CBO Finds Butch Lewis Act Costs Much Less than Expected
Pension reform is expected to cost $34 billion, not $100 billion as suggested in preliminary forecast.
Two US senators said the US Congressional Budget Office (CBO) has estimated that the pension reform legislation known as the Butch Lewis Act would cost $34 billion over the next 10 years, nearly one-third of the $100-billion figure cited in its preliminary analysis earlier this year.
Sens. Richard Neal (D-MA) and Sherrod Brown (D-OH) said the $34 billion estimate is also less than half the expected cost of propping up pension lifeboat program the Pension Benefit Guaranty Corp. (PBGC), which is expected to run out of funds by 2025.
“Passing the Butch Lewis Act would save the multiemployer pension system and prevent businesses from going bankrupt all without cutting a single dime of the benefits workers earned,” said Brown’s office in a release. “And it would do so for less than half the cost of allowing the plans to fail, allowing businesses to go under and allowing workers’ benefits to be slashed.”
The act would establish the Pension Rehabilitation Administration (PRA) to provide loans and financial assistance to certain multiemployer defined-benefit pension plans. Earlier this year, the CBO provided a preliminary cost estimate of the act saying that “the bill would probably increase deficits by more than $100 billion over t2019-2028 period.”
However, it added that under some interpretations of the bill’s language, few plans would qualify for loans and assistance, “resulting in federal costs that would be substantially less than $100 billion.”
Brown’s office cited previous congressional testimony from PBGC Director Thomas Reeder, who said the organization’s multiemployer program is projected to fail with a deficit of more than $67 billion, and that if this happens, it would cost $78 billion just to restore the PBGC. The PBGC’s multiemployer program protects more than 10 million workers and retirees in about 1,400 multiemployer plans.