A life of hard work should bring more than an old age in poverty. President Gerald Ford underwrote that promise in 1974 by signing the Employee Retirement Income Security Act.
The law authorized the use of premiums, not tax dollars, to insure private-sector pensions through the federally chartered Pension Benefits Guaranty Corp. Secure in the knowledge that Congress had their backs, unionized workers often gave up wages in favor of earning retirement benefits.
Now, like any 44-year-old structure, the PBGC needs repairs.
If Congress fails to shore it up, 1.5 million people — including almost 24,000 coal miners and Teamsters in Kentucky — will face cuts in their retirement income. Millions more would suffer if Congress allows the pension backstop to collapse under the weight of 200 teetering plans expected to fail within a decade.
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Two years ago, Senate Majority Leader Mitch McConnell killed a stabilization plan for coal miners’ pensions, despite bipartisan support. McConnell has insisted that any fix be part of a broader reform. His spokesman referred questions to the Senate Finance Committee.
Happily, a member of that committee, Sen. Sherrod Brown, D-Ohio, is proposing a broad reform, one Democrats want in the spending plan that Congress must approve by Jan. 19.
Under Brown’s plan, Treasury would make low-interest loans to pension funds that have been hammered by economic changes and stock market crashes. The infusion of capital would allow them to make long-term investments while paying benefits. After 30 years, the pension funds would have to repay the loans. Pension funds could borrow no more than they can be expected to pay back and would have to put the loans in safe investments. A new Pension Rehabilitation Administration would require evidence that borrowers are regaining solvency.
Brown’s bill also acknowledges that loans alone will not restore pension funds in the most critical condition, including that of the United Mine Workers of America which covers almost 10,000 Kentuckians, and the Central States Pension Fund which has 400,000 participants, including 14,188 in Kentucky. For them, Brown proposes an infusion of taxpayer dollars into the Pension Benefits Guaranty Corp.
The cost has yet to be determined. Brown is awaiting an analysis by the Congressional Budget Office, but the longer Congress delays, the more expensive the fix becomes. Brown’s plan would be far cheaper than letting the PBGC fail, which the CBO says would cost $101 billion, borne by retirees, taxpayers or both.
Brown has dubbed the bill the Butch Lewis Act, in honor of a Vietnam vet who worked to preserve his fellow Teamsters’ pensions. He died in 2015. The bill could bear the name of thousands of workers who risked their lives in the dank underground or through long nights moving goods that kept the economy going — workers who held up their end of the bargain, but who now, through no fault of theirs, could lose the benefits they earned and that they thought the government had insured. The personal pain and economic ripple effects of lost pensions would be especially severe in the coal-mining regions that have supported McConnell and President Donald Trump.
Anti-union think tanks sneer at Brown’s plan as a “bailout” that would do nothing for most taxpayers. It’s no more a bailout than the loans Congress rushed to the bankers who caused the crash of 2008, except the aid would go to the crash’s victims not its perpetrators.