Obama Seeks ‘Automatic Pensions,’ Labor Enforcement

President Barack Obama called for establishing automatic workplace pensions and expanding unemployment insurance as part of his spending plan for the U.S. Labor Department next fiscal year.

Obama is proposing a 4.7 percent increase in the Labor Department’s budget to $13.3 billion for the fiscal year beginning Oct. 1. That’s an increase from an estimated $12.7 billion in the current fiscal year and $11.8 billion in 2008, according to a budget outline submitted to Congress today.

The budget “lays the groundwork for future establishment of a system of automatic workplace pensions, to operate alongside Social Security, that is expected to dramatically increase” retirement and personal savings, Obama’s Office of Management and Budget said in its outline, without giving details on the costs.

The plan would force employers that don’t offer retirement plans to enroll employees in a “direct-deposit IRA account,” with the option for workers themselves to opt out. Currently, 75 million working Americans, or about half the workforce, lacks employer-based retirement plans, according to the administration.

The proposal “raises more questions than it answers,” said Representative Howard “Buck” McKeon of California, the top Republican on the House Education and Labor Committee.

“We need to take a step back and question this ever- expanding role for the federal government,” he said in a statement.

Extended Benefits

The pension plan would increase the savings participation rate for low and middle income workers to about 80 percent from 15 percent now, according to the budget blueprint.

The president also proposed making extended unemployment benefits more of an “automatic stabilizer” when certain economic conditions arise. The change aims to make the unemployment insurance program a “more effective social safety net,” the administration said. The proposal didn’t provide details on how that would be done or the extent of the changes.

Republicans in Congress may oppose efforts to broaden the unemployment insurance program, said James Sherk, a labor analyst at the Heritage Foundation, a Washington-based research group promoting free enterprise and small government.

“The entire premise is faulty,” he said. “Unemployment insurance is not supposed to be a safety net. Its not heating assistance or food stamps, it’s not supposed to be an expanded version of welfare.”

Workplace Regulations

Obama also proposed spending more money to reduce improper benefit payments. More than $3.9 billion in unemployment insurance benefits were erroneously paid in 2008, the administration said. The budget blueprint proposes collecting overpayments through garnishment of federal income tax refunds and boosting states’ resources for enforcement.