Pension Crisis Fix to Cost $34B, Far Less Than First Estimated (1)

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By Madison Alder

A potential legislative solution to the crippling insolvency among multiemployer pensions would set the government back $34 billion over the next 10 years, Sen. Sherrod Brown (D-Ohio) said Sept. 12, citing the Congressional Budget Office.

The finalized estimate for the Butch Lewis Act of 2017 (S.2147), which would provide government-backed loans to financially struggling plans while avoiding cuts to retiree benefits, is significantly less than a previous 10-year estimate that the measure would cost the government up to $100 billion, Brown’s office said.

The estimate comes two months before a bipartisan committee set up to solve the mutltiemployer pension crisis needs to find a solution that will get a priority vote in Congress. The super-committee last met in July. The multiemployer pension program operated by the Pension Benefit Guaranty Corporation, which insures public pensions, is already $65 billion short.

“What this score confirms is that in order to pass the best solutions for workers, retirees, businesses and taxpayers, we should start negotiations with proposals that meet the standard set by the Butch Lewis Act,” Brown told Bloomberg Law in an emailed statement Sept. 12. Brown is a co-chair of the bipartisan committee and co-sponsors the bill with Rep. Richard Neal ( D-Mass.).

The estimate reflects several tweaks to the original bill, including loan eligibility restrictions, clarification that government assistance is the last option, and an incentive to pay off loans sooner.

“The heart of the bill remains the same: It solves the pension crisis for workers, retirees and businesses without cuts to the benefits they earned and it does so for less than half the cost of the alternative,” Jennifer Donohue, a spokeswoman for Brown, told Bloomerg Law in an email.

The other half of the committee’s leadership, however, wasn’t sold on the number’s legitimacy.

Sen. Orrin Hatch (R-Utah), co-chair of the committee with Brown, “looks forward to reviewing a complete CBO analysis once modified bill text is released as he has not seen modified bill text; nor has obtained any formal estimate from CBO,” Hatch spokeswoman Nicole Hager told Bloomberg Law in an email Sept. 12.

A spokeswoman for the CBO didn’t immediately respond to Bloomberg Law’s request for comment.

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