Please note, the following article originally ran as the Washington Report column in the April 2015 issue of the ESOP Report, the newsletter of The ESOP Association.
If you would like additional information about newly introduced pro-ESOP legislation, read the ESOP bulletin.
This past month a set of inquires came in to The ESOP Association that the office has never really seen before.
Traditionally, when a committee, or committees, of the Congress, usually tax committees, work on revising law, or adding law pertaining to ERISA plans in general, and ESOP law in particular, it is not uncommon to have a Congressional office reach out to the Association’s office with questions. Not as frequent, but not unusual, the reach out is from a Congressional office of a member of the Congressional committees with jurisdiction over Title I of ERISA, which has the fiduciary provisions of law, along with some provisions on diversifying ERISA plan’s assets — these committees are often loosely referred to as the education and labor committees.
And we must cite one other example of why the Association might hear from a Congressional office — the member has openly and publicly co-sponsored a pro-ESOP legislative proposal, and the Association has that member listed publicly on its website as an ESOP “advocate.” Most often, and it is almost without fail, these members of Congress jumped on the pro-ESOP bandwagon due to direct visits with an ESOP company, or companies in her/his district or state.
But, here is the new development that triggered Association staff direct involvement with government relations responsibilities to sit back and wonder, “How come?”
How come over the past two months Congressional offices whose elected leader is not listed as an ESOP advocate, and who is not on the tax or labor committees of Congress, have unilaterally reached out to the Association’s DC office desiring to have a briefing on ESOP law, and to talk about new proposals the Representative or Senator is pondering to encourage ESOP creation?
While it would be dumb to set forth concrete reasons, there is reasonable speculation as to why are these not heard from before members of Congress reach out to the Association for ESOP information.
Interestingly, all of these inquiries came from a Congressional office of a Democrat.
So, what is it that has Democrats who have not been ESOP advocates, and who do not serve on a tax or labor committee, interested in promoting ESOPs?
It is a series of developments: One, the book The Citizen’s Share by respected academics Drs. Joseph Blasi and Douglas Kruse of Rutgers, and Dr. Richard Freeman of Harvard, attracted the attention of a think tank whose reputation among Democrats is very high — the Center for American Progress, or CAP. CAP staff, even before the book’s publication, was reviewing various policies that would increase the wage and wealth of average pay Americans, and broad-based ownership was on its radar screen for review. CAP staff actually had a half day roundtable discussion, with persons knowledgeable about broad-based ownership.
To highlight its work to increase income and wealth of average pay citizens, CAP sponsored a “summit” of top economists and opinion leaders that issued a paper full of recommendations to address income issues. In the paper was a straight forward endorsement of policies to increase “ownership” among more Americans, and ESOPs were specifically cited as an example of a program that did broaden ownership.
In conjunction with the CAP paper, famed economist Peter Orszag, who was President Obama’s first Director of the Office of Management and Budget, a very influential position in our government though not realized by most citizens, wrote a very straight to the point opinion piece for the widely read Bloomberg blog stating that President Obama needed to be forceful in promoting more ownership among Americans, citing ESOPs as did the CAP summit document.
Meanwhile on two recorded occasions — i.e. not a back room unpublished conversation — for the first time since Robert Reich was Secretary of Labor, the current Secretary of Labor, Thomas Perez, gave a glowing endorsement of ESOPs as good policy.
And, the Employee Ownership Foundation (EOF): You read it right, the Association’s affiliated 501(c)(3) was not directly involved, but…. Research supported by the Foundation and the publicity garnered by data gathered made its way into the discourse, woven into The Citizen’s Share in certain passages and sections — cited not as EOF materials, but citing work that neutral third parties had done on broad-based employee ownership that EOF helped fund, but certainly not controlled; data in a similar vein noted by the CAP staff people working on how to increase more ownership among average pay persons.
So, Democrats that prior to a few months ago did not take note of employee ownership, are beginning to do so.
Let it be said without hesitation; throughout the 90s and first 14 years of the 21st Century, the vocal men and women in Congress for promoting ESOPs were Republicans — much of its stemming from these men and women coming of maturity when their favorite national figure Ronald Reagan was President, and who was the best friend ESOPs ever had in the White House.
Always support for ESOPs in the tax and labor committees have been both Democrats and Republicans; and always the list of advocates is nearly balanced between the two, as when a member of Congress learns about ESOPs up close and personal on a company visit, s/he becomes a supporter.
But recently, it is pleasing to see the interest in ESOPs grow as opinion leaders that have the ear of Democrats in Congress have become more open about the value of employee stock ownership via the ESOP model.
Let us not let the “new” interest falter.