Reuters is reporting: “Senate Presses Forward on Pension Relief.” According to the article, the Senate “pressed forward on Tuesday with a bill granting U.S. companies billions of dollars in pension funding relief, despite Bush administration protests over proposed extra breaks for the airlines and steelmakers” and that a final vote on the bill is scheduled for Wednesday. Differences between bills passed by the House and Senate must be reconciled before a final version can be sent to President Bush.
You can access information about the Pension Funding Equity Act of 2003, H.R. 3108, here. You can access some of the very interesting debate going on from the Senate floor here.
As many of you probably already know, three Cabinet secretaries said they would urge President Bush to veto the bill if it contains provisions giving special relief to airlines and other companies that have fallen behind in their pension payments, as reported at CNN.com: “Administration threatens veto of pensions relief bill.” You can read the letter written to Senate majority leader, Bill Frist, here.
Continue reading for one Senator’s remarks, likening pension funding deficits to credit card debt. This same Senator Fitzgerald spearheaded a hearing held yesterday on the mutual fund industry, which you can read about in a separate post.
“I know pension funding is something that perhaps makes the eyes of the press glaze over. Not many members of the public understand the importance of this. This is a very roundabout way of transferring liabilities to taxpayers. It is not easy for people to understand. But if I were to make an analogy that the average American could understand about what we are doing here, imagine that you have someone who is behind in their credit card payments. Imagine that you said to that person, you are behind in making your payments on the credit card. You are only making the minimum payment. You are trying to make a minimum payment due each month. You have this huge balance. It is going to take years and years to pay off this deficit of what you owe the credit card company or the bank. Imagine if this person were to have their minimum payments lowered. Imagine that when they are already just barely making the minimum payments, you say: OK, we will even lower your minimum payment.
We are doing that here. But in addition, we are going beyond that. We are telling the credit card holder while you are lowering your minimum payments and digging the hole deeper so that you are likely never to get out of debt, we are going to go out and allow you to continue spending and add more to your credit card. Can you imagine a credit card company telling anybody that? That wouldn’t be a way to advise a distressed consumer to try to get out of debt.
We are doing that and more here today in the Senate. We are not only allowing these companies to quit making their required payments into their pension plans, but we are allowing them to continue spending. We are allowing them, specifically if they are 60-percent funded, to keep sweetening the pension benefits for their employees and digging the hole deeper. That would be not only allowing the credit card holder to keep spending but encouraging the credit card holder to go out while they are behind in the payments on this one credit card and get some more credit cards and run up balances on those credit cards.
Obviously, if we pass this legislation we are going to make it hopeless for some companies ever to recover and to fulfill the promises they have made to their pension participants.”