The Senate is positioning to scuttle an ambitious California effort to create retirement security for low-income workers, with a vote Wednesday morning that aims to block the state and others from launching programs to automatically enroll millions of people in IRA-type savings plans.

Wednesday’s roll call brings to a head an early confrontation between the state and the Trump-era Congress. The retirement law is a signature achievement of California Senate Leader Kevin De Leon, who worked on it for years and has helped lead a national effort to move similar laws forward in other states – all of which are threatened by the congressional action.

The House passed the measure to block the program in March at the urging of De Leon’s fellow Californian and longtime political rival, Kevin McCarthy of Bakersfield, the House majority leader. President Trump plans to sign the measure if it reaches his desk.

The vote comes amid an intense lobbying campaign by the 38-million-member AARP and other advocacy organizations urging senators to keep the innovative program in place. The AARP has been running radio ads this week calling on senators to protect the program, and it has put lawmakers on notice that the organizations members will be informed about how they vote.


We stand with states & small businesses across the country that are working together to help workers save. The US Senate should do the same. https://t.co/RPZOo3qGOj — AARP Advocates (@AARPadvocates) May 2, 2017

“Too many small business employees don’t have a way to save for retirement out of their regular paycheck,” said a statement from AARP Executive Vice President Nancy LeaMond. “Voting for this resolution would harm small businesses’ employees who need access to retirement plans so they can save for a more secure future.”

But senators are also being pressured by the U.S. Chamber of Commerce and a coalition of Wall Street investment firms to stop California and others from moving forward with the savings programs.

Opponents of the programs, which would set aside a small percentage of earnings in retirement accounts for 6.8 million workers in California alone, warn they lack the federal investor protections of existing retirement plans. Supporters say that argument is a red herring put forward by Wall Street firms anxious about the prospect of new competition, and that exemptions from federal rules enable states to limit the administrative burden on small employers subject to the new law.


California and other states were moved to address the large share of the workforce not enrolled in any retirement plan after efforts to create a federal “automatic IRA” program stalled years ago. Reports by some bipartisan think tanks and policy analysts suggest the programs could ultimately save states billions of dollars by creating a measure of financial security for elderly Americans who otherwise end up on the rolls of Medicaid, food stamps and other safety-net programs.

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