How to Save Coal Country: Pump Up Pensions or Create Jobs?

Does the government have an obligation to support the coal miners' union pension? This is the latest contentious issue circulating Capitol Hill, as a new bipartisan bill to prop up the retirement funds of the United Mine Workers of America (UMWA) makes its way through the Senate after clearing the Senate Finance Committee.

The problem: The UMWA has an estimated $5.6 billion in unfunded pension promises.

“What caused the pension crisis is the EPA and President Obama’s war on coal. I mean they’ve destroyed the coal industry. When you destroy an industry, then you destroy the industry’s ability to pay their obligations to their retirees,” former Senator Rick Santorum (R-PA) tells FOXBusiness.com.

The Miners Protection Act and the Retirement Enhancement and Savings Act are designed to safeguard the pensions of 120,000 coal miners. The bill, introduced by members of Congress who hail from heavy mining regions, would allocate up to $490 million per year to the workers. This money would be taken from a supply designated for abandoned mine recovery. The legislation would also extend healthcare benefits to 20,000 employees of recently bankrupt, unionized companies.

Some argue that the government has a legal obligation to support the UMWA’s pension and healthcare plans.

“The federal government made a promise to these coal miners and their families that should be honored,” Senator Bob Casey (D-PA) tells FOXBusiness.com. ” This agreement dates back to the historic Krug-Lewis Agreement, which ended the coal miners’ strike of 1946.”

The Krug-Lewis Agreement established terms for welfare and a retirement fund under the federal government. However, many believe Krug-Lewis was only effective during a period of time (1946-1947) when the mines were under federal control. Once they were privatized again in 1947, a new agreement was negotiated between the union and the mine owners, which does not explicitly obligate federal support for the union’s pension plan.

The coal industry has become a lightning rod on the campaign trail. Donald Trump has promised to restore jobs to coal states, while Hillary Clinton has been dogged over her comments last March.

“We’re going to put a lot of coal miners and coal companies out of business,” she said during a CNN Town Hall.  

Clinton has released a $30 billion plan to retrain coal workers for different jobs. The plan includes investing in new infrastructure and technology to bring money back in to mining-heavy areas.

Despite election promises, and coal country donation dollars for both parties, the problem extends beyond the mining sector. There may be a larger, systemic issue at play.

“When unions negotiate on behalf of their members, they are rewarded more when they bring back higher cash wages than when they bring back lower cash wages,” Diana Furchtgott-Roth, chief economist at the Department of Labor from 2003-2005, tells FOXBusiness.com. “When they come back and say ‘I’ve got you a 10% raise,’ and they don’t mention the pension plan is underfunded, then everyone is very happy.”

In fact, U.S. union pensions are underfunded by $600B, according to the Pension Benefit Guaranty Corporation. So the coal miners are in good company; and that poses another problem.

“If we get involved with miners pensions, then what are our grounds not to get involved with every other pension fund? And bail them out? And I just don’t think that’s the role of the federal government,” said Santorum.

Senator Mike Enzi (R-WY) shares the former presidential candidate’s fear that supporting one underfunded pension would be a slippery slope in an environment where so many retirement funds are lacking.

“One of the most risky aspects of this legislation is the precedent it would set,” he tells FOXBusiness.com. “This bill would only bailout one of the 1,238 union pension plans that we know are underfunded. There are already twenty other multiemployer pension plans that are slated to become insolvent before the UMWA pension plan does.”

Though the end goal of keeping the UMWA retirement funds solvent may have bipartisan support, Senator Santorum points out the motivations appear to be divided along party lines.

“This is an appeal to the area of the country that democrats are struggling in right now, because they’re destroying the economy in these areas so they’re making it look like they care. If they really cared they’d put people back to work,” Santorum says.

Republican Senator Enzi advocates a rollback of the current administration’s regulations on the coal industry as a step toward alleviating this problem.

“The way to actually help all coal miners is to get them their jobs back,” Sen. Enzi says. “What we should be doing to help the people who power America is to help the entire fossil fuel industry by addressing the… rules this administration has issued that have put coal miners out of work.”

At its heart, this bill ultimately boils down to another fight over the war on coal. What Democrats see as protecting the environment, Republicans view as an affront on the American worker and American jobs. While this bill could represent a battle won for some miners and their families, the war is far from over.