House Democrats planning a new and sweeping economic relief package to respond to the coronavirus say they’ll include federal aid for troubled union pensions.
Democrats have just begun drafting the relief bill, which they said would include enhanced family paid leave, more money for food stamps, and new worker safety requirements.
The pension bailout, if included in the measure, could cost tens of billions of dollars if it matches a pension relief package the House passed last year.
Speaker Nancy Pelosi, a California Democrat, told reporters she believes President Trump has signaled interest in aiding troubled pension programs but that it was excluded from the $2.2 trillion package signed into law last week because Senate Republicans, led by Majority Leader Mitch McConnell, did not want it in the bill.
“President Trump was actually supportive, but Mitch McConnell was not,” Pelosi told reporters. “And so, he said we’ll save it for the next bill. Well, here’s the next bill.”
House Democrats earlier this month introduced an economic relief package, but it was rejected by Senate lawmakers, who negotiated the $2.2 trillion bipartisan deal with the Trump administration.
The sidelined House proposal included the language in the House-passed Butch Lewis Act, a multiemployer pension bailout measure with a nearly $100 billion price tag. It would provide low-interest loans to the nation’s most underfunded union pension plans to help them stave off looming insolvency, and it would provide an additional $71 billion in direct cash assistance to those struggling pension plans. The measure would help ensure pension benefits for 1.3 million workers.
Pelosi did not indicate this week whether the draft of the new economic relief bill will include the Butch Lewis Act, but a Democratic aide confirmed it, acknowledging the plan would have to be bipartisan.
“Our proposal is the Butch Lewis Act, but, more importantly, we need and want multiemployer pension reform that works,” a senior Democratic aide told the Washington Examiner. “We are not so committed to an approach that we can’t negotiate a solution.”
The House-passed bill won support from dozens of House Republicans, but it never received consideration in the Senate.
The plan has generated opposition from some economists who argue it does nothing to address the underlying flaws in the pension programs that now threaten their solvency.
About 125 multiemployer pension plans will become insolvent in the next two decades, and some will go broke in the next few years, the Congressional Budget Office said.
“It’s a way to kick the can down the road, and you are using a lot of taxpayer money,” Rachel Greszler, a research fellow in economics, budget, and entitlements at the Heritage Foundation, told the Washington Examiner.
Greszler pointed to a Sept. 6 letter from the CBO that warned of the looming collapse of many union pension plans, even if Congress passes a pension bailout.
“About one-quarter of the affected pension plans would become insolvent in the 30-year loan period and would not fully repay their loans,” the CBO wrote. “Most of the other plans would become insolvent in the decade following their repayment of their loans.”
Greszler said it would make more sense for the federal government to shore up the Pension Benefit Guaranty Corporation, or the PBGC, which is also headed for insolvency, and to put in place reforms to help pension plans survive, such as a slight reduction in benefits.
Democrats and many Republicans said Congress has no choice but to act to stop the pensions from becoming insolvent.
The vast majority of union pension plans are grossly underfunded and will have to cut benefits to retired workers without federal help.
Congress last year passed legislation to protect the pensions and healthcare for 92,000 mine workers.
Senate Republicans also introduced their own multiemployer pension reform plan they said is “designed in a balanced way to avoid tipping more plans into a poorer-funded condition and also to avoid exposing taxpayers to the full risks associated with the largely underfunded multiemployer system and pushing the PBGC into insolvency.”
The measure was authored by Senate Finance Committee Chairman Chuck Grassley, an Iowa Republican, and Health, Education, Labor, and Pensions Committee Chairman Lamar Alexander, a Tennessee Republican.
“We need to act quickly, but we can’t just pour money into failing and mismanaged funds,” Grassley said. “Our plan will provide relief and reform now. Without it, our retirees will be left without the future they worked for.”
The AFL-CIO opposes the Grassley-Alexander plan, arguing it puts too much of the responsibility on the unions by requiring them to provide much higher premiums to the PBGC.
“This document contains no federal financial assistance whatsoever,” AFL-CIO officials said in a statement. “Contrast this to the over $700 billion that the government provided to the banks and Wall Street in 2008 and other corporate tax giveaways in recent years. It is punitive in nature, imposing hefty new costs that even healthy plans will be unable to survive.”
Democrats will have to negotiate a bipartisan solution with the Senate, which is run by Republicans. They’ll also have to convince McConnell, of Kentucky, that any pension bailout belongs in a new coronavirus relief measure.
“I’m not going to allow this to be an opportunity for the Democrats to achieve unrelated policy items that they would not otherwise be able to pass,” McConnell said Tuesday on the Hugh Hewitt show.
