Op-Ed: As coronavirus cripples the US economy, lawmakers must fix another looming problem
For the first time in over a century, a global coronavirus pandemic has turned the country’s focus to the dangerously fragile health of the American people and triggered an all-hands-on-deck response.
At the same time as our nation’s health care providers are fighting on the frontlines of coronavirus and working around-the-clock to care for patients, our policymakers are coming together to bolster our citizens against another silent enemy. A silent enemy that is threatening the people who assure we have supplies on our shelves and food on our tables – and the strength of our country as a whole and its position in the global marketplace.
That is why our nation’s leaders are working at breakneck speed to deliver economic stability in a very unstable time. And while uncertainty has left many of those who are at a working age fearful for the viability of their current employment, there is another group of Americans who find themselves in increasingly perilous circumstances and in need of relief – the millions of retirees and workers whose multiemployer pension plans are running out of money.
If the objective of Washington’s “stimulus” effort is to bolster our economy in the face of COVID-19 and reduce crippling anxiety in our communities about what the future holds, then addressing the pension crisis ought to be part of the response.
That is because we are now three months into the decade in which billions of retirement dollars are on track to disappear from the economy and millions of hardworking families’ wallets. If Washington continues to turn a blind eye to the multiemployer pension plan crisis, dozens of pension plans and the government agency that supports them will run out of money. Voters around the country agree: we can’t afford to wait any longer to save the retirement futures of more than 10 million American truck drivers, construction workers, bakers and musicians.
The Central States Pension Fund, one of the largest multiemployer pension plans, is expected to go insolvent in just five years. Not only would this directly harm hundreds of thousands of workers and retirees, with compounding effects on the children, spouses, and parents they support, it would also result in a crippling domino effect on the U.S. economy. Economists estimate the failure of Central States will result in more than a $5 billion GDP shortfall, a loss of more than $1 billion in federal tax revenue, and 55,000 fewer jobs.
Then there’s the individual toll this lack of action is already taking on families across the country. Take Doug, a retired mechanic living in New York, who worked hard to give his family a good life and to earn the secure retirement he was promised through the Road Carriers 707 Pension Fund, which is now insolvent.
As a result, Doug – along with thousands of other New Yorkers – suffered a 70 percent cut to his retirement benefits, and now he takes home just a few hundred dollars each month. Sadly, there is still a real possibility Doug could face additional cuts. Doug’s story is not unique – this is only the tip of the iceberg, and the damage will be irreversible by 2025.
During the last fiscal year alone, six multiemployer plans were terminated, and eight others requested financial assistance from the Pension Benefit Guaranty Corporation (PBGC), the federal backstop for plans that can no longer cover promised benefits. For a time, the PBGC was able to step in and help pay retirees’ benefits when plans like these were in trouble.
But now, the PBGC is also projected to become insolvent in five years, making their “guaranty” not much better than a band-aid solution. When the PBGC runs out of money, retirees’ benefits will be cut by an average of more than 94 percent.
The “wait and see approach” is not – and never was – conscionable. A real solution to this problem is needed now and must include retiree support and securing the PBGC. Finding common ground on this issue is not impossible. Congress even reached a bipartisan agreement late last year on the miners’ pension fund.
However, the miners’ fund is only one of the 125 multiemployer pension plans that are on the verge of collapse, and we know most voters hope Washington will buckle down to finish what was started. In fact, a poll issued by the Retirement Security Coalition shows three in four voters are concerned about being financially secure in their retirement years, and the same number agree we can no longer ignore the crisis.
That is why most voters support a comprehensive “shared solution” approach that fixes this problem.
Addressing the multiemployer pension funding crisis will help to bring confidence to an economy that has been rattled by the invisible enemy of COVID-19 and help to put America in rebound mode.
As part of a broader crisis response effort, it will help to renew confidence in our public and private sectors and mitigate the economic effects of the coronavirus threat. It’s the right thing to do, and it’s the right time to do it.
John Boehner, an Ohio Republican, served as a U.S. representative (1991-2015) and House speaker (2011-15). Joe Crowley, a New York Democrat, served as a U.S. representative (1999-2019) and House Democratic Caucus Chairman (2017-2019).