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Trump to Impose Sweeping Steel and Aluminum Tariffs
President Trump said on Thursday that he would impose stiff tariffs on imports of steel and aluminum, making good on a key campaign promise and rattling stock markets as the prospect of a global trade fight appeared imminent, the New York Times reported. In a hastily arranged meeting with industry executives that stunned many inside the West Wing, Trump said he would formally sign the trade measures next week and promised they would be in effect “for a long period of time.” The action, which came against the wishes of Trump’s pro-trade advisers, would impose tariffs of 25 percent on steel and 10 percent on aluminum, effectively placing a tax on every foreign shipment of those metals into the U.S. The president told more than a dozen executives that he wanted the tariffs to apply to all countries, arguing that if one country was exempt, all other countries would line up to ask for similar treatment, and that metals could end up being shipped to the U.S. through exempted countries. Trump’s authority to impose such sweeping tariffs stems from a Commerce Department investigation that concluded last month that imported metal threatened national security by degrading the American industrial base. Stocks fell in response to the potential tariffs, with declines in the industrial sector outpacing the overall market. Trump’s announcement came despite months of heavy pushback from American companies that use metals in their products, like automakers and food packagers, and foreign officials, who warned that tariffs would strain relations and could prompt retaliatory trade actions. It also elicited a swift and severe response from Republican lawmakers, who said the action would ultimately hurt American companies, workers, consumers and the economy.
Supreme Court to Decide Fate of Public-Sector Unions
Public-employee unions face a reckoning Monday when the Supreme Court hears a long-anticipated lawsuit seeking to strip them of the power to bill collective-bargaining costs to employees who don’t want to pay, the Wall Street Journal reported. The case arrives at the court as a dispute between a state employee in Springfield, Ill., and the union that represents his bargaining unit over a $45 monthly payroll deduction. The stakes are much higher: A ruling for the plaintiff would sap the strength of public-employee unions in states where they have been a pillar of the Democratic Party coalition. Under federal law, states hold significant discretion to decide the degree of power organized labor can exercise in the workplace. They can decide whether private businesses and labor unions can include in contracts “union-security” clauses that require hires to join a union or pay it an “agency fee” for representation in collective bargaining. Without such provisions, labor leaders say, too many employees would become free riders who benefit from union-won contracts while burdening more altruistic co-workers with overhead costs.
Pension Overhaul Bill Introduced in Kentucky Senate
A long-awaited plan to overhaul one of the country's worst-funded public pension systems was introduced on Tuesday in the Kentucky Senate, setting the stage for debate on one of the defining issues of this year's legislative session, the Associated Press reported. The new measure would not force any current or future state employees or teachers to move into a defined contribution 401(k)-style retirement plan. That was the cornerstone of the plan Kentucky Gov. Matt Bevin (R) wanted lawmakers to consider in a special session that never happened last year. Last year's proposal drew fierce opposition from hundreds of thousands of state workers and public school teachers. The backlash came in advance of an election year, the first since voters gave Republicans full control of the Kentucky legislature in 2016. Bowen said that the new plan balances the need to stabilize the pension systems while honoring commitments to public employees. The new bill also would not require all employees and teachers to pay an extra 3 percent of their salary for a retiree health benefit. And the new version does not create an incentive for employees and teachers to retire at their earliest possible eligibility by ending the ability to accrue more service credit in their current defined benefit plan.
Public Pensions Are Still Betting More Than Half of All Assets on Stocks
Public pension funds that lost hundreds of billions during the last financial crisis still face significant risk from one basic investment: stocks, the Wall Street Journal reported. That vulnerability came into focus earlier this month as markets descended into correction territory for the first time since February 2016. The California Public Employees’ Retirement System, the largest public pension fund in the U.S., lost $18.5 billion in value over a 10-day trading period ended Feb. 9, according to figures provided by the system. The sudden drop represented 5 percent of total assets held by the pension fund, which had roughly half of its portfolio in equities as of late 2017. It gained back $7.4 billion through last Thursday as markets recovered.
California Cities' Pension Bills May Rise With CalPERS Move
California cities may see their annual pension costs rise under a new policy from the state’s retirement system, threatening to foist added financial pressure on those already struggling to pay for promises to public employees, Bloomberg News reported. The California Public Employees’ Retirement System (CalPERS) is advancing a staff recommendation that would shorten the amortization period for new pension liabilities from 30 years to 20. That would boost the system’s funded ratio, require localities to pay off the debt sooner and allow the pension to recover faster from market downturns, according to a staff report. Approved by a CalPERS committee on Tuesday, the full board was set to vote on the changes yesterday. The ramped up schedule, while positive for the solvency of the pension system by letting it book gains faster, would make market losses felt more swiftly by local governments and require them to pay more into the retirement fund in at least the first few years. The shorter period reduces the possibility that the system, which currently has about 68 cents for every dollar in liabilities, falls below 50 percent funding, board member Bill Slaton said during the meeting.
MetLife Pegs Number of Workers Missing Benefits at 13,500
MetLife Inc. said that roughly 13,500 workers were left without their monthly retirement benefits over the past quarter century because of a records mistake, the first time the insurance giant disclosed the specific number of people affected by the pension snafu, the Wall Street Journal reported. In a regulatory filing on Tuesday, MetLife attributed the problems to a policy established 25 years ago to contact would-be pension recipients twice, rather than employing aggressive search techniques to track down people and make them aware of their eligibility for monthly income. It then shrank balance-sheet reserves that reflected MetLife’s payment obligation to these people. The company also said it lacked a system under which details about the missing payments were escalated throughout the company. At least some top executives, the company has previously said, didn’t become aware of the problems until last fall.
Atlanta Fires Back at Morgan Lewis With New Lawsuit in Pension Fight
Morgan, Lewis & Bockius represents two pension funds in their lawsuit against the city of Atlanta, but this week the city took the firm to court over how it’s being paid, the American Lawyer reported. The city’s lawsuit, filed on Thursday in Fulton County Superior Court, alleges that the firm assisted the chairs of the General Employees’ Pension Fund Board of Trustees and the Police Officers’ Pension Fund Board of Trustees in withdrawing nearly $1 million in pension assets to pay for their own ongoing lawsuit against the city. The funds sued the city late last year over an ordinance that consolidated the two, as well as a third that is not party to the lawsuit. “The city recently became aware that hundreds of thousands of dollars were removed from the [General Employees' Pension Plan] and paid to Morgan Lewis in connection with legal challenges to the ordinances, including the evaluation, development, preparation, and filing of the litigation,” the lawsuit said.