Economy & Budget

Miners’ union shouldn’t look to feds to bail out mismanaged pension fund

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Congress returns to town this week to a very short deadline. Within four days, they must fund the federal government, or face a shut-down.

The frenetic, last minute deal-making that always accompanies these self-made funding cliffs makes conditions ripe for backroom deals. The stakes are too high otherwise – fund my top three outrageous demands, the minority party declares, or face a government shutdown.

{mosads}It’s exactly this dynamic that has prompted Nancy Pelosi to demand that Republicans pay trillions to “fix” Obamacare. It’s led Chuck Schumer to declare his members will filibuster a bill that funds President Trump’s border wall.


And, according to news reports, this funding cliff has also led to a renewed push for Congress to bail out the United Mine Workers of America’s (UMWA) private pension fund, at a no-strings cost to taxpayers of a cool $5.6 billion.

To do so would be unprecedented. Never before has the federal government intervened to rescue a pension simply because it’sbeen so irresponsibly managed. (The UMWA likes to claim that the Krug-Lewis agreement of 1946 promised a government guarantee of miners’ pensions. But no, that deal officially terminated in 1947.)

How, exactly, did UMWA’s pension get into this state? 

While the shortfalls may be exacerbated by the economic hit that coal has taken in recent years (thanks, Obama), the pension plan is in this state only because of the union’s failure to manage it correctly. 

Over the years, the plan trustees and union pension negotiators have paid benefits to workers who did not earn them, neglected to adjust contribution and accrual rates over time, and used inappropriate data for investment earnings and life expectancies. 

At the same time, the union continued to promise gold-plated benefits that they knew they could not pay.

So, the union messed up the pension, and misled their members about it. And now they want the taxpayers to fix it.

The gall of the UMWA in making these demands is exceededonly by the fact that they think they can dictate the terms of their bailout.

The UMWA is demanding billions from the Treasury to fix their mistakes, yet they refuse to allow oversight and accountability for their pension spending. Past reports from the Department of Interior’s Office of the Inspector General (OIG) and Government Accountability Office (GAO) confirm that the union provides very little information about how the plan is managed, how costs will change over time, and how funds are spent.

In fact, the latest OIG audit – released just last month – identified major deficiencies in the plan’s internal regulations, and made more than 20 recommendations to improve oversight. This is on top of the fact that numerous issues from previous audits have not been resolved – including the finding that UMWA misused $19.9 million that the government gave them in 2000, or the fact that the pension has illegally submitted $36.8 million in claims. 

And still the union thinks the government should cut them another blank check, to the tune of billions.

Are you kidding me?

For Congress to step in and fund this pension sets a terrible precedent, particularly with the looming insolvencies of other, larger private plans. The Central States Teamsters pension, for example, is facing a $35 billion shortfall. If Congress bails out the UMWA, who will come knocking next?

But more than that, a congressional bailout written exclusively on the UMWA’s terms would be the height of recklessness. Not to mention that it would epitomize the cronyist, self-interested dealings of Washington politicians and union heads. (This is a deal only Jimmy Hoffa could love.)

The UMWA has received taxpayer’s funds before, and grossly misused them. They don’t deserve more. More importantly, taxpayers don’t deserve to be on the hook for the mistakes of a private union, particularly one that has no interest in allowing any oversight of federal funds they receive.

The UMWA and their workers have organized a massive, sympathy-driven lobbying campaign, hoping to guilt Congress into bailing them out. The plight of these mine workers is indeed disheartening – but it’s the UMWA’s door the mine workers should be banging on. Not that of the Treasury.

Rachel Bovard (@Rachel_Bovard) is the director of policy services for The Heritage Foundation (@Heritage), and a former policy director for the Senate Steering Committee.

The views expressed by contributors are their own and are not the views of The Hill.

Tags Budget Chuck Schumer Congress pensions Rachel Bovard United Mine Workers of America

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