AARP does taxpayers a disservice when recommending that the government subsidize multi-employer pension plans that have defaulted. Why not go after the companies who participated in the plans? Supporting the "Rehabilitation for Multiemployer Pension Act" in the July/August AARP Bulletin is wrong. This bill provides low-cost 30-year loans to defaulted plans at taxpayer expense. While I feel sorry for people affected by these plans that were obviously poorly run, why should taxpayers bail them out? Go back to the companies that funded these plans and have them provide loans and subsidies. It's not the taxpayer's fault that these pension monies were invested badly.
As a taxpayer, I’m certainly concerned about how my tax money is spent. However, taxpayers will absorb the costs with or without the proposed low interest loans to shore up multiemployer pension assets. According to a report from the National Institute on Retirement Security (NIRS), “Pensiononics 2018: Measuring the Impact of Multiemployer DB Pension Expenditures,” for every dollar in multiemployer pension benefits paid out in 2016, $2.13 in total economic output was supported.
In 2016, multiemployer pension plans paid $41.8 billion in benefits. The average pension benefit was $11,935 a year, but collectively it created $89 billion in total economic output and $50 billion in value added to the gross domestic product (GDP). It also generated $14.7 billion in federal, state and local tax revenue and supported 543,000 American jobs that paid $28 billion.
Additionally, Pension withdrawal liability will place the multiemployer system at risk. The multiemployer system is critical to the U.S. economy. In 2015, the multiemployer system paid $158 billion in federal taxes, $82 billion in state and local taxes, contributed more than $1 trillion to the U.S. GDP, and supported 13.6 million American jobs. This includes $203 billion in wages and $41 billion in pensions.
The government’s minimum exposure for doing nothing to financially stabilize multiemployer pensions is estimated to be more than $170 billion in 10-years, and $330 billion in 30-years, creating an economic ripple. The government’s investment in low interest loans to shore up multiemployer pension assets may be the least costly option for taxpayers.
I agree with AARP's position. The proposed government loan program (Butch Lewis Act - H.R. 397) is financially prudent and helps all Americans.