Many commenters, including yours truly, warned about this more than once: and now it’s about to happen. As soon as the stimulus bill is signed into law, hundreds of billions of dollars of US federal taxpayer money will be used to bail out pension funds in states that have crippled themselves through over-promising and under-saving.
The so-called American Rescue Plan, which would be more accurately called the Democrats Looting the National Fisc to Pay Off Demanding Constituencies and Grease Every Squeaky Wheel to the Left of Mitt Romney (DLNFPODCGESWLMR) Act, contains a few nickels and dimes for coronavirus vaccinations and billions upon billions of dollars to bail sundry labor bosses and financial managers out of the most recent episode of financial trouble associated with union pension plans, a decades-long parade of organized crime and disorganized incompetence brought to you by the Teamsters, the mafia, Wall Street, and the most ruthless mob of them all: the U.S. government.
This is straight-up piracy, but it is also more than that. Like their public-sector counterparts, these union-run multi-employer plans are in trouble not because of the coronavirus epidemic or some other unforeseeable circumstance but simply because they have promised extraordinarily generous benefits and failed to put aside money to pay for them. Under pressure from previous underfunding, the managers of these pensions (a committee that has over the years included everyone from Goldman Sachs to Labor Department regulators) have sought out riskier and riskier investments, hoping to achieve higher returns and help them close the gap. That has — contain your jactitations of shock and alarm! — not always worked out as intended. (The thing about risk is, it’s risky.) In effect, they took their money to the casino, came up short, and now are using their political clout with the Biden administration and congressional Democrats to demand that somebody else — you taxpaying suckers — make good on their losses.
Democrats in Congress — and, especially, those who hope to one day become president — take their orders from the union goons because while the American labor movement represents relatively few private-sector workers, it can end any given Democrat’s career in elected office pretty easily. (See: California, hilariously incompetent misgovernance of.) And, increasingly, the labor movement is dominated by public-sector employees rather than private-sector ones, public-school teachers and police rather than factory workers and truck drivers. These public-sector workers are naturally comfortable with the forced transfer of wealth from the public at large to rapacious and highly organized political constituencies — that is their business model.
There’s more at the link.
Illinois is the worst-performing state among those desperate for bailouts. Wirepoints reports:
Illinois’ pension debt, already the nation’s biggest, grew to $317 billion in 2020 according to a new report from Moody’s Investors Service.
. . .
The $317 billion in debt pushes Illinois’ pension crisis into a whole new level. Illinois’ debt now amounts to roughly 37% of GDP. That’s up from 26 percent Moody’s reported the year before.
. . .
Moody’s also reported that the asset-to-payout ratio for the state’s funds are now equal to about seven years’ worth of payouts … Healthy funds have ratios that range from 25-40 years’ worth of payouts.
Again, more at the link.
So Illinois and states like it, having painted themselves into a financial corner through wasteful and mismanaged expenditure and promising benefits to retirees that its pension funds can’t afford, are now going to be bailed out by the federal government, using your money and mine. Nobody asked us whether we want to assume this burden, and nobody (at least, nobody in the Biden administration or the Democratic Party or the progressive left) cares what we think. Our thoughts aren’t important to them – only our money.
In the light of such rapacity, expect further efforts on the part of the progressive left to “nationalize” private pension funds and personal retirement savings (401K’s and IRA’s). They’ll proclaim grandiloquently that it’s to achieve a “fair” solution to the nation’s pension crisis: but it’s really robbing those who’ve made provision for their retirement, to pay those who haven’t. There’ll be furious resistance to it, of course, but the progressive left now sees itself as in control, and won’t care about that. They’ll order, and they expect us to obey – or see the full panoply of the “Nanny State” deployed against us.
Sadly, the scale of the problem has become so great that nationalizing private pensions may be the only way that federal and state pensions and entitlement programs for seniors (including Social Security and Medicare) can survive. As National Review points out:
The unfunded liability of Social Security (meaning the amount of money the system would need to have right now to secure its long-term solvency) is $38 trillion. The unfunded liability for Medicare adds another $53 trillion to the burden. For perspective, the unfunded liabilities for those two programs — by themselves — add up to about three times the total value of the S&P 500.
In comparison, “Total US retirement assets were $33.1 trillion as of September 30, 2020“. That’s more than double the annual Gross Domestic Product of the USA. It’s the biggest pool of retirement funds in the country, and therefore an irresistible target to those who want to cover up their political and fiscal fecklessness by any means available. Expect more and more pressure to “nationalize” those retirement assets, use them to pay down federal and state government pension deficits, and replace them with some sort of “national pension” scheme – funded out of future government deficits, of course, because there’ll be no money for it anywhere else!