Looming pension shortfalls to complicate next shutdown fight

Source: Politico.com

The next potential sleeper cause of a government shutdown? Pensions.

Congress barely averted a shutdown last year amid a fight over miners’ health care. Now the looming collapse of pension plans for the miners — as well as thousands of Teamster truck drivers and food service workers — is fueling another, even more expensive, round of brinkmanship.

Key Democrats are vowing to fight for a fix as part of any forthcoming deal to fund the government. And they warn that if Congress doesn’t step in soon to forestall the insolvency of several key pension plans — including the massive Central States plan, which covers an estimated 400,000 union workers and retirees — taxpayers risk ending up on the hook for an even bigger multibillion-dollar rescue for the government’s pension guarantee agency.

But it’s far from clear the workers will get their rescue. Conservative Republicans will be loath to provide anything that looks like a bailout, particularly for union workers. And one of the Senate’s leading Democratic advocates for relief, Sherrod Brown of Ohio, is one of the GOP’s top targets ahead of his reelection campaign next year.

Brown said in a Monday interview that he sees the pensions fix as a “moral appeal” for action, along the lines of the Democrats’ push to help the young undocumented immigrants known as Dreamers.

“There are tens of thousands of Teamsters and mine workers and bakery and confectionery workers and carpenters that will see huge cuts in their pensions, and they start pretty soon” if a long-term solution isn’t reached, Brown said. “It’s not just fixing it and getting it done because the economics and the math get worse and worse. It’s because of what it does to families.”

Last year at this time, Brown joined West Virginia Sen. Joe Manchin and other Democrats in a standoff over adding long-term health care and pension help for retired miners to must-pass government funding legislation. Senate Majority Mitch McConnell (R-Ky.) ultimately included a rescue for retired miners’ health care in a $1 trillion spending deal earlier this year, but addressing their pensions wasn’t part of that package.

This winter, it’s more than retired miners who are facing potentially steep pension cuts if their plans aren’t shored up by early next year. The Teamsters are dispatching retirees to the Hill this week to lean on Congress to back a pensions rescue plan.

“We’re still going to do everything we can,” Manchin said in a Monday interview. “I’m pushing as hard as I can.”

Manchin underscored, however, that “it has to be a bipartisan fix.” His proposal to keep miners’ pensions afloat is backed by West Virginia’s GOP senator, Shelley Moore Capito, and GOP Rep. David McKinley, but Brown’s bill that would rescue other so-called multi-employer pension plans has yet to attract a Republican backer.

“We’re working with a lot of Republicans — some that are listening,” said Mike Walden, a retired Teamster who serves as president of the National United Committee to Protect Pensions. “So we’re trying to get them on board to at least get this passed or attached to the spending bill.”

Senators in both parties have been in talks for weeks about a way forward on the pension funding, one source in the upper chamber said. But the prospects for a deal by year’s end are highly uncertain, even though Senate Minority Leader Chuck Schumer (D-N.Y.) and House Minority Leader Nancy Pelosi (D-Calif.) listed “Americans’ endangered pensions” alongside aid to Dreamers as one of their key priorities in a year-end spending deal after a meeting last week at the White House.

And while Brown said he wants a fix included in a funding bill, he did not threaten to withhold his vote if the at-risk pensions aren’t addressed. Lawmakers likely have until the spring to act before certain beneficiaries begin to face lost benefits. “The Republicans are always the ones to shut the government down,” he said. “They’re always the ones threatening.”

Another obstacle, beyond the number of other high-profile priorities on Congress’ year-end to-do list, is the price tag of a broader pensions fix.

Brown’s proposal would empower the Treasury Department to make loans to the at-risk pension plans, which would use the money on safe investments to backstop the retirement plans that are currently at the greatest risk. Beyond those loans, the at-risk plans are expected to require as much as $25 billion in long-term assistance from the government-backed Pension Benefit Guaranty Corporation in order to avert insolvency.

But the PBGC is already projected to reach insolvency by 2025, and staving off that worst-case outcome would cost $101 billion over 20 years, according to the nonpartisan Congressional Budget Office.