Maybe the '70s Weren't So Bad

I have to admit, the passage of health care was a bittersweet moment for me. On one hand, I'm glad we've finally passed legislation that will provide medical coverage to so many Americans. Being a self-employed, small business owner paying too much for coverage, having family members with pre-existing conditions and being a proud dad with kids that will be graduating college in the blink of an eye, this bill positively affects me and my family. And almost as important, having universal health care is what the mightiest civilization in the history of mankind should do...protect their own.

But on the other hand, I wonder if politics may have prevented an even better piece of legislation. Instead of two opposing points of view meeting in the middle and working together, this bill was instantly sensationalized and isolated as the dividing line for the 2010 mid-term elections. Instead of coming together and solving a problem that EVERYONE agrees exists, a bitter game of politics threatens this bill as lawsuits mount and positions become firmly entrenched.

It made me curious to learn more about how a piece of legislation that deeply affects my daily life, ERISA, came to be. Passed in 1974, ERISA is the birth of the IRA and 401(k) and transitioned us from a "pension" society where companies were responsible for an employee's retirement into the "401(k)" society we are today. ERISA was a major piece of legislation that has been amended and modified along the way and still is the law of the land governing retirement accounts. And it has quite a bit in common with the current health care bill.

The problem America was facing in 1974, according to the speech President Gerald Ford's gave prior to signing the bill, was too big to ignore. "From 1960 to 1970, private pension coverage increased from 21.2 million employees to approximately 30 million workers. During this same period, assets of these private plans increased from $52 billion to $138 billion. And they are now increasing at a rate of $12-15 billion a year. It will not be long before such assets become the largest source of capital in our economy."

"Yet, this same growth in pension plans has brought with it a host of new problems. Many workers have ultimately lost their benefits – even after relatively long service – because when they left jobs, they thereby gave up rights to hard-earned pension benefits. Others have sustained hardships because their companies folded with insufficient funds in the pension plan to pay promised pensions. In addition, some pension funds have been invested primarily for the benefit of the companies or plan administrators, not for the workers."

In 1974, we obviously had a Republican president, but what did the legislative branch look like? This was the 93rd Congress and the Democrats were firmly entrenched. They had control of the Senate (56 D, 42 R, 2 O) and the House (242 D, 192 R, 1 O). It's believed the idea for the bill was conceived in the 60s while Kennedy (D) was president. It gained steam in '63 after Studebaker went bankrupt and couldn't afford to pay pension benefits. The bill was introduced in 1974 to the House by a Democrat and to the Senate by a Republican. This was a non-partisan effort to say the least.

Public officials in the executive branch and Congress overcame strong opposition from business and organized labor to pass ERISA. Before it passed, federal law gave employers and unions great discretion in the design and operation of employee benefit plans. Most importantly, firms and unions could and often did establish pension plans that placed employees at great risk for not receiving any retirement benefits. In the early 1960s, officials in the executive branch proposed a number of regulatory initiatives to protect employees, but business groups and most labor unions objected to the key proposals. Sound familiar?

Faced with opposition from powerful interest groups, legislative entrepreneurs in Congress, chiefly New York Republican senator Jacob K. Javits, took the case for pension reform directly to voters by publicizing frightening statistics and "horror stories" about pension plans. This deft and successful effort to mobilize the media and public opinion overwhelmed the business community and organized labor and persuaded Javits's colleagues in Congress to support comprehensive pension reform legislation. ERISA was signed into law on September 2nd, Labor Day, by President Ford...24 days into his presidency.

The need for ERISA was so similar to the need to reform health care, but solving it was handled so much differently. Both parties worked together to overcome special interest and big businesses. ERISA passed Congress with an overwhelming majority, 376-4 in the House alone. This comment, again from President Ford's speech, struck me the most. "It is essential to bring some order and humanity into this welter of different and sometimes inequitable retirement plans within private industry." Go back reread that last line but substitute the word "health care" for "retirement".

Chalk it up to the naivete of youth if you must, but I still believe politicians can come together and do good things when they're more concerned about their constituents well being than their votes. I hope the new health care bill overcomes its difficult, partisan beginning and blossoms into a great piece of legislation. ERISA was born in the turbulent 60's and was passed 24 days after Nixon resigned because of Watergate. Even with all of that politicking happening, they still found time to write, sell and pass good legislation...together.

I hope, for all of us, the partisan tone of today's politics soon finds itself out of favor. It's making me sick.