Yesterday's Wall Street Journal reported that Pennsylvania Senator Bob Casey has introduced to move pensions from companies that have gone out of business to under the umbrella of federal Pension Benefit Guaranty Corporation (PBGC).
The article explains that:
"The PBGC is already significantly underfunded and taxpayers are its ultimate backstop. Yet the Casey bailout could dump as much as $165 billion in new liabilities on the PBGC, while multi-employer plans would get a clean bill of health. What a deal.
"This cause has taken on new political urgency, and no less than Senate Majority Whip Dick Durbin has endorsed the bill. The reason for the rush is new rules that may soon be issued by the Financial Accounting Standards Board (FASB), the green-eyeshade outfit that dictates how companies keep their books. Those proposed rules would expose the multi-employer time bomb."
The article reports:
"Thus the election year urgency to pass the Casey bill. If Democrats could shift orphan company pensions to the taxpayer, the liabilities for the remaining companies would fall dramatically, and the multi-employer scheme could continue. Unions and employers could keep promising current workers fabulous pay and benefits, without which they have little chance of stemming their continuing decline in membership.
"The losers? Those would be existing retirees in multi-employer plans, who were also promised such benefits but whose pensions would now be dumped on the feds. Even under Mr. Casey's bill, payouts to current retirees would be limited to $21,000 a year--a fraction of what workers expected to receive."
The bottom line here is very simple. Unions will not have to use their dues to keep their pension funds solvent--the American taxpayer will do it. Why would the taxpayer subsidize union pensions at the same time Social Security is operating at a deficit?
Stay tuned. This legislation has a hight priority for the fall session of Congress. It needs to be stopped.
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