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A Senior House Republican Discusses the Pension Crisis and the Need for Serious Reform

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Washington, July 10, 2019 | comments
USA Daily Chronicles

The top Republican on the House Ways and Means Committee Kevin Brady (R-TX) delivered the following opening statement at a Full Committee Markup of Multiemployer Pension Legislation.

CLICK HERE to watch the markup.

Remarks as prepared for delivery:

“Thank you, Chairman Neal, for calling today’s meeting.

“Republicans agree – we are in a multiemployer pension crisis.

“Roughly 130 union-managed pension funds covering over 1.3 million workers are severely underfunded; and are set to be completely drained over the next decade.

“This crisis is not just limited to these failing plans.

“When all these plans are considered, less than half (43%) of the promises already made are actually funded – meaning there is roughly $638 billion of promised dollars for these workers’ retirement that simply don’t exist.  They are imaginary.

“Folks who worked hard their entire life – and their families – relied on the plan leaders to manage the plans responsibly, to keep their advertised promises to workers. 

“This should be a pretty straightforward task. But instead of delivering on their only obligation, the trustees drastically overpromised – and now can’t deliver for their union workers. 

“This lousy financial mismanagement is the root of this crisis.  That is what we should be focused on fixing.

“I’ve been a construction worker, a meat packer, and a sheet metal worker in a manufacturing plant.  I know how hard these men and women work. 

“Listen to me carefully: workers in these insolvent union-managed pension plans deserve a real solution.

“Unfortunately, this bill today doesn’t make these failing plans more stable, doesn’t end underfunding, or make them more solvent over time.

“Forcing hand-picked plans to accept crushing balloon payment loans they can never hope to repay – while putting off necessary reforms to make them solvent – hurts workers, businesses, and innocent taxpayers who did nothing to create these failed plans.

“It’s the workers we worry about the most.  It was wrong for some elected union leaders and irresponsible plan trustees to promise what they knew they couldn’t deliver.

“Didn’t they know every family depends on every dollar in retirement?

“Not all elected union leaders and plan trustees were irresponsible.  But for those who were, it is their workers whose retirement security is now at risk.

“What workers in this jam need now is for Congress to come up with a serious, bipartisan solution. 

“Today’s bill is well intended.  But it isn’t the answer; in some cases, it could make it worse for workers down the road.

“We cannot rely on the same people who created this mess to not do the same thing they’ve always been doing, hurting the same workers they’ve already let down.

“Not to mention, this Democrat bill attempts to completely reverse bipartisan 2014 legislation that began to address this crisis.

“Those reforms allow certain plans to cut benefits in order to regain solvency over time.  If we were serious about solving this crisis, we should build on this and other policies to continue to help union workers.

“Unfortunately, we find ourselves debating legislation that double-downs on the worst aspects of the current multiemployer pension system. 

“To think the government can fully guarantee pension promises based on a 7 or 8 percent annual return – that’s the same fantasy that got us into this mess.

“Instead of working to fix what is broken in this system, today’s partisan legislation is a pat on the back to elected union leaders at the expense of workers’ retirement and would make the pension crisis much worse.

“We have tried to kick the can down the road before.  In 2006, Congress waived required contributions for plans who claimed they can’t make required contributions.

“In 2007, plans were $193 billion underfunded; in 2015 plans were $638 billion underfunded.

“PBGC, the federal insurer of these plans, went from a deficit of $739 million in FY 2006, to a deficit of $54 billion in 2018 – a increase of over 70-fold.

“Workers deserve better.  We should be working to ensure that plans can make good on their promises.

“This means eliminating the various gimmicks many of these plans currently use.

“Plans must also accurately measure pension promises in a manner similar to insurance companies making those same promises.

“Additionally, we must focus on accountability.  A promise is a promise, and companies need to be on the hook for every pension promise made to workers.  

“And finally, we need to prevent severely underfunded plans from digging themselves into even deeper holes – under the guise of protecting workers. 

“This means walling off contributions that fund new promises—that almost assuredly will be broken—instead of perpetuating the Ponzi scheme under which retirees are paid out of the contributions that are supposed to fund new benefits for younger workers.  That’s double counting.

“In truth, the underlying problem for these plans is severe mismanagement, not unforeseeable market circumstances. We know that because pension plans for single businesses have fully recovered from the financial crisis . . . plus more. 

“Chairman Neal is right to bring this issue forward. We may strongly disagree with this proposal; but we are committed, and willing, to come together to help these workers, our neighbors.

“Let’s start over and work together to develop serious bipartisan reforms to this crisis.”

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