Senator Ron Wyden (D-OR) tried to pull a fast one last month to help out the United Mine Workers of America union.
While Congress, the country and the media were fixated on the twists and turns of efforts to rescue the Highway Trust Fund, Wyden and some other members of Congress pursued an entirely different agenda, using the Trust Fund legislation to bail out the underfunded United Mine Workers of America’s pension plan.
When the Senate Finance Committee, which Wyden chairs, first reported out a Highway Trust Fund bill it slipped in a provision advocated by Senator Jay Rockefeller (D-W.Va). The provision called for $2.7 billion of the funds to be raised to be diverted to help bail out the underfunded pension plan for retired coal miners.
Congressional efforts to bail out the United Mine Workers health and pension plans have been going on for decades.
A 1992 law authorized the transfer of interest accruing to the unspent balance of the Abandoned Mine Reclamation Fund to help for the United Mine Workers health care fund. That was followed by 2006 amendments to the Abandoned Mine Reclamation Program, which provided transfers of general funds to insure the solvency of the Mine Workers health care plans.
This time, however, Wyden’s committee proposed paying for the union rescue with a gimmick called “pension smoothing” that has been roundly criticized by liberals and conservatives alike as nothing more than a sham.
Pension smoothing lets corporations delay contributions to their employee pension plans. Because pension deposits are tax-deductible, postponing them raises corporations’ taxable income and, therefore, increases tax payments to the government.
The problem is the increased revenues from the smoothing period will be largely offset later when corporations will pay less in taxes in years when they rebuild their pension plans to make up for the underfunding period.
In other words, Wyden’s committee proposed using illusory revenue from a corporate pension gimmick to save a failing union pension plan.
The Committee for a Responsible Federal Budget excorciated both the Senate Finance Committee and the House Ways & Means Committee for using the ruse.
But there was little public debate on the $2.7 billion union rescue plan. Compare that with the furor surrounding President Obama’s request for $3.7 billion to deal with the surge of children from Central America crossing the southwest border into the United States.
Maybe Wyden, Rockefeller and the measure’s other supporters thought their union bail-out would succeed because it was in a must-pass bill.
Maybe Wyden acceded to adding the bail-out money because he knows his seat is safe no matter what.
Maybe Wyden did it as a going-away-gift to Rockefeller, who’s retiring from the senate at the end of this term.
Or maybe, even though Wyden knows pension smoothing is a farce, he could, as a liberal, care less about the growing national debt when there are favors to be granted.
Thankfully, though, his gambit failed. A Highway Trust Fund bill that transfers $10.8 billion to the Fund finally passed on July 31st after the Senate accepted a House version without the miners’ pension provision. Obama signed the law on August 8th.
But don‘t think that means the end of attempts to bail out the union miners’ pension plan. Members of Congress surely have other tricks up their sleeve.
You’ve got to watch them every second.