February 12, 2020
As the primary season gets underway, one candidate, President Trump, doesn’t seem particularly worried about which presidential hopeful wins which state. He has a strong economic record to run on and he can seemingly easily expose the follies of his opponents’ big government plans. But he has a potential Achilles' heel: failing multiemployer pension plans. Unless Trump embraces a sensible approach to managing millions in underwater pensions, people in the United States may have to deal with a President Biden … or Sanders.
These problems are particularly pronounced in states such as Wisconsin, Michigan, and Pennsylvania, where once-powerful companies in industries such as trucking have closed en masse. According to some back-of-the-envelope calculations, approximately 440,000 people in Michigan are trapped in underperforming multiemployer plans. That figure is 155,000 in Wisconsin and 495,000 in Pennsylvania.
If these retirees don’t get their due, it’ll be a pox on the house of whichever incumbent holds the levers of power. Politicians could, of course, take the “easy way out” and rescue these plans via a $100 billion taxpayer bailout
. However, this policy move wouldn’t exactly ingratiate Trump and his congressional allies with citizens already tired of rampant taxation (especially in high-tax states such as Michigan and Wisconsin). Plus, it would simply set the stage for more reckless behavior and another bailout down the road.
Fortunately, Senate Finance Committee Chairman Chuck Grassley and Sen. Lamar Alexander released a proposal
last year that can fix the issue without bilking taxpayers. Their suggested fix strengthens reporting requirements for these plans, ensuring that pension sponsors cannot continue to underreport liabilities and leave everyone else with the bill.
The Grassley-Alexander proposal may not be perfect, and some watchdog groups will inevitably complain that the government is too active in managing multiemployer liabilities in the first place. But the plan provides the only feasible, real-world alternative to runaway bailouts and pension cuts while sparing retirees from the recklessness of their former employers.
By supporting these bold proposed reforms, Trump can send a message to graying Rust Belt workers that he has their back and is willing to go to bat for them. And, taxpayers can rest easy knowing that their hard-earned dollars are safe from ill-advised bailouts. This makes for good politics, but most importantly, the proposal provides peace of mind for millions of people without breaking the bank.
Ross Marchand is the director of policy for the Taxpayers Protection Alliance.