Lame-Duck Congress Nears Last-Minute Vote On Sweeping Pension Reform

Cole Stangler December 3, 2014

Rep. George Miller (D-California), along with Rep. John Kline (R-Minnesota), may have reached an agreement on major pension reform to be passed within the next two weeks. (Ralph Alswang / Center for American Progress)

Con­gress is near­ing a vote on arguably the biggest change to pri­vate pen­sion law in decades.

The pro­posed reforms would grant sweep­ing new author­i­ty to the trustees of some deeply trou­bled” mul­ti-employ­er pen­sion plans to slash ben­e­fits promised to cur­rent retirees — some­thing that’s ille­gal under exist­ing law. A cor­ner­stone of some col­lec­tive bar­gain­ing agree­ments, mul­ti-employ­er plans cov­er more than 10 mil­lion work­ers, most­ly in con­struc­tion but also in the trans­porta­tion, man­u­fac­tur­ing, retail and ser­vice sec­tors.

Reps. John Kline (R‑Minnesota) and George Miller (D‑California), the high­est-rank­ing mem­bers on the House Edu­ca­tion and Work­force Com­mit­tee, have bro­kered a last-minute deal to reform mul­ti-employ­er pen­sions, In These Times has learned. They’re now urg­ing par­ty lead­ers to include the plan as part of an omnibus spend­ing bill, just before the 113th Con­gress is set to leave Wash­ing­ton for good on Decem­ber 11.

The full extent of the Kline-Miller pro­pos­al remains unclear. In addi­tion to pro­vid­ing trustees with new ben­e­fit-gut­ting pow­ers, it may include oth­er less high-pro­file ele­ments from the Solu­tions Not Bailouts” report, a pro­pos­al authored last year by the Nation­al Coor­di­nat­ing Com­mit­tee for Mul­ti­em­ploy­er Plans (NCCMP), a labor-man­age­ment coalition.

Over the last year, pro­po­nents of the NCCMP plan have tried — and failed — to get a vote on a stand-alone bill. Seek­ing bipar­ti­san sup­port, they were stymied by the res­ig­na­tion of a key ally in Rep. Rob Andrews (D‑New Jer­sey), the for­mer rank­ing mem­ber on the pen­sion sub­com­mit­tee, and by mount­ing out­cry from orga­nized labor. After In These Times first report­ed on the plan last Octo­ber, the Team­sters and Boil­er­mak­ers joined the Machin­ists in oppo­si­tion. (Mean­while, Andrews, who faced a House ethics inves­ti­ga­tion when he stepped down in Feb­ru­ary, has since lob­bied Con­gress on behalf of the NCCMP.)

Some unions wel­come the reforms as a tough but nec­es­sary move to shore up the long-term sol­ven­cy of the mul­ti-employ­er pen­sion sys­tem. The AFL-CIO’s Build­ing and Con­struc­tion Trades Depart­ment (BCTD) has lob­bied most aggres­sive­ly in sup­port of the NCCMP plan, accord­ing to oppo­nents of the pro­pos­al. A spokesper­son for the BCTD did not respond to request for comment.

Mul­ti-employ­er pen­sion plans, all of which are par­tial­ly insured by the fed­er­al Pen­sion Ben­e­fit Guar­an­ty Cor­po­ra­tion (PBGC), do face a bud­get squeeze. All in all, the plans car­ry an $8.3 bil­lion deficit that is pro­ject­ed to hit near­ly $49.6 bil­lion by 2023—the result of the eco­nom­ic cri­sis, a short­age of work­ers pay­ing into the plans, and in some cas­es, mis­man­age­ment. If a mul­ti-employ­er plan is unable to meet its oblig­a­tions, the PBGC steps in and cov­ers a small amount of what retirees are owed, but it’s a frac­tion of the the promised benefit.

Under the Kline-Miller plan, cuts would be restrict­ed to 110 per­cent of ben­e­fits that the PBGC would oth­er­wise pay. Con­gress must act now, the log­ic goes, or it’s going to hurt even more later.

The pro­pos­al includes anoth­er pro­vi­sion to soft­en the blow: Ben­e­fit cuts would need to be approved by retiree vote, unless the plan pos­es a sys­temic risk” to the PBGC, in which case trustees can pro­ceed with­out a vote.

But that sounds more com­fort­ing than it is. By far, the plan most at risk to the PBGC is the 410,000 mem­ber Team­sters’ Cen­tral States Fund. It’s high­ly unlike­ly the plan’s retirees would get a chance to vote on any ben­e­fit cuts. 

Crit­ics charge that it is unfair to place the bur­den of sta­bi­liz­ing the plans on the backs of retirees. After all, pen­sion ben­e­fits are essen­tial­ly deferred wages that have already been earned. They want trustees and Con­gress to con­sid­er oth­er steps — plan merg­ers or bailouts, for instance — before mess­ing with long-estab­lished anti-cut­back” rules. They’re also frus­trat­ed by the lack of transparency.

For the NCCMP or any mem­ber of Con­gress to try to sneak this onto an end-year bill is out­ra­geous,” says Karen Fried­man, pol­i­cy direc­tor at the Pen­sion Rights Cen­ter, which strong­ly oppos­es the plan. It’s nefar­i­ous, because they’re basi­cal­ly try­ing to sneak through pro­vi­sions that would have a huge impact on mil­lions of retirees, poten­tial­ly set a dan­ger­ous prece­dent and tor­pe­do a fun­da­men­tal part of pri­vate pen­sion law. And they’re try­ing to do all this in the last few weeks as Con­gress is get­ting ready to leave before the new Con­gress starts? That’s ridicu­lous. They should be ashamed of themselves.”

Rep. George Miller’s bless­ing is piv­otal. After 39 years in Con­gress, the lib­er­al stal­wart is retir­ing at the end of the session.

The Repub­li­cans could have moved this a year ago,” says Bruce Ols­son, assis­tant direc­tor of leg­isla­tive and polit­i­cal action for the Machin­ists. They had the votes, but they didn’t want to jump off that bridge with­out hold­ing hands with the Dems. You can already see the ads — ‘[Rep] so and so vot­ed to cut the pen­sions of the elderly.’”

Miller’s sup­port may swing Democ­rats who would nor­mal­ly be uneasy back­ing such major reforms.

Miller is like this lib­er­al lion. He’s done a lot of good stuff in his career over the years,” Ols­son con­tin­ues. “[He] gives cov­er to a lot of peo­ple who aren’t famil­iar with the issue” to sup­port the proposal.

Union back­ers of the NCCMP pro­pos­al like the Build­ing Trades have cal­cu­lat­ed that it is bet­ter to get a deal done now rather than lat­er. They fear the next Con­gress will be even more heavy-hand­ed in its approach, accord­ing to a lob­by­ist close to the issue. Repub­li­can majori­ties in the House and Sen­ate, for instance, could move to strip union influ­ence over mul­ti-employ­er plans altogether.

But Kel­ley Still­well, 57, a retired con­struc­tion work­er from Hen­der­son, Neva­da, and long­time mem­ber of Labor­ers Local 872, isn’t buy­ing it. He is furi­ous at his union’s lead­er­ship which, he says, ignores the plight of retirees.

I joined the union move­ment 38 years ago and I retired with a pen­sion guar­an­teed for the rest of my life,” says Still­well. I feel like this is a total sell­out of the prin­ci­ples of the entire union movement.”

The Inter­na­tion­al Asso­ci­a­tion of Machin­ists (IAM) is a spon­sor of In These Times. Spon­sors have no role in edi­to­r­i­al content.

Cole Stan­gler writes about labor and the envi­ron­ment. His report­ing has also appeared in The Nation, VICE, The New Repub­lic and Inter­na­tion­al Busi­ness Times. He lives in Paris, France. He can be reached at cole[at] Fol­low him @colestangler.
Limited Time: