Thread: Biden’s union pension bailout: What it means, and will it work?

The Looting will Continue but at a faster pace


FOX News
Biden’s union pension bailout: What it means, and will it work?

Breck Dumas - 5h ago

The Biden administration unveiled details this week of the final rules surrounding the federal bailout of hundreds of union pension plans passed as part of Democrats' $1.9 trillion American Rescue Plan Act coronavirus relief package last year, saying it will secure workers' benefits for decades to come.

ARPA's Special Financial Assistance Program injects $90 billion of taxpayer funds into the federal government's Pension Benefit Guaranty Corporation, which insures private-sector pensions. Prior to the passage of the purported COVID package, the PBGC was set to become insolvent in 2026.
The White House claims the plan will prevent 2 to 3 million workers from having their pension payments cut in retirement, by saving upwards of 200 private-sector union plans that had been in danger of insolvency.

© Photo by SAUL LOEB/AFP via Getty ImagesUS President Joe Biden speaks about the economy and the final rule implementing the American Rescue Plans Special Financial Assistance program, protecting multiemployer pension plans, at Max S. Hayes High School in Cleveland, Ohio, July 6, 2022. Photo by SAUL LOEB/AFP via Getty Images

President Biden touted the accomplishment during a speech in Ohio on Wednesday, saying that retirees in the shaky plans who have already seen cuts in benefits "will have them restored retroactively," and that he "turned a promise broken into a promise kept."

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"We saw before the pandemic and the economic crisis that followed," Biden said, "Millions of retirees were at risk of losing their retirement security through no fault of their own, based on conditions and unrelenting attacks on unions that were taking place."
But some pension experts are skeptical of the plan, and are raising concerns.
One sticking point is that the rules have changed to allow one-third of the taxpayer-provided funds to be invested in stocks, which, according to The Wall Street Journal, "overrides a previous restriction that generally limited them to investment-grade bonds."

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In response to the plan, University of Pennsylvania Wharton School of Business Professor Dr. Olivia Mitchell, executive director of the school's Pension Research Council, tweeted, "Spare me!"
She called the move "risky," and said it is "unlikely" to keep the multi-employer plans "solvent through 2051, despite White House optimism."
© Photo by SAUL LOEB/AFP via Getty ImagesUS President Joe Biden is greeted by (L-R) US Representatives Shontel Brown and Marcy Kaptur, US Senator Sherrod Brown and Cleveland Mayor Justin Bibb, on arrival at Cleveland Hopkins International Airport in Cleveland, Ohio, July 6, 2022. Photo by SAUL LOEB/AFP via Getty Images

Derek Kreifels, CEO of the State Financial Officers Foundation, noted that the pension funds were in trouble long before the pandemic, asserting the move was political and a gamble for taxpayers and union workers alike.
"The White House is going to allow the same pension fund managers – who have been historically awful at their jobs – the ability to make riskier investments with not only hardworking American’s pensions, but also the nearly $100 billion worth of taxpayer dollars delivered to unions under the guise of COVID relief," Kreifels told FOX Business.

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He added, "In truth, this is a disaster of the Biden administration’s own making, putting millions of American’s retirements at risk with terrible economic policies that are reverberating throughout every facet of our lives – from the gas pumps to the grocery stores."
Ryan Frost, a policy analyst at Reason Foundation's Pension Integrity Project, says whether the bailout and its new rules will work is "a mixed bag."



© Photo by SAUL LOEB/AFP via Getty Images
People cheer as US President Joe Biden speaks about the economy and the final rule implementing the American Rescue Plans Special Financial Assistance program in Cleveland, Ohio, July 6, 2022. Photo by SAUL LOEB/AFP via Getty Images

"Obviously it will work for these retirees as they'll no longer be facing benefit cuts as the PBGC runs out of money, but there are zero safeguards in place to prevent the plans from running out of money again," he said. "In fact, the bill even modifies the PBGC guarantee formula to increase the maximum potential benefits the retiree can receive."
Frost says the question is what the trade-off will be for the U.S. taxpayer to bail out these private pensions.
"The plans will now be projected to reach 80% funded in 30 years, using some unknown discount rate that is going to vary between each plan," he told FOX Business. "Congress needs to come back next year and put some safeguards and strings around plans who accept this money so they don't drop further into insolvency, risking pension cuts and requiring another ‘financial assistance’ program snuck into a $1.9 trillion budget package."

Biden’s union pension bailout: What it means, and will it work? (msn.com)

Associated Press

Dems want to tax high earners to protect Medicare solvency

By ALAN FRAM, Associated Press - 2h ago

WASHINGTON (AP) — Senate Democrats want to boost taxes on some high earners and use the money to extend the solvency of Medicare, the latest step in the party's election-year attempt to craft a scaled-back version of the economic package that collapsed last year, Democratic aides told The Associated Press.

© Provided by Associated Press
FILE - Senate Majority Leader Chuck Schumer, D-N.Y., speaks with reporters following a closed-door caucus lunch, at the Capitol in Washington, June 22, 2022. Senate Democrats want to boost taxes on some high earners and use the money to extend the solvency of Medicare, the latest step in the party's election-year attempt to craft a scaled back version of the economic package that collapsed last year, Democratic aides have told The Associated Press. (AP Photo/J. Scott Applewhite, File)

Democrats expect to submit legislative language on their Medicare plan to the Senate's parliamentarian in the next few days, the aides said. It was the latest sign that Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-W.Va., could be edging toward a compromise the party hopes to push through Congress this summer over solid Republican opposition. Manchin scuttled last year’s bill.
Under the latest proposal, people earning more than $400,000 a year and couples making more than $500,000 would have to pay a 3.8% tax on their earnings from tax-advantaged businesses called pass throughs. Until now, many of them have been using a loophole to avoid paying that levy.
That would raise an estimated $203 billion over a decade, which Democrats say would be used to delay until 2031 a shortfall in the Medicare trust fund that pays for hospital care. That fund is currently projected to start running out of money in 2028, three years earlier.
Most U.S. businesses are pass throughs, which include partnerships and sole proprietorships and range from one-person law practices to some large companies. Owners count the profits as income when they pay individual income taxes, but such companies do not pay corporate taxes — meaning they avoid paying two levels of taxation.
Democrats this week also sent the parliamentarian a separate 190-page piece of the emerging Schumer-Manchin compromise that would lower prescription drug costs for patients and the government. Provisions include requiring Medicare to negotiate drug prices, limiting beneficiaries' out-of-pocket costs to $2,000 annually and increasing federal subsidies for copays and premiums for some low-income people.

© Provided by Associated Press
FILE - Sen. Joe Manchin, D-W.Va., talks to a reporter at the Capitol in Washington, May 26, 2022. Senate Democrats want to boost taxes on some high earners and use the money to extend the solvency of Medicare, the latest step in the party's election-year attempt to craft a scaled back version of the economic package that collapsed last year, Democratic aides have told The Associated Press. (AP Photo/J. Scott Applewhite, File)


With November elections for control of Congress approaching, Democrats hope the two proposals will be a remedy for a campaign season that so far looks bleak. Republicans are favored to win a majority in the House and could do the same in the Senate.
Democrats say both plans will show voters they are battling to curb health care costs and protect the widely popular Medicare program, positions they say will be dangerous for Republicans to oppose. Polls show widespread public alarm over recent months' historically high inflation rates, supply chain problems and other economic issues that along with President Joe Biden's dismal popularity ratings are pushing voters Republicans' way, the GOP says.

Schumer and Manchin have been bargaining privately for weeks on a package aides say could include around $500 billion in spending and tax credits, more than paid for with about $1 trillion in revenue and other savings. Schumer has described the talks as productive but acknowledged that some issues remain unresolved.
Energy and environment programs, corporate taxes, IRS budget increases to strengthen tax enforcement and a renewal of soon-to-expire federal subsidies for people buying health insurance under President Barack Obama's health care law are also under discussion, aides say.
It remains uncertain what will emerge from the talks. The aides described the latest proposals and status of negotiations only on the condition of anonymity because they were not authorized to disclose the information by name.
The suggestions of progress were emerging seven months after Manchin derailed a roughly $2 trillion, 10-year social and environment bill, dealing a stunning blow to a cornerstone of Biden's domestic agenda.
The Democratic-run House approved the measure in November, but Manchin abruptly announced he could not support the legislation because of its cost and his worries that it would fuel inflation. Similar provisions lowering pharmaceutical prices and raising taxes on some upper-income people were in that bill.
The West Virginian's backing remains crucial in the 50-50 Senate. Democrats are using special procedures that would let them pass the pared-down package over expected unanimous GOP opposition with the tie-breaking vote of Vice President Kamala Harris.
Democrats are expected to unanimously back the Medicare solvency and prescription drug plans, one Democratic aide said.
“Medicare is a lifeline for millions of American seniors, and Senator Manchin has always supported pathways to ensure it remains solvent. He remains optimistic there is a path to do just that,” his spokesperson Sam Runyon said.
Senate parliamentarian Elizabeth MacDonough will have to certify that the new bill's provisions adhere to the chamber's budget rules. Last year, she ruled that language making it easier for immigrants to remain in the U.S. had to be removed because it violated prohibitions against using the special procedures to enact significant policy changes.
Medicare has 64 million beneficiaries. Its trust fund covering hospital services, called Part A, is financed largely from taxes deducted from peoples' paychecks.
That trust fund gained two years of solvency, until 2028, in last month's report by the program's board of trustees. It attributed the improvement to the economy's recovery from the coronavirus pandemic-spawned recession.
But both Medicare and Social Security face long-range financing problems, and the trustees suggested that lawmakers act “sooner rather than later” to strengthen them. Without congressional action, Medicare's hospital trust fund would be able to pay only 90% of its costs in 2028 and less thereafter, the trustees said.
The proposal to increase taxes on some wealthier Americans would raise $203 billion over the coming decade, according to information examined by the AP that Congress' Joint Committee on Taxation provided to Senate Democrats. Federal actuaries told the Democrats that such financing would delay the trust fund's shortfall until 2031, another document showed.

Dems want to tax high earners to protect Medicare solvency (msn.com)