Scott Remarks at First Meeting of Joint Select Committee on Solvency of Multiemployer Pension Plans
WASHINGTON – Ranking Member Bobby Scott (VA-03) issued the following remarks at the first official meeting of the Joint Select Committee on Solvency of Multiemployer Pension Plans to formally organize and approve its rules.
“Thank you, Chairman Hatch and Chairman Brown.
“This Committee is charged with tackling a complex and urgent problem, preventing the foreseeable collapse of the multiemployer pension fund.
“Hard-working Americans earned their pensions in demanding industries such as construction, trucking, and mining. Through no fault of their own, their pensions are now in jeopardy. These Americans are at risk of losing nearly everything for which they worked and sacrificed over their lifetime. They live in red states and blue states, and they are counting on us to solve this problem.
“Employers are counting on us, too. If plans fail, participating businesses would likely confront the prospect of bankruptcy or at least a worsened financial outlook due to the “last man standing rule” of having to absorb the pension liability of any employer that goes out of business.
“Employers also report that problems in accessing capital may occur far sooner than the actual insolvency date of these plans, if lenders demand repayment of loans due to the borrower’s pending withdrawal liability. If accounting rules start requiring these liabilities to be listed on financial statements, a cascade of business failures could be triggered as credit dries up or gets far more expensive. For these businesses, this crisis is not years away. It is a threat right now. And if one plan goes down and takes the business with it, that business may be involved in other plans, which may become financially strained.
“So as we proceed in the months ahead, I would encourage us to keep two things in mind:
“First, we should fully explore the scope of the multiemployer pension crisis and understand its consequences to our constituents. Let’s hear from all relevant parties. If plans fail, which will happen if the status-quo continues, it would be catastrophic for workers, retirees, employers, local communities, and the U.S. economy.
“Second, we need to focus on the cost of doing nothing to the United States taxpayers. Make no mistake about it, the costs that would result from our failure to act – in terms of reduced tax revenue and increased social safety net spending such as food stamps and Medicaid – are likely to be far greater than the price tag of any solution we reach.
“So, let me briefly read from one source that discussed the far-reaching impact plan insolvencies would have on retirees, local communities, and taxpayers.
“I quote, ‘Retirees will see their standard of living reduced. At a minimum, they will have less income to spend in local economies. The reduced spending will be felt by businesses, especially in small communities. Less money spent by retirees also means less paid to local government in sales and other taxes. When tax revenue decreases, the demand for social programs will increase, because many retirees will likely lose their homes and/or have difficulty paying for medical expenses. This will cause many to become reliant on social programs that have to be funded by taxpayers at a time when tax revenue will be declining. Simply put, pension plan insolvencies and a PBGC collapse will have a cumulative negative effect on entire communities. Individuals, government, and businesses will all suffer unless a solution is found.’ Close quote.
“That quote comes from the United States Chamber of Commerce.
“They understand the full cost of inaction and the extent to which taxpayers are already on the hook if plans fail, and why we should begin our work with an assessment of the extent of the problem, especially the impact of doing nothing and what that impact would be on the Federal Government.
“I want to thank Chairman Hatch and Chairman Brown for their leadership. I want to thank the mine workers for being here to remind us that we’re dealing with real people’s lives, and I look forward to working with everyone here in the months ahead.
“I yield back.”
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