Pension bailout stakes are enormous
Recent news articles indicate that a miners pension plan bailout may be on the agenda for congressional leadership. However it is yet unclear what such pension bailout might involve. What is certain is the financial stakes are enormous.
There are no easy answers to the miners pension crisis, especially now that it has grown so vast.
There is, however, one very bad answer to be avoided now and in the future: anything that would put taxpayers on the hook for an expensive bailout.
America has become a bailout nation. From automakers to investment houses to banks, Washington has used taxpayers money to rescue failed business over and over. What’s next? With the recent supreme court decision, it might be the unions.
As a taxpayer, I hate bailouts. The bank bailouts in the final days of the Bush administration and the automaker bailouts at the beginning of the Obama administration gave rise to the Tea Party and the Occupy movements. Well, if some lawmakers have their way a bailout to dwarf all previous bailouts is on the way.
As a taxpayer, I never had a seat at the negotiating table of the unions and the coal companies, and I never made any compensation promises to the miners. Miners are not at fault for broken promises of future pension benefits. But since I did not make those promises, I should in no way be obligated to stand behind them.
Miners who were promised these pension benefits have every right to demand them. However, they are owed the benefits by the sponsors, not by me or any other taxpayer.
Lawmakers must not let employers and union representatives off the hook for their responsibilities to these miners by putting any taxpayer on the hook instead.
No taxpayer bailout: It would be both unfair and a damaging moral hazard to introduce the prospect of a taxpayer bailout of pension plans or pension plan insurance.
I, as well as many taxpayers, don’t have access to such pension benefits.
These benefits were promised by employers and unions, not by me or any other taxpayer. There will be no incentive for employers or unions to honor obligations to fund their benefit promises once it becomes known that taxpayers are standing by to pick up the tab.
Taxpayers should neither be made to pay for these pension benefits directly, nor should they be made to finance them with loans almost certain not to be repaid.
At this point, the problem is so severe that there are no clear answers, irrespective of one’s policy predispositions. The ideal outcome that employers/unions adequately fund the benefits they promise, and that they don’t promise benefits they can’t fund is no longer easily enforced without causing many pension plans to be dumped, thereby worsening the problem. It seems obvious that some one is responsible for funding the pension promises it has made. But that someone is not me.
Someone will be stuck with a substantial monetary loss no matter what is done.
The most prominent question that should be asked yet is being ignored. What happens if this plan is made into law?