Only a few weeks ago, our nation’s economy was robust, strong and growing. Then the COVID-19 crisis struck. Now we have record unemployment and financial markets that have contracted by double-digits, many Americans under virtual house arrest and an economy that is in cardiac arrest. In response, Washington has passed several aid packages to limit the damage and to help normalize things in hopes that the economy will bounce back quickly once the healthcare risks are substantially reduced.
Anytime there is an economic crisis, there is the risk that government will use that crisis to advance their own political agenda, rather than the public good. We saw Nancy Pelosi early on demand that elements of the Green New Deal be included in an aid package. That was complete nonsense and entirely unrelated to the current crisis. But because an economic crisis can be misused by unscrupulous politicians, it isn’t a reason to bury one’s head in the sand! It is actually a very good reason to try to foresee potential crises whenever possible and head them off before they explode onto the scene.
The nation’s multiemployer pension system is obligated to provide retirement benefits to over 10 million American families. But the system was in crisis before COVID-19 struck and crushed the economy. Now things are even more dire. Before COVID-19, about 125 multiemployer plans were headed to financial insolvency in as few as two or three years. Now the number of plans that are headed to insolvency will only increase and it will now happen sooner. And beyond the next year or two, even more plans are on the brink. These failures will impact millions of American workers and their families. The ripple effect will reach far wider and likely would trigger another serious economic downturn as the housing crisis did in 2008.
Naturally, there are some in Congress who are proposing that the next aid package include a “TARP-style” bailout for these failing and at risk multiemployer pension plans. As a conservative, I oppose handing out hundreds of billions of taxpayer dollars in a pointless bailout that won’t fix anything.
But there are those in Congress who understand that if we do nothing, government will be on the hook for unimaginable sums and the economic shock waves would be reminiscent of the 2008 crash that fueled a trillion dollars in bailouts. These conservatives see how important it is to head this crisis off at the pass. There is a rumor that the White House is working on such a plan — one that would provide temporary aid to at risk pension plans, in exchange for reforms that would get these pension plans back on a sound financial footing and eliminate the need for a full-blown taxpayer bailout in the near future.
If these rumors are correct, House and Senate Republicans should support the plan. If this multiemployer pension crisis isn’t prevented, there will be another huge crisis that the Left will gladly use to grow government, bust budgets, and pass record breaking pork bills that benefit their political allies, but harm taxpayers.
Conservatives may be tempted to do nothing about this coming crisis. I can understand that inclination. But it is dangerous. And it plays into the hands of those who seek to make Americans more dependent upon government and who seek greater, permanent government spending. And that spending will not be just to fix the crisis, but will include all the other “goodies” and “pork” that will be thrown into the mix while Congress is allegedly trying to “fix” a crisis and “help” Americans in need. If you think a trillion dollars for non-existent shovel ready jobs turned out badly, you “ain’t seen nothin’ yet!”
So the White House is smart to tackle this problem and demand important reforms which will make the fix permanent and eliminate the need for the taxpayer to be on the hook for these pensions for the next 50 or more years.
Most pension recipients in insolvent plans are still receiving their full benefit because the Pension Benefit Guaranty Corporation (PBGC), a government run and owned entity, has made up the difference. But with the growing number of insolvent plans, the PBGC will not be able to keep up and the American taxpayer will likely be on the hook for future pension plan failures. Those failures are going to hit much sooner and much harder thanks to the COVID-19 financial and economic crisis.
The Democrat approach is to simply promise taxpayer dollars to make up the shortfall. But they will also provide lots of other goodies to their political allies and constituencies — precisely as they did in 2009 with TARP. In contrast, a conservative approach — one that the White House is reportedly supporting and that Senator Charles Grassley (R-IA) has been advocating for a while now — would be to provide limited aid and but to enforce real and needed reforms now.
Senator Grassley has said, “[W]e can’t just pour money into failing and mismanaged funds. Our plan will provide relief and reform now.” Senator Grassley seems to have a good handle on what needs to be done to prevent this crisis and he is clearly avoiding the Democrats’ desire to go full bore trillion dollar bailout for pension plans.
Conservatives need to be careful to not make perfection the enemy of the good. Doing nothing because the proposed solution isn’t perfect, is dangerous. Insisting on perfection will inevitably lead to another crisis that our friends on the Left will not let go to waste. Then we will see more wasteful government spending, more debt, more Americans dependent upon government, and more job-killing regulations. None of that bodes well for those who value freedom and opportunity. True conservatives must be proactive in preventing this coming financial crisis. If the White House is headed in this direction, House and Senate Republicans should get behind the plan.