Fall is almost upon us. Kids are headed back to school. Political campaigns are heating up in earnest. And, way too often big and important issues go ignored while the focus is on the sensational and personalities. One such issue is the Multi-Employer Pension Plan (MEPP) crisis.
You never heard of the crisis? Not sure what a MEPP is? Well, a MEPP is a plan negotiated by workers in a single bargaining unit who work at more than one employer. Some of the workers might be employed by a shipping company. Others at a warehouse. These plans were created back in 1974 when our economy looked vastly different than it does today.
As employers went out of business or were merged with other companies, the workers and retirees covered by a given MEPP became the responsibility of the companies that remained in the MEPP. Obviously, this generates a huge unfunded burden on a MEPP, not to mention on the companies that remain in the MEPP.
Six million retirees, along with four million workers, rely on MEPPs. One third of the ten million participants are in plans that are headed either towards a funding deficiency or outright insolvency. More than one million are in plans that are projected to be insolvent within the next 20 years. The so-called backstop, the Pension Benefit Guaranty Corporation (PBGC) will be insolvent in less than a decade.
In Minnesota alone, there are 20,850 retirees and actives currently in one of the most troubled of the plans, Central States. There are 128 companies with a presence in Minnesota that pay into Central States. These employers are local warehouses, auto dealers, grocers, and construction companies.
What are the stakes beyond massive cuts in benefits for those who are part of Central States, if the fund goes insolvent? A recent study authored by Alex Brill, former chief economist and policy director for the House Ways and Means Committee, projects it would mean a loss of nearly $175 million in pension income, more than 2500 lost jobs, a hit of more than $20 million in state and local taxes, and nearly $85 million in federal taxes.
Clearly, we are talking about something that is serious. Congress has formed a Joint Select Committee to come forward with a report no later than November 30 of this year. Senator Tina Smith of Minnesota is one of the members of the Committee.
Given how grave the challenge is to find a solution that is fair and reasonable to workers, retirees, and employers, as well as the American taxpayer, this is no time for lines in the sand or rigid and predictable partisan posturing.
Simply stated, Democrats must get past the idea there will a massive federal bailout that would send a bill in the neighborhood of $100 billion to the American taxpayer. Republicans need to move beyond there being absolutely no role of the federal government in resolving the crisis.
There are several options that would involve sharing the sacrifice, protecting the American taxpayer, and putting troubled MEPPs on a path of long-term solvency. We need Senator Smith, and the entire Joint Select Committee, to get down to business and sort through the options in time to meet the November 30 deadline. Kicking the can down the path should not be a consideration. The longer we wait to fix things, the harder and more expensive it will be. Millions of Americans are depending on adults doing the right thing. Congress should not disappoint them.
Connie Mack IV is a former Member of Congress from the State of Florida. Currently, he serves as the Chairman of Protect Our Workers Earned Retirement (POWER!) a coalition of employers, workers, and retirees committed to finding a fair and reasonable solution for everyone, including the American taxpayer.