Intense pressure from members of Congress—aided by behind-the-scenes work of the AFT—has prompted the Bush administration to back off a new policy that would penalize contractors who offer traditional defined-benefit pensions and healthcare plans.

In a June 19 letter to Sen. Pete Domenici, who chairs the Senate Committee on Energy and Natural Resources, Energy Secretary Samuel Bodman announced he would suspend the policy for one year "to continue to consult with stakeholders."

Bodman made the announcement in the wake of bipartisan Congressional opposition to the regulations. Just a few days after the policy was announced in late April, the AFT alerted key lawmakers in Congress as well as AFT members, leaders and the public, and AFT president Edward J. McElroy strongly criticized the move, charging that "this administration is helping to write the playbook on how to cheat workers out of their retirement and healthcare" (see statement).

The Energy Department on April 27 said it would no longer reimburse contractors if their pension and medical benefits exceed "market-based benchmarks," specifically, defined-contribution pension plans (similar to 401(k)) and market-based medical benefit plans The policy would apply to new contractor employees.

This new approach would use federal tax dollars to undermine traditional retirement benefits and health care coverage, charged the AFT, and a unified labor and Congressional effort forced a one-year moratorium on the DOE regulations.

Senior Democrats in both the House and Senate sent letters to President Bush demanding that he rescind the policy.  Such a regulation "is a direct attack on Americans' retirement security" and "will erode the quality and comprehensiveness of health care benefits for employees, and could unfairly penalize the least healthy workers," said Minority Leader Harry Reid (Nev.) and seven other senators who signed a May 5 letter. The Democrats were joined by key Republicans who also objected to the policy.

"This policy sets a very dangerous precedent that could be extended to other programs funded by the federal government, such as education, healthcare, or federal grants to states," said AFT lobbyist Bill Cunningham.  "It represents an extreme anti-worker agenda and we must continue efforts to permanently ban this approach."

June 21, 2006