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 this road and actually tried to do it, then Congress might take notice and pass legislation to do this,” Mr. Iwry said.
But this week, Mr. Iwry said, “the financial services industry simply directed the congressional majority to throw shade on Labor’s effort to encourage the states.”
Democrats mounted a furious campaign to defeat the bill. Senator Chuck Schumer of New York, the Democratic leader, and Representative Nancy Pelosi of California, the House minority leader, said that President Trump would betray his supporters by signing it into law.
A veto would “show he really did mean it when he said he understood the plight of the American worker,” Mr. Schumer and Ms. Pelosi wrote in a joint statement on Wednesday.
A White House official said in March that, if the bill passed the Senate, President Trump would sign it into law.
The commotion around the vote reveals a deep split between state-level Republicans and those in Congress. Congressional Republicans are comfortable with the ways Erisa defers to the private marketplace. Those in the states see the savings accounts as one of the few ways for low-wage workers to get ahead of living paycheck to paycheck.
This week, a bipartisan group of 23 state treasurers, commissioners and comptrollers wrote a letter to Mr. McConnell urging him to protect their independence on the issue.
“For states, this wasn’t partisan. This was principle,” said Angela M. Antonelli, the executive director of the Center for Retirement Initiatives at Georgetown University. “Red states were saying blue states should have the freedom to do what they want, and vice versa.”
“The states can’t afford to do nothing,” Ms. Antonelli said of the need for them to create a plan in place of Congress. The issue may ultimately be decided by the courts if states decide to sue.
David Damschen, the Republican state treasurer in Utah, wrote in an op-ed in the Washington Times last month that the discussion among Republicans showed that “some lawmakers really do believe the federal government knows best and will act to kill innovation occurring in the nation’s statehouses to appease business interests.”
Few Republicans in Washington buy that argument. Senator Todd Young of Indiana, was one of only two Republicans to vote no on Wednesday. “While state-based retirement plans are not my first choice, if implemented carefully, they could help close the retirement savings gap and ease the strain faced by our social safety net system,” he said.
Representative Francis Rooney, a Florida Republican, was a co-sponsor of the House resolution passed Wednesday by the Senate. He acknowledged the gap between state and national Republicans, but said state-level officials were too eager to meddle in an issue that had long been subject to federal supervision.
“There are Republicans that have a different tolerance for big government intrusion,” Mr. Rooney said. “They have a different tolerance for federalism.”
“Bureaucracies are like amoebas; They just grow and grow and grow,” Mr. Rooney said. “I had one senator ask me, ‘Why would my state treasurer be for this?’ And I said, ‘Because she’s a state elected official who wants to regulate more stuff.’”
For those defending the states’ rights, the debate is not merely a question of oversight. Advocates of the state-based savings accounts see a pernicious influence from special interests.
“All politicians get confused between pro-market and pro-business policies. They listen to their business constituents who are actually lobbying to protect their profits, not to make the market economy work better,” Ms. Stevenson said.
“I think that state Republicans understand that there’s a retirement crisis, and if they don’t help try to solve the crisis by getting people to save more for their own retirement, there will be pressure for bigger government handouts down the road,” she said. “Every penny counts when you’re dealing with low-wage workers.”