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WSJ: House Moves to Combine Pension Measure With Spending Bill

By John D. McKinnon

House lawmakers Wednesday evening took the first steps toward approving legislation aimed at averting a crisis that threatens hundreds of thousands of retirees’ pensions.

The House Rules Committee voted to combine the measure with a vital year-end spending bill and send it on to the House floor, potentially putting it on a fast track to approval. The full House is expected to vote on the spending package Thursday and send it to the Senate.

The far-reaching pension bill—made public for the first time on Tuesday night—was generating opposition from some, and adding it to the spending bill would only complicate both measures. But it is questionable how much leverage critics would have to block the pension legislation if it becomes part of a funding bill that keeps government running and avoids a shutdown.

While the bill would result in lower payments for some pensioners, it also would allow Congress to address in rapid fashion what otherwise could turn into a crisis. In basic terms, the bill is aimed at allowing some financially troubled pension plans to trim benefits for current retirees, to avoid running out of money within a few years.

Many lawmakers of both parties, as well as employers and some affected unions, are supportive, saying the measure is needed to avoid wiping out benefits for affected retirees altogether. It also averts the need for a costly and politically dicey federal bailout, lawmakers said.

“This pension deal is a huge, huge victory for the American people and the American taxpayer,” Rep. Tom Cole (R., Okla.) said at Wednesday’s Rules Committee meeting.

Some Democrats in particular were uneasy with the solution, saying it is being rushed through Congress and could create a dangerous precedent encouraging other retiree benefit cuts.

“This is unprecedented and I worry about the impact on retirees and the slippery slope we’re about to head down,” said Sen. Ron Wyden (D., Ore.), the Finance Committee chairman, in a statement. “I am working hard to protect retirees’ pensions, and jamming this bill through Congress virtually sight unseen is no way to solve this issue.”

Rep. Gene Green (D., Texas) warned that he might vote against the spending bill because of extraneous provisions such as the multiemployer pension measure.

“You can’t load that Christmas tree up, because it will fall down,” he said.

The proposal is aimed at forestalling a looming crisis in a type of pension that is common in trucking, retail, construction and some other industries. These plans, known as multiemployer plans, are typically managed jointly by unions and employers.

Amid broad economic changes and light government oversight, some large multiemployer plans have become badly underfunded and could run out of money within a few years. The collapse of just one or two of them in turn would quickly bankrupt a federal safety-net program that backs up all of the plans, which cover more than 10 million people.

Two of the biggest troubled plans are the Teamsters’ Central States fund and a United Mine Workers plan.

The safety-net program’s unfunded long-term liabilities from expected failures of multiemployer plans soared from $8 billion last year to $42 billion in this year’s annual report of the Pension Benefit Guaranty Corp.

But the measure under consideration requires lawmakers to impose some painful remedies.

Senior groups including AARP have objected, arguing the measure would overturn long-standing federal protections for retiree benefits.

In response, lawmakers said they are creating special protections for benefits of retirees who are disabled or are 75 and older. Lawmakers also have given participants the right to vote on proposed benefit cuts. But their vote could be overridden in cases where a plan’s failure would threaten the entire safety net.

Some unions also have objected to premium increases that are included. Rep. John Kline (R., Minn.), a chief architect of the plan, said on Tuesday that premiums would increase to $26 per worker from the current $13. That is down from earlier proposals, however.

Still another provision could reduce pension-contribution liabilities for delivery giantUnited Parcel Service Inc., and potentially others. That drew fire this week from Teamsters head James P. Hoffa, who criticized the provision as a “secret backroom deal” for UPS.

Lawmakers said on Tuesday that UPS had sought a broader exemption but didn’t get it. Mr. Kline said lawmakers included provisions to shield some employers from “pretty crushing” liabilities, however.

UPS disputed the Teamsters’ characterization of the measure, saying it didn’t initiate the legislation and has only recently seen specifics.

The measure was dividing other unions. Several in construction and in food and retail were pushing for approval, but others were critical.

To read the full article online, click here.

Posted 09:05AM on December 11 2014 by Jessica
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