Brendan Miniter discusses the fight over pensions and how unions are conspiring to keep you poor: “For Whose Benefit? How governors deal with their pension crises will affect the course of Social Security reform”
But the fight over pension reform isn't limited to states, and increasingly the private-account genie is getting out of the bottle. And that has broad implications for how powerful labor unions will remain in the coming years. Surprisingly perhaps the opening skirmish in this more parochial fight is already under way in Congress. The president is pushing legislation that would force companies to put enough money aside to fully fund their pension plans--a no-brainer for most Americans and something the Senate has already passed.It’s not bad enough that taxpayers will soon be saddled with huge public obligations, but they’ll be forced to pay off the pensions at private corporations also.
There is trouble, however, in the House, where, The Wall Street Journal reported last week, the United Auto Workers union has teamed up with General Motors to oppose any move to force companies to put more money aside for pension plans. UAW and other union leaders are worried that such a mandate will compel more companies to drop their defined benefit plans altogether and instead offer 401(k) plans, in which the company makes a defined contribution to an employee's personal investment account.
The problem with that, of course, is that 401(k)s give workers greater flexibility to change jobs and more power over their own finances--neither of which is good for increasing union membership. Rather than joining the new economy and finding ways to offer employees portable, self-directed benefits, the UAW is fighting to keep old pension plans in place, and in the process making it more likely that taxpayers will eventually pick up the tab when companies go bankrupt and flip their pension plans to the Pension Benefit Guarantee Corp.--for which GM, Ford and union-heavy airlines are all prime candidates. When that happens, maybe we should all start looking for the union label on our tax bills.