Any standalone, substantial minimum wage bill will face a filibuster requiring 60 votes to overcome it. Despite the White House fantasizing that Republicans might support a serious minimum wage increase, there probably are not 10 GOP senate votes to break such a filibuster.
Meanwhile, if Democrats try to attach a minimum wage increase to a bill that Republicans actually really want to vote for — say, the National Defense Authorization Act — Republicans could move to simply strike it out of that underlying bill, which enough conservative Democrats might agree to, and then the GOP would vote en masse for final passage of the stripped-down legislation.
Everyone in Washington knows this script, so a move to attach a minimum wage to a bill like this would likely be a performative gesture, but not a legislative victory.
Coronavirus vaccines will hopefully get economies humming this year, as people feel comfortable returning to shops, businesses reopen and workers get jobs again. The International Monetary Fund expects the global economy to grow 5.5% this year following last year’s 3.5% plunge.
A stronger economy often coincides with higher inflation, though it’s been generally trending downward for decades. Congress is also close to pumping another $1.9 trillion into the U.S. economy, which could further boost growth and inflation.
A sizable portion, about $500 billion, is a bailout of state and local governments that for the most part do not need one. While state tax revenues took a small hit from the pandemic and associated economic lockdowns, the damage is far smaller than was once feared. States should handle their own finances.
But it’s not just a bailout; it’s a bailout in which the funding is allocated based on the size of each state’s unemployed population. In other words, states that imposed draconian and unnecessary economic lockdowns during the past year are going to get a larger share of the federal cash than states that managed to balance public health needs and the economy—an arrangement that New Hampshire Gov. Chris Sununu rightly calls “outrageous.”
Boston Mayor Marty Walsh has vowed to work with both parties as Labor Department secretary to address the hundreds of underfunded multiemployer pension plans in the U.S. that are now in danger of collapsing.
The big problem standing in his way? Congress has that power, not the U.S. Labor Department, according to labor attorneys and industry insiders. Which means that if Walsh is confirmed by the full Senate for the Cabinet spot, the two-term mayor will have to rely on his organized-labor background and a unique propensity to bridge divides and broker deals outside DOL’s scope to help rescue the tapped-out plans.
“The thing that is going to be pretty neat about going in to see Secretary Walsh is you’re not going to spend the first 20 minutes trying to explain what the heck a multiemployer pension plan is,” said Timothy Lynch, a senior director at Morgan Lewis in Washington who testified in 2018 before the now-defunct Joint Select Committee on the Solvency of Multiemployer Pension Plans.
Without congressional intervention, about 100 multiemployer pension plans are expected to become insolvent in the next 20 years, and some much sooner. In other words, for these pension plans, their liabilities to retired employees and current employees with vested benefits far outweigh their assets and incoming contributions. Although the Pension Benefit Guaranty Corporation is intended to provide a backstop to any insolvencies, the sheer number of plans facing insolvency and the total size of unfunded vested liabilities will bankrupt the PBGC’s multiemployer program as well. It is against that backdrop that Congress has added the Butch Lewis Emergency Pension Plan Relief Act of 2021 to the COVID-19 relief bill.
Fourth, the bill would create a special financial assistance program for those plans that are expected to become insolvent in the near future. Under the bill, the Treasury would grant money to the PBGC, which would then disburse it to eligible plans. Eligible plans include (a) those in critical and declining status, (b) those that have approved benefit suspensions, (c) those that are in critical status with a funding percentage of less than 40% with more inactive than active participants, and (d) those plans that are already insolvent. The bill would instruct the PBGC to develop regulations within 120 days for applications and to prioritize applications from plans that are (a) insolvent, (b) likely to become insolvent within five years, (c) have a present value of over $1 billion in unfunded vested benefits, or (d) have already implemented benefit suspensions. The money would be paid in a single, lump-sum payment in the amount sufficient to guarantee benefits, without reductions, through 2051. If a multiemployer plan were to receive financial assistance, it would be required to reinstate any suspended benefits, and repay the amount of benefits previously suspended. Finally, an employer’s withdrawal liability would be calculated without taking into account this assistance for 15 calendar years after it was received.
States like Illinois, New York and California have long histories of financial negligence. California ran a budget deficit during seven of the last 16 years, according to a Wirepoints analysis of Pew Charitable Trust data. Connecticut has 10 years of deficits to its name. New York has 11. And Illinois and New Jersey have run budget deficits every year since at least 2004.
And then there’s the problem of pensions. States like Illinois, Connecticut and New Jersey all have amassed hundreds of billions in pension debt – all self-inflicted by state lawmakers.
The pandemic had nothing to do with those past deficits and debts, but that’s exactly what more federal aid would end up paying for.
The legislation states that its objective is “to pay all benefits due” up until 2051. However, experts with whom I spoke explained that this is not intended as a complete funding of all benefits due during the period, but only meant to fill in the gaps so that, added together with their current assets and future contributions, there will be enough funds to pay benefits for the next 30 years.
The bad news:
The text of the legislation, as written at the moment, does not spell out any of these mechanics. Is the plan to require contributions at the same level as these troubled plans are currently paying in, or more, or less? To what extent would those contributions be used to build assets for future accruals, vs. being “spent” on already-accrued benefits by being included in the calculations of federal bailout funds, as offsetting money? My expert friends did not know, and, to be honest, this is the sort of detail that, in any prior pension funding legislation, is spelled out in the law itself rather than left for the PBGC (Pension Benefit Guaranty Corporation) to sort out as regulation. This is concerning, because it risks the whole program going south very quickly.
Illinois Senators Dick Durbin and Tammy Duckworth, as well as Illinois Rep. Brad Schneider, are leading the charge to repeal the cap on state and local tax deductions, as reported by Crain’s and elswehere. They’ve each sponsored bills to eliminate the SALT cap, as it is called, which became law in 2017.
That cap of $10,000 on deductibility of state and local taxes, including property taxes, walloped many high income taxpayers not just by increasing their federal tax bill but by reducing the value of homes they own. We described the research showing that in our recent article here.
There’s actually no debate about it: Liberal and conservative tax experts alike agree that the eliminating the SALT cap would be a windfall for high earners. The conservative Tax Foundation explained why here, and the liberal Institute on Taxation and Economic Policy, ITEP, wrote this in an article opposing elimination of the cap:
There’s an improved chance Congress will pass legislation over the next year or two to prevent multiemployer pension plans and the Pension Benefit Guaranty Corporation (PBGC)’s multiemployer insurance program from becoming insolvent, according to law firm Morgan Lewis.
In a blog post on the firm’s website, Morgan Lewis Senior Director Timothy Lynch and Partner Daniel Salemi wrote that the biggest factor that could lead to a legislative solution is the fact that the Democratic Party controls the White House and both houses of Congress. They also say the Biden administration may see greater urgency in moving for a solution due to the major economic fallout that would occur if PBGC’s multiemployer program were to become insolvent in 2026, as is currently projected.
Yes, but only if they are removed from office during their presidency, said Brian Kalt, a law professor at Michigan State University. Being impeached by the House of Representatives does not impact the benefits.
Many lawmakers and public figures called for Trump’s removal from office during the final days of his presidency, but he avoided this fate, so the benefits are safe.
There is one caveat: the law could always change. Some advocates say the Former Presidents Act is an unnecessary cost, arguing that modern-day presidents have lucrative opportunities and do not need the public’s help after stepping down.
A number of Democrats and Republicans united in opposition this week to the strict limits imposed by Robinhood and other online stock brokerages on the purchasing of GameStop and other stocks swept up in a Reddit-fueled trading frenzy.
Disparate members of Congress like Alexandria Ocasio-Cortez, D-N.Y., Ro Khanna, D-Calif., Ted Lieu, D-Calif., Ken Buck, R-Colo., and Sens. Pat Toomey, R-Pa. and Ted Cruz, R-Texas, were among those who criticized the move, with many calling for hearings that Democratic leaders say will soon take place in both the House and Senate as what began as an internet movement continues to roil Wall Street.
Lawmakers trained attention on the volatility surrounding GameStop’s stock as several others this week. The stock climbed from $4 only a few months ago to more than $400 this week, juiced by an online movement not dissimilar to others that have broadly altered the political landscape in recent years. At the same time, hedge funds that made large bets on GameStop’s stock cratering — known as “shorting” — began to pile up big losses. Then the brokerages instituted limits, leading to charges of collusion with the larger financial entities facing big losses.
As you know, Congress oversees the bureaucracy. It’s agencies, the unelected bureaucrats that make a lot of the regulations that affect our lives. Colloquially, you might know this as a part of The Deep State. The Senate Banking Committee and the House Financial Services Committee oversee the Securities and Exchange Commission (SEC).
The GameStop saga has laid a lot of things bare. But one thing that needs pointing out is that most of the people on those committees have no clue how the entire financial system as it pertains to exchanges and markets works. I am not impugning the personal characters of the Senators and House members on the committees. In 99.9% of the cases they are decent and intelligent people. What I am saying is most of them have no clue when it comes to understanding the industry they are charged with overseeing. It is rare when you find an elected official that really and truly understands. Not rare like a four leaf clover rare. Rare like seeing a tiger in the wild rare.
I am not talking about trading markets either as plenty of elected congresspeople seem to know how a brokerage account works. I am talking about understanding the mechanics and plumbing, and truly understanding.