Pension Deficit Disorder

Print Friendly, PDF & Email

With the passage of Obamacare, organized labor now feels invincible. Like a randy roué jacked up on Viagra, Big Labor has been trying to screw the taxpayer as many times and in as many ways as it possibly can during these, its salad days. Several recent developments illustrate the surging satyriasis of the unions.

One was the subject of a article by Diana Furchtgott-Roth, about union tool Sen. Bob Casey (D-PA). Casey has introduced a bill that would bail out union pension plans, which are collectively underfunded by about 165 billion bucks (as estimated by Moody’s).

His bill, with the truly Orwellian name of “The Create Jobs and Save Benefits Act of 2010,” along with similar bills introduced by Rep. Earl Pomeroy (D-ND) and Rep. Pat Tiberi (R-OH), aims at shoring up the scandalously underfunded “multiemployer defined-benefit plans” beloved by organized labor.

These plans are run by the unions rather than the employers. They allow workers to move from one company to another but stay in the plan; yet they are, of course, a powerful device for keeping workers in the union for their entire working lives. It also turns out that multiemployer plans are less likely to be fully funded than single-employer ones — by nearly five to one!

Under the Casey bill, the federally owned Pension Benefit Guarantee Corporation (PBGC) would be given the power to take over the pension plan of any company that withdrew from a union plan. The PBGC — that is, the taxpayers of America — would then have to pay the benefits of all employees until the very last worker or designated survivor died.

How convenient for both the greedy unions and the greedy businesses!

This nod in both directions could create a coalition of Dems and Repubs for the bill — a bill that is nothing but an exercise in moral hazard. As Furchtgott-Roth observes, it would encourage businesses to declare bankruptcy, dump their pensions on the PBGC, and reorganize under a new name. Freed from the responsibility to fund pensions, such companies would attain an unfair advantage over their competitors. The bill would also encourage unions not to deal seriously with underfunded pension plans. As our author caustically puts it, “Exactly how much mismanagement by employers and union leaders must the taxpayer underwrite?”

In April, President Obama issued an executive order that will push federal agencies to require contractors on large projects ($25 million or more) to agree to unionize if they aren’t unionized already. Considering that 85% of American construction workers are not union members, this will be a major intrusion into the industry, one that is already suffering a 27% unemployment rate. (A contract that requires the contractor to employ only union workers is called a “Project Labor Agreement” or PLA).

Obama has thus rescinded an executive order issued by Bush, and has basically set the American taxpayer up to pay higher costs for federal projects. An independent study last year, commissioned by the Department of Veteran Affairs, showed that PLAs would raise construction costs on VA construction jobs by up to 9%. Other academic economic studies estimate that PLAs drive up costs by 10% to 20%. A study performed by the Beacon Hill Institute showed that PLAs inflated the cost of building 126 schools in the Boston area by 14%.

This is the corrupt ChicagObama at his slyest. Unions

shovel many millions to Obama and his cronies in Congress, who then funnel billions back to the same unions.

Leave a Reply

Your email address will not be published. Required fields are marked *