The GOP-controlled Senate voted 50 to 49 on Wednesday afternoon to repeal a rule that paved the way for states to create retirement plans for workers who don’t already have them through their jobs. The White House says that President Donald Trump will sign the repeal.
The rule was not particularly controversial when Obama issued it. Even some conservative state officials defended the rule and lobbied Republicans not to scrap it, saying a repeal would complicate their own programs and make it harder for workers to save for retirement.
The only interest group that really cared to see it go was Wall Street. At the end of the day, that was enough.
“It feels like we’re scraping the bottom with these [repeals],” Sen. Chris Murphy (D-Conn.) said Wednesday on the Senate floor.
Obama’s executive order clarified that state-run “automatic IRA” accounts do not conflict with federal pension law. That made it easier for individual states to set up government-sponsored retirement plans that workers are automatically enrolled in unless they opt out. At least five states have already pursued these auto IRAs because millions of workers don’t have employer-sponsored plans and won’t be remotely prepared for their golden years.
In other words, Obama did a bit of deregulation to help out the states ― something Republicans typically love.
But the Financial Services Roundtable, a powerful lobby for the banking industry, called upon Congress to strip away the “safe harbor” that Obama’s rule gave states to set up auto IRA plans. The group said it wasn’t fair that such plans wouldn’t be held to the same strict standards as privately run retirement plans under the Employee Retirement Income Security Act, the complicated law regulating pensions.
Many Republicans agreed that it would give the state-administered plans an unfair advantage. Rep. Francis Rooney (R-Fla.), a backer of the repeals, told Politico last month that he believed carving the state plans out of pension law left workers vulnerable. “They have an administrator dealing with other people’s money and need the fiduciary protections of ERISA,” he said.
Murphy noted that by repealing the rule, Republicans were actually hamstringing states and making sure they remain tied up in a complicated regulation ― not exactly a reflection of traditional GOP values. “One day you’re for state-based innovation,” he said, “and the next day you’re against it.”
Obama also signed a separate rule clearing the way for cities to set up auto IRAs. Trump and Republicans repealed that measure last month. Backers of the rules were hopeful the state one might survive because there was some support from Republican state officials for it. According to a paper from the University of California, Berkeley, repeal of the safe harbor for states could affect 13 million workers in the five states that already have plans: California, Connecticut, Illinois, Maryland and Oregon.
Sen. Patty Murray (D-Wash.) noted that the concept of automatic IRA’s enjoyed Republican support before Obama sought to expand them. (The conservative Heritage Foundation helped popularize the idea with its research.)
“As much as my colleagues on the other side of the aisle may not like to recall now, many of them have been on the record previously supporting these kinds of efforts,” Murray said.
Republicans used an arcane legislative tool called the Congressional Review Act to repeal the auto IRA rules. The 1996 law enables Congress to dismantle a regulation within 60 days of it being finalized, while ostensibly forbidding agencies from rolling out a similar regulation in the future. Republicans have taken full advantage of a window early in Trump’s presidency in which they could scrap regulations issued at the tail end of Obama’s presidency.
Unlike normal bills, these “resolutions of disapproval” require only a simple majority to pass the Senate, which means the Democratic minority has been helpless to stop them. So far, Republicans have used the Congressional Review Act to target some 30 regulations. Trump has now signed repeals in more than a dozen cases, several of them pertaining to regulations issued through the Labor Department, like the one on auto IRAs.
“The most interesting and troubling thing about this is that it may very well be the ultimate block on modernizing workplace standards,” Celine McNicholas, labor counsel for the Economic Policy Institute, recently told HuffPost.