Will It Pass?

The House of Representatives is preparing to vote as early as tomorrow on a proposed $3 trillion stimulus package (aka HEROES ACT) that consists of 1,815 pages of what Senate Republicans are calling the Democrats ultimate “wish list”. Among the proposals is much needed financial support for struggling multiemployer pension plans. We’ve highlighted for years why addressing this situation is so critically important. However, I am concerned that this all-encompassing legislation will not see the light of day, as Senate Republicans are already proclaiming that this legislation is dead on arrival.

As you may recall, the House passed in July 2019, through bi-partisan support, H.R. 397 (the Butch Lewis Act). I would prefer that this legislation be moved by the Senate before tackling the Heroes Act, which will likely be stalled, watered down, or not acted on at all. The participants in critical and declining multiemployer plans have been fighting for government support for years, and any further delays will ultimately create a situation that sees more than 1 million Americans lose their promised, and EARNED, benefits.

The market correction that we are living through right now has further negatively impacted the funded status of these struggling plans and shortened the likely time frame for insolvency and their ultimate destiny at the PBGC, where promised benefits go to die.

A lot has been written about our ability as a nation to incur further increases in the “deficit”. I’d like to encourage anyone that hasn’t taken the time to study Modern Monetary Theory (MMT) to do so, as you will find that a public debt results in a private surplus. Are we spending too much at this time? Only time will tell, but we need to do what we can to save our economic future, which has been crushed with these lock-downs.

I am blessed to have as a friend and former colleague, Charles DuBois, who invited me to learn about MMT some 7 or 8 years ago. I continue to learn so much from Chuck. He shared with me the other day the following:

“If, and only if, a nation is operating below full usage of its real resources, then public sector deficits can be increased with no negative consequences – currently or in the future.” AND
“This proposition holds only for nations with their own free-floating currency, no debt denominated in a foreign currency and an operating central bank e.g. US, UK, Canada – but not the EU, etc.”

Furthermore, inflation is the constraint. We need to insure that we have the economic capacity to meet the heightened demand that the Federal deficit will produce. There are roughly 37 million unemployed Americans anxious to get back to work to help produce those needed goods.

Bottom line: We shouldn’t be focused on the “cost” of saving these critically important pension systems for fear that the deficit will impact our children’s and grandchildren’s ability to get the goods that they will demand. That myth carries no weight, as there is no crowding out impact.

3 thoughts on “Will It Pass?

  1. I am asking you respectfully.For the sake of all retirees.. Please tell me I am wrong… HOW DO YOU SEE IT???
    SEC. 40106. PBGC GUARANTEE FOR PARTICIPANTS IN MUL-6TIEMPLOYER PLANS. Section 4022A(c)(1) of the Employee Retirement In-8come Security Act of 1974 (29 U.S.C. 1322a(c)(1)) is amended by striking subparagraphs (A) and (B) and inserting the following: ‘‘(A) 100 percent of the accrual rate up to $15, plus 75 percent of the lesser of— ‘‘(i) $70; or ‘‘(ii) the accrual rate, if any, in excess of $15; and ‘‘(B) the number of the participant’s years of credited service. ………………………………………………………………………………………………..

    Lets UNFUZZY the Math.. ‘(A) 100 percent of the accrual rate up to

    $15….You will get 100% of the first $15…… AND 75 percent of the lesser of—

    ‘‘(i) $70; or

    ‘(ii) the accrual rate, if any, in excess of $15 ……………………………………………………………. OK lets stop here..

    IF YOUR accrual rate is $100..

    After the 1st $15 is covered at 100% YOU have $85 left (in excess of $15)…BUT it says 75% of the LESSER of that number(in your case$85) or $70…So which number is LESSER…$70 OR $85….. That would be $70

    CORRECT???

    So you are getting &15 plus 75% of $70(max) which is $52.50… With me so far. So $15 &$52.50= $67.50 for every service year…… If YOU are getting $100 now and you had 30 years service your check would be $3000 a month.If this passes you will get $67.50 x 30 years for a total of $2025 a month…32.5% CUT…THIS IS HOW I READ IT. AM I CORRECT???? LETS SEE……. ………………………………………………………………………………………………..The NUCPP PROPAGANDIST HAS POSTED THIS!!!!!!!!!Teamsters Pension Crisis: The PBGC would pay up to $67.50 per year of service for a partitioned retiree. The fund would pay the difference of your earned pension. ex: 30 years at 100 per month per year service is a $3000 per month retirement. 30 x $67.50 = $2025(32.5% cut) per month the PBGC would contribute and the fund would pay the $975 difference.!!!!!!!!!! Here they are admitting THAT IS what the language says just as I read it AND YOU WILL BE CUT!!!HOWEVER THEY CLAIM ” The fund would pay the difference” I say that is a lie and the language says no such thing. Further Murphy said “the fund will pay nothing” CAN YOU SHOW ME WHERE IT SAYS “THE FUND WILL PAY THE DIFFERENCE” Especially since what the language does say is once you are partitioned the fund is not longer liable for your pension. IF RETIREES WERE TO BE MADE WHOLE WHY DOES THE LANGUAGE NOT SAY YOU WILL GET 100% OF YOUR ACCRUAL RATE INSTEAD OF ONLY 100% OF THE FIRST $15 THEN %75 of………………………………………………..

    LETS USE ANOTHER ACCRUAL RATE

    RIGHT NOW YOUR ACCRUAL RATE IS $93.50 X 30 YEARS

    Your check now is $2805.00

    USING $93.50…..The first $15 is covered at 100%

    This leaves you with $78.50…..Now $70 is “the lesser” of $70 and $78.50 SO

    You will get 75% of the $70 or $52.50

    $15 +$52.50= $67.50 of your $93.50 accrual rate

    After partition $67.50 x 30 years

    Your check will drop to $2025.00

    That is a $780 cut..OR a 27.8% cut

    Thank you Russ. Hope you and your family are in good health.

    • Thanks, Richard. Fortunately, we remain healthy and hope that you and your family do, too. I will get back to you once I can work through the math and language in the proposed legislation. Give me a day or so. Thanks, Russ

    • Good morning, Richard. I hope that you had a great weekend. I have heard back from someone who I trust implicitly, and he has confirmed that your numbers are correct, but wants to highlight two critical points. First, the PBGC guarantee would be doubled with no premium increase and importantly, there are no cuts to benefits in plans that get partitioned. Have a good day.

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