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Democrats saved union pensions after Hoffa's long campaign

Biden's American Rescue Plan Act provides $83 billion to prevent deep cuts to pension benefits. Here's how the Teamsters quietly maneuvered taxpayer aid to union retirees.
Joe Biden speaks at the Teamsters Vote 2020 Presidential Candidate Forum Dec. 7, 2019 in Cedar Rapids, Iowa.
Joe Biden at the Teamsters Vote 2020 Presidential Candidate Forum on Dec. 7, 2019, in Cedar Rapids, Iowa.Win McNamee / Getty Images file

WASHINGTON — No one knows better that elections have consequences than labor union leaders, who secured an $83 billion pension-fund bailout in President Joe Biden's American Rescue Plan Act.

"Without Joe Biden winning, and we won the two Senate seats in Georgia and we were able to do reconciliation, none of this would’ve happened," James P. Hoffa, the general president of the International Brotherhood of Teamsters, said in a telephone interview with NBC News. "The Republicans weren’t going to do it.

The Teamsters' Central States pension fund, covering nearly 400,000 workers and retirees, is the marquee beneficiary of pension provisions attached to the larger relief bill. But labor leaders say as many as 200 plans will be shored up, providing direct benefit to as many as 1.5 million people in the short term, and many more overall.

"That means the difference between eating and not eating, and having a good retirement and one where you’re basically out there working trying to survive," Hoffa said. "The No. 1 priority, we've solved it."

This account of the Teamsters' drive to save retirement plans for millions of pensioners is drawn from interviews with several of the union's officials, congressional sources and the public record. It begins with one Hoffa, the late Teamsters chief James R. Hoffa, and the Central States pension fund he started. And it ends with a yearslong campaign by his son, James P. Hoffa, to work the levers of influence in Washington to salvage the retirement money of union members.

Every Republican voted against the Covid-19 relief measure, and many of them specifically targeted the pension legislation for derision because they said it was an expensive gift from Democratic leaders to labor allies that would be funded by taxpayers.

"Americans know this bill will benefit states and unions that have been poorly mismanaged," Rep. Lauren Boebert, R-Colo., said on the House floor.

Over time, union rolls have dwindled, meaning there have not been enough active workers contributing to pension funds to meet the obligations owed to retirees. Officials with the Teamsters union point to Washington's deregulation of transportation industries in the 1970s and '80s as a driver of the problem. The markets played a role, too, with busts taking an enormous toll on the Central States fund and similar multiemployer union pensions.

The Central States fund was due to go broke by 2025 without assistance, and many of its beneficiaries had already suffered cuts in their checks as a result of a 2014 law that allowed pension trustees to approve reductions in an effort to remain solvent.

That law, part of a broader budget measure signed by President Barack Obama, kicked the Teamsters into overdrive because it paved the way for pension plans to slash benefits for retirees to stay afloat. Worse yet, the unfunded liabilities were massive enough to push the federal Pension Benefit Guaranty Corporation into oblivion.

Democrats stepped in this month with the proposal to pump money into the troubled pensions.

House Ways and Means Committee Chairman Richard Neal, D-Mass., said during House consideration of the American Rescue Plan Act that he doesn't think of the pension provisions as a bailout.

"It's a backstop," said Neal, who sponsored the pension measure before it was folded into the American Rescue Plan Act. "If we didn't come to the support of these pensions, it would take down the Pension Benefit Guaranty Corporation, which insures pensions for Americans in the private sector."

Republicans, of course, saw things differently.

"They will continue to be chronically underfunded," Rep. Tom Rice of South Carolina, said. "This problem needs to be fixed, but this plan does nothing to fix the problem."

Teamsters labour union James P. Hoffa speaks at a news conference regarding truck drivers striking against what they say are misclassification of workers at the Ports of Long Beach and Los Angeles in Long Beach
President of the International Brotherhood of Teamsters labor union James P. Hoffa speaks at a news conference regarding truck drivers striking against what they say are misclassification of workers at the Ports of Long Beach and Los Angeles in Long Beach, Calif., on Oct. 27, 2015.Bob Riha Jr / Reuters file

About seven years ago, Hoffa tapped John Murphy, a senior vice president for the Teamsters, to build a lobbying campaign that combined a dedicated team in the union's Washington office and grassroots pressure from union-retiree constituents calling and visiting lawmakers.

The Teamsters and other labor leaders brought Speaker Nancy Pelosi, D-Calif., to a town hall meeting in Detroit in July 2018 to talk to several hundred union members. At the time, they were pushing Washington to help with a less-generous loan program backed by Treasury bonds.

"We have a defined challenge to our country that we should not be facing, because it's just not fair and it's just not right," Pelosi told the crowd, according to The Detroit News. Every time she saw Hoffa in recent years, she would greet him with the word "pensions" before he could get it out. When Democrats took control of the House in 2019, Pelosi moved the loan-program bill through the House. But it was dead on arrival in the Senate, where then-Majority Leader Mitch McConnell, R-Ky., opposed the costly fix.

Then, when Democrats won power in the Senate in January on the strength of a pair of run-off election victories in Georgia, the dynamics of the pension issue changed dramatically. Instead of asking unions to address their pension liabilities through a loan program, Democrats saw an opportunity to inject tens of billions of dollars of relief into the multiemployer pensions to keep them solvent for the next few decades.

Biden, who framed much of his campaign around rebuilding unions as a path to strengthening the middle class, was on board. Hoffa spoke to him repeatedly about the issue during the 2020 election cycle.

"He said 'I'll be there,'" Hoffa said. "He was very well aware of it."

But Democrats hold very thin margins in the House and Senate. Any defection could have scrapped the provision or the whole bill.

Murphy was so glued to his television screen during overnight Senate votes on March 5 and 6 that his wife told him he needed to "get a hobby" that didn't involve tracking procedural maneuvers in the wee hours.

He grew more nervous when Sen. Joe Manchin, D-W.Va., voted with Republicans on an unrelated amendment that would have shortened the relief bill's bonus unemployment benefits from September to July. But when Manchin later gave Democrats a 50-49 majority on an amendment changing the horizon to Sept. 6, Murphy's spirits lifted.

"It wasn’t until he came back home on that unemployment that I really felt good that we were going to do it," Murphy said. "It was razor-thin."