Right Thinking From The Left Coast
Reality is merely an illusion, albeit a very persistent one. - Albert Einstein


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Yet Another Bailout

While the GOP may be, sort of, hearing us, it’s clear that the Democrats are not:

A Democratic senator is introducing legislation for a bailout of troubled union pension funds.  If passed, the bill could put another $165 billion in liabilities on the shoulders of American taxpayers.

The bill, which would put the Pension Benefit Guarantee Corporation behind struggling pensions for union workers, is being introduced by Senator Bob Casey, (D-Pa.), who says it will save jobs and help people.

As FOX Business Network’s Gerri Willis reported Monday, these pensions are in bad shape; as of 2006, well before the market dropped and recession began, only 6% of these funds were doing well.

This is a bailout of the multi-employer pension plans, like that run by the Teamsters. The idea would be to split off the employees of companies that have collapsed and have the Pension Benefit Guarantee Corporation fund them. To correct Fox News here, $165 billion is the total potential obligations, if the entire pension system collapsed.  The $165 billion number is like the several trillion dollar number people were throwing around for the previous round of bailouts and guarantees.  If the system collapses that badly, we’ll be too busy keeping the barbarian Canadian hordes from pillaging our cities to worry about taxes.  The actual liability is likely to be “only” $8-10 billion.

But it’s still wrong.  The PBGC is not a bailout program; it’s an insurance program funded by the pensions that participate—premiums these multi-employer plans never paid.  Indeed, the entire point of multi-employer plans was to pool the risk in order to protect employees and obviate the need to join PBGC.  It’s ridiculous to ask the taxpayers to cover the stupid decisions of the pension fund managers and it’s unfair to allow the pension programs to never pay a premium but get the insurance benefits anyway (although that’s not stopping the Democrats from doing the same thing with health insurance).

Posted by Hal_10000 on 05/28/10 at 06:03 AM in Politics Law, & Economics • Permalink

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