Healthcare isn’t the only Obama-era social policy that Congressional Republicans started to roll back this week. The Senate took aim at a Labor Department rule green-lighting publicly-run retirement programs enacted by blue states like California, Oregon, and Illinois. Bloomberg reports:
The Senate approved a resolution killing an Obama-era Department of Labor rule that allows states to require some private-sector employers to help their workers save for retirement. President Donald Trump is expected to sign the resolution, approved May 3 by a 50-49 vote, that effectively overturns the agency’s rules that exempt such state retirement plan programs from coverage under the Employee Retirement Income Security Act. The resolution already passed the House and a similar resolution repealing city-run retirement plan programs already carries Trump’s signature.
Most of the press coverage around this issue has been contemptuous of the GOP position, suggesting that it reflects the party’s heartlessness and deference to Wall Street lobbyists. And while special interests surely played a role (as they do in every piece of legislation) there is actually a strong case against the Labor Department rule based on the public interest.
Without proper federal oversight, state-run plans in places like California could take advantage of workers and mismanage their money. The Obama Administration essentially exempted these plans from the federal accounting standards that exist for privately-run retirement plans like 401(k)s. The way states like California have run their public employee pension programs into the ground does not inspire confidence in their ability to manage workers’ nest eggs in a lax regulatory environment.
That said, for all their flaws, blue state efforts to encourage people to save more aggressively for retirement represent earnest attempts to address a pressing problem. As with Obamacare, the GOP is alert to the problems with the liberal approach—but it’s unclear if it has a positive plan of its own. It’s not enough for Republicans to put pressure on the Democratic state-run plans; they also need to develop their own comprehensive approach for addressing the crisis of retirement saving that has accompanied the collapse of the blue model. The good news is that based on what we have heard from the Hill, some lawmakers in both parties are thinking along these lines.