4. “A NEW LEGISLATIVE ERA IN THIS COUNTRY”: PENSION REFORM FROM BLUEPRINT TO BILL
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The public officials on the Cabinet Committee hoped to draft legislation based on their report, but this task posed a stubborn, though common, dilemma. The groups the committee proposed to regulate—employers and labor unions that ran private pension plans—said regulation would do more harm than good.Agency officials did not know enough about pension plans to assess these objections.And the groups that did have pension know-how were the very employers and unions that opposed the committee’s recommendations . Why should they help the administration prepare regulations they opposed? Faced with this quandary, the Cabinet Committee resolved to prepare legislation with or without private-sector assistance. Business and organized labor had pension expertise. If, as these groups claimed, pension reform was bad policy,they could prove it or live with the measures the administration devised on its own. In retrospect,the Cabinet Committee’s aggressive tactics were a great success . In three years’ time, agency officials turned the sketchy recommendations in Public Policy and Private Pension Programs into a detailed legislative proposal,which the Labor Department sent to Congress in May 1968.The bill that became ERISA was a later iteration of this Labor Department bill.At the time, however, the administration’s foray into pension reform was a political fiasco that revealed just how great the distance was between supporters and opponents of pension reform. In the course of drafting a bill, the members of the Cabinet Committee and their staff aides concluded that pension reform legislation would not achieve its employee-protective goals unless it included minimum vesting and funding standards and a termination-insurance program . Jacob Javits, who introduced a comprehensive pension reform bill in March 1967, reached the same conclusion. Business groups and most of organized labor categorically opposed some or all of these initiatives. 116 4 “A New Legislative Era in This Country” Pension Reform from Blueprint to Bill In January 1968, the Cabinet Committee urged President Johnson to propose legislation with vesting and funding standards and termination insurance as part of the administration’s legislative program. As in 1964, the committee’s recommendation trapped the president between reformers in the executive branch and business leaders who objected to regulation of pension plans. Initially Johnson stalled. When congressional initiatives on pension reform forced him to act,he attempted to steer a middle course.The White House allowed Willard Wirtz to send the bill to Congress on behalf of the Labor Department rather than the administration.In the event,Johnson ’s scheme failed miserably and brought the rift over pension reform clearly into focus. As the Ninetieth Congress drew to a close, business groups warned of a government takeover of the private pension system, while the Treasury and Labor Departments criticized private pension plans as a“flimsy foundation”that exposed employees to“an incredible list of‘ifs’ and ‘maybes.’”1 “no danger of rash pension laws” The Johnson administration took up the issues in the Cabinet Committee Report when it began preparing its legislative program for 1966.2 InAugust 1965, the White House established a Task Force on Labor and Related Legislation whose mandate included the preparation, in conjunction with the Treasury Department, of “a position with respect to the recommendations of the President’s Committee on Corporate Pensions.”3 Willard Wirtz’s appointment as chair of the group guaranteed that the recommendations would receive sympathetic consideration.4 As the task force began its work, Wirtz asked Peter Henle,the Labor Department economist who had directed the staff group that wrote the Cabinet Committee report, to call staffers together again to develop“alternative suggestions for possible future action.”5 Renewed congressional interest in pension and welfare plans led agency of- ficials to consider reforms that went beyond the Cabinet Committee’s proposals . Legislators had paid little attention to pension plans since 1962, when Congress passed the Disclosure Act Amendments and self-employed pension legislation. In the Eighty-ninth Congress, which began in January 1965, interest picked up. Around the time the White House began preparing its legislative program, John McClellan (D,Ark.), the Senate’s foremost investigator of union malfeasance, convened hearings on a subject that had received relatively short shrift from the Cabinet Committee—the conduct “A New Legislative Era in This Country” / 117 118 / “A New Legislative Era in This Country” of plan administrators. Public Policy and Private Pension Programs recommended additional disclosure and limits on pension fund investments in employer securities, but the Cabinet Committee did not propose regulation of...


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