Biden’s trillion dollar ‘COVID’ bill gives more to union bailout than health-related measures
Despite being slated as “the COVID-19 relief bill,” President Biden’s $1.9 trillion American Rescue Plan focuses little on public safety measures and more on liberal wish list items, according to Matthew Dickerson in The Daily Signal.
In fact, less than 10% of the bill’s spending will be dedicated to public health. The vast majority will go to special interest payoffs and other wasteful spending that will do little to reduce the spread of COVID-19 or help the economy recover.
Nearly $90 billion has been allocated for a taxpayer-funded bailout of union pension plans — about twice as much as what’s earmarked for COVID-19 testing and contact tracing — that “were massively underfunded long before COVID-19,” continues Dickerson.
I wrote about the underfunding problem last April, noting that there was a time when public pensions were better funded. But due to mismanagement, budget problems, not measuring assets and liabilities accurately, etc., public pensions have been severely underfunded for decades and faced funding deficits nationwide pre-COVID. And with that has come broken pension promises.
The problem with Biden’s pension bailout, Rachel Greszler with The Heritage Foundation writes, is that it causes pension plans “to become more underfunded instead of improving their finances.”
As the CBO [Congressional Budget Office] noted, “All three provisions would reduce required employer contributions,” which “would result in greater shortfalls and higher variable-rate premiums.” Ironically, these ill-effects for workers and employers boost the federal government’s ledgers through higher tax revenues and increased PBGC premiums, reducing the outward appearance of the magnitude of the bailout by $12.6 billion.
Meanwhile, by providing cash bailouts to a limited number of plans, this proposal opens the door to upwards of $673 billion in future private union pension bailouts, as well as $4 trillion to $5 trillion in public-sector state and local pension bailouts. All told, every American household could be on the hook for more than $45,000 in unfunded liabilities for other people’s pensions, even as they try to save for their own retirements.
Instead of “bailing out reckless actions without consequences for plans and without recourse for taxpayers,” Greszler concludes, we should be focusing on reforms that “minimize pension losses while also protecting taxpayers and fixing the system for current and future workers and retirees.”
In Minnesota, that could include switching to more fiscally responsible pension plan structures, such as a defined contribution plan or even a hybrid pension plan that offers a small defined benefit pension plan in tandem with a defined contribution plan, similar to a 401(k). The pervasive pension underfunding not only affects current and retired public employees but taxpayers who provide the wages for government employees and help financially cover the promised benefits of defined benefit pension plans.