No new ideas: Congressional Democrats want to bail out state pension debts with… more debt
If there is one thing you can always set your watch to is that with Democrats in Congress, the solution to any problem is to spend more money and create more debt.¬† And as such it should come as no surprise when a week ago a Senator from Ohio announced plans to introduce a new bill intended to help bailout state pension funds with… Treasury debt.
That’s right… the solution for underfunded debt obligations by state and municipal governments in their pension plans are to supplement them by borrowing more debt from the Federal government.
Sen. Sherrod Brown, D-Ohio, plans to introduce legislation that would allow struggling multiemployer pension funds to borrow from the U.S. Treasury to remain solvent.
The bill, co-sponsored by Rep. Tim Ryan, D-Ohio, could be introduced later this week or shortly after. It would create a new office within the Treasury Department called the Pension Rehabilitation Administration. The funds would come from the sale of Treasury-issued bonds to financial institutions. The pension funds could borrow for 30 years at low interest rates. One restriction for borrowers is they could not make risky investments.
The bill would also fund a program at the Pension Benefit Guaranty Corp. to finance any remaining needs of pension plans borrowing from the new program. “Any money needed for the PBGC would be a tiny fraction of what it would otherwise be on the hook for if Congress fails to act,” said an analysis by Mr. Brown’s office. –¬†Pionline
Using the taxpayer as a bailout mechanism isn’t the first time Democrats in Congress have sought to use debt as a fallback tool to aid irresponsible local governments.¬† In fact with the growing collapse of their Magnus Opus in Obamacare calling for much more subsidies for both states and individuals, instead of accepting that the program was flawed Democrats are demanding increases to the budget to put even more debt onto the already massive heap that is the nation’s unfunded liabilities.
After years of seeing prices rise in everything from student loans to healthcare once the Federal government began to subsidize these industries, Congress will never accept the writing on the wall that free market determination of price is the best way for competition to drive down costs.¬† And the same can be said of state and local governments who over the years have made so many promises that their budgets couldn’t cash that now they are left with once again trying to force the taxpayer to come bail them out of their mistakes.
Kenneth Schortgen Jr¬†is¬†a writer for¬†The Daily Economist,¬†Secretsofthefed.com,¬†Roguemoney.net, and¬†Viral Liberty, and hosts¬†the popular¬†youtube podcast¬†on Mondays, Wednesdays and Fridays.¬†Ken can also¬†be heard Wednesday afternoons giving an weekly economic report on the¬†Angel Clark radio show.