Sen. Sherrod Brown, D-OH, and Rep. Richard Neal, D-MA, ranking member of the House Ways and Means Committee, recently released news of the lower figure. (Photo: Shutterstock)
The Butch Lewis Act, a bill that would rescue more than 100 multiemployer pensions that are projected to go insolvent, that cover a total of 1.3 million workers and retirees, would add $34 billion to the U.S. debt over ten years, according to the Congressional Budget Office.
That's considerably less than a previous provisional score of the bill, which CBO put at more than $100 billion.
The score has not been released by the CBO. Sen. Sherrod Brown, D-OH, and Rep. Richard Neal, D-MA, ranking member of the House Ways and Means Committee, recently released news of the lower figure. Brown co-chairs the Joint Select Committee on Solvency of Multiemployer Plans. Neal is also on the 16-member bipartisan committee.
The Butch Lewis Act, originally introduced in the Senate by Brown, would establish the Pension Rehabilitation Administration within the Treasury Department. The PRA would issue bonds for sale to institutional investors, the proceeds of which would be channeled to plans in critical and declining status in 30-year, low-interest-rate loans. Principal would be paid back after 30 years, but a provision of the bill as it was originally written relieves pensions of loan obligations if they can't be paid back.
CBO scores, or estimates the cost of bills after Congressional committees have ordered legislation to be reported for a full floor vote. The Butch Lewis Act has not advanced out of committee– the Joint Select Committee has until the end of November to report a bill for a floor vote.
But CBO also provides technical assistance to Congressional staffers on thousands of proposed pieces of legislation each year. While that informal information is subject to the full CBO review process, it is not considered an official score.
In a memorandum to media, Brown and Neal described the $34 billion price tag as CBO's “finalized” estimate of the Butch Lewis Act.
In July, CBO wrote Sen. Orrin Hatch, R-UT, co-chair of the Joint Select Committee, explaining its original $101 billion estimate.
“The estimated budgetary effects are highly uncertain because several key aspects of the legislation are broadly described, making it difficult to project how the proposal would be implemented,” CBO director Keith Hall wrote.
Specifically, the original version of Butch Lewis was unclear on whether loans would be issued inside or outside the 10-year budget window. Nor did the bill set a specific interest rate for the 30-year loans, or define under what circumstances a loan could be forgiven.
Presumably, staffers have clarified the bill, which explains how CBO came to the lower $34 billion tab in its recent technical assistance.
Inquiries to Sen. Brown's staff were not returned before press time.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
