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Posted on 01/26/2004 5:09:00 AM PST by OXENinFLA
The Senate will be back on the floor Monday, Jan. 26 1:00 p.m.:
Convene and resume consideration of H.R. 3108, the Pension Funding Equity Act.
http://thomas.loc.gov/cgi-bin/bdquery/z?d108:h.r.03108:
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The PRESIDING OFFICER (Mr. ALEXANDER). Without objection, it is so ordered.
Mr. LOTT. Mr. President, what is the parliamentary situation? I wish to speak on the pending legislative issue, the pension bill. Is the floor open for comments?
The PRESIDING OFFICER. Yes, it is.
Mr. LOTT. Mr. President, I rise in support of this legislation. I commend the Senators who have been involved in working out most of the disagreements, including Senators GRASSLEY, BAUCUS, GREGG, KENNEDY, and, of course, our leaders, Senator Frist and Senator Daschle, who have all been involved in working through the difficulties of this legislation.
Quite frankly, this is complicated and difficult legislation to understand. A lot of times, people start referring to issues by acronyms such as COLA or DRC. If you are not really involved in the intricacies of pension issues and, particularly, this area of deficit reduction contribution, you can get lost in the details. You can even be misled as to what the reason for it is and what the impact will be.
I have followed this issue because I am a member of the Finance Committee, which has jurisdiction in the area of pension plan contributions, and also as chairman of the Aviation Subcommittee of the Commerce, Science, and Transportation Committee. I do believe the airline industry is in a difficult situation now, but I think they are a critical part of America's economy and our transportation system. There is no question that they have been greatly impacted by fuel costs, the events of 9/11, and even, temporarily at least, by the war in Iraq. They have been struggling to deal with those issues. They also have had mistakes in their past, in management decisions. Some of the contracts they have with labor put real pressure on them in terms of being able to make enough money to pay all the costs of delivering this service. Regardless of that, I think it is hugely important for America that we have a viable and available airline industry.
We have been doing things to try to help them. Right after 9/11, we passed major airline relief, leading up to the war in Iraq. In the aftermath of 9/11, we provided direct assistance to the airlines. Late last year, we passed the Federal Aviation Administration reauthorization, a significant multiyear legislation that was hard to get through, but we got it done. It was supported by management and labor and the administration in the end. That gives some certainty about what the administration will be doing, what they can do. We opened up some areas that needed some changes. This area is also very important to the survival of some of our airlines.
Some will argue that it gives the major airlines an advantage over the smaller airlines. I certainly am not in a position to want to do that. I want all of our airlines to be able to meet the responsibilities and commitments of their pension plans but also to be able to stay in business and provide service. We need the shorter routes, the ones that fly from point to point, and the hub airlines. I want a healthy airline industry. This is one step in that process.
Some people will attack this legislation and say the airlines brought it on themselves. Sure, they have made mistakes, but a lot of things they are being hit with cannot be put at their doorstep as being their fault. They
[Page: S162] GPO's PDF didn't cause 9/11. They have not been responsible for the increasing and up and down prices of fuel. A number of factors that have played into their economic situation they cannot be blamed for. They have certainly made mistakes, but this is not something they brought on. This is a requirement in the law that we put on them. This is a part of the PBGC legislation, where they have to pay into the pensions, and we capped how much they could pay in.
A few years ago, in 2000, the airlines were committed and paying, I think, 100 percent of what was needed. But in the last year or two, they have fallen under severe pressure, and, as a result of the quirks in the law, they now would have to pay an accelerated penalty, even more money, because of the 30-year Treasury bond calculation process to determine how much they paid in. That has come to a conclusion. They have to go to a new system.
My point is that I think this DRC relief is the right thing to do. It is a temporary 2-year deal. They are not absolved of all of their responsibilities. It is an 80-60 percent--80 percent relief in the first year, 60 percent in the second year, and only plans that were not subject to the deficit reduction contribution relief in 2000 would be eligible for this relief.
The plans would not be able to increase benefits if they were 75 percent funded or less. An application process would allow companies that are not in those industries to request DRC relief if they were not subject to the DRC in 2000.
This is a temporary modification to provide relief to allow airlines to work through the difficulties they are having now. I believe this relief will enable them to move forward and fulfill their commitments in the future.
It is not going to bring in all of the plans. It is targeted at airlines and steel only, and I understand only a couple of steel companies would be affected by this.
This legislation is bipartisan. Democrats and Republicans have been working to try to address some of the concerns and deal with the recognition that interest rates have contributed to this problem, stock market declines have contributed to this problem, and what would we do to be of assistance to the airlines. But it also makes sure the PBGC is not left holding the bag. I think we have come up with the right solution.
Some people will argue the DRC relief will actually worsen the financial standing of the PBGC. I am concerned about the financial stability of the PBGC, but I think this temporary, limited relief will actually be in its best interest. If we do not do this, some of these airlines will go into bankruptcy and PBGC will have an even more difficult situation on their hands. If these companies wind up taking chapter 11, then the pension fund is going to have a problem.
The point might be made: Let's wait for the bigger pension reform bill. I know Chairman Grassley and others want to have broad pension reform. We need to do that. But we are not going to be able to do it in the next month or two, and I don't even think we are going to be able to get it done this year. We need to do it. We ought to do it. This problem is imminent. If we don't act by April 1, these airlines and steel companies are going to have to pay at the accelerated rate, which they are not going to be able to do. So it is timely. We have to act now because in a very short period of time, the roof will come falling in on these companies.
I understand there may be a couple of amendments. I appreciate the fact that Members did work with me on a provision I had concerning multiemployer withdrawal liability. We worked on compromise language that is in the legislation which I think is acceptable. Many of the questions that were raised by the chairman of the Budget Committee and by Senator Kyl of Arizona have been addressed. I understand they may have an amendment or two. We ought to debate those amendments and have a vote. But then I hope my colleagues will allow this legislation to move forward, go on to conference, and let's get it done in a timely fashion. It is in the best interest of the airline industry and, I believe, the PBGC, and the American taxpayer.
I thank the Chair. I yield the floor.
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So THAT'S what this bill is for.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
(Purpose: To limit the liability of the Pension Benefit Guaranty Corporation with respect to a plan for which a reduced deficit contribution is elected)
At the end of section 3, insert:
(__) LIMITATIONS ON PBGC LIABILITY FOR PLANS TO WHICH ALTERNATIVE DEFICIT REDUCTION CONTRIBUTION APPLIES.--
(1) IN GENERAL.--If a plan with respect to which an election under section 412(l)(12) of the Internal Revenue Code or section 302(d)(12) of the Employee Retirement Income Security Act of 1974 (as added by this section) is made terminates during the applicable period, the maximum guarantee limitation under section 4022(b)(3) of such Act, and the phase-in rate of benefit increases under paragraph (5) or (7) of section 4022(b) of such Act, shall be the limitation and rates determined as if the plan terminated on the day before the first day of the applicable period.
(2) APPLICABLE PERIOD.--For purposes of paragraph (1), the term ``applicable period'' means, with respect to any plan, the period--
(A) beginning on the first day of the first applicable plan year with respect to the plan, and
(B) ending on the last day of the second plan year following the last applicable plan year with respect to the plan.
For purposes of this paragraph, the term ``applicable plan year'' has the meaning given such term by section 412(l)(12) of the Internal Revenue Code of 1986 and section 302(d)(12) of the Employee Retirement Income Security Act of 1974 (as added by this section).
Mr. KYL. Mr. President, let me describe briefly what the background of this amendment is and what the amendment will do--the effect of the amendment is actually quite simple--and then I will discuss the reasons for it.
As you are aware, the background of this legislation is the House-passed bill, H.R. 3108. An amendment to that bill has been offered by the chairman of the Finance Committee, the ranking member, and others that would make some corrections to the House bill, H.R. 3108 and, among other things, provide for a partial waiver of some payments that otherwise would be made into the fund that helps to guarantee the pension benefits of employees.
We are aware of the fact that the Federal Government has undertaken a responsibility for ensuring that pensions which are funded by employers will actually be there when the employees need to collect on those pensions. But in some cases, corporations run out of money, go bankrupt, go out of business, or otherwise can't meet these obligations. In that situation, the Federal Government has to step in and has agreed to do so under certain terms through the Pension Benefit Guaranty Corporation. As a result, we have an obligation to ensure that the funding for these contingent liabilities is secure. Part of the way we do that is to ensure that the employers that make the obligations to their employees pay in enough money to be able to pay for the benefits they have promised.
The problem is that some of these corporations are not in very good shape. As a result, there is a fear that they are not going to be able to make the contributions they need to make in order to pay the benefits to their employees when the time comes.
As a result of this concern, what we have done is to say these corporations need to make some catchup payments to ensure the money will be there. This is necessary in part because of a technical problem in the way that the funding was fixed based upon a U.S. Government security that is no longer issued, as a result, we are having to substitute a different basis for the payment which will be a blended corporate bond rate, a technicality, but that is going to be the basis for a couple of years of contributions for corporations until another method is devised.
In the meantime, corporations whose pensions are underfunded are being required to make up some of these contributions, and it is called the deficit reduction contribution, or the DRC, to reduce the deficit that has been created and that we need to make up if the money is going to be there for the employees when it comes time to collect their pensions.
[Page: S167] GPO's PDF
---------------------------- I'm not sure if KYL is talking only about the Amendment or if he's referring to the whole bill in general. Either way this does not look like a good thing.
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Mr. DASCHLE. : Administration officials systematically misrepresented the threat from Iraq's nuclear, chemical, and biological weapons programs and ballistic missile programs.
And I'm SURE Daschle has uniquivical proof of this 'systematically misrepresented' threat.
WOE THE DAY!
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