Every hardworking American deserves peace of mind in their retirement years. Unfortunately, for millions of Americans who participate in multiemployer pension plans, that certainty has all but disappeared.
Many of these plans are facing severe financial crisis that is only getting worse. If these plans fail, retirees will face steep cuts to the retirement benefits they worked hard to earn. Each day we wait to find a real solution puts the future at risk for more and more of these retirees.
Multiemployer pension plans are retirement plans sponsored by more than one employer as part of a collective bargaining agreement. While there are still many plans in strong financial shape, a growing number of financially-distressed plans are at risk of insolvency. When a pension plan fails, the Pension Benefit Guaranty Corporation — a government corporation funded by premiums paid by pension plans — guarantees retirees receive a fraction of the benefits they were promised. This puts tremendous financial strain on retirees who depend on their pension to make ends meet.
To make matters worse, the PBGC’s multiemployer program is also in dire financial trouble. Last year, the program had a deficit of more than $53 billion, and the PBGC predicts that, without any change, it is likely to be insolvent by 2025. When this happens, retirees in insolvent plans receiving assistance from PBGC will only receive a portion of the already-small amount guaranteed by the PBGC. The PBGC estimates that most participants will receive less than $2,000 per year, hardly what they were promised after a lifetime of work. We have less than six years to prevent these drastic cuts, and Congress must act now to solve this crisis.
These dire circumstances for the PBGC and many multiemployer plans are unequivocal facts. Instead of considering a serious solution, House Democrats voted this week to pass the “Rehabilitation for Multiemployer Pension Act,” more commonly known as the Butch Lewis Act. This bill does nothing to solve the multiemployer pension crisis and requires no fundamental changes to plans in poor financial shape. Instead, this bill gives struggling pension plans a “loan,” then allows the loan principle to be forgiven if it cannot be repaid. That is not a loan — it’s a taxpayer-funded gift that will cost hundreds of billions of dollars. Millions of Americans who have seen their companies go under and had their benefits reduced as a result would be paying to bailout union retirees and make them whole instead.
The Butch Lewis Act would, for the first time ever, put taxpayers on the hook for the failure of private, collectively bargained pension plans. No one in the government helped negotiate or guarantee these benefits, and I am concerned about the precedent we set if the federal government becomes the guarantor for private pensions.
There’s a long history of bipartisanship on this issue. In 2014, I worked tirelessly with then-Chairman John Kline, Ranking Member George Miller and the Obama administration to develop a bipartisan solution called the Multiemployer Pension Reform Act — the last action by Congress on this issue. MPRA gave pension plans the tools to save themselves without a taxpayer bailout.
Unfortunately, the Obama administration made a political decision and refused to approve MPRA applications for the country’s largest troubled plans, including Central States. As a result, the Obama Treasury Department only approved one of six applications it reviewed. In contrast, the Trump administration’s Treasury Department has approved all 13 applications it has reviewed. The Obama administration virtually ensured Central States retirees will receive far less than they otherwise would, all because President Obama preferred politics over policy.
The multiemployer pension system is worth saving, but it does not need a taxpayer bailout as the solution. We must balance the needs of employers, retirees and taxpayers alike in providing potential solutions to this crisis. Democrats need to stop playing politics, put the cameras away and sit down with Republicans to find a solution on which we can all agree. Democrats are wasting time forcing a vote on legislation that will not become law; and, the longer we wait, the worse the crisis becomes. I’m waiting on their call.