Labor’s new legislative prerogative?
Defenders of worker’s rights have successfully educated the public about the misnamed Employee Free Choice Act, big labor’s favorite piece legislation, convincing most Republican Members and even a few Democrats to impede the passage of EFCA. EFCA is so wildly unpopular because it would eliminate the secret ballot, a tenet of American democracy, and interject government arbitrators into union-business disputes. Americans overwhelmingly have opposed bills that shift power away from individuals to the union.
While it is certainly possible that Democrats will try and pass EFCA during a lame duck session, it is equally possible that they will try and pass a lesser known pension bailout bill. Many union multiemployer pension plans are severely underfunded. AWF highlighted this impending pension crisis in a May letter sent to Congress. An excerpt from the letter explains the problem at hand:
"These two bills (Senator Casey’s and Representative Pomeroy’s) mark a stark departure from traditional pension insurance. The Pension Benefit Guarantee Corporation (PBGC) insures the pensions of more than 44 million American workers and retirees in over 29,000 private, company-run single-employer and union-run multiemployer defined benefit pension plans. PBGC receives no funds from general tax revenues. Its operations are supported by insurance premiums—set by Congress—paid for by sponsors of defined benefits plans.
The two bills propose to use taxpayer dollars to bail out several multiemployer plans. Using taxpayer funds to pay for private pensions would be a first in PBGC history. That would be patently unjust. Most of the funds that would be eligible for this bailout were severely underfunded well before the financial crisis hit. That underfunding is largely due to mismanagement by the plan sponsors, who would now get a pass, at taxpayer expense.
In 2009, Moody’s Global Corporate Finance estimated that the nation’s largest 126 multiemployer plans had a collective funding shortfall of $165 billion. In 2006, well before the financial crisis, only 59 percent of multiemployer plans had 80 percent or more—what the Department of Labor considers healthy—of the assets required to pay."
There is a new wildcard which is likely to spur union action on this issue. The Financial Accounting Standards Board (FASB) will soon require unions to make their withdrawal liability from multi-employer pension plans public. This will likely reveal that a substantial number of union’s pension liabilities are more than the union’s assets. Unions will have nowhere to hide.
Additionally, Dick Durbin (D-Ill.), the most powerful Senate Democrat behind Harry Reid, signed on to the Senate version of the pension bailout bill, originally sponsored by Senator Casey. This bill is just as problematic as EFCA and could cost as much as $165 billion. Defenders of workers, the free market, and taxpayers should keep a close eye on the union pension bailout legislation.
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