IS CONGRESS PREPARING THE LARGEST BAILOUT EVER?

By: John Gray |
September 07, 2016

In December 2007, the world’s financial markets appeared to stand still. The economy was crumbling before our very eyes, thanks to flawed government policies and the avarice of certain Wall Street players.

Washington came to the rescue; golden bailouts reigned supreme.

The Wall Street bailout — commonly referred to as the Troubled Asset Relief Program or TARP — originally provided $700 billion in taxpayer funds. Later, Congress limited that figure to $475 billion. Still, as bad as TARP was, $376 billion was repaid; more than $55 billion was written off. In total, TARP cost the American taxpayer, to-date, $30 billion.

Now there is something far larger and much more dangerous lurking in Congress. According to a new study published by The Heritage Foundation, Congress is interested in another bailout. This time however, the taxpayer may ultimately be on the hook for nearly $6 trillion. And this time, it won’t be paid back — ever.

In particular, the paper, “Why a Coal Miner Pension Bailout Could Open the Door to a $600 Billion Pension Bailout for All Private Unions,” highlights Congress’ interest in a taxpayer-funded bailout for the “overpromised, underfunded pension plan of the United Mine Workers of America (UMWA).”

The UMWA is believed to be unique. As The Washington Post writes,

Still, some workers [coal miners] fear losing the $530 average monthly benefit … losing benefits would break a promise made to coal miners decades ago, with the federal government acting as a guarantor.

[I]This notion of the “federal government as a guarantor” is false. It derives from an incident in 1946, when coal miners were threatening to strike. President Harry Truman directed the Secretary of Interior to negotiate with the miner’s union for pension and health care benefits. But there is nothing special about the UMWA. As The Heritage Foundation argues, the government did help facilitate the negotiations, but there was no actual commitment on behalf of the government. As Heritage notes,

It was the union and its plan trustees — not the federal government — that consistently promised pensions and health care benefits as part of employees’ total compensation packages and then failed to collect the funds necessary to pay those benefits.

In other words, if the UMWA can convince Congress it deserves a taxpayer bailout, then so too should every underfunded pension plan in America. Actually, the UMWA, underfunded by $5.6 billion, is just one of 1,300 union pension plans that desperately needs an infusion of cash. To shore up all these failing pension funds, Heritage finds, would cost you, the taxpayer, as much as $600 billion.

As it goes in Washington, any sign of trouble usually means that you’re only witnessing the tip of an iceberg. [SS1] And in this case, a $600 billion liability represents a much, much deeper problem. Union pensions aside, there are also noticeable financial problems lurking among private, non-union pension funds. If cash-strapped pension funds become eligible for bailouts, then tack on another $740 billion to the taxpayers’ bill.

As you can see from the chart, the problems facing pensions has been increasingly deteriorating. In 1990, private and union pensions were underfunded by $37 billion. The problems accumulated, perhaps believing that Congress would one day clean up the mess. Today, those pensions problems are nearly 4,000 times larger, with a tab of $1.4 trillion.



But the chunk of iceberg that will ultimately sink this Titanic includes the unfunded liabilities and public pension plans of city and state employees across the nation. That figure is a whopping $4.7 trillion. California has an unfunded burden of nearly $800 billion; Illinois, $331 billion.

One thing is obvious — the U.S. has pension problems. For once, however, this is not the fault of the federal government. It’s the fault of union heads and CEOs who have been lying through their teeth to workers all over the country — and now the bill for those lies is coming due. Congress has enough work to do this fall without “fixing” UMWA’s pension problems and then inviting the whole neighborhood to get in line for a bailout. Nice try, UMWA, but this one is on you.



- See more at: https://www.conservativereview.com/c....VhSaaB08.dpuf