Bush's Pension Reform Upsets UAW

CNN article, January 14 2005
http://money.cnn.com/2005/01/14/news/economy/uaw_bush.reut/index.htm

The United Autoworkers Union recently sent a letter to Congress urging them not to adopt pension reforms introduced by the Bush administration. Alan Reuther, the UAW legislative director, said that the reforms would undermine the "entire defined benefit pension system."

The Bush reforms were caused by a $450 billion shortfall at the Pension Benefit Guaranty Corporation (PBGC), a federal program that insures the pensions of over 44 million workers. This program incurred huge losses after years of failing steel companies and the recent bankruptcies of major airlines. The Bush administration, under the direction of its Labor Secretary Elaine Chao, wants to force companies to take more responsibilities for paying off their pension plans. This added responsibility worries both industry and labor, because it could mean higher payments to the PBGC which would be akin to a corporate tax hike. Any extra expenditure from the corporation's standpoint hurts the bottom line and increases the risk of bankruptcy.