Empower Wisconsin | Nov. 14, 2019
Here’s a bad deal.
Congressional Democrats, foot-dragging on anything that would give President Donald Trump a political victory, could make their vote for Trump’s United State-Mexico-Canada Agreement (USMCA) contingent on a taxpayer-funded bailout of private union pension plans.
The free trade pact, signed by the three countries nearly a year ago, replaces the existing North American Free Tree Agreement.
USMCA, proponents say, is designed to bolster North America’s global trade position in general and to shrink the trade gap between the U.S. and Mexico in particular. It gives Big Labor, longtime sugar daddy of the Dem Party, a lot more of what it has been asking for in terms of protections.
But the trade deal has been languishing for some time as the political players in congress bargain for more.
Private sector unions have objected to just about every major trade deal over the past four decades. They’re not sold on the new-and-improved NAFTA just yet.
As the Heritage Foundation’s Rachel Greszler and Tori Smith recently wrote, USMCA supporters may use a pension bailout pledge to move reluctant Democrats.
“Attaching this unrelated pension bailout to the USMCA would be fiscally reckless and reward irresponsible pension managers without fixing the underlying issues driving the underfunding crisis,” the trade analysts wrote.
Some 1,400 multi-employer pension plans are less than half funded, promising about 11 million workers and retirees $638 billion more than the pensions have set aside to pay them, the authors note. The government-backed Pension Benefit Guaranty Corp. is expected to be bankrupt by 2025.
The Democrat-led House this past summer passed a bill that would “give a select group of the worst-funded pension plans” north of $100 billion in taxpayer dollars, the Heritage piece reports. It would invest billions of dollars in the stock market in hopes of earning higher returns than the pension fund’s low-interest loans.
There’s a potentially even bigger bailout package for the United Mine Workers of America’s underfunded pension plan.
Such bills on their own would face an extreme uphill battle in the Republican-controlled Senate. That’s why some see the bailouts as potential leverage in obtaining support for the bigger trade prize.
Bad idea. As the Heritage trade analysts estimate, a full-scale pension bailout could cost every worker in the U.S. an extra $42,000 in new taxes throughout his career.
“While such a bailout would leave federal taxpayers on the hook for broken private, and state and local, pension promises, it would do nothing to help those taxpayers with Congress’s failure to address the pension shortfall that will affect them—that is, Social Security’s $16.8 trillion shortfall,” the Heritage analysis notes.