Your May 28, 2018, editorial, "Just say no to multiemployer plan bailout," is simplistic and poorly reasoned.
Your characterization of the Butch Lewis Act as a bailout contradicts your own solution of giving the PBGC's multiemployer program a capital infusion. By a capital infusion you are suggesting a direct grant from the federal budget. Should that capital infusion equal the PBGC's current multiemployer program's 10-year deficit of $67.3 billion, or the nominal expected deficit of $78 billion in 2026? You failed to specify the cost of your capital infusion strategy.
In contrast, the Butch Lewis Act envisions a loan program funded by debt raised in the public U.S. Treasury bond markets. Institutional investors, hungry for safe assets, will gladly buy those special pension bonds if they are guaranteed by the federal government. Arguably, these loans will not be adequate to maintain the solvency of a number of highly troubled plans like Central States and the UMWA plans. In addition to a Butch Lewis loan, these plans will require PBGC financial assistance to maintain solvency. One budget expert scored the Butch Lewis 10-year budget cost at $29 billion — a bargain compared to doing nothing and allowing these plans to fail, which will compound the above costs through decreased tax revenue and economic activity.
The American Academy of Actuaries' recent issue brief, "Loan Programs for Underfunded Multiemployer Plans" offers guidance and responsible standards for a workable loan program that would share risk with all stakeholders. The AAA concluded: "Viewed more holistically, loans will preserve benefit levels and delay the failure of plans, thereby generating savings to the PBGC and social safety net programs, which could offset a portion of the government's costs associated with a default."
It's also irresponsible and defamatory to disparage Central States by bringing up ancient history involving pre-1978 corruption. Central States has been governed by a federal court consent order for the past 36 years. Butch Lewis contemplates strong monitoring of its loan program. There is no doubt that Central States would comply with a federal loan program that prevented its failure.
Your other argument that Butch Lewis would become a precedent for troubled state and local government plans is totally misleading. You fail to recognize that the federal law does not govern state and local government plans and that the PBGC only provides insurance to private plans.
Finally, and most importantly, we need to humanize the plight of multiemployer plan participants. Over 1 million and as many as 3.5 million American workers and retirees' pensions are at risk. Historically, the federal government has played a critical role in protecting its citizens from economic risks beyond their control. The Economist magazine stated it succinctly in its April 7, 2016, edition in reference to Congress: "Setting up an insurance scheme, and then failing to fund it adequately, is a betrayal of its constituents."
James P. Hoffa is general president of the International Brotherhood of Teamsters. This content represents the views of the author. It was submitted and edited under P&I guidelines but is not a product of P&I's editorial team.
