Americans for Tax Reform encourages lawmakers to oppose H.R. 397, the Rehabilitation for Multiemployer Pensions Act.
Congress should instead focus on enacting meaningful reform that addresses multiemployer pension plan funding, secures solvency of the PBGC and minimizes the burden placed upon taxpayers.
As ATR has previously noted, the multiemployer pension plan (MPP) crisis will require Congressional action to prevent somewhere between 1 million and 10 million plan beneficiaries from losing the majority of their pension benefits. With an unfunded liability over $600 billion, MPPs are set to begin failing at significant levels in the next 6 years and the Pension Benefit Guarantee Corporation (PBGC) is scheduled to reach insolvency by 2025. Congress has a narrow window to address this crisis and the longer lawmakers wait to reform MPPs, the larger the problem becomes.
Unfortunately, H.R. 397 fails to enact meaningful reform to the funding rules governing MPPs and enables a failing system to continue the same practices which brought us to the present crisis.
H.R. 397 would simply provide 30-year loans and new financial assistance in the form of grants to financially troubled multiemployer pension plans with few protections for taxpayers. H.R. 397 fails to secure workers’ benefits in the long-run and would only necessitate further government intervention in the future.
According to the Congressional Budget Office (CBO), H.R. 397 would cost taxpayers over $67 billion over the next decade. However, this number is likely to be significantly higher as the CBO score only accounts for a 10-year window rather than the 30-year repayment timeframe outlined in the legislation.
While promises were made to participants in multiemployer plans, they were made by private labor unions, not the government and certainly not taxpayers. Given the lack of guardrails surrounding these loans combined with the history of failed pension plans, there are few reasons to believe these loans would ever be paid back, making H.R. 397 an effective taxpayer bail out for MPPs.
ATR encourages lawmakers to vote “NO” on H.R. 397 and instead enact meaningful reform aimed at addressing the long-term stability of MPPs. A list of possible reforms can be found in ATR’s letter to the Joint Select Committee on Multiemployer Pension Solvency from last Congress.