Senate aides continued their whirlwind of meetings with the chamber's parliamentarian, Elizabeth MacDonough, on Thursday as Democrats ready their $1.9 trillion coronavirus relief package for the floor of both chambers.
The discussion Thursday morning involving aides to the Finance, Budget and Health, Education, Labor and Pensions panels centered on a section of the House-drafted bill that would pump some $86 billion into multiemployer pension plans that are bordering on insolvency.
It's a relatively small piece of the overall package, but the pension fix has huge significance for Democrats' union backers, and among the original cosponsors of similar legislation in the last Congress was Joe Manchin III, D-W.Va., one of the pivotal votes in the 50-50 Senate.
Republicans, who argue the measure is a costly "bailout" and payoff to Democratic constituencies and donors, have made the argument that the measure runs afoul of the Senate's "Byrd rule" which limits deficit impacts and prohibits extraneous material.
The House provisions were reported by the Ways and Means Committee, but would affect the Pension Benefit Guaranty Corporation and the 1974 Employee Retirement Income Security Act, or ERISA, which is under the jurisdiction of Education and Labor and HELP.
House Democrats will incorporate a manager's amendment at the House Rules Committee that would add references to the Treasury Department, which would administer the new "special financial assistance" program with the PBGC, as well as conforming changes to the internal revenue code. There's also a batch of tax code changes in the pensions title affecting single employer pension plans that implicate Ways and Means and Finance jurisdiction.
The jurisdictional issue is important because under the fiscal 2021 budget resolution, Finance has nearly $1.3 trillion worth of room for deficit spending, versus $305 billion in HELP. So if the pension provisions get dumped into HELP's lap, that could squeeze out other education and health care priorities in the package.
It wouldn't be the first time that pension law changes affecting both ERISA and the tax code have been included in reconciliation under Finance Committee jurisdiction. Other examples include the 2001 tax cuts; the 1997 balanced budget deal; and the 1990 deficit reduction law.
Union pension plans' financial woes are putting such a strain on the PBGC that its multiemployer insurance fund is in danger of running dry by 2026. At that point, pension benefits for workers as well as those already retired would face cuts. The Teamsters union’s Central States fund, with some 360,000 participants, is expected to be insolvent in 2026, for example.
According to the Congressional Budget Office, under the new grants program in the reconciliation bill, the PBGC could continue to pay full benefits into the 2040s.
The pension fix also has the support of organizations that represent both companies and unions.
“While not perfect, the proposed multiemployer pension plan solution will keep an ugly COVID-intensified situation from becoming much worse,” according to a statement Thursday from the Retirement Security Coalition, which includes the U.S. Chamber of Commerce, the American Benefits Council, the United Association of Plumbers and Fitters and UPS.
The issue has been around for years, however, and President Joe Biden didn't include a pension fix in his proposals for a $1.9 trillion virus aid package. That's given critics an opening to blast the measure as unrelated to COVID-19 relief and unneeded on an emergency bill.
At the Ways and Means markup earlier this month, Rep. Tom Rice, R-S.C., argued that because federal law allows these pension plans to make “unrealistic” assumptions on investment returns, the plans habitually fall short of those assumptions.
The result is that unions promise retirement benefits they won’t be able to afford, and employers get away with making much lower contributions than are needed to meet those promises, Rice said.
“They make these promises to these workers that they’re going to pay them x dollars when they retire, and they don’t put enough money in the plans to cover that," Rice said. "And the plans collapse."
Aides were set to discuss continuing health care coverage provisions for laid-off workers under the federal law known as COBRA at a separate meeting Thursday.
That's another issue that both the tax-writing and health and labor panels have split jurisdiction over. It was unclear if legislative language to require employers to notify workers of their rights to the new 85 percent federal subsidies under the provision would make the cut under Byrd as well.
Meanwhile, Capitol Hill was still on edge waiting for guidance from MacDonough on whether the House bill's minimum wage increase to $15 over five years would pass the Byrd test.
On the Senate floor, C-SPAN picked up Brian Schatz, D-Hawaii, asking MacDonough if she'd made a decision. "We haven't released anything," MacDonough replied.
Katherine Tully-McManus contributed to this report.