Skip to comments.Unions are desperate for a tax-paid pension bailout( unions need a bailout and fast)
Posted on 10/19/2010 11:13:59 AM PDT by goldendays
When it comes to accounting, the devil is in the details.
A new Financial Accounting Standards Board (FASB) rule taking effect in December requires greater transparency for union pension plans and threatens to bankrupt organized labor.
In order to survive, unions need a bailout and fast.
This presents a political problem -- if unions go bankrupt, so do Democrats. Eleven of the top 20 largest political contributors are labor unions, and nearly all of that money is spent campaigning against Republicans.
By bailing out unions, Democrats are bailing out themselves.
Unions have known for years that their multiemployer pension plans have unfunded liabilities that could run hundreds of billions of dollars.
That's why unions have been loath to accurately report their pension liabilities -- requiring transparency could devastate whole industries as banks and creditors will likely refuse to lend money to companies on the hook for such outrageous pension obligations.
Fortunately for them, it's much cheaper for unions to buy the White House and Congress than to fund their pensions properly. Even by their normally profligate standards, unions went for broke in 2008, spending $400 million electing Democrats.
In 2010, "Democrats are relying more than ever this year on another outside force to help even the playing field: organized labor," reports the New York Times.
Despite being beholden, Democrats have been unable to enact the two laws unions most desire.
Democrats pushed hard but unsuccessfully for Card Check. That legislation would remove the secret ballot in union elections. By making union votes public, labor organizers would know who to target and intimidate in order to pressure them to change their vote.
With new unions, they could use mandatory binding arbitration to force additional businesses to infuse cash into their failing multiemployer pension plans.
The other piece of legislation is, not surprisingly, a bailout bill offered by Sen. Bob Casey, D-Pa., and co-sponsored by Senate Majority Whip Richard Durbin, D-Ill. (A similar piece of legislation is being offered in the House by Rep. Earl Pomery, D-N.D.)
The bill would make failing union pension plans fully backed by the Pension Benefit Guaranty Corp., a government-sponsored entity.
In the plain language of the bill, "obligations of the corporation which are financed by the fund created by this subsection shall be obligations of the United States."
It creates a fund that these pension plans will be able to go to that will be filled by taxpayer funds as needed through the normal appropriations process.
In this sense, Casey's bill is an entitlement for the 7 percent of Americans still in labor unions. There is literally no dollar figure in the bill, but the PBGC had a deficit of $21 billion last year and it's estimated that shoring up failing union pension plans could cost taxpayers another $165 billion.
Rather than make union managers and businesses accountable for their pension mismanagement, these plans would have the full backing of the federal government, removing financial pressures to make the plans fiscally responsible. In the Daily Caller, a Capitol Hill Republican compares the arrangement to Fannie Mae and Freddie Mac's disastrous backing of the housing market.
With Republicans likely to control at least one chamber of Congress after November and post-census redistricting helping the GOP retain control, a lame duck session could be the Democrats last chance to save unions and help keep their campaign coffers filled.
The question is: Will Republicans be able to stop another special-interest bailout before January? If they succeed, it could be the beginning of the end for unions as an influential political force.
Maybe if they spent less supporting Democrats these funds would have more to pay out to their members. Just a thought.
Mark Hemingway: Will November be the death knell for big labor unions?
By: MARK HEMINGWAY
Commentary Staff Writer
October 17, 2010
Mark your calendars. Next month we might be able to pinpoint the day that big labor unions begin their decline to political irrelevancy.
And no, we’re not talking about Election Day, though big Republican victories will undoubtedly help usher unions off the political stage.
On Nov. 1, the Financial Accounting Standards Board (FASB) ceases to take public comment on a new rule requiring that companies more accurately report liabilities they have from participation in multiemployer pension plans. Unless FASB is persuaded otherwise, the rule takes effect Dec. 15.
There are some 1,500 multiemployer pension plans in the United States, which are unique to unions. In these plans, multiple companies pay into the pension plan, but each company assumes the total liability.
Under “last man standing” accounting rules, if five companies are in a plan and four go bankrupt, the fifth company is responsible for meeting the pension obligations for the employees of the other four companies.
What this means is that companies with union labor often have pension liabilities that are several multiples higher than the pension expenditures they report — the Kroger grocery store chain shocked analysts last year when it disclosed its multiemployer pension liabilities more than doubled in a year to $1.2 billion.
Ratings agencies such as Moody’s and Standard and Poor’s have been highlighting the lack of transparency in union pension plans. Now Wall Street wants union businesses to be upfront about their liabilities.
FASB’s new rule could effectively wipe out the paper worth of many companies, especially in the trucking and construction industries. Once banks and creditors are aware of these staggering pension liabilities, it will make it nearly impossible for union businesses to get loans, credit lines or bonding.
If forced to report their true liabilities, hundreds — perhaps thousands — of companies will scramble to get out from under their union obligations.
“The blind panic is un-frickin’-believable. [Unions] are flipping out,” says Brett McMahon, a representative of Associated Builders and Contractors and vice president of Miller & Long Concrete Construction.
Multiemployer plans are already on the verge of collapse. A recent Government Accountability Office study looked at multiemployer plans from 1980 to 2006. The study found that the number of people paying into the plans was equal to the number of retirees being paid out in 1998.
Since then, the plans have been unsustainable Ponzi schemes — the Teamsters union plan alone has some four times number of retirees as employees paying in.
Unions have but one shot to save themselves. They’ve been agitating for a legislative solution for some time, and unions had some very specific demands in mind when they spent $400 million electing Democrats in 2008.
First, they wanted a “card check” bill that would allow unions to bully employees into creating unions. With new unions, they would use mandatory binding arbitration to force new companies into their failing multiemployer plans.
Legislatively, card check appears dead in the water. Now Democrats are likely to lose control of the House of Representatives in November’s election. Not only that, post-census redistricting looks like it could help Republicans retain control of the House for years to come, making it nearly impossible to get legislative favors for unions.
With FASB’s new rule starting before year’s end, time is running out for unions. If unions end up decimated by collapsing pension plans and the ensuing class-action lawsuits as workers try to recoup their retirement, Democrats will lose millions in political donations.
That’s why Democrats have already put together a plan to save unions. And in a lame duck session just after the election, Democrats have nothing to lose.
Get ready for another taxpayer-funded union bailout.
Read more at the Washington Examiner: http://www.washingtonexaminer.com/opinion/columns/Will-November-be-the-death-knell-for-big-labor-unions_-1246982-105141124.html#ixzz12pTDjdfN
The blind panic is un-frickin-believable. [Unions] are flipping out
Oh goody! Bankrupt those vultures!
The best bailout is to make the members pay more into their own retirement.
Oh goody. Now the Unions will be a wholly-owned subsidiary of Federal, Inc.
FYI: SEIU has a two tier pension plan.
One for the 100 odd executives who run SEIU, the rest are under another plan.
The executive plan has been doing well for the last 15 years.
The rank-file plan has been in financial difficulty since 2004 and I suspect is close to collapse. It is this plan which has been funding RAT elections for the last 10 years.
...if unions go bankrupt, so do Democrats. Sounds good to me
The unions should be bankrupted just as the USSR was.
Prediction..casy’s advocacy of this bill will be the main reason of his defeat in 2012..
Prediction..Casey’s advocacy of this bill will be the main reason of his defeat in 2012..
Prediction..Casey’s advocacy of this bill will be the main reason of his defeat in 2012..
All states must be declared Right to Work states and compulsory union dues outlawed
This can be done by executive order
Lets see how much money these crummy Marxist scumbags have to spend on politics when they cant force their members to either pay dues or be fired
We need to hasten the demise of these money grubbers as fast as possible!!
“Maybe if they spent less supporting Democrats these funds would have more to pay out to their members. Just a thought.”
A good thought at that. The millions they spend on dimoKKKRAT campaigns would go a long way to help fund their pensions.
Wouldn’t the pubs just defund it in January!
So, we expect John Boehner and Mitch McConnell to drive the stake into the heart of organized labor. Hmmmmmm. One can dream—and instead of counting sheep, we count on Hatch, Snowe, Collins, McCain, Graham, and Cornyn.
Union Bailouts and State Bailouts are going to be the biggest issue of 2011. Pressure will mount on the new GOP majority that they Bailed out Wall Street, why not “main street”?