This week, Congress took an important step forward to protect the benefits of retirees in multiemployer pension plans facing insolvency.  On Tuesday, June 11, 2019, the House Committee on Education and Labor marked-up the Rehabilitation for Multiemployer Pensions Act (H.R. 397), better known as the “Butch Lewis Act.”  Among other things, the bill would create a federal loan program within the Department of Treasury authorized to finance loans to certain multiemployer plans facing insolvency.  At the conclusion of the mark-up, members voted along party lines to move the bill out of Committee.

The Butch Lewis Act was introduced during the first week of the 116th Congress by Rep. Richard Neal (D-MA), Chairman of the House Ways and Means Committee, and Rep. Peter King (R-NY).  Proponents of the bill—which has bipartisan support and over 170 co-sponsors—seek to prevent the insolvency of certain plans in critical and declining status, thereby protecting retirees’ benefits without requiring cuts.  Opponents, however, have criticized the bill for not addressing structural problems in the multiemployer pension system.

During the mark-up, Education and Labor Committee Chairman Bobby Scott (D-VA) emphasized that the collapse of the multiemployer pension system would cost far more in taxpayer dollars than congressional intervention, as retirees who lose their benefits would be forced to rely on social safety net programs and employers would be pushed to cut jobs.  According to a fact sheet issued by the Committee, the cost of congressional inaction, in terms of lost tax revenue and increased social safety net spending, would be between $170.3 billion and $241.3 billion over a 10-year budget window—and between $332 billion and $479 billion over a 30-year time horizon.  The Congressional Budget Office has not yet scored the cost of H.R. 397, but the office issued preliminary estimates for versions of the bill last year that ranged from $34 billion to $100 billion.

Although the Butch Lewis Act advanced out of Committee, the mark-up evidenced the difficult path the bill will face if it is to become law.  Ranking Member Virginia Foxx (R-NC) strongly criticized H.R. 397 as a political “ploy” by Democratic members on the Committee, and opined that it would “meet certain death” if it reaches the Senate.  This sentiment was echoed by Rep. Tim Walberg (R-MI), the Ranking Member of the Subcommittee on Health, Employment, Labor, and Pensions.  The Republican response to H.R. 397 likely stems, in part, from the fact that a draft proposal by the Joint Select Committee on Solvency of Multiemployer Pension Plans—a special bipartisan Committee convened last year—did not include a loan program, indicating a lack of bipartisan consensus around such an option.

The Butch Lewis Act cleared an important procedural hurdle this week, but the process revealed the challenging road ahead—both for the bill, and for other proposals to reform the multiemployer pension system.  In the near term, the House Ways and Means Committee likely will hold its own mark-up of H.R. 397 in the coming weeks.  Covington will continue to monitor these developments closely.