Obama's Next Bailout Beneficiaries: Corrupt Union Pension Funds
By Hans Bader
The Obama administration and its congressional allies are now pushing for billions more in bailouts for mismanaged union pension funds, and teachers unions.
The union pension bailout bill “would transfer tens of billions of dollars worth of retiree liabilities” from unions “to taxpayers.” It would bail out the massively underfunded pension fund of the SEIU, a corrupt left-wing union that uses mobs to intimidate, and occasionally beat up, its critics and creditors. (The SEIU serves as a security force for Obama allies and liberal Congressmen seeking to keep Tea Party protesters away from their events.) The union pension funds are estimated to be underfunded by $165 billion.
The Obama administration is also proposing a multi-billion dollar teacher bailout sought by the teachers’ unions. Although education spending per student has quadrupled, after inflation, since 1960, and teacher class sizes have shrunk considerably, the Obama administration wants to increase spending even further to prevent states from laying off any teachers. Even the The Washington Post, which endorsed Obama and has endorsed every Democratic presidential candidate since 1952, considers this unwise and financially reckless “wasteful spending.” (The SAT has been “recentered” in recent years to hide the fact that SAT scores have effectively gone down even as education spending has skyrocketed. My 1986 SAT score of 1520 out of 1600 would be a perfect 1600 on the relevant portions of today’s SAT, thanks to “recentering.”) Ironically, no additional spending would be needed to prevent layoffs if teachers would simply accept small pay cuts. (The average school teacher in Montgomery County, Maryland, makes $76,483 in base pay–which hasn’t stopped school officials from threatening to sue the County for supposedly inadequate school funding.)
While pushing an unnecessary teacher bailout, the administration has shown little interest in the plight of the unemployed. It deliberately removed from the $800 billion stimulus package billions in transportation spending that would have stimulated the economy, after feminist leaders complained that such projects would employ blue-collar men, many of whom are now unemployed (80 percent of those who have lost their jobs in the recession are men). The transportation spending was replaced with wasteful welfare spending, and other provisions of the stimulus package largely repealed the limits on welfare passed in the reforms of 1996.
The Obama administration earlier lifted a $400 billion limit on bailouts for Fannie Mae and Freddie Mac, two mortgage giants known as the Government-Sponsored Enterprises (GSEs). It was just the beginning: “Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie,” reports The New York Times.
At the direction of the Obama administration, Freddie Mac ran up more than $30 billion in losses to bail out mortgage borrowers, some of whom have high incomes. Federal regulators sought to make Freddie Mac hide the resulting losses from the SEC and the public.
Fannie and Freddie helped spawn the mortgage crisis by buying up risky mortgages and repackaging them as prime mortgages, thus creating an artificial market for junk. ”From the time Fannie and Freddie began buying risky loans as early as 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime.” They paid their CEOs millions, and engaged in massive accounting fraud–$6.3 billion at Fannie Mae alone–to increase the size of their managers’ bonuses. As Government-Sponsored Enterprises, they were exempt from the capital requirements that apply to private banks, so they did not have enough reserves to cover their losses when their mortgages started defaulting.
(Obama received $125,000 in contributions from these mortgage giants as a Senator, second only to the corrupt Senator Chris Dodd, who is retiring this year due to his financial scandals. Dodd is the chief drafter of the financial “reform” bill.)
The financial “reform” bills recently passed by the House and Senate do nothing to reform Fannie Mae and Freddie Mac. But they will increase pressure on banks to make risky loans in depressed neighborhoods, and increase credit card costs.
The Obama administration also recently provided billions for the international bailout of Greece, which came close to bankruptcy thanks to its socialist policies and pensions for people who retire as early as age 50 (in many ordinary occupations, like hairdressers).