You can take your rollbacks and shove it. That’s the (surprisingly blunt) message to the Senate after it repealed an Obama-era regulation last week that allowed states to auto-enroll private sector workers in government-run 401k and IRAs for those who lack retirement plan access.
“Today, in the face of a multi-trillion dollar retirement savings crisis, Congress chose to side with the special interests over working Americans,” Oregon Treasurer Tobias Read said in a statement. “Sadly, this attempt to attack state-based retirement plans and the financial security of workers is exactly what we have come to expect from Washington D.C.”
Calling it another example of the “short-term thinking coming out of Congressional Republicans and the Trump Administration lately,” he added that Congress should be spending its time finding ways to help American families save for retirement, “not erecting barriers.”
Despite the vote, the Beaver State said it will move forward with OregonSaves, its pilot IRA/401k-style program launching on July 1.
“The need to address the oncoming retirement crisis is too great,” Read reasoned. “This action will not halt our commitment to working Oregonians.”
Other states that have enacted similar programs, namely California and Illinois, are expected to do the same.
U.S. Senators voted 50-49 in favor of repeal, with Bob Corker, R-Tennessee, and Todd Young, R-Indiana, crossing party lines to vote against the repeal. Senator Dick Durbin, D-Illinois, missed the vote due to medical reasons, which meant the Senate avoided a tie and possible involvement from Vice President Mike Pence.
President Trump killed its city-run counterpart in mid-April, and Senate majority leader Mitch McConnell, R-Kentucky said at the time that “we will advance another CRA to protect workers from similar efforts at the state level.”
Democrats and supporters of state-sponsored IRA and 401k plans hailed them as a way to slow what they see as a coming retirement savings crisis, while Republicans objected to their exemption from ERISA, adding that nothing would prevent states, cities and municipalities from overloading investment menus with their own government bonds.
“These retirement savings-regulations are a classic case of the whole being worse than the sum of its parts,” McConnell said. “The Obama Administration encouraged states and municipalities to set up government-sector retirement plans. Sounds great, some might say, but that’s until you see the fine print.”
States always had the power to set up these plans, he added, but they “chafed at federal laws protecting the workers who would be automatically enrolled in them,” referring to ERISA provisions.
“They didn’t like that the basic retirement protections that apply to those who manage private sector retirement plans would apply to the government too.”
Claiming that this is what the regulations “are actually about,” he said allow states and cities to create an employer mandate that forces private-sector workers into these government-run plans.
He added they “liberate the states and big city mayors from federal consumer protections for these hard earned dollars. And they create a competitive advantage for these new government-run plans. The end result will be more government at the expense of the private sector.”