Price tag to prop up pensions less than thought

WASHINGTON — The nonpartisan office tasked with predicting the price of legislation said Wednesday that a bill aimed at shoring up the nation’s multiemployer pension plans would cost taxpayers $34 billion between 2019 and 2028 — less than half the initial estimated costs.

The Butch Lewis Act, introduced by Sen. Sherrod Brown, D-Ohio, would provide a low–interest, 30– year loan to troubled pension systems with no cuts to benefits. Brown twice tried and failed to attach the bill to larger spending bills because of concerns by conservatives that such a loan program would be a bailout. The bill is named after a West Chester retiree who died in 2015 while fighting to save his pension.

Those who participate in the troubled plans have argued that saving the pensions isn’t a bailout, but an obligation. They said they paid into those funds over the course of their careers, often sacrificing pay raises in order to have more invested in their retirement.

The fact that the score is so low — lower, in fact, than simply shoring up the government agency that insures such pensions — may help shape a debate in Congress over how best to save the troubled pensions and will likely spur Democrats to dig in on that solution as the best alternative for retirees whose pensions are at risk.

The multi-employer plans — plans that allowed multiple employers to pool their resources to provide retirement for their workers — were negotiated by unions and administered by trustees selected by the union and employers. For years, they ran at a surplus. But market crashes and trucking deregulation as well as other factors put many of those funds at risk. According to the Pension Rights Center, some 10 million workers nationwide are served by 1,400 multi-employer plans. Of those, 150 to 200 plans, covering 1.5 million workers and retirees, could run out of money within the next 10 years. Among them: Central States, a 400,000-member Teamsters union that includes 48,000 Ohio members. In all, some 60,000 Ohioans are in at-risk plans, according to Brown.

The score — offered by the Congressional Budget Office in a memo to lawmakers — is far lower than earlier estimates, which put the cost as high as $100 billion.

It’s also far cheaper than propping up the Pension Benefit Guarantee Corporation, the government agency that insures multiemployer benefit plans. A previous CBO estimate put the cost of bailing out the PBGC at about $101 billion, and last November PBGC director Thomas Reeder testified before a House subcommittee that bailing out the agency would cost about $78 billion.

Brown, the co–chair of a bipartisan, HouseSenate panel tasked with solving the pension crisis, has pushed the Butch Lewis Act as a starting point for negotiations and said he’s open to other suggestions. But he and other Democrats on the panel are reluctant to simply prop up the PBGC, arguing that even if the government spent billions doing so, retirees in the troubled multi-employer plans would see their benefits cut. And the PBGC benefits would only become available after the troubled pension plans have failed, putting businesses at risk of bankruptcy as they attempted to pay what they owe their retirees.

“My one and only priority is solving this problem, and I am open to any idea that gets the job done,” Brown said in a written statement released Wednesday. “What this score confirms is that in order to pass the best solutions for workers, retirees, businesses and taxpayers, we should start negotiations with proposals that meet the standard set by the Butch Lewis Act.”

Both Brown and Sen. Rob Portman, R–Ohio, serve on the Joint Select Committee on the Solvency of MultiEmployer Pension Plans. The committee has until late November to craft a plan that could be put before the House and Senate for an up–or–down vote, with no ability to amend the agreement.