Why are Democrats considered to be the party of organized labor? Because Democrats have proven it through their labor policies in the past and present.
While Senate Majority Leader Mitch McConnell’s cold, deathlike hands put a freeze on any legislation from the Democrat-led House of Representatives, the Democrats continue to legislate, govern and do their job.
One of the last bills passed in the U.S. House before the August recess was the Butch Lewis Act, which may save the pensions of 1.5 million workers and retirees — including thousands of workers in Louisville, elsewhere in Kentucky, Indiana and across the region. They and other U.S. workers face devastating cuts to their pensions — as much as a 90% cut from what they are owed.
See, many of these workers and retirees at risk are part of multi-employer pension funds that are in distress (think: funds such as those for the Kentucky public school teachers, police and other public employees, but these are employees of private companies). As of 2015, of about 1,400 of these multi-employer funds, 300 were considered to be at risk of failing, according to the Congressional Budget Office.
This is a labor crisis in America today.
Generally, this crisis is the result of three factors: two recessions; low interest rates not providing enough return on the principal of the funds; and changes in the workforce, where fewer employees are contributing to the pension funds, while more retirees are now drawing their benefits from the funds.
The crisis is also due to poor regulation by the government.
In 2006, when Republicans controlled all of the federal government, they raised the required contribution of single-employer companies to their pension plans, but didn’t require the same of multi-employer funds.
The Republican solution: cut benefits.
In 2014, as part of a budget deal, Republicans in Congress allowed for underfunded pension funds to cut retirees’ benefits to keep the funds solvent. As a result, some retirees saw their pensions cut to a quarter of what they were receiving… and were promised.
Democrats have a different approach.
The Butch Lewis Act essentially creates an agency that would extend loans to multi-employer pension funds facing insolvency — loans to be paid back over 30 years — and those loans would be funded by selling long-term government bonds.
This ensures that workers and retirees get what they worked and paid for. It even requires that the participating funds restore the benefits to retirees whom have already seen their checks reduced.
Alex Brill, an economist from the nonpartisan American Enterprise Institute, studied what the effects would be if just one of these troubled funds — the 400,000-member Central States, Southeast and Southwest Areas Pension Fund — goes under. Brill found that this fund would lead to losses of 55,000 jobs, $5 billion in GDP, $1.2 billion in federal tax revenue and about $450 million in state and local tax revenue.
If these pensions sink, they will also take down with them a lot of businesses and workers who have done everything right but just happened to be part of the wrong multi-employer fund. Butch Lewis protects them, too.
This is like the bailout of the American auto industry in 2009: When the federal government loaned nearly $80 billion to the automotive industry and saved over 1.5 million jobs, from which the government received over $105 million in taxes. A study by the Center for Automotive Research found that the taxpayer “made” over $58,500 per job saved.
That was great governing in the face of a crisis, and so is the Butch Lewis Act. In fact, 29 Republicans in the House voted for the bill, making it about as bipartisan as legislation gets these days.
Now the bill heads to Mitch’s side. If the auto bailout is any indication of how he’ll receive it, the bill, pensions and workers are doomed. Mitch opposed the auto bailout and stood in the way of an even larger package because the United Auto Workers wouldn’t concede to reduced wages.
So, why is organized labor overwhelmingly in support of Democrats? Because Democrats see governing as an opportunity to help workers and retirees in the face of crisis… while Mitch and the GOP see crisis as an opportunity to steal a little more from workers.
The GOP doesn’t deserve a vacation on Labor Day. Instead, Mitch should call the Senate back to Washington to take up the Butch Lewis Act and do something for the workers and retirees this Labor Day. •