Mitch McConnell Rallies Americans To Support State And Local Pensions

By singling out state and local pensions as undeserving of coronavirus relief, Mitch McConnell has redirected national attention to the pre-existing public pension underfunding crisis. Americans are rallying in support of police, firefighters, and school teachers.

Senate Majority Leader Mitch McConnell supports a $58 billion bailout of the airline industry in response to the coronavirus pandemic; hundreds of billions to bailout supposedly small businesses—many of which, according to a Reuters analysis released today, are publicly-traded companies with plenty of cash. Late last year—pre-coronavirus—McConnell supported a bill to secure the pensions for nearly 90,000 retired coal miners as a recent wave of coal company bankruptcies threatened the solvency of the federal pension fund.

Recently McConnell said he opposes additional aid for state and local governments in future coronavirus relief bills because these governments would use federal funds to simply bail out their struggling pensions. He favors “allowing states to use the bankruptcy route” to deal with their underfunded public pension liabilities.

In short, according to McConnell, airlines, small and not-so-small for-profit businesses and coal industry pensions should be spared from bankruptcy; state and local pensions should seek bankruptcy as a means of re-negotiating (aka reneging on) benefits promised to workers.

By singling out state and local pensions that provide retirement security to the nation’s police, firefighters, other first responders and school teachers as undeserving of coronavirus relief, McConnell has redirected national attention to the public pension underfunding crisis predating the pandemic.  

Americans should be thankful to McConnell for raising the issue of public pension underfunding at this time.

While the nation is currently in the grip of an unprecedented national health emergency, after the pandemic passes (and hopefully a cure is found soon) the public pension crisis, decades in the making, will remain—unless addressed now. Indeed, absent federal relief, public pensions will be worse off post-coronavirus than they were.

As I remind readers in Who Stole My Pension?, half of all state and local pensions have cut benefits since the 2008 market meltdown. The average public pension was only 70 percent funded—pre-coronavirus. If pension benefits were slashed and funding levels declined during the greatest 11-year bull market in history, what’s likely to happen in the near future if the stock market continues to struggle or plummets?

McConnell’s near-giddy willingness to use trillions of taxpayer monies to bail out big business (as well as his coal miner constituents) stands in ugly contrast to his mean spirited frugality when it comes to state and local workers.  Not surprising, Americans are rallying in support of police, firefighters, and school teachers. Those who oppose honoring pensions promised to state and local workers could not have crafted a more obviously disingenuous argument or picked a more unattractive spokesperson.