Sticking Taxpayers With a Multi-Billion Dollar Pension Bailout
The fine details of the $1.9 trillion American Rescue Plan are still coming to light, and among them is an old Washington, D.C. standby: a bailout.
This wasn’t your run-on-the-mill bailout. It was a multi-billion taxpayer rescue of pension plans that made generous promises to help workers in retirement, but without any way to fund them. According to the Mercatus Center’s Charles Blahous:
Even if not corrupt in intent, [the bailout’s provisions] cannot help but ultimately be corrupting. They will provide an estimated $86 billion of taxpayer money to bail out pension promises made jointly by corporate management and union representatives, actors who spent years understating their pension obligations so as to avoid meeting their associated funding requirements. The message the ARP relays to pension sponsors everywhere—from private corporations to states and localities—is clear: Don’t bother funding your pension promises. Make the right political connections and they’ll have taxpayers bail you out. The costs of this legislation will be immense, both in dollars and in its effects on future behavior.
This does set a disastrous precedent and worse, it creatives an incentive some will find too powerful to avoid.
Promise workers the moon and stars in retirement, walk away from any obligation to fulfill those promises, stick taxpayers with the bill.
Rinse and repeat.