Mr. President, private sector pensions are relied upon by millions of Americans for retirement security. They are agreements made between an employer and its employees, or a union and its members, which allow the recipients to receive payments in retirement. Those payments are based on a formula that includes a number of factors, including years of service.
I’ve worked on pension policy for all of my professional life. I’ve dealt with pensions as a young accountant, Mayor of the City of Gillette, Wyoming, Member of the Wyoming Legislature, Member of the Senate Pensions Committee, Chairman of the Senate Pensions Committee, Member of the Senate Finance Committee, Chairman of the Senate Retirement Security Subcommittee, Chairman of the Senate Budget Committee, and Chairman of the Conference Committee on the 2006 Pension Protection Act that saved pensions for thousands of workers without wholesale business bankruptcy.
I also authored that 2006 Pension Protection Act, which dramatically altered the funding rules and made single employer pension plans much more stable. The Act also made significant changes to defined contribution plans that drastically improved participation.
I believe it’s safe to say that I speak today from my experience as a Member of this body with a large background in pension policy, and I am concerned about where we are heading.
Out of the 24,361 single employer pension plans that we have information on, 4,486 are underfunded. The most recent actuarial estimations of that underfunding by the Pension Benefit Guaranty Corporation is over $758 billion, which should concern us all because the assets of the Pension Benefit Guaranty Corporation’s single-employer insurance program total only $85 billion. Mr. President, let me say that another way: the insurance program for that $758 billion only has $85 billion in assets.
But that’s not even our biggest pension problem. Out of the 1,361 multiemployer pension plans – that means collectively bargained agreements – that we have information on, 1,238 are underfunded. The most recent actuarial estimations of that underfunding is just over $611 billion, even though the assets of the Pension Benefit Guaranty Corporation’s multiemployer insurance program total only $1.9 billion. In other words, the safety net for that $611 billion is only $1.9 billion. I would equate that to trying to catching a whale shark with a net made for minnows.
This shouldn’t come as a surprise to anyone. The PBGC wrote in its 2015 annual report that “it is more likely than not that the multiemployer program’s assets will be depleted in 2025.” The insurance policy for collectively bargained pensions is on track to become insolvent in less than a decade.
Altogether, private sector pensions are underfunded by about $1.35 trillion or to put it in a better perspective, by $1,350 billion. On top of that, per the most recent actuarial data available for state and local pensions, the total amount of underfunding in public sector pension plans is $1.2 trillion, or $1,200 billion.
So, Mr. President, the total amount of unfunded liabilities in both private and public sector pension plans is around $2.6 trillion. That means that these pension plans have agreed to pay out $2.6 trillion more than they have available.
For reference, $2.6 trillion, or $2,600 billion, is more than double what our current annual discretionary spending is. That’s more than double what we in the Congress make annual spending decisions on, including defense, transportation, agriculture and education.
I have heard some of my colleagues come to the Senate Floor and speak to the troubling predicaments of specific pension plans. Many of them are currently advocating for shoring-up the United Mine Workers of America pension plan, which is just one of the 1,238 union pension plans that are underfunded. I am concerned about this for several reasons.
First, if we take the steps my colleagues are advocating for with regard to the UMWA, what are we going to do when the next underfunded pension plan comes looking for assistance? And what about the plan after that? There are hundreds of private-sector pension plans in critical, endangered, or declining status throughout America today, so I’m not sure how Congress would help the UMWA and not the others. Paraphrasing President Washington: We are walking on untrodden ground. There is scarcely any part of our conduct which may not hereafter be drawn into precedent.
I’ve frequently heard my colleagues try to differentiate this case by speaking of a promise of a pension that was made to retirees in this particular union. But that agreement was between the members and the union, it was not an agreement with the federal government.
Second, I find it necessary to remind my colleagues that this country is $19 trillion in debt and consistently increasing our spending. We don’t have the money to shore-up pension plans.
And to be clear, despite proponents arguing that this legislation is paid for by coal companies’ contributions to the Abandoned Mine Land trust, in reality, it would be paid for by taxpayers.
The Surface Mining Control and Reclamation Act is funded by a tax levied on mining operators per tonnage of coal harvested. Interest from the AML fund can currently be transferred to three trusts to support UMWA healthcare benefits, and if the AML interest does not cover those healthcare costs, the three UMWA healthcare plans are entitled to payments from the U.S. Treasury. Mr. President, the AML interest payments are often not sufficient to meet the three UMWA healthcare plans’ needs, so the General Fund of the Treasury provides the balance. For example, in FY 2012, interest from the AML fund paid $48.4 million towards UMWA healthcare funds and the U.S. Treasury General Fund – taxpayer dollars – provided $205.6 million. Now my colleagues are asking taxpayers to pay for even more than healthcare for UMWA beneficiaries.
And the portion of funds coming from the U.S. Treasury will only increase. As I mentioned, the AML trust is funded by a tax levied on coal harvested. The key word there is “harvested.” It breaks my heart to say this, but according to the U.S. Energy Information Administration, U.S. coal production – or harvesting – is projected to be down over 25 percent this year as compared to 2014. That’s due in large part to the Mercury Air Toxics Standards Rule, the Stream Protection Rule, the Clean Power Plan, the freeze on federal coal leases, the proposed increase in coal royalty rates, and everything else this Administration is doing to shut down coal. Less coal being harvested means less taxes will be paid into the AML trust fund. As those AML dollars dry up, more and more of the money this bill proposes to use for UMWA healthcare and pensions will come from taxpayer dollars.
Again I’ll point out that this agreement was made between the members and the union, not between the members and the American taxpayer. Mr. President, that bears repeating: the UMWA agreement was made between the members and the UMWA, not between the members and the American taxpayer.
It’s also worth noting that the AML fund is not unique in that it is comprised of fees paid by a specific industry or user base. One of the most significant pension problems we hear about today is the Central States Pension Fund, which includes a large number of truckers. That fund is going broke, so I want to offer my colleagues an analogy using that fund.
To be sure that there are roads to drive on, trucking companies pay a higher tax on their diesel fuel as well as taxes on truck and trailer sales, heavy tires, and heavy vehicle usage. Together with a tax that all consumers pay on every gallon of gasoline purchased, these taxes fund the Highway Trust Fund. This “trust fund” for highways builds roads and pays for repairs and new bridges that the trucking industry and other drivers rely on. Using a dwindling AML trust fund to shore up the UMWA pension would be like shoring up the Central States Pension Fund with the fund that builds highways because truckers pay into the highway fund. That is what UMWA is asking us to do!
My guess is if we examined all the pension plans in critical and declining or endangered status, we could probably identify a fund that relevant employers or employees paid into in some way. If we go down this road, what’s to stop those funds from being raided to shore-up the quasi-related pensions? Where do we draw the line?
Lastly, I worry about the claims that we are helping all coal miners with this proposal, when in reality, the policy does absolutely nothing for miners who are not members of the UMWA. According to the Bureau of Labor Statistics, nearly 11,000 workers in the coal industry have lost their jobs in the last year, largely due to this administration’s policies. Yet my colleagues have proposed a bill that would help only a portion of those people. And the bill wouldn’t help put those folks back to work, developing the energy source that generated 33% of America’s electricity last year. Instead, proponents of this bill are saying: if you’re a member of the United Mine Workers of America, we want to help with your healthcare and pensions. But if you’re not, or if you want your job back, then too bad.
Mr. President, I am not without sympathy for the UMWA coal miners. Coal miners play an integral part in our economy, and my colleagues have heard me say time and again that America runs on coal. Nowhere is that more evident than in my home state of Wyoming, which produces 40% of our Nation’s coal. In fact, we produce more coal than the second through sixth states in coal production combined.
I have the deepest respect for coal miners and am worried about those who have been laid off in Wyoming and across the country. I understand the unique healthcare needs of miners, and I respect the healthcare promise that this country has made to the miners over many decades. I have supported those healthcare needs in the past, most specifically by working across the aisle to shore-up the three UMWA healthcare funds back in the mid-2000’s. I believe it’s important that coal miners continue to receive quality healthcare. I also believe that it’s crucial that they, as well as all other Americans, have the opportunity to live out their retirement years in financial solvency. But I also want America to remain financially solvent. I don’t believe the efforts of my colleagues advocating for this UMWA bill help UMWA miners in a way that is fair to the federal taxpayers or coal miners across America.
I also know the troubling truth about some of America’s pension plans, as well as the faces of the participants within those plans. I’ve met them and heard their stories throughout my professional life. There are facets of our retirement system that we can fix to help retirees, but I remained concerned about the use of federal tax dollars to shore-up a specific pension plan and to make false promises.
Thank you, Mr. President. I yield the floor.