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Congressional plan for coal miner health care bailout begs question: Who’s next?

By   /   May 3, 2017  /   No Comments

Republican members of Congress face a dilemma, particularly those from coal-mining states.

As Congress considers a $1.3 billion bailout of health benefits for retired union coal miners, they must weigh the arguments for and against such federal bailouts.


“My district has more United Mine Workers members than any other Congressional district in the nation,”Congressman Mike Bost, R-Ill., said. “West Virginia has a total of 8,000. Kentucky has a total of 3,000. And I have a total of about 4,500 in my district. It’s a lot of people.”

But Bost also served 10 years in the Illinois General Assembly, and knows that Illinois’ pension systems are more than $130 billion in debt.

Bost said he understands why some taxpayers are worried that a federal bailout for the United Mine Workers’ health care benefits could open the door to a federal bailout for public pension systems across the country.

“There is a danger in bailouts,” Bost said. “But this one is different.”

Congress is considering a $1.3 billion bailout of health benefits for 22,600 former coal miners. The bailout is included in the $1 trillion spending plan designed to keep the federal government running. Bost said Congress is looking to use money from the coal mine reclamation fund to pay for the health care bills of what he calls a “finite group” of elderly people. Bost said this week that he’s pleased Congress has reached an agreement on what he calls “vitally” important benefits.

“The coal companies used a loophole to abandon these people,” Bost said. “It’s the right thing to do.”

Rachel Greszler, a research fellow at The Heritage Foundation, disagrees, saying taxpayers shouldn’t be paying for what the union promised its members but never delivered.

“There was never a promise from the [federal] government,” Greszler said. “It was the union itself. They set up this fund and wanted to pay out benefits right away, in 1947, to people who were retiring. But they never made contributions. It’s the same thing as Social Security. If you start paying benefits to people who didn’t earn them, you’re digging a hole that at some point you have to climb out of. But the problem that you have with the coal industry is that they can’t climb out.”

Coal mining in the United States is not what it used to be. More than 860,000 people worked in the coal industry at its peak in 1923. Nearly 75,000 people worked in the industry in 2000. In 2016, just 65,000 people worked in mines. The number of coal mines also is down significantly, as is total coal output.

Greszler said that’s the biggest problem for union mine workers.

“There’s one worker for every 11 retirees,” Greszler said.

There are also questions about the bailout plan itself.

A new Inspector General’s report from the U.S. Department of the Interior found numerous flaws with the $1 billion former President Barack Obama sent to the United Mine Workers health-care fund between 2011 and 2015. The report said the union listed nearly 1,800 people born in the 1800s as beneficiaries. The report also found the union added thousands more people to the list of “previously retired” miners.

Slippery Slope?

Greszler said Congress is setting a dangerous precedent with a bailout for miners. Even if it’s only their health care.

“If you open the door to the mine workers, how can you say in the future, ‘We’re just going to pick and choose?'” Greszler said.

Bost agrees.

“I don’t know what we’re going to do with the Central State’s pension system,” Bost added. “That’d be a true bailout because there is no revenue there.”

The Central State’s pension fund also is in trouble. It’s underfunded by about $18 billion, and thousands of truck drivers say they could lose their pensions as well. The Central State’s pension fund was supposed to be the retirement account for nearly 400,000 Teamster members in the Midwest. But under funding, questionable accounting, and scandals dating back to Jimmy Hoffa’s days have left the pension fund in the brink of collapse.

But Greszler said miners and truckers aren’t the concern.

She said taxpayers need to be very worried about a Congressional bailout of state and local government pensions.

“If you say, ‘We’re just going to provide a small, limited bailout for the coal miners’, that’s $5 billion,” Greszler said. “But then you just open the spigot. And if you open it to private unions, how can you not then bail out state and local governments? That’s retired firefighters and teachers, and there’s plenty of sympathy for them.”

Greszler said the total unfunded liability for public sector pensions tops $5 trillion.

But the miners’ health care bailout had the bipartisan support of lawmakers from coal-mining states.

“I’m proud to have secured this important provision as we put together the final package,” Senate Majority Leader Mitch McConnell, R-Kentuck, said Monday on the House Floor. “I’ll continue to fight for relief for coal communities going forward.”