Bad News for Unions

Bad news for the unions, but good news for the economy and taxpayers!
Most everyone is familiar with the fact that Congress passed and the President signed into law a $1.1 trillion omnibus spending bill. Included in the omnibus bill was an amendment known as the Multiemployer Pension Reform Act of 2014. Notice the word Multiemployer.
Multiemployer, or "Taft-Hartley," pension plans commonly are administered by labor unions on behalf of their members and funded by multiple employers in a given industry, subject to collective bargaining contracts with the union. This means the union doles out the money in the form of pensions. It gets its money to pay the pensions from the various companies, which hire union members. The amounts are determined by previous negotiation and contracts between the union and those companies, which employ union members. In addition, the union has control of all the pension funds, and if properly invested, supplies another source of income to the pension fund.
Over a period of time, it has been learned that for various reasons a number of unions have insufficient funds to continue paying previously specified pensions to retirees.
A complicating factor is the involvement of a previously established federal pension insurance fund, the Pension Benefit Guaranty Corp. (PBGC). The PBGC recently reported that its multiemployer insurance program was almost certain to become insolvent in 10 years. Of the 1,400 multiemployer plans nationwide, 200 plans covering a total of 1 million participants are at risk of termination. This is also a projection of insolvency of the PBGC, because it's payout on claims exceeds its receipts of insurance premiums. In 2013, the PBGC lost $8.3 billion and a staggering $42.4 billion this year. That loss is paid for by US taxpayers or increasing the national debt.
The basic problem was caused by union mishandling of pension funds. Unions explain that their shortage of funds to continue paying pensions indefinitely have resulted from bad market investment conditions for three consecutive years, from 2000 to 2002, followed by the Great Recession of 2008. Nothing is said about their opportunity to invest in government bonds during that period, the fact that they compensated their union executive executives extremely well, and spent lavishly on meetings, and lobbying.
However,those are probably only small factors. The big problem is based upon the fact that pensions are a manifestation of the old Ponzi scheme. In this case, the entrance of new union members, with their payments of dues and negotiation of pension benefits from their corporate employers, have been inadequate to cover the continuing costs of the previous retirees. Union membership has been falling.
The federal government has been intimately involved in private pension plans, including ERISA, which is a federal law that sets minimum standards for pension plans in private industry. Congress could not ignore the plight of the PBGC with its continuing plunge to disaster. Congress had the option of doing nothing, which would then force the PBGC to continue paying claims and increasing its debt. How long this could continue is speculative, since PBGC debt would be cumulative. It would either have to go to the House of Representatives for  funding or take his chances on issuing bad checks.
Another option for Congress was a taxpayer bailout of the current and future PBGC debt and/or direct bailout to the unions involving multi employer plans. Either of these would be very unpalatable to the voting public.
Congress took the easiest way which was tp allow unions handling multi employer plans to cut benefits to retirees. This put the spotlight on the unions, rather than on Congress.
The good news for the US taxpayers is that is that there is no immediate bailout either to the PBGC or to the unions. The bad news for the unions is that the action of cutting pension benefits to previous retirees is a disincentive to any potential member to join a union. Another nail in the union coffin.
On a broader basis, we no longer need unions in the US. In the early days of the Industrial Revolution, labor acted individually rather than collectively. in addition, the labor force was nowhere nearly as educated as it is now. With those factors, large companies employing a large labor force took advantage of that force with low wages and difficult working conditions. Unions were necessary to put a stop to that.
However, economic conditions in the US have completely changed. Labor is now much more educated and has many more choices of job opportunities. An individual does not need to be involved with aunion to have his rights protected and continued opportunities for employment. Unions are basically a monopoly and disadvantageous to a consuming public, primarily because they lead to higher prices for products and services. As union membership has been falling, the monopoly aspect has become less significant, but it still exists to some degree.
We don't need unions and  allowing the promised retirement benefits of union members to fall is a further step to union decline. In spite of the Washington Times implication that this was a sweet deal for the unions, I believe Congress did the right thing.