In contrast to their usual opposition to regulations, Republicans were the group defending these federal guidelines. Before the vote this week, Senator Mitch McConnell of Kentucky, the majority leader, said the state rule “undermines a private retirement savings system that millions of Americans have counted on for decades.”
Five states have already passed laws allowing for these privately managed, state-sponsored savings accounts. Dozens of others are considering versions of the legislation. If President Trump signs the bill, and the White House had said he would, the experiment would take a hit.
“This current Congress seems to want to put fingers in their ears and covers over their eyes,” said Betsey Stevenson, a professor of economics and public policy at the University of Michigan and the chief economist at the Labor Department from 2010 to 2011. “There are some really hard problems with retirement, but this is an easy one.”
Approximately 55 million Americans lack workplace retirement accounts. Inertia and ignorance are among the reasons many do not enroll in employer-sponsored retirement plans. So the Obama administration constructed the Labor Department rule to encourage states to set up these savings plans on their own, without being subject to Erisa.
J. Mark Iwry, a senior adviser to the Treasury secretary in the Obama administration, was a co-author of a paper proposing an automatic individual retirement account, a precursor of the automatic enrollment programs states devised. Mr. Iwry said that when he was developing the concept, he thought: “Hey, this is kind of cool. This is something for which people might be able to cross the ideological chasm.”
“I was talking to a bunch of states simultaneously, not with the thought that they would take the lead on this ultimately, but just that, if a state or two started down…