Democratic Lawmakers Urge Quick Passage of Butch Lewis Act

House and Senate Democrats warned that, if nothing is done, many of the more than 200 multiemployer plans in the U.S. are projected to fail within just the next 10 years.

Congressional Democrats working on labor and retirement issues convened Wednesday morning to call on their Republican majority colleagues to consider immediate stand-alone passage of legislation, known as the Butch Lewis Act, which would, Democrats argued, “ensure the pensions that American union workers have earned over a lifetime of work are protected into the future.”

Democratic Senators and Representatives laid out the Butch Lewis Act as a key tenant of their so-called “Better Deal” platform. The legislation is named for Butch Lewis, the former President of Teamster Local 100 and “a leader of the fight to save Teamster pensions.” Lewis died in December 2015 and is survived by his wife, Rita Lewis, who has continued to work directly with Congressional Democrats on this issue.

For context, in December 2014, Congress approved and then-President Barack Obama signed a spending bill that included provisions that allow for potentially significant cuts to financially troubled multiemployer pensions. Under new provisions in the law, the pension benefits of certain retirees could be cut by 30% or more, and this has already occurred. Before the law was changed, it was illegal for an employer to cut the pension benefits collectively bargained retirees have earned.

Beside a long list of Democrats, speakers endorsing the bill’s passage Wednesday morning included current Teamsters President Jim Hoffa, as well as rank and file retired union members. The speakers sounded dire warnings that numerous multiemployer pension plans—including the massive Central States Teamsters Pension Plan, the United Mine Workers Pension Plan, and over 200 more plans impacting workers in every state in the country—are on the brink of failure. The longer action is delayed on this challenge, the more severe will be the consequences for the retirees and employers involved, and for tax payers.

Speakers agreed that, if nothing is done, many of these multiemployer plans are projected to fail within just the next 10 years. The result of significant cuts to these pensions would be economically devastating, Democratic lawmakers and union leaders argued. For context, in 2015, multiemployer participants were paid $241 billion in wages and pension benefits and those participants contributed over $35 billion in federal taxes and an additional $8.4 billion in state and local taxes.

Democrats argued that, if pension plans are allowed to fail, not only will employers no longer be able to pay promised benefits, but taxpayers would be at risk of having to pay billions. Already the Pension Benefit Guarantee Corporation (PBGC), the government sponsored insurance company for multiemployer pensions, has an exposure of $59 billion and is projected to become insolvent by 2025. The Congressional Budget Office estimates that the cost of backstopping the PBGC, should it fail, would be $101 billion dollars over 20 years.

Conventional political wisdom suggests the bill is unlikely to earn immediate consideration by House and Senate Republicans, who are busy pushing through a major tax cut prior to the start of the 2018 midterm election cycle. However, during a long list of recent interviews, retirement industry analysts and lobbyists have frequently pointed out that more and more lawmakers on both sides of the political aisle are coming to understand the time is ripe to follow up on the highly successful Pension Protection Act (PPA) of 2006. And so, there could be some political surprises brewing for 2018, whether involving the Butch Lewis Act or another piece of timely retirement-focused legislation, known as the “Automatic Retirement Plan Act of 2017.”