Brady: Democrats Force Taxpayers to Cover Irresponsible Promises with Largest Private Pension Bailout in History
After the Biden Administration announced this morning it was forcing taxpayers to pay $35.8 billion to the Teamsters-run Central States Pension Fund, Ways and Means Republican Leader Rep. Kevin Brady (R-TX) issued the following statement:
“The largest private pension bailout in American history—that only benefits a tiny minority of workers—comes thanks to Democrats allowing those who mismanaged pensions to determine whether their funds qualify for taxpayer assistance with no safeguards.
“Despite years of bipartisan negotiations and recommendations, Democrats rejected protections for union workers in other underfunded multi-employer plans that are not as politically connected as the Teamsters’ Central States plan.
“Now, American taxpayers are being forced to cover promises that pension trustees never should have been allowed to make.”
Background: In their partisan so-called “stimulus,” Democrats included an unprecedented taxpayer-funded bailout of poorly mismanaged union- and employer-run pension plans in a bill that was supposed to be focused on crushing the virus and reopening the economy. The condition of multiemployer pensions is serious, and improving it requires thoughtful consideration and long-term solutions.
- The Congressional Research Service reported that that multiemployer pensions were already underfunded by more than $650 billion before the impact of the COVID-19 pandemic. The Congressional Budget Office has since estimated that the bailout will cost $84 billion.
- That staggering amount is significantly higher than the cost of the partition plan passed by the House twice in 2020, and it will be allocated to a relatively small number of plan participants. According to the Pension Benefit Guarantee Corporation (PBGC), the bailout will benefit only about 2 million of the roughly 11 million participants in multi-employer plans.
- PBGC estimated the cost of the bailout could be as much as $91 billion, up to $45,500 per participant. American taxpayers are being asked to cover promises that pension trustees never should have been allowed to make.
- Democrats rejected Republican amendments to improve the management and solvency of multiemployer pension plans, including:
- Appointing independent trustees;
- Strengthening governance rules;
- Targeting assistance to plans currently in critical and declining status;
- Repealing a provision that prohibits PBGC from governance oversight of plans receiving taxpayer assistance;
- Repealing a provision that would allow plan trustees to artificially worsen the financial condition of their plan to qualify for federal assistance.