that rewards Main Street and not just Wall Street. The freedom to form unions and bargain is critical to the progressive movement–when workers have the tools they need to build a better life, they have the power to improve their communities and the solidarity to make progressive political change throughout the nation.

In other words, the Left has been relying on EFCA in order to have one-party rule in America permanently. The problem is, EFCA has been temporarily stalled and now the train-wreck of union pensions is barreling down on the Democrats. In order to save the Democratic Party, they must save the unions (or more specifically, the unionized companies) from failing.

While Democrats will tout the union pension bailout bill as another way to “create or save jobs,” it is misleading. The union pension bailout bill will save Democrat politicians’ jobs and it may also temporarily save some union jobs, but at what expense?

There are no guarantees that bailing out the union pensions at the expense of taxpayers will save the unionized companies. Moreover, if the union companies are allowed to fail, the markets and industries that these companies operate in will likely absorb the work, creating jobs in other (albeit non-union) companies.

On the other hand, even though Democrats know that another union bailout will likely make them even bigger pariahs with the American people, the very survival of their party rests on their ability on passing this poisonous piece of legislation. If they fail, the ramifications for the Democrats are disastrous.

Failing to bailout the union pensions would likely cause the failure of a fairly high number of unionized employers. If unionized employers fail, unions will lose members. Without union members, unions would have no union dues with which they can fund Democrats’ political campaigns and would not be able to mobilize effective Get Out the Vote (GOTV) efforts.

There are a couple of reasons Democrats and their union handlers are pushing this poisonous bill now: Union bosses and Democrats know there is likely going to be a major upheaval in November. As a result, what they have not been able to accomplish in the last 18 months in Washington will presumably be stalled for another few years (at least until 2013). They cannot survive that long. The union pension bailout bill is the lifeline to ensure their survival until they can regain dominance again.

In the coming months, watch for more push from the Democrats to bailout the union pension plans. If it doesn’t happen before the mid-term elections, it could very well happen immediately after. However, for any Republicans considering supporting this legislation, they do so at their own peril, for the Democrats are only pushing this to save their party by making sure they have foot soldiers in future elections.


“I bring reason to your ears, and, in language as plain as ABC, hold up truth to your eyes.” Thomas Paine, December 23, 1776

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