Using Your 401k Account To Bail Out The Union Pension Fund

The headline of this article sounds like a total impossibility–just as forced healthcare insurance did only a year ago.  However, there is something brewing for the ‘lame duck’ session of Congress (assuming the Republicans increase their numbers in Congress, which I think they will) that all Americans need to be aware of.

The information on this possible legislation is hard to find, but I have found enough different sources on it to be convinced we will see some aspect of it.  First we have to have the crisis, then we need the big government solution.

The crisis is simple.  Unions do not have enough money to pay their pensions and taxpayers are running out of money to give to the government to fund those pensions.  Whatever shall we do? 

Yesterday the Wall Street Journal reported that:

“The 1.6 million-member AFSCME is spending a total of $87.5 million on the elections after tapping into a $16 million emergency account to help fortify the Democrats’ hold on Congress. Last week, AFSCME dug deeper, taking out a $2 million loan to fund its push. The group is spending money on television advertisements, phone calls, campaign mailings and other political efforts, helped by a Supreme Court decision that loosened restrictions on campaign spending.”

Meanwhile, on October 8, Human Events reported:

“Democrats in the Senate on Thursday held a recess hearing covering a taxpayer bailout of union pensions and a plan to seize private 401(k) plans to more “fairly” distribute taxpayer-funded pensions to everyone.”

This is part of the testimony of Rose Eisenbrey, Vice President of the Economic Policy Institute (EPI), before the Senate Committee on Health, Education, Labor and Pensions on October 7 of this year:

“EPI has published and advocated what we feel would be an excellent national supplemental retirement plan, the Guaranteed Retirement Account, which was authored by Prof. Teresa Ghilarducci, Director of the Schwartz Center for Economic Policy Analysis at the New School for Social Research. In a nutshell, the GRA would mandate employer and employee contributions to a federally administered cash balance plan. The combined 5% of payroll contributions would be invested by a Thrift Savings Plan-like entity in the bond and stock markets, with a guaranteed minimum return of 3% beyond inflation. A $600 tax credit would cover the entire 2.5% contribution for workers earning $24,000 or less, and greatly reduce the effective contribution rate for other lower-paid workers. We calculate that at the end of a normal working life, the average worker would accumulate, along with Social Security, enough to assure a 70%replacement rate of pre-retirement income.”

Doesn’t this sound a lot like Social Security (which is now in serious financial trouble)?  Don’t we learn from our mistakes?

How much of the $87.5 of union money that is funding Democrats could have been used to fund their pensions?  Right now the bailout of union pension funds is scheduled for the lame-duck session of Congress after the election.  If the Republicans do not make significant gains in the Congressional elections next month, we could see more of the same after January.

I am not opposed to taking care of people in their retirement.  Not everyone is able to have a substantial 401k plan.  However, the government has handled Social Security so badly (Congress opted out of Social Security in the 1960’s and has been spending the money on other things ever since!), why in the world should we let them take more of our money and do it again?  Both parties have robbed Social Security, but only one party is after our 401k money!

Please remember this when you vote in November.