Mr./Madam President, I come to the floor to discuss legislation approved by the House of Representatives that would leave taxpayers holding the fiscal bag for a specific category of underfunded private pension plans.
Throughout most of my professional life, from my days as an accountant, to my service as the Mayor of Gillette, Wyoming, and in the Wyoming legislature, and to my membership on the Senate Health, Education, Labor and Pensions and Finance Committees, I’ve worked on pension policy. This experience has taught me many things about retirement security and the need for sound planning.
My concern with the House-passed bill is not just with its immediate costs to taxpayers, but also what it would mean down the road. This bill would send the signal to private pension plans that regardless of how underfunded they are or how risky their investments, the taxpayer will be there to bail them out.
Pensions are an important source of retirement income for millions of Americans, but thousands of private sector multiemployer pension plans are seriously underfunded. These are plans sponsored by a group of private employers as part of a collective bargaining agreement with their employees and are separate from the single employer plans, which are generally better funded.
According to the Pension Benefit Guarantee Corporation, multiemployer pension plans are underfunded by more than $637 billion. Out of the 1,247 multiemployer pension plans that we have information on, 1,235 are underfunded.
In July of this year, the House of Representatives passed the Rehabilitation for Multiemployer Plans Act of 2019, which would bail out some of the worst-funded multiemployer plans at the taxpayers’ expense. The bill would provide a combination of low-interest loans and direct cash payments to private sector multiemployer plans that are currently insolvent or designated as “critical and declining.”
The official Congressional Budget Office cost estimate of the bill says it would increase deficits by $49 billion over the next ten years, but as a separate analysis I requested from the budget office points out, the true cost and risk to taxpayers is actually much higher.
First, the bill includes a handful of revenue provisions to help offset its cost, but the House included these same provisions in a separate bill it passed earlier this year. Without this $16 billion in double-counted revenues, the bailout bill’s price tag jumps to $65 billion over the next decade.
Second, the analysis projects that most pension plans would not fully repay their loans without the grant assistance provided in this bill. What that means is that these plan providers are going to use taxpayer dollars to help repay loans made to them by taxpayers. That’s quite the deal.
Further, the budget office’s analysis shows that even with these taxpayer-provided grants, one-quarter of plans receiving loans under the House bill would become insolvent within the 30-year loan period. CBO projects that most of the other plans would become insolvent in the decade after they repay their loans. All this begs the question, “Then what?”
Third, as I alluded to a moment ago, much of the bill’s cost doesn’t show up in the first ten years. When you consider the total amount of new spending the bill authorizes over the next several decades, along with the added interest costs we will have to pay, the total cost would be more than $100 billion.
And to add insult to injury, the House bill would not resolve the larger multiemployer pension crisis. The bill would only apply to plans that are currently insolvent or “critical and declining.” It would not address the many other plans that are treading water now but will face insolvency in the future. And, you can bet that if this bill goes through, those plans will be expecting their bailout when the time comes.
All of this is setting up for additional bailouts in the future, potentially putting taxpayers on the hook for hundreds of billions of dollars.
Only about 12 percent of private sector workers participate in a pension plan, and an even smaller number participate in these multiemployer plans. This bill would put the vast majority of workers who don’t have their own pension plans on the hook for bailing out the small percentage who do. That hardly seems fair.
Hardworking Americans overwhelmingly agree that we can’t afford a pension bailout. A recent poll shows a majority of voters oppose a taxpayer-funded bailout of unfunded union pension plans. This is because voters know a bad deal when they see it.
Before I close, I want to remind my colleagues that the federal government already has its own unfunded promises that need addressing and these are programs that will affect the vast majority of Americans. The Social Security trustees estimate that program’s long-term benefit promises exceed its dedicated tax revenues by almost $17 trillion. And Medicare’s long-term spending is projected to exceed its dedicated taxes and premiums by more than $40 trillion.
We need to work to find solutions to address the federal government’s own funding shortfalls and not bailing out underfunded private sector pension plans.
Thank you, Mr. President. I yield the floor.