Biden, Democrats, grant $36 billion taxpayer-funded bailout for Teamsters Union pension fund
Labor unions have reliably voted for Democrats for decades, with the last two election cycles being no exception, and now it looks like President Joe Biden and congressional Democrats have greatly rewarded that political loyalty with a display of largesse at the public's expense.
It was revealed in December 2022 that a $36 billion taxpayer-funded bailout for a roughly 360,000-member labor union pension fund had been authorized for disbursement by the Biden administration, The Federalist reported.
That equates to approximately $100,000 in taxpayer funds for each beneficiary of the Central States Pension Fund which is largely comprised of Teamsters Union members, a union that has overwhelmingly supported Democrats, including President Biden, with millions of dollars in contributions and donations to individual candidates and outside groups.
Biden brags about bailing out union supporters
President Biden's White House actually bragged about this clear giveaway of billions in taxpayer funds to a small group of its own supporters in a December press release about the "historic relief" it was granting to Teamsters workers and retirees.
The $36 billion came from a larger pool of funds designated to support multiemployer pension funds known as the Special Financial Assistance Program which was created within the $1.9 trillion American Rescue Plan Act of 2021 that was passed without a single Republican vote and was promoted as necessary pandemic relief spending just months after Biden took office.
The White House press release asserted that the $36 billion for the Central States Pension Fund, which had just been approved for distribution by the purportedly independent Pension Benefit Guaranty Corporation, would make the fund solvent until 2051 and prevent "drastic cuts to the hard-earned pensions" of the 350,000-plus union members of the fund.
Rewarding bad behavior
At the same time as that announcement, however, came a warning from Rep. Kevin Brady (R-TX), the top Republican on the House Ways and Means Committee, that this was nothing more than a taxpayer-funded bailout to cover the "irresponsible promises" and financial mismanagement of the nation's largest private pension fund.
"The largest private pension bailout in American history -- that only benefits a tiny minority of workers -- comes thanks to Democrats allowing those who mismanaged pensions to determine whether their funds qualify for taxpayer assistance with no safeguards," Brady said in a press release.
"Despite years of bipartisan negotiations and recommendations, Democrats rejected protections for union workers in other underfunded multi-employer plans that are not as politically connected as the Teamsters’ Central States plan," he added. "Now, American taxpayers are being forced to cover promises that pension trustees never should have been allowed to make."
No incentive to better manage underfunded pensions
Forbes also reported on the $36 billion taxpayer-funded bailout of the Teamsters Union pension fund in December and noted that unlike most other taxpayer-funded bailouts in the past, this one had little or no strings attached to either demand or incentivize changed behavior and better management and instead simply rewarded the decades-long mismanagement and underfunding of the CSPF.
"If you look at the financial crisis, banks got money, but they had to change how they operated," University of Virginia accounting professor Jim Naughton told the outlet. "We tried to make sure what happened couldn’t happen again. What’s unique here is that money is being handed out, but there are no meaningful requirements for changing how these plans are managed."
"This is the worst course of action because it throws money at the problem without requiring multiemployer plans to reform how they operate," Charles Blahous of George Mason University's Mercatus Center told Forbes of the bailout. "It does nothing to stop the bleeding. In fact, it’s worse than that, because it rewards plan sponsors who failed to fund their pensions, so it incentivizes underfunding even more than doing nothing would have."
A "political payoff" to "return the favor" of union support
"It’s a political payoff," Blahous added to Forbes in reference to the Democratic alignment of the Teamsters Union. "That’s all it is. The thing that’s so dangerous is that it tells everyone who responsibly funded their pensions that they’re a sucker."
In February 2021, just after President Biden took office, OpenSecrets reported on the tens of millions of dollars that labor unions gave to his campaign and Democrats more generally in the 2020 election cycle and asked, "Will he return the favor?" Unfortunately, it looks like the answer to that question is yes, and at the taxpayer's expense.