Issues / Legislation » Legislative Weekly Reports

Week Ending April 8, 2016

Obama Administration Issues Rule Protecting Retiree Savers

In a powerful effort to protect retirement savers, the Obama administration’s Department of Labor issued its long awaited “Fiduciary” final rule, which requires investment advisors to provide financial advice in the best interest of their clients.  This best interest rule is very important and will help protect families saving for retirement by preventing investment advisors with conflicts of interest from providing conflicted advice.  The DOL rule is needed because currently investment advisors are allowed to recommend specific investment strategies that enrich themselves but are not in their clients’ best interest.  The White House Council of Economic Advisors has reported that this conflicted investment advice costs retiree plan participants $17 billion in annual losses, which over a 35 year period, could result in losing almost 25% of assets.

AFSCME President Lee Saunders stated: “This is a very important step to protect Americans’ retirement savings against predatory practices that contribute to our nation’s retirement crisis… For too long, the financial industry has manipulated the rules to line its pockets by stacking the deck against working people.”  Senator Elizabeth Warren (D-MA) declared: “It’s an enormous victory for hardworking Americans.”

This new rule helps AFSCME members who are saving for retirement by providing strong federal legal protections ensuring they are receiving advice in their best interest, which will reduce excessive fees, risks, and investments in assets with expected poor performance.  AFSCME has advocated very strongly for many years in favor of this best interest “fiduciary” standard. Looking ahead, AFSCME will continue advocating on this issue to prevent Congress from approving legislation, including some that has already been introduced, that would block, delay, defund, or otherwise weaken these new significant and much needed protections. 

Obama Administration Issues Rule Preventing Sham Corporate Overseas Relocations Designed to Avoid Federal Taxes

In a strong step to reduce corporate tax avoidance, the Obama administration’s Department of Treasury issued new regulations that restrict corporations from using sham overseas relocations (“inversions”) to avoid federal taxes.  These new protections are significant and over time could prevent the federal government from losing hundreds of billions of dollars in tax revenues.  An immediate result will be to scuttle the expected $152 billion merger of Pfizer and Allergan, to date the biggest overseas relocation deal designed to exit America for lower tax rates.  Had the deal been completed, the firms were expected to avoid more than $35 billion in federal taxes.

AFSCME, working with allies as part of the Americans for Tax Fairness Coalition, which we formed, has worked tirelessly for the new rule.  We believe that if corporations want the benefits of being a U.S. company, they must pay their fair share of taxes.  This is fair and the American people expect it.  President Obama said inversions are “one of the most insidious loopholes out there” and “this is something that I’ve been pushing for a long time…When companies exploit loopholes like this, it makes it hard to invest in the kinds of things that are going to keep America’s economy going strong.” 

Senate Prepares to Move Forward on Spending Bills

This week the Senate announced it will begin to work on Fiscal Year (FY) 2017 spending bills, with Energy and Water spending levels possibly receiving a full committee vote next week. That bill will also include the allocations for each of the 12 funding subcommittees. Overall funding is set at $1.07 trillion as agreed to in last year’s budget deal.  This allocation is essentially unchanged from FY 2016.

Early reports are that the allocations will be even-handed among spending categories in an initial attempt at fairness. However, two essential subcommittee bills for programs that support working families and public employees did not receive equal shares of the budget pie last year for programs that fund: 1) Transportation and Housing, and 2) Labor, Health, Human Services and Education. For FY 2016 they each received an increase of just 3.6% relative to the prior fiscal year while the other subcommittees received an average increase of 6.9%.  A “fair” allocation to these subcommittees would need to make up for last year’s relative underfunding.  Sen. Barbara Mikulski (D-MD), the senior Democrat on the Appropriations Committee, has pledged to fight for fair allocations for each funding bill, as well as for domestic spending to receive equal increases to any given to defense (“parity”), and against ideological policy riders.  Republicans have been clear, however, that they plan to load up the bills with anti-labor and other riders.

AFSCME is strongly urging Congress to provide overdue, necessary increases in non-defense domestic spending, to reject the draconian House Budget Committee budget, to follow the parity principle, and to pass clean funding bills without poison pill riders.

Senate Moving Forward on FAA Extension

This week, the Senate passed by voice vote H.R. 636, the legislative vehicle to advance short-term reauthorization of Federal Aviation Administration (FAA) programs. The Senate’s two-year, $33.1 billion bill, sponsored by Sen. John Thune (R-SD), does not include the controversial privatization of air traffic control programs, which was a major priority for House leaders to accomplish “transformational reform.”

In a major victory for AFSCME, the Senate unanimously passed Sen. Susan Collins’ (R-ME) amendment that would prohibit the closing of the contract weather observer (CWO) service. AFSCME represents hundreds of these workers nationwide and has been fighting this proposal since May 2015, when the FAA proposed cutting contract weather observers at 57 of the nation’s airports, shifting their responsibilities to air traffic controllers. Sen. Collins said:  “Delegating this responsibility to air traffic controllers, who must also monitor and manage air traffic, poses an unnecessary safety risk. I am so pleased that the bipartisan amendment I authored to prohibit cuts to the important contract weather observer service was unanimously adopted by the U.S. Senate.”

Senators voted 85 to 10 to include an amendment sponsored by Sen. Thune to reduce airport security vulnerabilities by requiring the Transportation Security Administration to more thoroughly vet airport employees and develop practices for employee security screening.  The Senate approved by a vote of 91 to 5 another amendment proposed by Sen. Martin Heinrich (D-NM) that would increase the number of TSA security teams that could be deployed at airports, train stations and port facilities.  

UPW Visits Congressional Delegation

Leaders and members of Hawaii’s United Public Workers (UPW) Local 646 lobbied Congress as part of their recent Study Tour to Washington, D.C. The group was briefed by AFSCME’s Federal Government Affairs Department on federal issues and then visited with both Sens. Mazie Hirono (D-HI) and Brian Schatz (D-HI) along with staff from the office of Rep. Mark Takai (D-HI) to discuss the need for fully funding public services. Sen. Schatz is a member of the Senate Appropriations Committee, which makes decisions on program and service funding levels for annual spending bills. The delegation spent time discussing how federal funding decisions impact them and their co-workers in Hawaii. Both Senators and Rep. Takai’s staff person supported all of the funding priorities UPW put forward.

Hundreds of Thousands Losing Access to Nutrition Assistance

This year, an estimated 500,000 to a million low-income adults between the ages of 18 and 49 will lose food benefits from the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), according to a recent report from the research and advocacy organization Center on Budget and Policy Priorities (CBPP).  These adults without dependent children will have their SNAP aid limited to three months out of every 36 months if they are not working at least 20 hours a week or in a 20 hour a week job training program.  This requirement was part of the 1996 Temporary Assistance for Needy Families (TANF) law but starting in 2009, states requested and were granted waivers of this requirement due to high rates of unemployment during the Great Recession.  Those waivers allowed adults without dependents to receive SNAP benefits on a monthly basis without restriction. 

Due to falling national rates of unemployment, by the end of 2016, the CBPP reports that more than 40 states will have imposed the shorter time limits and reduced benefits, including 22 states where the limits are coming back for the first time since the recession.  “Although the overall jobless rate has been slowly falling,” said Dorothy Rosenbaum, a food policy expert at the CBPP, “other labor market data indicate that many people who want to work still cannot find jobs. Cutting off food assistance does not enable them to find employment or secure more hours of work.” She reports that the people likely to lose benefits because of the time limits have monthly incomes averaging from $150 to $170 per person, or 17% of the federal poverty level.

It remains within states’ discretion whether to request a federal waiver of the time limits.  Some have chosen not to do so, even though they could qualify.  In addition, some states have returned federal funds available through a SNAP employment and training program, with 21 states failing to use any of the federal money that was available, according to officials with the federal Food and Nutrition Service within the Department of Agriculture.

Congressional Briefs Filed in Case Challenging Executive Actions on Immigration

This week, the congressional GOP leadership spearheaded the filing of two briefs in the U.S. Supreme Court case U.S. v Texas. The Court is hearing the Department of Justice’s (DOJ) challenge to a lower court’s injunction that is preventing implementation of President Obama’s executive actions that would create a Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA) program and expand the Deferred Action for Childhood Arrivals (DACA) program.  These policies allow four to five million currently unauthorized immigrants to be free from the fear of deportation and to receive work authorization.

In an unprecedented move, the GOP-led House filed a brief on behalf of the whole chamber opposing the DOJ’s position, even though 181 House members voted against authorizing the filing.  Also this week, Senate Majority Leader Mitch McConnell (R-KY), along with 42 other Republican Senators, filed a brief opposing the President’s executive actions.

The Court will hear oral arguments in the case on April 18.  A decision is expected in June.

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