The Committee for a Responsible Federal Budget produced a blog the other day. Here is the first paragraph –
“The House Ways & Means Committee is considering pension reform legislation that CBO estimates will add $64 billion to deficits over the next ten years and could ultimately cost substantially more because of a relatively gimmicky loan approach that allows pensions to pay back only interest for the next 29 years and requires a massive balloon payment in year 30.”
The fact that the bill is proposing ONLY a $64 billion loan package to be spent over 10 years seems a drop in the bucket given the estimated federal fiscal year budget deficit (10/1/18 to 9/30/19) for 2019, which is estimated to be $1.09 trillion, and 2020’s budget shortfall that will grow an estimated 1% on top of that figure.
Would they rather have these pension systems fail and then witness nearly 1.3 million American plan participants fall onto the social safety net? Furthermore, Cheiron (pension actuary) has calculated that 111 of the 114 pension systems tested in support of the original Butch Lewis Act legislation would be able to make the balloon payment after all was said and done. If so, the “cost” is dramatically lower than the estimated $64 billion. The roughly $6.4 billion to be spent annually to sure up these plans represents 6/10s of 1 basis point per annum.
How about we take care of the people who were promised a benefit and are now facing the growing likelihood that this benefit will be lost or severely reduced through no fault of their own and instead have the Committee for a Responsible Federal Budget tackle the more significant areas of our budget that that seem to have costs spiraling out of control.