Week Ending June 24, 2016
House Fails to Overturn President Obama’s Veto Protecting the Retirement Savers’ Best Interest Rule
The House failed to override President Obama’s veto of a bill that would have stopped the implementation of the Department of Labor’s (DOL) retirement savers’ best interest final rule. The rule requires investment advisors to provide retirement savers’ with advice in the saver’s best interest. The House voted 239 to 180 to sustain the President’s veto (a veto override requires a 2/3rds majority vote) with no Republicans voting to support the veto and no Democrats voting against it. We expect that conservatives’ next legislative attack on this rule will be to try and add a provision to block it onto a spending bill. Separately, the financial industry has already filed numerous lawsuits attempting to block implementation of this rule.
The best interest rule protects tens of millions of retirement savers by prohibiting advisors from providing conflicted advice, and by requiring that clients receive “best interest” advice. This rule reduces excessive fees, risky investments, and investment advisors’ self-interested advice. The White House reports this has previously cost retiree plan participants $17 billion in annual losses, which over 35 years could cause an individual saver to lose almost 25% of their related assets. AFSCME strongly supports these needed retirement protections.
Deadlocked Supreme Court Blocks Obama’s 2014 Immigration Executive Orders
On Thursday, the U.S. Supreme Court’s 4-4 ruling in United States vs. Texas leaves in place the 5th Circuit Court of Appeals’ decision blocking implementation of President Obama’s 2014 executive orders protecting almost five million undocumented immigrants from the threat of deportation and allowing them to receive work authorization. The Deferred Action for Parental Accountability (DAPA) and expansion of the Deferred Action for Childhood Arrivals (DACA) program would have removed the constant fear of families being torn apart and allowed immigrants toiling in the shadow economy to have the workplace protections, wages and benefits to which all working people are entitled.
This case is another example of the harm caused by the highest court in the land not having its full complement of nine members. The Supreme Court continues to operate with just eight justices since GOP leaders continue to block consideration of President Obama’s nominee, Merrick Garland, picked to replace Antonin Scalia. President Lee Saunders declared in a statement: “The same political agenda that challenged the President’s authority in DAPA and DACA expansion is preventing the Court from operating at full capacity. Americans expect the U.S. Supreme Court to fully function and exist above politics in order to protect the Constitution.” Hillary Clinton, the presumptive Democratic presidential nominee, stated in response to the Supreme Court’s ruling: “I believe that President Obama acted well within his constitutional and legal authority.”
Looking ahead, President Obama’s original DACA program of 2012 is not affected by this ruling and will continue. After the United States vs. Texas decision was released, the President noted that most individuals who would have been eligible for DAPA and expanded DACA continue to be low enforcement priorities. We are also hopeful that the case will be reheard by the Supreme Court after a ninth justice is confirmed.
Democrats Hold Historic Sit-In on House Floor
Nearly two weeks after the June 12 mass shooting in Orlando, Rep. John Lewis (D-GA) led House Democrats in a “sit-in” that lasted for over 24 hours, to protest congressional inaction on gun measures. In response, House Speaker Paul Ryan (R-WI) put the House in early recess until after July 4 and shut off the floor camera that provide a live feed to C-SPAN.
In the Senate, guns also took center stage after members of both parties demanded four separate votes on gun-related measures as amendments to the FY 2017 Commerce, Science and Justice spending bill. After those votes failed and Senate Majority Leader Mitch McConnell’s (R-KY) attempt to end debate on the bill also failed, Sen. Susan Collins (R-ME) proposed a compromise to bar some people on the no-fly list from gun purchases. The Senate voted 46 to 52 not to block the Collins amendment, but stopped short of approval. The Senate also voted 67 to 31 to block an amendment by Sen. Ron Johnson (R-WI) to give the Attorney General authority to block gun sales to suspected terrorists on the no-fly or selectee lists.
Small Business Hearing on New Overtime Rule
On Thursday, the House Small Business Committee held a hearing on how the new overtime rule proposed by President Obama will impact small employers. According to the U.S. Department of Labor (DOL) many businesses, including small businesses, require low-level salaried employees’ to work long hours for no extra compensation. The new overtime rule is intended to help to restore fairness for all workers no matter how people are employed. Four conservative witnesses testified against the rule, citing concerns that small businesses and nonprofits do not have the budget flexibility to increase currently-exempt workers’ salaries to the new threshold of $47,476. The one witness invited by the Democrats testified in favor of the rule and reminded the Committee that employees who work for small businesses and nonprofits are no different from those who work in medium-sized and large businesses. He stressed that the new salary threshold level is needed to prevent employers from denying a 40-hour workweek and overtime pay to more workers.
AFSCME supports the new rule and believes that Americans who are employed by small businesses should have the same rights as others workers. When the new rule takes effect on December 1 it will give new protections to 12.5 million workers, and provide an economic boost for working families automatically into the future.
2016 Social Security and Medicare Trustees’ Report
On Wednesday, the Social Security and Medicare Board of Trustees issued their annual financial review of programs. The financial position for both programs has changed little since last year according to the 2016 reports. Although both face long-term challenges, they are manageable and can be addressed by Congressional action.
While still currently running a surplus, the trustees reaffirmed that Social Security can pay full benefits until 2034, the same year that was projected in last year’s report. After that, it will be able to pay about three-quarters of scheduled benefits through 2090.
On Medicare, the 2016 trustees report shows that the slowing growth of health care costs has improved Medicare’s trust fund that pays for hospital, home health and limited-skill nursing home care. Thanks to the Affordable Care Act, Medicare’s solvency has improved. The program is projected to pay full benefits through 2028, increasing solvency by more than a decade from before passage of the health care reform law. For the majority of Medicare beneficiaries, Part B premiums are projected to increase only minimally in 2017, from $104.90 to $107.60. For beneficiaries who do not receive Social Security benefits, the standard monthly premium is projected to increase from $121.80 to $149.00 in 2017, if the trustees’ projections are correct. The annual deductible is projected to increase from $166 to $204 for all beneficiaries. AFSCME will continue to advocate for reduced premium and deductible increases for beneficiaries.
Congress must act and make changes in order for Social Security and Medicare to continue to be dynamic programs. The reports released underscore the vital importance of preserving, protecting and expanding Social Security and Medicare. In an out-of-balance economy that increasingly favors the wealthy few, and with half of Americans without access to pensions, Social Security and Medicare are increasingly necessary to keep tens of millions of Americans out of poverty when they leave the workforce. Americans who work their entire lives and pay into Social Security and Medicare deserve to have access to benefits when they retire, and Congress should, and can, strengthen the financial solvency of these programs for future retirement, disability and survivor beneficiaries – but not by shifting costs on to beneficiaries.
House Adopts Zika Funding; Draws Veto Threat from White House
In the wee hours of Thursday, the House voted 239 to 171, largely along party lines, to adopt an agreement between House and Senate Republicans on funding to combat the Zika virus. The $1.1 billion Zika funding package was bundled with larger federal funding bills but action is uncertain in the Senate and President Obama has threatened to veto the package. The President raised concerns because it immediately takes away $750 million from other health-related federal programs to offset the new spending for Zika. AFSCME urged Congress to pass emergency funding that would not require offsets because the cuts proposed will hinder efforts to respond to the next public health crisis, natural disaster, or national security event requiring emergency funding.
The path forward in the Senate is uncertain also because the House-passed Zika package contains controversial provisions concerning women’s access to family planning providers, and regarding rules to protect waterways from pesticide pollution. Zika funding is also needed to address growing concerns especially in U.S. territories, as well as the mainland. In Puerto Rico for example, there are more than 1,700 confirmed cases of the Zika virus, including hundreds of pregnant women. Puerto Rico is already suffering from a severe fiscal crisis which the Zika epidemic will further exacerbate.
On a related issue, Republican Senate leaders expect a vote on the House-passed PROMESA bill (H.R. 5278) sometime before the July 1 expected default by Puerto Rico on $2 billion of its $70 billion debt payments. AFSCME, AFL-CIO, SEIU, and UAW continue to oppose the House debt restructuring plan because it would lead to significant reductions in pensions, weaker worker safeguards by allowing a subminimum wage for younger workers and overturning overtime protections, and restrict the Commonwealth’s sovereignty. Puerto Rico’s enormous debt and related financial problems have reinforced the urgent need for economic stimulus and financial assistance including funding needed to fight and respond to the Zika virus.
House Passes TANF Extension with “Social Impact Partnerships”
On Tuesday, the House passed by voice vote the Social Impact Partnerships to Pay for Results Act (H.R. 5170). Instead of making meaningful changes to the Temporary Assistance for Needy Families (TANF) program, this bill diverts $100 million from TANF’s contingency fund to “social impact partnerships” without requiring that the money be spent for TANF-related purposes. This model (also known as social impact bonds) has no positive track record and has been described in a congressional report as “a fancy way of contracting out” that fails to address the many challenges with contract development, execution and monitoring. The bill extends TANF for one year.
H.R. 5170 is a missed opportunity. It fails to boost funding for the TANF block grant, which has not been increased since 1996 and has lost 32 percent of its purchasing power due to inflation. It also does nothing to fix the inflexibility and ineffectiveness of the current federal TANF work requirements. Positive reforms would include expanding opportunities for vocational education, allowing job search and job readiness to “count” more expansively, and aligning work activities more closely with the Workforce Innovation and Opportunity Act (WIOA) approach. AFSCME opposes the bill.
House Passes Bipartisan Child Welfare Bill
On Tuesday, the House passed by voice vote the Family First Prevention Services Act of 2016 (H.R. 5456). It allows states to use federal child welfare funds that are now reserved for foster care and adoption additionally for two types of prevention services and programs: mental health and substance abuse prevention and treatment services, and in-home parent skill-based programs, which include parent skills training, parent education and individual and family counseling. While additional funding for prevention services is welcome, the bill pays for them by cutting federal support for adoption assistance and too severely limiting congregate care when needed. The Senate has a companion bill with uncertain timing.
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