Look For The Union Label--On Your Tax Bill

It's payback time in Washington, and the unions are calling in their markers. Congress is now preparing another bailout--for unions too big to fail (as well as those too small to succeed). The latest bill, proposed by Democrat Senator Bob Casey of Pennsylvania, would guarantee that mismanaged, misplaced, misapplied and just plain missing union pension funds will be replaced by you, the taxpayer.

In a chapter right out of Animal Farm or 1984, the bill is called the "Create Jobs and Save Benefits Act of 2010." Many union employees have retirement and pension benefits which would make Midas blush, but that isn't enough. The union bosses want to make sure that no union employee will ever get less than he was promised by those same bosses. This perpetuation of outrageous and crippling pension deals used to be guaranteed by union pools ("multiemployer pension plans") which shored up or saved benefits for union employees who moved to a company that later went bankrupt and couldn't fund the pensions.

The employees who were vested in the pension, even though years from retirement, would never be allowed to accept the risks that the rest of us face. Once a member was vested and then found himself without a participating company to pay the benefits for his full retirement, he became what is called an "orphan." Orphaned union member benefits were previously paid for out of money collected from companies which were still capable of paying into the retirement fund (the "pool"). Casey now wants to leave that money in place for ever-increasing benefits for the healthy companies' union employees and instead have you, the taxpayer, pick up the tab for the orphaned union retirees.

The whole concept is that regardless of whether the union benefits themselves have caused a company to go under, or the union has screwed up funding the pensions which the healthy companies have been paying into all along, the union retiree will now have the complete security of knowing his cushy pension will always be funded. Under certain extraordinary circumstances, Congress authorized the Pension Benefit Guaranty Corporation (PBGC) to rescue the union pensions. But the taxpayer funding (Guaranty) has to be approved and reviewed annually. In a scheme similar to the Federal Deposit Insurance Corporation, the PBGC is theoretically only guaranteeing a pension failure bailout once for a total of $12,870 per retiree.

When these guarantees were worked out originally under the multiemployer (pool) concept, there were many active union employees for each retiree, so the funds usually appeared to be working. That has changed drastically, such that today for every working union pool worker, there is one retiree. That means that there is simply no way the union/healthy employer scheme can fund the orphan pensions. Some unions are even worse off. The Teamsters Union has four retirees for every currently employed worker, which means it's almost impossible to fund Teamster employee retirees, let alone have money left over to go into a pool for orphan retirees.

In other arenas, this is called a Ponzi scheme. When liberals do it, it's called "compassion." Things are so badly underfunded and mismanaged in the multiemployer pools that UPS recently paid a penalty of over $6 billion just to get itself out of the Central States Fund pool so that it could establish its own retirement fund. It was still a bargain for UPS, since despite the fact that it now had to pay for its own pension fund on top of the $6 billion penalty, the company was now responsible only for its own employees and not the retirement of thousands of union types who never worked a day for UPS.

The Ponzi pyramid is about to collapse, and that means years of mismanagement, misfeasance and malfeasance at the funds must now be salvaged by going to the taxpayers--or so says Senator Casey. By using federal funds to save the pension funds, the unions are now free to tell future employees that "there will always be a pension fund if you sign up for membership in our union." In other words, the unions have either intentionally or negligently allowed the multiemployer funds to shrink to unsustainable levels with no worries, since they can always count on the Democrats to have the taxpayers make up the difference.