Kristen Estell, Heartland Capital Strategies
In our political climate-- with a bill as large and complex as the Covid relief bill President Biden hopes to sign Friday--there are bound to be disagreements about who should be rescued and by how much. Yet, in 2008-2009, after Wall Street banks and hedge funds destroyed the economy, leading to the loss of $4 trillion in workers’ pensions, there was bi-partisan support for baling out those same banks. No questions asked.
One point that would seem to be a given, is that workers-- especially blue collar workers--who have paid into their pension plans for their whole career should be able to retire comfortably. This is, after all, the much sought after demographic that it seems both political parties should be tripping over each other to support.
But a quick review of headlines from this Covid bill relief show something else:
“Rescue Package Includes $86 Billion Bailout for Failing Pensions: Democrats pushed through a big aid measure for multiemployer pensions whose problems predate the pandemic.” (New York Times)
“The stimulus includes money to help 10.7 million pension plans. Republicans don't see how that's pandemic aid.” (Business Insider)
“The Covid Spend-O-Rama’s Multiemployer Pension Bailouts: Some Disappointed First Impressions” (Forbes)
One would think, looking at these headlines, that saving pensions is something that will hurt American taxpayers, but Democrats are doing it because it's just good politics. In fact, saving pensions is a way to save state and local governments money, it supports local economies (see article below), and it’s good politics.
Some object to this rescue because this pension problem predates Covid, which is true. But just like every other inequality and problem in this country, the Covid related economic crisis has made it worse. Now there are fewer employed workers paying into these pension funds, and already tight government budgets are stretched thin by the loss of tax revenue.
This isn’t news to Ohio Democratic Senator Sherrod Brown, who has been fighting to save pensions for years. Brown called Senate passage of President Biden's $1.9 trillion COVID spending package “the best day of my Senate life” because it rescues 185 union pension plans.
Read details in the Expresso below for how these pensions will be saved and more on how elections matter, as Biden is impacting not just certain pensioners but all investors hoping for responsible investments, payouts they can count on, and forward-looking government oversite of the market.