President Joe Biden announced Thursday he’s bailing out a struggling union pension fund with $36 billion of taxpayer money, the largest federal bailout of a pension fund ever.
The Central States Pension Fund, which provides benefits to Teamsters union members in the trucking, warehouse, and construction industries, was projected to run out of money by 2025 due to rising inflation, weak stock markets, and a lack of active workers participating in the fund, the Washington Times reported. Biden plans to save the fund from insolvency by using money from his $1.9 trillion dollar American Rescue plan, which even Democrat lawmakers admit caused the country’s record high inflation.
The announcement comes a week after Biden upset rail workers by not backing their strike to fight for paid sick leave, blowing his campaign commitment to become “the most pro-union president” in U.S. history.
“Ensuring that workers and their families enjoy the retirement security they earned through a lifetime of work is a central part of President Biden’s economic plan,” the White House said. “President Biden is building the economy from the bottom up and middle out, including helping to ensure a dignified retirement for all American workers and their families.”
George Mason University’s Charles Blahous said the bailouts encourage “more of the irresponsible behavior that got pensions into trouble in the first place.”
The Central States Pension Fund spends more than $2 billion per year more than it is taking in from contributions, according to the Times. Without Biden’s bailout, the fund would have cut Teamsters union members’ benefits by an average of 60 percent.
The Central States Pension Fund is not the only pension fund struggling under Biden’s economy, the Times reports:
A report by the Pension Benefit Guarantee Corporation (PBGC) found that out of roughly 1,400 insured multi-employer pension plans, 124 have reported that they will run out of money within 20 years. Those 124 pension plans represent about 1 million workers.
As plans become insolvent, they apply to the PBGC, a government organization aimed to protect the plans. But the multi-employer program was in bad shape and faced the likelihood of insolvency in 2026 and a “near certainty” of insolvency by 2027 due to the cost of covering pension failures.
The money going to the Central States Pension Fund accounts for about one-third of the estimated total cost of the PBGC aid program, the Associated Press reports. Biden’s massive pandemic relief package is expected to keep the PBGC afloat through 2051.
Sen. Chuck Grassley (R., Iowa), among other Republicans, opposed the bailout in March, calling it a “blank check with no measures to hold mismanaged plans accountable.”
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