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A congressional effort to squelch state-run retirement programs for private-sector workers may get a push over the finish line from the U.S. Chamber of Commerce.
The Senate is expected to approve a resolution in early May killing a Labor Department rule that gives states the green light to mandate such programs for workers at small businesses that don’t offer retirement plans.
The resolution has already passed the House, and President Donald Trump is poised to sign it once it passes the Senate. There was speculation from some observers that several Senate Republicans were wavering in their support for the resolution and that passage wasn’t assured. But the Chamber appears to be using its clout to push for passage—a prospect that makes it less likely there will be sufficient Republican no votes to defeat it.
The Chamber “may rate Senators on how they vote on the resolution,” Randel K. Johnson, the Chamber’s executive vice president for labor, immigration and employee benefits told Bloomberg BNA in an April 21 email. These ratings are used by the Chamber to evaluate which political candidates to support, Johnson said.
Most “politicians running in the next election will think five times before voting against the resolution—and then decide not to do it” to avoid the consequences of a low Chamber rating, Joshua Gotbaum, chairman of the Maryland Small Business Retirement Savings Board, which is responsible for overseeing that state’s program, told Bloomberg BNA in an April 21 email. Gotbaum is the former director of the Pension Benefit Guaranty Corporation and is now a guest scholar at the Brookings Institution in Washington.
Eight Republican senators are up for re-election in 2018, and a low rating may mean a loss of campaign contributions or a primary challenge.
There’s also a possibility that time will run out for Congress to pass the resolution. Congress’ authority for passing the measure is the Congressional Review Act. Under that law, the Senate has until about May 10 to overturn the Department of Labor rule. That could become an issue if Congress gets bogged down in negotiations to avoid a government shutdown.
The Obama-era rule allows state programs to impose mandates on small employers that don’t offer retirement plans without running afoul of federal law. Employers would be required to act as conduits for payroll deductions into individual retirement accounts established for the workers.
Under programs being implemented in eight states, the states facilitate the plans but the investments are managed by private-sector companies. Employers don’t contribute to the IRAs. Workers are automatically enrolled but can opt out at any time.
The Chamber has long opposed employer mandates from either the federal or state governments.
In addition, the Chamber said it opposes the state-run programs because of their complexity, lack of Employee Retirement Income Security Act protections and because the programs would cause employers to abandon future or existing ERISA-covered plans.
Supporters of the state-run programs say they would strengthen workers’ ability to save for retirement.
Speculation that passage of the resolution was at risk arose after a similar resolution aimed at blocking city- and county-run programs passed the Senate in March with only a 50-49 margin before being signed by Trump. Tennessee Republican Sen. Bob Corker broke party ranks in voting against that resolution. He told Bloomberg BNA then that he voted against the resolution because the federal government shouldn’t “stand in the way of states seeking to solve very real problems, especially in the midst of a growing retirement security crisis.” Corker is up for re-election in 2018.
Sen. Johnny Isakson (R-Ga.) was absent from the vote on the city-run programs. He is a co-sponsor of both resolutions, however, and is expected to vote to repeal the DOL rule.
It was thought by some observers that other conservative Republicans who similarly adhere to traditional states’ rights principles would find Corker’s rationale persuasive.
“Helping people save their own money for their own retirement used to be a popular conservative idea,” Gotbaum said. “Outside Washington, it still is, as we see from the fact that Republican state treasurers support automatic savings programs that their Washington representatives are trying to undermine.”
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Text of the resolution is at http://src.bna.com/muJ.
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