Date: 2005-12-15
Speaker: GEORGE MILLER (democrat)
Chamber: H
State: California

Madam Speaker. I yield myself 5 minutes. Madam Speaker. when we are starting to deal with the pension plans that protect Americas retirements. one of the- things we should do is to make a decision not to do any harm. But the fact of the matter is that this bill makes things worse in many ways for many pensioners in this country and many future pensioners. First. and foremost. we created the Pension Benefit Guaranty Corporation to be there to protect some of the retiree benefits of people if pension plans went bust or the corporations went bust. We are now told that this legislation makes that problem worse. The speaker who was just in the well said there was some $23 billion in deficit in that plan. And what we now see is a Pension Benefit Guaranty Corporation. the Congressional Budget Office tells us that this makes it at least $9 billion worse over the next decade. So while we narrow the deficit. in fact we see that we increase this agencys deficit problems. This is an agency that can look out into the future and can see up to $100 billion of liabilities possibly coming their way. Maybe some of them will not come because of this bill. but many of them will come because of this bill. because this bill. in fact. makes it easier. makes it easier to terminate plans. It makes it easier to put plans into .bankruptcy. It certainly does not make it any more difficult to put into bankruptcy as we saw with United Airlines. So what does that mean? That means that a plan that was designed. an insurance policy that was designed for when companies went out of business. now companies can take their pension plans. the retirement nest eggs of their workers. and put them into bankruptcy. and the company can go merrily on fts way. I do not choose that term lightly. "merrily on its way." because after what we saw after years and decades of manipulating the pension plans of United Airlines. about not being truthful with the employees. not being truthful with the public. not being truthful with the shareholders about their liabilities. they put them into bankruptcy. Those workers had given back billions of dollars in wage concessions. retirement concessions to try to keep that airline afloat. They were not able to because they went into bankruptcy. Yesterday. we learned that the top executives of that corporation have* now petitioned the court to distribute $235 million in stock to those very same executives that ran this corporation into the ground. that they are going to get $235 million in stock. The employees who had all of the concessions. all of the cutbacks. the employees are going to be required to service. maintain. run and staff those airlines. start all over. having fallen and been cast to the floor. That iswhat is wrong with this legislation. It treats those in the corporate suites entirely differently than it takes care of the workers on the shop floor or on the airlines or in the repair facilities. That is the problem with it is that we see that this plan simply does not provide the kinds of protections necessary. the kinds of protections that are necessary for those employees who have worked so terribly long for those corporations. who invested their entire lives in these corporations. Plus the fact that it also makes it. and we are told by a number of the employer groups. this is what makes it more likely that the companies will terminate their plans. that they will freeze their plans. What does that mean? That means a lots of people who may be 50. 55 years old today. just as we found out with the cash balance plans."this makes it easier to do a cash balance. a lot of people who are working today are going to find out that they will not have a retirement nest egg that they have been planning on. They will not be able to carry out the standard of living that they were anticipating to provide for their families. That is what this legislation does. It makes those. kinds of decisions much easier. much easier for the companies to do that. What does that mean? That means that America is going to end up with a poorer- retired population than they had before. That means that these people are going to have less of the kind of retirement that they had anticipated because of the acceleration of the terminations. because of the acceleration of the freezing of the plans and because of the ease which you can now go and apparently the acceptability in the business community of entering bankruptcy. We changed the personal bankruptcy. laws in thisCongress because we said people ivere using it as a convenience. It is interesting now that the corporations have decided they will use it as a convenience to redesign themselves. to reconfigure themselves. to reinvent themselves. If United Airlines is the model. the only losers will be the workers and the retirees in those corporations. That is what this legislation does not do. It does not really speak to trying to make sure that we could do all that we can to secure the retirement of current workers and of future retirees. I would urge my colleagues to vote against this legislation when we get to that vote and understand that we should not be making the problems of Americas pensioners even worse than they are today. Madam Speaker. we are facing a serious pension crisis that has already cost employees across the Nation billions of dollars in lost benefits--benefits they were told were ironclad. If you calculate just the losses employees suffered in the Nations four largest pension terminations it exceeds $6 billion in earned defined benefit promises. Lets be clear what is happening to our retirement systemthis Enron the sequel. This is Enron 2 with a Oengeance. This is a national disgrace. This bill does absolutely nothing about companies who decide to use the Federal Government to dump and run on their promises to employees. Exploiting loopholes in our pension and bankruptcy laws. clever lawyers have -turned a Federal agency that was supposed to be a last resort for companies that were closing shop. into a dumping ground for companies to ditch unwanted promises toreward investors at the expense of employees and taxpayers. So powerful is this gaping hole in our pension protections. companies can now exact major wage and benefit concession by merely threatening to terminate their pension plan. Folks. if you want help fast forward to the new WalMart economythis is your bill. If you want to further weaken employees hand in the battle for fair wages and benefits. this is your bill. If you want to stand by and watch as companies freeze. downgrade or drop their pension plans. this is your bill. Last summer thousands of United Airline employeesmechanics. flight attendants. and pilotslost billions in irreplaceable pension savings that changed their lives forever. These familiesdenied the courtesy of even a single hearing before the Education and Workforce Committeeparticipated in an online hearing Democrats sponsored. Over 1.000 participated in this unique online hearing and their powerful voices were heard. Thlay wrote to us about the personal and financial devastation resulting from the loss of promised benefits. and the lost opportunity to earn future benefits. Listen to Kenneth Schmidt. a longtime employee of United from Goodyear. AZ. who wrote: Dear Congressmen. I had worked for United for 38 years when I retiredin February of 2003. My job as a mechanic was always a source of pride to me. I worked midnights for many years. with doing so I missed out on many family gatherings. holidays. etc. This was what I chose to do in life. and I did it with no complaints. But. now I am faced with large cuts to my retirement benefits. My retirement should be a time of taking- it easy. traveling. and enjoying my "Golden Years". If this cut happens both my wife and I will be forced to reenter the work world. probably full time. if our medical insurance is also affected. This is a sad time in this country for all the workers who are relying on a pension to ease their lives. and make this time relaxing. and enjoyable. The stress that is being created by this turn in events is not healthy for anyone. Please try and help all retirees. and future retirees out of this most unfortunate set of troubles. Guess what this bill says to Kenneth Schmidt and the millions of future Ken Schmidts who have suffered from broken pension promises: Too bad. tough luck. Youre on your own. How can it be that tens of thousand of United Airlines employees like Ken Schmidt lose billions of dollars in promise benefits. and we do nothing? For example. we all know that United Airlines was permitted to terminate its flight attendants plans without ever having to show it was necessary to continue operating the company. The plan Wvas terminated despite the testimony of a government hired economist who concluded the United plan was affordable and should be continued. This bill .does nothing for them. The Democratic substitutedenied by the Republican leadershipwould have restored the United plan until the company showed it couldnt afford it. This bill does nothing for thousands of pilots whose benefits are cut by half or more by the Federal Government when a plan is terminated. When a plan is taken over by the PBGC after termination byits sponsor. the PBGC is required by law to impose ah~avy penalty of those who retire at age 60even airline pilots who are forced to retire at age 60 under Federal law. Our substitute fixes this injustice and allows pilots to get the same maximum PBGC benefit other workers receive. H.R. 2830 rejects the Senate bill provisions that provide urgent relief to companies like Delta and Northwest airlines so these companies dont terminate their plans. Our Democratic substitute includes this urgently needed relief. If you want to let the hardearned pensions of airline employees across the Nation crumble into a heap of broken promises like United and USAirways. this is your bill. Mr. Chairman. the sponsors of. H.R. 2830 have referred to it as a "pension reform bill." They say it will reforfn the Pension Benefits Guaranty Corporation thats already $23 billion in the red and going up. And they say it will turn around $450 billion in underfunding reported by the Nations pension plans. In truth. this bill not only fails to tackle pension reform. it actually hastens the unraveling of the PBGC and defined benefit plans. Here is what the Congressional Budget Office says about this bill: "H.R. 2830 would actually increase the PBGCs 10 year net costs by $9 billion. or by about 14 percent compared to with what it would be under current policy." The PBGC found the samethat H.R. 2830 would mean billions more red ink to its agency over current law. How can a bill be reforming a system if it is increasing the PBGCs red ink over current law? It cant. and thats why this bill is a sham. This bill also repeals two longstanding. bedrock protections for employees that. if permitted to pass. will haunt employees for years to come. First. this bill overrides discrimination laws against older. existing workers for cash balance plans without any transition protections. It means that older workers will face up to what the GAO calculated would be up to a 50 percent cut in their benefits. These angry constituents will be calling the offices of Members of Congress in drovesjust like thousands of IBM employees who spent years seeking to rectify deep cuts in pension benefits from a cash balance conversion. They will ask why Congress permitted companies to slash their benefits with no transition protections. no option to stay in the traditional plans. with no legal recourse. Tough luck to them. according to H.R. 2830. By contrast. the bipartisan Senate bill has significant protections for older workers. but this bill rejects them all. This bill is also larded up with lots of special interest perks. but none as pernicious as the repeal of the longstanding prohibition on conflicted investment advice. Federal pension law has always required investment advice to employees to be on the 16velfree from selfinterested. tainted financial advice. No more. This bill gives a sweetheart deal to investment houses by allowing them to offer conflicted investment advice to employees so long as they disclose to them that fix is in. And of course. it ignores years of mutual fund financial scandais involving padded fees and commissions. secret market timing. late trading. and more uncovered by the SEC. Elliot Spitzer. and other State attorneys general. Here is what Arthur Levitt. former SEC chairman. says about the Boehner/Thomas investment advice provision. . . . I have reservations when . . . advice comes from the very same mutual fund company whose products are for sale to a plans participants. One of my bedrock principles of investing is that advice should come from mutual parties with no axe to grind. Financial journalist Jane Bryant Quinn and NY Attorney General Elliot Spitzer have also expressed strong opposition to this change. Its amazing that we dont lift a finger for the Ken Schmidts of the world.. but we pull out all the stops to reverse a 30year bedrock protection for employees for mutual funds and. investment firms lobbyists. By contrast. the Senate bill does not include this repeal and goes further to actually strengthen the independent advice employees receive. This bill does nothing to ensure fair treatment between workers and executives. Under this bill. if an employer does not fund its pension plat above 80 percent. then the workers get punished by benefit limits. Whats the penalty for the executives who ran the plan down between 60 percent and 80 percent? Zero? If an employer does not fund above 60 percent. the bill requires more benefits limits for workers. For executives. only a weak provision for new executive compensation. with loopholes that allow the companies to promise future golden parachutes. This bill doesnt reform our pensions. it actually hastens the pension crisis according to two independent Federal. agencies. Rather than encouraging companies to keep their defined benefit plan. in place. it encourages companies to freeze. downgrade or drop their pension plans altogether. It gives the green light to companies who want to dump and run. and opens new loopholes for mutual funds to steer employees into investments that feather their own nests at the expense of employees. It overrules age discrimination laws to slash the pensions of older workers and other existing employees. And it launches new. punishing benefit cuts for employees of underfunded pension plans. while letting the very executives who ran the company and the pension plan into the ground off the hook. And it does nothing to address the urgent crisis of our airline companies and employeeswhere jobs and the hardearned retirement benefits of hundreds of thousands of Americans hang in the balance. I urge you to oppose this bill. Madam Speaker. I reserve the balance of my time.