Prairie State Wire

Fiscal watchdogs have alerted taxpayers that Congressional Democrats might attempt to attach a bailout plan for public pensions to one rescuing private sector union pensions, with no changes in the bad practices that led to massive unfunded liabilities in the first place.

But one of the nation’s leading experts on public pensions believes that Republicans in Congress will put the brakes on any efforts by Democrats to hand out taxpayer money to their political allies in the form of pension bailouts.

Republicans in Congress “would almost surely impose significant conditions on such assistance, such as freezing the pension plan and imposing at least some benefit cuts on retirees,” Andrew Biggs, resident scholar at the American Enterprise Institute, told Prairie State Wire.

A bailout for the multi-employer [union] pensions could be in the mix, the Washington Examiner reported, as part of another coronavirus stimulus package.  Under legislation aimed at the most underfunded plans approved by House Democrats back in July 2019, no cost saving measures were required for the plans to receive the money – low interest loans with no guarantee of payback.

“In the end, if Congress extends a pension bailout to all union pension plans, it could cost taxpayers well beyond the $638 billion in multi-employer pension underfunding [that is more likely in the $700 billion-$800 billion range today],” wrote Rachel Greszler, research fellow in economics, budget and entitlements at the Heritage Foundation.

“And then there’s $4 trillion to $6 trillion in state and local underfunded pension plans,” she added. “If Congress bails out private sector plans, how can it say no to retired policemen, firefighters, and teachers?”

The economic fallout from the lockdown over the coronavirus is placing many private and public pensions plans in even worse fiscal shape, but their troubles stem from years of underfunding, poor management, and, for the public plans, overpromising by elected officials, according to some fiscal conservatives.

“…several states, including Illinois, are longtime bad actors when it comes to pension funding,” Biggs said. “The idea that those plans would receive a bailout when ordinary Americans are seeing cuts to their 401(k)s seems hard to accept.”