Get ready for the next ginormous taxpayer bailout:
A Democratic senator is introducing legislation for a bailout of troubled union pension funds. If passed, the bill could put another $165 billion in liabilities on the shoulders of American taxpayers.
The bill, which would put the Pension Benefit Guarantee Corporation behind struggling pensions for union workers, is being introduced by Senator Bob Casey, (D-Pa.), who says it will save jobs and help people.
As FOX Business Network’s Gerri Willis reported Monday, these pensions are in bad shape; as of 2006, well before the market dropped and recession began, only 6% of these funds were doing well.
Although right now taxpayers could possibly be on the hook for $165 billion, the liability could essentially be unlimited because these pensions have to be paid out until the workers die.
Faithful Examiner readers already know that I warned this was happening in a column in early April:
The mother of all taxpayer bailouts is right around the corner.
Union bosses want taxpayers to foot the cost for bailing out the labor organizations’ many failing pension plans that millions of their members are counting on to “be there” when they retire. Unfortunately, the average union pension plan has only enough money to cover 62 percent of its financial obligations.
Such a low level of funding puts those plans on the government’s critical list. Pension plans funded below 80 percent are considered “endangered” by the government. Below 65 percent is “critical.” With union membership declining, that puts these funds into a tailspin from which they’ll likely never pull out.
The government’s Pension Benefit Guaranty Corporation only guarantees pensioners $12,000 a year, should their pension plan fail. Good luck retiring on that.
But as the economy sours, there’s increasing pressure to bail out workers from failing unions. Last July, for example, the PBGC agreed to take on $6.2 billion in pension liabilities from bankrupt auto parts manufacturer Delphi. And that’s just one company. In 2007, the PBGC was already running a deficit of nearly a billion dollars. Things will only get worse as the PBGC is expected to assume $86 billion in liabilities by 2015.