Armageddon: What Democrats Are Hiding & Why They Are Really Scared

[Sandra]

http://www.redstate.com/laborunionreport/2010/10/19/armageddon-what-democrats-are-hiding-why-they-are-really-scared/

Armageddon: What Democrats Are Hiding & Why They Are Really Scared

If Democrats were running a corporation, their actions would be criminal.

Posted by LaborUnionReport (Profile)

Tuesday, October 19th at 2:00PM EDT

45 Comments

Unions and Democrats are scared. They should be.

Very soon, Democrats and their union bosses’ worst fears may soon be realized and, if they cannot continue their slight of hand, it may threaten their very existence. While it is true that Democrats and their union bosses
are facing possibly debilitating losses on November 2nd, they are hiding the
really bad news from voters until after November 2nd.

Do you remember that promise we heard back in 2008 about transparency? Democrats and, in particular, then-candidate Barack Obama stated emphatically that “transparency and the rule of law will be
the touchstones of this presidency.” What a joke that was. Well, it’s
time to shed some light on the house of cards that is about to come crashing
down on Democrats’ and union bosses’ heads.

“This is Armageddon.”

In June, a conversation took place in a hotel restaurant in Washington. As a latecomer to the conversation, it was easy to pick up that the topic that was the $165 billion union pension bailout bill introduced by Sen. Bob
Casey [D-PA] in March.

Upon introductions, one of the individuals stated, “this is Armageddon.”

When asked for clarification, the person explained about the accounting rules developed to shore up underfunded union pensions and the dates when those union companies affected would have to assume their liabilities had the
DC crowd (in particular, the Democrats and the unions) in a panic.

Yesterday, the Washington Examiner’s Mark Hemingway gave a good breakdown of how bad it could get for Democrats and their union bosses:

On Nov. 1, the Financial Accounting Standards Board (FASB) ceases to take public comment on a new rule requiring that companies more accurately report liabilities they have from participation in multiemployer pension plans.
Unless FASB is persuaded otherwise, the rule takes
effect Dec. 15.

There are some 1,500 multiemployer pension plans in the United States, which are unique to unions. In these plans, multiple companies pay into the pension plan, but each company assumes the total
liability.

Under “last man standing” accounting rules, if five companies are in a plan and four go bankrupt, the fifth company is responsible for meeting the pension obligations for the employees of the other four
companies.

What this means is that companies with union labor often have pension liabilities that are several multiples higher than the pension expenditures they report — the Kroger grocery store chain shocked
analysts last year when it disclosed its multiemployer pension liabilities
more than doubled in a year to $1.2 billion.

[snip]

FASB’s new rule could effectively wipe out the paper worth of many companies, especially in the trucking and construction industries. Once banks and creditors are aware of these staggering
pension liabilities, it will make it nearly impossible for union businesses
to get loans, credit lines or bonding.

The effects of having to meet reality will almost certainly cause a significant drop in stock prices for those companies affected and, as a result, may cause a large ripple effect throughout the rest of the economy. In
those cases where the liabilities exceed the value of the unionized companies,
it is entirely possible many of those companies will
go out of business, laying off tens of thousands of employees,
and further causing a drop in economic activity.

Some companies risk having their ratings downgraded, especially if weaker companies become bankrupt and leave the pension plans.

One example of a company that would likely go out of business is YRC trucking, which employs approximately 35,000 Teamsters. While the freight currently carried by YRC would likely be picked up by other carriers (many of which are non-union),
the loss of members (and their dues) would be devastating for the Teamsters
and the Democrats.

Right now, before November 2nd, Democrats don’t want voters to know that their union benefactors may further cause the economy to fall further or more companies to close and jobs to be lost. As a result, Democrats are not talking
about it on the campaign trail. Instead they’re hoping they can work out a scheme during a lame
duck session, sticking taxpayers with another $165 billion union
bailout.

Without the bailout though, as we noted in July, unions and Democrats face a bleak future:

On the other hand, even though Democrats know that another union bailout will likely make them even bigger pariahs with the American people, the very survival of their party rests on their ability on passing
this poisonous piece of legislation. If they fail, the
ramifications for the Democrats are disastrous.

As opposed to taking more from taxpayers and adding more to the debt or creating another Ponzi scheme, the Competitive Enterprise Institute’s F. Vincent Vernuccio offers some alternatives to the union
pension bailout:

The entire multiemployer model needs to be rethought. The funding and disclosure standards of the PPA and FASB are a good start but more needs to be done. Unions who use their
pensions for recruitment should be required to tell prospective union
members if the retirement packages they are touting are in critical or
endangered status. Any mention of government insurance should be accompanied
by the caveat that multi-employer plans are only insured by up to
$12,870.

No worker should be forced into a critical status pension fund. They did not make the promises to current employees and retirees and should not be forced to pay into a broken system.

Union members should be allowed the same mobility and retirement control as the other three quarters of workers receiving pension benefits in America. Defined contribution (DC) plans should be
encouraged for new workers. Older members should be given the option to
opt-out of failing pension plans and convert the money they receive
into a DC plan.

If all contributing employers or a majority of beneficiaries agree, a multi-employer plan should be terminated if the ratio of employees to retirees reaches 1 to 1 – in 2007 before UPS
withdrew; the Teamsters Central States Plan covered 451,000 workers with
only 155,000 currently employed. A system where one worker is supporting
three retirees is doomed to failure. Instead of having decades of future
liabilities, employers should be given an option of a onetime buyout of
failing union pensions.

America is careening toward bankruptcy. While blame can initially be laid at the feet of both parties, over the last 20 months, Democrats’ meddling in the private-sector, out-of-control spending, and sheer ineptitude in
recognizing the job-killing policies they promote have pushed the nation
closer to the precipice.

Now, with two weeks before November 2nd, Democrats are hiding the fact that financial Armageddon may be right around the corner. If Americans are the ’shareholders’ and politicians are the executives in charge,
the lack of disclosure on the part of Democrats would be
criminal.

[Sandra]

Get off the steroids Wayne, you look like crap!

[Sandra]

100% correct Teresa. Unions started as a good thing, now they are corrupt and out of control! They are a big part of the reason companies left the US, they couldn't compete, not the SEIU is on China and other countries spreading there ilk there. I hope those countries are a lot smarter... I may lose my home next spring/Summer... We all worked hard, raised children to do the right thing, just to wake up one day and find it all stolen from us, and it goes back to Wilson. Only 3 presidents since then have been honest and good. Just pitiful... Now generations of children will be lucky to have anything left to look forward to with these crooks in office. Too bad the tea party sill doesn;t get it, both sides are against us! So we all will be bitten hard again until we all get on the same page and realize the two parties need to be buried! Neither one works anymore... I wish I could vote independent but it will be a wasted vote, I have not followed a straight party ticket in 10 years and I still don't but I need to stay focused on what the rest of us are trying to do, even if it is not what the country should be doing. I hope we survive this until 2012 and everyone that thinks one party or the other wakes up! 2012 to me is weed and feed, get rid of all that have been in over two terms and the ones who have stabbed us in the back.

[Teresa Smith]

Why should we the people bail out Unions, these Unions spend and spend on getting people elected. That is criminal to me. What a waste of money. My family does not have a retirement fund we struggle every month. We had hoped to retire and sell our home and with the profit be able to help with retiring and now my home is worth half of what I paid for it. I'm outraged. Worked all our lives and now not only is my home worth much less than what I paid for it, social security is broke. The people who so called"govern" us should be in jail go all the way down the line and sell their belongings and holdings and put it in the social security pot for the people whose money they wasted, blown on stupid things and given to other countries. I'm sick of them.