Two More Repeal Targets Republicans hedge on rescinding a pair of damaging regulations.
https://www.wsj.com/articles/two-more-repeal-targets-1493225908
Congress is making good progress on rolling back Obama Administration regulations, but a case of political nerves is protecting two obvious targets for repeal that are still standing: a Labor Department exemption from the Employee Retirement Income Security Act (Erisa) for state-run retirement plans and the Education Department’s borrower defense rule.
Such left-leaning states as California, Illinois, Maryland, New Jersey and Oregon have passed laws to set up state-administered retirement accounts for workers in the private economy who aren’t covered by employer plans. Employers would be required to automatically enroll workers in the state plans and deduct payroll contributions—up to 10% of wages in California—though employees could opt out.
The putative goal is to reduce administrative fees through economies of scale. But workers can easily sign up for a low-cost Roth IRA over the internet and choose how much to contribute. Liberals don’t trust workers to make their own financial decisions, so Democrats want to “nudge”—the behavioral economist’s euphemism for compel—them to sock away more money while giving politicians control of their investments.
Many workers would unknowingly contribute a share of their wages to retirement plans they don’t know exist and may not be able to exit. They also wouldn’t be protected by Erisa since former Labor Secretary Tom Perez last year exempted state plans with automatic enrollment. Thus, an employer in Wisconsin who enrolls workers in a 401(k) would be deemed a fiduciary. But in California an employer’s fiduciary obligations would be waived if he enrolls his employees in the state plan. Employers would have a new incentive to drop workers on the public plans that would be guaranteed by taxpayers.
The House has passed a resolution overturning the Erisa exemption, but the Senate isn’t moving. Tennessee Sen. Bob Corker appears to be the main obstacle, arguing that states should be able to experiment. But they don’t need an Erisa waiver for that. The issue is that the Labor rule unfairly favors government plans in a way that could hurt workers.
Meanwhile, Republicans should also move to rescind a midnight rule by the Obama Administration that lets borrowers who claim they’ve been duped by their colleges to discharge their student loans. The Education Department estimated the rule would cost taxpayers between $9.5 billion and $21.2 billion over the next decade, though Obama officials repeatedly underestimated the cost of loan forgiveness.
Colleges could be billed for discharges without due process. The standard of proof would be lower than that for demonstrating fraud in most states, and department officials would defend and adjudicate students’ claims. This would inflate the federal bureaucracy as much as the taxpayer tab.
The rule also sets various “triggers” (e.g., lawsuits) that would allow department officials to demand collateral from colleges. This is how the Obama Administration put ITT Tech out of business. Arbitration agreements and class-action waivers would be prohibited. Nonprofit and public colleges could be targeted by plaintiff attorneys as much as for-profits.
Republicans would do taxpayers and the Trump Administration a favor by unwinding these rules before they do serious damage.
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