PBGC OIG Validates Foxx Concerns Over Pension Bailout Boondoggle
WASHINGTON, D.C., December 20, 2022
The media missed it….
The head of oversight for the Pension Benefit Guaranty Corporation (PBGC) sounded the alarm earlier this month warning that PBGC may have broken the law! Specifically, the Office of the Inspector General (OIG) requested a legal opinion from the Government Accountability Office on whether PBGC has the authority to change the calculation of the amount of taxpayer dollars handed out under the Democrats’ flawed multiemployer pension plan bailout program.
Education and Labor Committee Republican Leader Virginia Foxx (R-NC) raised this very issue back in September. In a letter to PBGC’s director, Foxx wrote: “[Allowing plans to use two separate interest rates] is especially concerning given that the interim final rule explicitly states, ‘PBGC does not have authority to provide a different rate or bifurcate the statutorily mandated interest rate.’”
PBGC’s OIG validated Foxx’s concerns pointing out that “PBGC faces both a risk of improper payments and a reputational risk” for its bifurcated interest rates.
The use of separate interest rates is a ploy to funnel as much money as possible into these failing and mismanaged pensions. We applaud the OIG for questioning whether the use of two separate interest rates is legal.
Allocating billions of dollars to fund massive multiemployer pension bailouts—at taxpayers’ expense—was always a mistake. In fact, the Congressional Budget Office (CBO) confirmed our suspicions that the price tag for the Biden administration’s uncapped handout will continue to rise. Despite initial claims that it would cost “only” $85.9 billion, we now know pension bailouts will cost $4.5 billion more than original estimates. According to CBO, taxpayers will be on the hook for $90.4 billion to fund these mismanaged pensions, thanks in part to PBGC’s loose interpretation of the law. Don’t forget, there’s no cap on how many taxpayer dollars can be thrown at these plans.
Last week, PBGC began approving supplemented bailout applications that use a bifurcated interest rate, which allow plans that have already received taxpayer dollars to take a second bite at the apple. These bailouts are disastrous for taxpayers and do nothing to fix the underlying problems plaguing multiemployer pensions. It’s time for reform—not more irresponsible spending.