Biden pumping $36 billion into Teamster's pensions and that's just the start

The wide range of spending options for President Biden that was embedded in the American Rescue Plan now covers union pension plans and it could be a foreshadowing of future events. On Monday’s edition of the Newell Normand Show the CEO of Gulf Coast Bank and Trust, Guy Williams, gave his take on the President’s plan to pump $36 billion into the struggling Teamster’s Central States Pension Fund. According to the Biden administration, that “infusion” of $36 billion is the largest amount of federal aid ever given to a pension plan. That money will come from the $1.9 trillion relief package the Democratic led Congress had approved last year to respond to the COVID-19 pandemic. Without that bailout, Teamsters officials said deep cuts would have to be made to the retirement incomes of roughly 350,000 Teamster workers and retirees spread throughout the country. Williams said President Biden truly embraced the concept of spending at the center the American Rescue Plan.

“It’s good policy if your policy is to support your friends, and I think it’s something that both parties but it’s sort of one of the most glaring examples. The American Rescue Plan was passed with very few restrictions, so the President can use his discretion to decide what he wants to do. And he’s decided to put money into a number of different pension plans, and as you say, some got a billion here and there which in Washington is like throwing pennies, but the Teamsters got $36 billion, by far the biggest amount. And it’s a direct bail out of a pension plan that was poorly managed, poorly designed and underfunded,” Williams told Newell.

Williams says that bailout is a “preview of coming attractions” because many municipal pension plans in the United States are grossly underfunded. Williams pointed to Illinois’ broken pension system as the prime example. Williams predicted those struggling pension plans will seek a bailout at some point. With an open-ended bill such as the American Rescue Plan, Williams said it’s more than possible the Biden administration can give money to whoever it chooses. The administration proved that when it announced the $36 billion bailout last week.

There is such a thing as pension reform. Newell explained that during his time as the head of the Jefferson Parish Sheriff’s Office, there were changes made to that agency’s pensions. The years required to become vested were extended from 12 years to 20 and there were measures taken to ensure the pension plan was funded.