Dueling JCT scores on ESOP legislation

Politico

28-07-2025

With help from Lawrence Ukenye
QUICK FIX
SCORE SETTLING: A bill to make it more attractive for businesses to offer employee stock ownership plans, or ESOPs, would cost well over $100 billion over the next decade according to Congress' nonpartisan bean counters.
An estimate from the Joint Committee on Taxation obtained by POLITICO found that S. 1727 would run $155.6 billion over 10 years, as employers and workers take advantage of the bill's 'unique' tax treatment compared to more traditional pay and investment vehicles by diverting money toward ESOPs.
'Compared to wages, this form of compensation would be less expensive: there is no limitation on deductions, and there is no application of employment taxes to employer contributions to retirement plans,' the JCT's analysis, which notes that tax collectors would likely recoup some of these costs in the long term.
The estimate, dated July 24, was conducted at the request of Sen. Bernie Sanders (I-Vt.), the top Democrat on the Senate HELP Committee.
A parallel estimate JCT prepared for HELP Chair Bill Cassidy (R-La.) shows that total would shrink to just $7.4 billion over that 10-year period if KSOPs — a set-up that blends aspects of ESOPs and 401(k)s — are excluded from the legislation. Cassidy sponsors the legislation, along with a companion measure S. 1728, which is part of a batch of bills the Senate HELP Committee is scheduled to take up on Wednesday.
A HELP spokesperson said that the KSOP tweak is one of several changes that will ultimately bring the legislation's price tag far below the version of the bill that the JCT relied upon.
'The JCT score in question is from an analysis of the incomplete framework of the bill and does not include key elements like exclusion of KSOPS, contribution limits and others that will almost completely reduce this score and will be a part of the legislation considered during the markup,' Ty Bofferding said in a statement.
'This also ignores the fact that the economic benefits of any retirement legislation would be realized after the limited 10-year scoring window. Portraying this JCT report as representative of the legislation set to be marked up this week is maliciously misleading.'
A spokesperson for Sanders declined to comment beyond the JCT report.
Business groups and ESOP proponents argue the Labor Department and federal law has been stacked against these plans for decades and see a window of opportunity with Republicans in full control of Congress and the White House. Cassidy has fashioned himself as a champion of ESOPs as a way for employees to build equity in the companies they work for.
ESOP detractors say guardrails are necessary to ensure that workers are not taken advantage of and left with worthless or overpriced stock.
GOOD MORNING. It's Monday, July 28. Welcome back to Morning Shift, your go-to tipsheet on labor and employment-related immigration. Send feedback, tips and exclusives to [e-mail], [e-mail], [e-mail] and [e-mail]. Follow us on X at @NickNiedz and @Lawrence_Ukenye. And Signal @nickniedz.94.
Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories.
LEGAL BATTLES
STRIKE TWO: A second federal judge has ruled against the Labor Department in its attempt to suspend operations at Job Corps centers across the country.
U.S. District Judge Dabney Friedrich, a Trump appointee in D.C., ruled Friday that DOL's plan violated the Administrative Procedure Act and the Workforce Innovation and Opportunity Act in a case filed by several Job Corps enrollees.
'At bottom, DOL's position is entirely circular: So long as the agency uses the term 'pause' and never makes a final decision to 'formally close' a center, it is authorized to shutter any Job Corps center indefinitely,' Friedrich wrote.
Friedrich's preliminary injunction follows a similar ruling by a district court judge in Manhattan that was narrowed last week to comply with the Supreme Court's CASA decision limiting the courts' ability to block government policies nationwide.
Friedrich's injunction is notable because it sidesteps the Supreme Court's restriction by tying it to the APA, an argument that Judge Andrew Carter Jr. rejected Wednesday in the other case.
A DOL spokesperson did not respond to a request for comment on the ruling.
Unions
HONEY, NOT VINEGAR: The head of the North America's Building Trades Unions is hoping to stanch setbacks in construction projects his members are working on by appealing to the president's image as builder-in-chief.
'We're talking about red states that are really being hammered by some of these decisions,' NABTU President Sean McGarvey told POLITICO. 'I want to give the president the benefit of the doubt. … If he had the time to see the net effects of this, I think the president would call a time out and bring in his team and say: 'Whoa let's take a look at what we're doing here. I'm a builder — I know what it takes to build projects and this is not good.''
NABTU has been tracking a host of actions taken by agencies in recent months to scuttle or impede projects that it says are worth billions of dollars and thousands of jobs, such as the Grain Belt Express transmission line that recently saw a conditional loan guarantee cancelled by the Energy Department. McGarvey said that there's no guarantee that other projects will sprout up to replace those job opportunities.
'There's so many people involved in a project, both on the public side and the private side, that once you shut the machine down, it takes a long time to get the machine running again,' he said.
Though the strategy may be a stretch, given Trump's deep-seated opposition to things like wind energy and the allure of big-name companies promising to invest in U.S. manufacturing, NABTU has proven to be one of the few unions to demonstrate traction with the White House.
To wit, the Office of Management and Budget last month instructed agencies to adhere to a Biden-era policy requiring project labor agreements on most federally funded construction projects after the Defense Department and General Services Administration attempted to circumvent the policy. NABTU won a court victory in May and lobbied the Trump administration to reverse course.
Related: 'Boom fades for US clean energy as Trump guts subsidies,' from Reuters.
AROUND THE AGENCIES
NEW ADDITIONS: The Equal Employment Opportunity Commission last week added three senior personnel to work with acting Chair Andrea Lucas' leadership team.
Sharon Rose is joining the EEOC as chief operating officer after previously serving as senior counsel at DOL's Office of the Solicitor. Shannon Royce will serve as Lucas' chief of staff and previously worked at the Department of Health and Human Services.
Amanda Smith was appointed to serve as director of communications and legislative affairs; she previously served as a senior adviser at the Republican National Committee.Most recently, she co-led government affairs communications at Lockheed Martin.
PLAYING NICE: DOL last week rolled out an expansion of self-audit programs across its workforce protection arms, which can help employers correct problems and head-off the possibility of government investigations.
As part of the initiative, the Wage and Hour Division is reviving a payroll audit program launched in 2018 that was scuttled early in President Joe Biden's tenure, while the Occupational Safety and Health Administration is expanding Voluntary Protection Programs. DOL's mining regulator and veterans employment office are also offering new resources.
In the Workplace
SIGN OF THE TIMES: A steel plant in J.D. Vance's hometown is shutting down an experiment in clean energy and doubling down on coal, Scott Waldman reports for POLITICO's E&E News.
The Biden administration's plan to transform the clean energy economy relied on hundreds of billions of dollars in subsidies and incentives, which in turn would help generate additional private investment.
The Trump administration has almost completely reversed that approach, undercutting both the Inflation Reduction Act and the bipartisan infrastructure law — and pledging to increase the nation's reliance on coal and other fossil fuels.
More workplace news: 'Working Grandmas Are Redefining Grandparenthood,' from The Wall Street Journal.
In the States
GOV'T EFFICIENCY, Pt. 1: New York is one of the slowest states to process workers' unemployment insurance claims and begin paying out benefits, New York Focus reports.
'New York paid 64 percent of eligible people within [21 days] in the first half of this year — far below the 87 percent benchmark that the federal government considers 'acceptable.''
The delays have also gotten worse in recent months, dipping as low as 55 percent on-time in May. The state Labor Department said it has fewer employees handling UI claims than before the pandemic.
— Pt. 2: A flaw in a New York City youth jobs program's direct-deposit system allowed scammers to fraudulently draw millions from ATMs, The New York Times reports.
More state news: 'In Las Vegas, Republicans take victory lap on 'no tax on tips' policy; Democrats decry its details,' from the Las Vegas Sun.
WHAT WE'RE READING
— 'Intel to Lay Off 15% of Workers, Cancel Billions in Projects in Bid for Rebound,' from The Wall Street Journal.
— 'AI intensifies battle for talent, housing and investments in San Francisco,' from The Washington Post.
— 'ICE Took Half Their Work Force. What Do They Do Now?' from The New York Times.
THAT'S YOUR SHIFT!