[Congressional Record Volume 141, Number 176 (Wednesday, November 8, 1995)]
[House]
[Pages H11930-H11936]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 PROTECTING AMERICA'S PENSION BENEFITS

  The SPEAKER pro tempore (Mr. Bilbray). Under the Speaker's announced 
policy of May 12, 1995, the gentleman from North Dakota [Mr. Pomeroy] 
is recognized for 60 minutes as the designee of the minority leader.
  Mr. POMEROY. Mr. Speaker, at the outset of my special order, let me 
express pretty substantial disappointment in the presenters that have 
occupied the last hour, filling this Chamber with rhetoric that often 
was not based in a single shred of fact.
  Mr. Speaker, I think the people that follow the carryings on in this 
Chamber probably get mighty tired of just long, windy speeches after 
long, windy speeches. What might be kind of fun once in a while is to 
have some meaningful dialog, give and take. God forbid even an honest 
debate might break out here on the House floor, and we had that chance 
that evening. We had that chance in the hour that just passed, and 
repeatedly, as I asked for recognition to pose a question, simply a 
question or a clarification, or to straighten out a flat misstatement 
of fact, I was denied that opportunity.
  Well, there are a couple of things I want to set straight at the 
outset of 

[[Page H 11931]]
my comments. First of all, relative to Bosnia, the matter which we just 
heard a great deal about, there is no proposal before this Congress 
about sending troops, nor does the President have proposals that he is 
enacting about sending troops.
  The action about Bosnia is taking place in Dayton, OH, where a 
terribly important peace conference is going on with leaders of the 
warring camps in Bosnia, seated at a peace table. Lord knows they have 
a long, tough road to how in front of them. Coming out of that, this 
administration has given this Congress the assurance that there will be 
no commitment of U.S. troops without prior opportunity for Congress to 
speak on that question.
  At that time, this Congress will know exactly what is the plan of the 
administration, if any; how many troops, how many countries 
participating in the peace mission, what share might be ours, what is 
the mission, what is the length of time. Those are the questions we 
need to debate on this issue. This matter is not before the House, 
notwithstanding the representations of speaker, after speaker, after 
speaker that have just discussed this question ad nauseam.
  Second point: One of the speakers even had the audacity to talk about 
harm posed by the Democratic plan relative to pensions. I am telling 
you, this is an outrageous misstatement, because there has been nothing 
advanced from this Congress on the Democratic side or this 
administration that would impact either the risk or return on pension 
funds.

                              {time}  2245

  Again, when I sought to pose the question to the gentleman, no, he 
would not yield any time, he did not want to discuss it, did not want 
to debate it.
  We can do better than that. In fact, in the next hour, I want to make 
sure we extend an opportunity. We are going to be debating the $40 
billion pension raid proposal contained in the Republican Budget 
Reconciliation Act which passed the House. I am going to be joined in 
discussion of this topic by the gentlewoman from Jacksonville, FL [Ms. 
Brown] and the gentleman from Wisconsin [Mr. Barrett]. But we do not 
propose to have all the information on this topic, and we would be very 
happy to entertain any from the other side of the aisle that might like 
to come and shed some light on how in the world a proposal makes sense 
for our retirees and future retirees that would allow the withdrawal of 
$40 billion from America's pension funds. Any time anyone wants to come 
to the floor and seek to engage us in debate, I guarantee right now I 
will yield time.
  Let me give a little background before yielding to the other 
participants in our discussion this evening.
  This issue is of significant interest to me because I spent the 8 
years of my professional life prior to coming to Congress as an 
insurance commissioner charged with regulating the solvency of 
insurance companies. I understood very well that often people had 
everything tied up in the security offered by whatever type of 
insurance plan they had in force. Therefore, we had to make sure the 
companies had the solvency to make good on their obligation.
  What do we have with pension plans? The very same thing. Retirees, 
today's retirees and tomorrow's retirees, need to know the companies 
can make good on their pension obligations to their workers. It is 
critical.
  It is even more critical now than ever before, because the Budget 
Reconciliation Act reduces the future spending in Medicare, exposing 
seniors and future retirees to greater out-of-pocket costs for their 
health care bills. So they must understand that their private 
retirement savings are absolutely secure.
  Quite incredibly, in my opinion, in the Budget Reconciliation Act is 
a proposal that would remove the penalties for raiding pension funds 
presently in the law. They estimate that $40 billion would flow out 
of pension funds under their proposal. Why in the world would they 
propose letting companies reach into the workers' pension funds and 
pull out $40 billion? One of two reasons.

  The first is a budget one. Companies deduct income when they invest 
in pension funds. They are taxed on income they pull out of pension 
funds. They recapture some tax. In fact, $40 billion raided from 
pension funds would produce about $9 billion in tax.
  Second, and a reason that I think has to have some bearing on this 
question, because the policy of raiding tomorrow's pension security 
simply to produce a little short-term revenue in the budget situation 
does not make any sense at all. That is absolutely cutting off your 
nose to spite your face in terms of long-term need. I have a sense that 
there must be some very well-placed companies out there with some 
powerful friends in the majority that want to get at their workers' 
pension money, and they have been accommodated beautifully by the 
Republican plan on the pension proposal.
  First of all, let me briefly discuss the history of how we got the 
existing protections in place in law. Remember the go-go 1980's? This 
was the rock-and-roll period of booming financial activity, some of it 
which did a great discredit to commerce in this country. This was the 
type of activity where there was a great amount of hostile takeovers, 
one corporation buying another corporation through transactions known 
as leveraged buyouts. Ultimately, the debt used in acquiring the 
company often was retired by robbing out of the workers' pension funds 
to pay some of the leveraged buyout costs.
  There is a public concern presented by this activity for two reasons. 
First, the workers often stand to get dramatically reduced pension 
benefits. Second, the Pension Benefit Guaranty Corporation ultimately 
supported by U.S. taxpayers guarantees the obligations.
  Since 1974, the Pension Benefit Guaranty Corporation has paid $370 
million for 2,000 failed pension plans. Last year, it paid $720 million 
in benefits alone. Among the failed pension plans, some you will have 
heard of, Eastern Airlines, Pan American Airlines. These pension plans 
do go down, and this taxpayer-backed entity does make the payment.
  Now, when Congress saw pension plans flooding out to the extent they 
did in the 1980's they became mighty concerned. We can see exponential 
growth walking through the 1980's in revenues coming out of worker 
pension funds.

  It became so critical and so obvious that on November 3, 1985, the 
New York Times, almost 10 years ago to the day, had a cover story in 
their business section about raking in billions from company pension 
plans, how corporate officials were raiding pension plans to fund a 
variety of things that had nothing to do with worker pension security 
and placing the retirement security of their workers at risk as a 
result.
  This was unacceptable. This was totally unacceptable. It was not just 
one party that thought that, both parties thought this was 
unacceptable. On three different occasions they moved in place 
protections to stop the outflow of pension funds. In 1986, in 1988, and 
in 1990--on three different occasions--they moved in place serious 
excise penalties to stop the hemorrhage of pension funds, and it 
worked.
  We see the activity in the latter 1980's up to the present day 
dramatically reducing in this chart essentially the flood of pension 
funds out of pension programs to pay for these leveraged buyouts and 
other unrelated activities has all but stopped under the present 
scenario.
  The Republican plan would kick this into high gear. $20 billion 
flowed out of pension funds in the 1980's. The plan contained in the 
Republican majority Budget Reconciliation Act would have $40 billion, 
double the entire amount lost in the last decade, flowing out of worker 
pension funds.
  No one serious about retirement security in this country believes 
that our biggest pension problem as a country is overfunding. We are 
underfunded. We have got to get private capital together so people can 
meet their own retirement needs.
  In that vein, no one that I know of that is responsibly approaching 
this problem believes that the loss of $40 billion from pension plans 
makes the funding crisis we face with worker retirement obligations any 
easier. In fact, it makes it dramatically worse. The Pension Benefit 
Guaranty Corporation has said a plan like this is irresponsible and 
would expose workers' pension security.
  When this matter came before the House, because of the importance of 

[[Page H 11932]]
  the issue, a number of us went to the Committee on Rules and tried to 
get a vote. We had a darned good case to make, because, as important to 
the country as $40 billion of pension funds, this matter did not have a 
hearing in the Committee on Ways and Means, not a hearing. It was just 
marked up and plunked in the Budget Reconciliation Act. We asked in the 
Committee on the Budget for a separate vote. This did not give us a 
separate vote. It was passed as part of the budget package.

  In the Senate, a separate vote was demanded and ordered, because 
their rules do not allow the precluding of separate votes on issues of 
this consequence. By a vote of 94 to 5, the Senators rejected this 
proposal.
  Even today, the proposal lingers in conference committee. Well, is it 
dead or is it not dead? This proposal is very much alive as we debate 
it tonight. I along with my colleagues have not stayed up in this 
Chamber till this late hour simply to hear ourselves speak. We are 
vitally concerned about the seriousness of this issue and the 
unrelenting efforts of some, including the Ways and Means chairman and 
others in this majority, that are insistent upon the enactment of this 
proposal. They will not come to the floor and debate it, as I offered 
on last night and have again issued this evening, but they will try and 
get this plunked into the budget reconciliation package in the dead of 
night, behind closed doors, and we are here to explain this proposal 
and its devastating consequences to the American worker.
  In this respect, I yield to the very distinguished gentlewoman from 
Florida [Ms. Brown], clearly a champion for workers' retirement 
interests.
  Ms. BROWN of Florida. I thank the gentleman. First I would like to 
commend the gentleman from North Dakota for leading this special order, 
and also my other colleague. I am very proud of our class.
  Once again, the party of the rich and famous is up to their old 
tricks again. The recently passed budget plan included a provision that 
would allow corporations to raid $40 billion from pension funds and use 
it for whatever reason they see fit. This provision is just plain 
wrong.
  During the 1980's, as the gentleman indicated earlier, $20 billion in 
pension funds were drained by companies and in many cases used to 
finance corporate takeovers, leaving the retirement savings of millions 
of American workers at risk.
  Mr. Speaker, why do the House Republicans want to risk losing the 
pensions of 11 million workers and 2 million retirees, a lot of them in 
the State of Florida? Why are the House Republicans digging up this 
ill-advised pension raid which failed in the 1980's and is certain to 
fail again? I think I know. It is another tax break for the wealthy at 
the expense of the working people and retirees. Or perhaps they are 
saving the pension fund the way they are going to save Medicare and 
Medicaid, saving it by raiding it.

  The Senate rejected this language. I urge the budget conferees to 
reject it and all Members of this body, the people's House, to stand up 
for the people, the retirees, and the workers in this country.
  Let me say one thing before I go. This is a pink slip. If the 
American people do not wake up, their pink slip is in the mail.
  Mr. POMEROY. Reclaiming my time, and I would pose a question to the 
gentlewoman before she leaves.
  In your district, men and women going to work every day, often 
finding really their entire future pension security riding on the 
solvency of the corporate pension fund that has been promised to them 
when they retire. Do you believe that they are aware that the majority 
party in this Chamber is proposing to expose their pension funds for a 
grab by those who control that corporation?
  Ms. BROWN of Florida. I really think that the American people, and 
particularly the retirees, because we have so many of them in Florida, 
need to wake up. They have no idea what these Republicans are doing up 
here. They have no idea that these Republicans are trying to raid their 
pension funds. We need to inform them. They need to wake up.
  If this goes on, this could be another S&L, would the gentleman not 
think?
  Mr. POMEROY. There is no question about that. We have watched U.S.-
taxpayer dollars amount to tens of billions, hundreds of billions of 
dollars paying off the obligations of failed savings and loans. The 
taxpayer had to weigh in because these entities were insured by a U.S.-
taxpayer-backed insurance program. Pension funds have the same type of 
thing, a U.S.-backed insurance program. That does not mean that 
retirees get all their money, because the amount guaranteed may be well 
less than the amount obligated and committed to them under their 
pension program.
  So it comes out the worst of both worlds. The worker gets stuck, the 
taxpayer gets stuck, and the corporation that fleeced the plan, those 
directors, are probably very long gone.
  In terms of calling this to the attention of the American people, 
though, I must applaud the gentlewoman for her very vigorous efforts in 
her district and beyond to alert workers about the threat posed to 
their pension security.

                              {time}  2300

  Let me ask one question: If I am a retiree in Florida and my time 
comes for my pension that I have worked 30 years or 35 years or 40 
years and the pension is not in, what happens? I mean, what if the 
company is no longer there?
  Mr. POMEROY. That is a very good question. I will assume that you are 
talking about, and I will just answer in the context of an insured plan 
under the Pension Benefit Guaranty Corporation, the PBGC would pay a 
claim on that pension, would pay pension benefits. They may, however, 
not represent the entire amount of the pension that otherwise would 
have been paid had the pension fund not gone belly up.
  There is a critical component of this that I think really reflects 
just how mean-spirited the Committee on Ways and Means action was. When 
they put forward the plan to allow corporations to withdraw from worker 
pension funds $40 billion, an amendment was offered. It was an 
amendment that simply would have allowed notification of the workers. 
You are going to take our pension funds, at least let us know. The 
notification amendment was voted down. The committee went on record to 
allow corporations to quietly, without notice, undermine the solvency 
of the worker retirement fund.
  Ms. BROWN of Florida. I would just say that it is another example of 
the Republican extremists in this country, and remember, you think it 
is somebody else, but your pink slip is in the mail.
  Mr. POMEROY. I really thank the gentlewoman very, very much for her 
participation this evening.
  I now yield to my colleague, the gentleman from Wisconsin [Mr. 
Barrett].
  Mr. BARRETT of Wisconsin. It is a pleasure to spend some time with 
you and the gentlewoman from Florida [Ms. Brown] here tonight.
  I thought it was interesting, as we started this hour, that you 
invited Members from the other side to come down and debate this issue, 
because I think it is an issue that deserves a full debate, and a 
debate we obviously have not had on the floor here in Congress. It is a 
debate, frankly, we did not have in committee, because there was no 
hearing on this proposal as well.
  But as you were making the invitation, it reminded me a little bit of 
``The Price Is Right'': ``Come on down let's talk about it. Come on 
down,'' I think ``The Price Is Right'' is a good television show to 
draw an analogy to here. It is clear what is going on here is the price 
is right. The price of $40 billion being taken out of the pension funds 
is what is going to hit the American people and is going to hit the 
American people very hard.
  It is also ironic that the majority is marching lockstep behind the 
Speaker on this issue, and the Speaker, of course, is a history 
professor, but if there is one thing we seem to have forgotten in this 
whole debate, it is history, because we have been down this road 
before. This is not the first time that this Congress has gone down the 
road of having pensions bled out of companies at the expense of 
workers, so that workers who have worked, as the gentlewoman from 
Florida [Ms. Brown] said, 30 or 40 years, and are hoping to have quiet 
years in retirement, are all of a sudden given a pink slip and told the 
retirement benefits are not there and they can go to the Pension 
Guaranty Corporation.

[[Page H 11933]]

  Many times the Pension Guaranty Corporation will fully fund them. Of 
course, there is a substantial cost to the taxpayers when they do so, 
but not always. It is not always the case that the Pension Benefit 
Guaranty Corporation will pay the whole benefit.
  What I would like to do for the next half hour is have a casual 
dialogue about some of the real world problems, because unfortunately 
we have not had the hearing in the Committee on Ways and Means on this 
issue. We have not had a debate or a separate vote on this issue on the 
floor. And you have already indicated, even the workers themselves, 
when they are going to be affected directly by this, when their 
benefits are going to be directly affected by this, will not even be 
given notice.
  The first, I guess, the first issue is are they their benefits. Maybe 
we have got down there a little card from one of our colleagues. Maybe 
we could take a quick look at that and see what one of our colleagues 
on the other side of the aisle has to say about pension benefits and 
whose money it is.
  Mr. POMEROY. I think this is a pretty classic case where actions and 
words simply do not run in a very consistently way at all.
  Not long before this issue came up, we had another pension issue. Now 
that, in my opinion, was a totally made up issue. It was about the 
issue of economically targeted investments which the other side has 
suggested was a proposal advanced by the Clinton administration that 
would allow the investment of pension funds in unworthy investment 
vehicles. They are flat out misrepresenting that issue.

  No economically targeted investments would be appropriate unless they 
met standards of risk and return consistent with the fiduciary 
obligation of the people running the fund. In other words, no short 
cuts on solvency, no short cuts on return, no short cuts on risk if you 
are going to do one of these so-called economically targeted 
investments.
  Anyway, that was a debate that is now past. But some of the 
statements offered by Members of the majority in the course of that 
debate, I think, underscored the importance of pensions and make their 
own votes in favor of the $40 billion pension grab very, very curious 
indeed. Here is a quote. ``This is the people's pension money. Keep 
your hands off of people's retirement. Keep your hands off the 
pension,'' spoken by a freshman Member of the majority. I agree with 
everything he said.
  The only thing is a vote for a $40 billion pension raid takes this 
statement and turns it right on its head.
  Mr. BARRETT of Wisconsin. That is absolutely correct. I do not know 
if the gentlewoman from Florida [Ms. Brown] wanted to add something at 
this point.
  Ms. BROWN of Florida. As I always say, the Republicans talk a good 
game, but they do not walk that walk. When it comes to the American 
worker, clearly, you know, they do not stand up for the working people 
and not the retirees and not the veterans, and it just goes on and on 
and on.
  Mr. BARRETT of Wisconsin. Let me, if I may, just sort of try to bring 
to the floor here how this issue came about, because earlier this year, 
of course, when the Republicans decided that they wanted to come forth 
with a budget, there was some criticism of them because they did not go 
after corporate welfare. There were Members of their own party who 
said, ``Look, we are leaving corporate welfare alone. If we are going 
to ask people in their country to suffer, if we are going to ask kids 
on school lunch programs to take a cut, if we are going to ask students 
to have student loans cut, ask senior citizens to take a cut in growth 
of Medicare, how can we as a party with a straight face go to the 
American people and say we are not going to touch corporate welfare?''
  They got together and said, ``Let's go after corporate welfare. What 
can we do?'' This is the corporate welfare they are going after; of the 
$25 billion in cuts that they are claiming as corporate welfare, $10 
billion of it comes out of this program. Now, the $10 billion is 
achieved, because as you indicated, I say to the gentleman from North 
Dakota [Mr. Pomeroy], their projections are the $30 billion to $40 
billion will be taken out of pension funds in the next 5 years.
  That is twice as much as was taken out in the 1980's when this was a 
big crisis in our country, so that as far as they are concerned, what 
happened in the 1980's through the entire decade, that was chump 
change. They are not going to kid around with $20 billion. They are 
going for the whole enchilada. They are going for $40 billion coming 
out of the pensions, and the pensions that belong to the workers in 
those companies.
  And as that gentleman said from the other side of the aisle, this is 
the people's pension money, keep your hands off people's retirement, 
keep your hands off the pension. That is a quote from a colleague from 
the other side of the aisle.
  So they have decided, ``OK, if we get $30 billion to $40 billion that 
we can take out of the retirement funds, we will generate some tax 
revenues, because there is still the 25 percent or 35 percent, excuse 
me, corporate tax rate that they will basically have to pay, so that 
will generate $9 billion to $10 billion.'' That as their big push for 
corporate welfare, is they are going to take money away from people who 
are either about to retire or have retired.
  Mr. POMEROY. You know, the very words ``corporate welfare'' would 
lead one to believe that some unfair break given to a corporation was 
going to be straightened out. Well, here, as you so well pointed out, 
they give corporations another big break, and if is at the expense of 
the worker.
  Right now, the corporation is restricted from grabbing a worker's 
pension fund, and those restrictions are eliminated. The excise tax is 
eliminated, allowing any amount over the 125 percent continuing 
liability in the plan to be withdrawn for any purpose whatsoever at no 
excise tax level whatsoever between now and July 1, 1996. I call this 
the windfall window, because this is the time you would really see that 
pension money flow.
  Then they move in place a 6\1/2\ percent excise tax, but that 6\1/2\-
percent excise tax, compared to the 50-percent tax today, I believe the 
6\1/2\-percent tax represents an amount cheaper than the corporations 
could borrow the money, and there would continue to be a very heavy 
draw on workers' pension funds.
  Ms. BROWN of Florida. Do you have any idea what they could use these 
funds for?
  Mr. POMEROY. That is a very good question, and I have been trying to 
think about what they could use them for. I have got basically three 
scenarios.
  Mr. BARRETT of Wisconsin. Let us break it down. Maybe we can help 
out: I am a predator, I am a corporation that likes to go in and take 
over other corporations.
  Ms. BROWN of Florida. I am a worker now.
  Mr. BARRETT of Wisconsin. How does this help me as a predator 
corporation?

                              {time}  2310

  Mr. POMEROY. We have seen this before. This is the whole business 
that provided the financial underpinnings for the hostile takeovers 
that proliferated throughout this country in the 1980's, leaving so 
many of our corporations deeply leveraged and in debt, and so many 
workers unemployed. You are the predator, you want to buy a company; 
you basically want to use as much of this company's assets to pay the 
cost of buying it. In other words, you buy me and use my assets to pay 
off the purchase price. It is a heck of a deal.
  Mr. BARRETT of Wisconsin. This will encourage a new round of predator 
leveraged buyouts.
  Mr. POMEROY. Absolutely, predator companies taking hold of other 
companies and bleed out their pension funds to pay the purchase price.
  Ms. BROWN of Florida. Let me ask the gentleman a question, Mr. 
Speaker. However, as a worker, when you are rightsizing and downsizing, 
you do not need me. So even though it is my pension, I lose my job.
  Mr. POMEROY. That is the tragic irony. All so often in these 
leveraged buyouts where the worker's very pension funds finance the 
takeover, the worker loses his job because of downsizing and 
rightsizing and restructuring and every other darned thing that results 
in so many pink slips that have gone out in so many recent years.

[[Page H 11934]]

  Mr. BARRETT of Wisconsin. Let us assume that I am a family-owned 
corporation, a small corporation that does not want to be taken over, 
that has tried to be as extremely responsible as I could be, tries to 
be a good corporate citizen, so as a result, we have put in more than 
the 125 percent that is required by law. Let us say we have 150 percent 
in the fund. What kind of incentives is this going to put on me?
  Mr. POMEROY. This is one of the most tragic aspects of how this would 
play out, because there are thousands of corporations that understand 
their success is because of the hard work of their workers, and just as 
their workers are committed to the corporation, the corporation is 
committed back to the worker, and they run healthy pension funds to 
make sure there is no question about their ability to meet their 
retirement obligations when their workers retire.
  This corporation is going to have to think again, because a predator, 
just as we described earlier, could take this company over and use 
those pension funds to pay for the transaction, so actually, even those 
companies that highly value their employees and the importance of 
pension security are going to have to draw down the pension funds to 
avoid becoming a takeover target.
  Mr. BARRETT of Wisconsin. In other words, I am going to have, as a 
defensive measure, even though I want to be a good corporation and take 
care of my retirees and the people who have worked for me for 30 or 40 
years, as a defensive measure, so I am not attractive to corporate 
takeover, I am going to have to bleed out as much money as I can out of 
that pension fund and bring it down as close to 125 percent as 
possible; is that what you are saying?
  Mr. POMEROY. That is exactly what I am saying. You might be the most 
responsibly-managed corporation ever in this country, but if your 
pension fund is over that 125 percent amount, you face exposure to a 
hostile takeover, financing the transaction by pulling ultimately from 
your workers' retirement.
  Mr. BARRETT of Wisconsin. If I could, the third scenario, since you 
are an insurance commissioner, the third scenario that I could foresee 
is where you have a company that is not exactly doing that well and 
the pressures it puts on them. Maybe you can tell us your insights 
there.

  Mr. POMEROY. What I saw with insurance regulation as one of the 
earliest signs of a company going under was when they would underfund 
their loss reserves. These are the reserves they put aside to pay 
claims in the future. When they start underfunding, it means they are 
underfunding tomorrow's obligation to meet today's cash flow.
  If a corporation is incompetently managed, and losing money, it has a 
couple of options. It can try and raise money through private markets, 
it can borrow the money, but in either instance it is expensive, and 
very difficult questions may be asked about the competence of that 
corporation's management.
  Would it not be easier to get rid of those penalties restricting that 
corporation management team from getting at the workers' pension money? 
And then would it not be easy for that corporation management team to 
pull off the workers' retirement kitty to meet cash flow demands of 
that corporation? That is exactly what would happen under this. That is 
exactly why the Committee on Ways and Means has allowed this money to 
be used for any purpose whatsoever; no notice to the employees when 
they pull money out of the pension funds, but it can be used for any 
purpose whatsoever. It could even be used for huge corporate bonuses, 
or any other lavish activity, unrelated to the workers themselves who, 
by their productivity, generated the success of the corporation and who 
are owed the retirement security in a well-funded pension plan.
  Mr. BARRETT of Wisconsin. There are really a couple of issues here; 
there is the issue, first of all, of the majority policy change, where 
right now, under current law if corporations are going to take money 
out of this fund, it has to be used for the benefit of the employees, 
essentially. It has to be used for their health benefits, primarily. 
This change means they can use it, as you indicated, for corporate 
bonuses, for buyouts, for expensive vacations, anything they want. So 
we are really departing from the notion we have worked on for the last 
decade that this is the people's money. We are now moving from that to 
the notion that this belongs to somebody else, and these are in fact 
risky investments that they are going to be going toward.
  I personally find it appalling that we have not had any debate in 
committee, we have not had a debate on the floor, and equally appalling 
is that the American workers, if this measure were enacted into law, 
might find out about a bleeding of their pension fund, funds they had 
invested for 30 or 40 years, only after reading about it on a business 
page that their corporation had been sold.
  Mr. POMEROY. Or worse yet, they would find out when the pension fund 
was no longer sufficiently solvent to meet their obligation, and the 
PBGC was entering into it. But all the technical dimension of this 
pension issue aside, do you not think that this Congress owes it to the 
workers you represent that when they move forward a plan that 
represents the biggest threat to solvency of pension plans ever 
considered by this body, that at least they would have a hearing?
  Mr. BARRETT of Wisconsin. You would think they would have a hearing, 
you would think they would have a vote, you would think they would hear 
testimony from people who are involved in this. That is why I think it 
is important for us to point out what the position is of the Pension 
Benefit Guaranty Corporation, because they were asked what their 
opinion was of this $40 billion raid. As Martin Slate, the executive 
director, stated on September 27, 1995: ``Our analysis shows 
that removal of these funds would leave many pension plans with 
insufficient resources to protect retirees and the PBGC. These pension 
plans would not be adequately funded to pay all benefits, should they 
fail. This risk could grow with changes in interest rates and asset 
values, or if companies experience financial difficulty.''

  If the Republican leadership in this Congress would have asked the 
corporation, the government corporation, what its reaction was to their 
proposal, this is what they would have been told.
  Mr. POMEROY. I think that is a very important point, because the PBGC 
is just like a regulator of pension funds. Just like insurance 
commissioners regulate insurance companies, and you would ask an 
insurance commissioner about a solvency question on insurance 
companies, the PBGC is the regulator of pension funds.
  If you have something proposing a $40 billion hit to pension funds, 
you would think you would want to get the PBGC up and ask their 
opinion. It did not happen in the Committee on Ways and Means. 
Fortunately, the PBGC has stated their opinion anyway, and their 
opinion is no way, that is a terrible setback in the stability of 
pension funds. This threatens the security of worker pensions 
throughout the country.
  Ms. BROWN of Florida. Mr. Speaker, if the gentleman will continue to 
yield, this reminds me, in the 1980's we had the foxes guarding the 
henhouse. Now we put the foxes in charge of the henhouse, and that is 
the U.S. Congress, the people's House of Representatives.
  As a worker from Florida or a retiree, I am concerned. I am listening 
to you tonight. What can I do to turn this around.
  Mr. POMEROY. I think that is an important question, because it is not 
too late for the workers across the country to get involved. I would 
answer you this way. I would hope that workers that become concerned 
about pension security would write to their Congressmen, their 
Congresswomen. Chances are if they are represented by a Republican 
Member of this body they have already voted not once but twice to allow 
a $40 billion raid on their pensions. That is unacceptable. Workers, I 
cannot understate the importance of it, have to let their Members know 
that their pension security is absolutely vital to them, and that 
playing with their pensions is simply unacceptable.
  Ms. BROWN of Florida. I have always been so proud of serving in the 
people's House. I have served 10 years in the Florida House, and this 
is my third year here, but now I thank God for the other body, and I 
would say, contact your Senators also, because at least 

[[Page H 11935]]
they have reasons, they have hearings. They just do not ram things 
through.
  Mr. POMEROY. I think that is a good point, the fact that this 
Congress, when it began, was supposed to be the Congress of open rules, 
where we could debate, and what do we see? We see continually that we 
are not allowed to break out very vital policy questions and have a 
separate debate and vote.

                              {time}  2320

  And then, I think ironically, very typical tonight, they did not even 
want to ask questions or have a debate of any kind, even though we are 
here in fairly relaxed format the end of a very busy day. This is the 
opportunity where we could thrash this out; they were not interested.
  Mr. BARRETT of Wisconsin. Congressman Pomeroy, let us shift gears for 
a minute. I would imagine that if we had any Members on the other side 
who wanted to debate this, or perhaps even people who have followed 
this issue, they say we are yelling the sky is falling, we are crying 
chicken, and they would argue perhaps, although I do not share their 
argument, that 125 percent of current liability is more than sufficient 
to cover what is needed to pay for pensions. Can you address that?
  Mr. POMEROY. I will address it this way, responding technically with 
the Pension Benefit Guarantee Corporation. They have done a study, in 
fact, of 10 corporations having that level of funding today. If it 
would be withdrawn, if the funds would be withdrawn as allowed under 
this proposal, they could very likely face solvency problems in the 
future.
  In fact, an interest rate drop of as small as 1 percent, so 
dramatically effects future outlay projections in a pension plan 
actuarial analysis that many would be insufficiently funded to meet 
their worker obligations.
  We have been down this road before. Mr. Speaker, here are some 
examples that my colleagues may recognize. In 1985, United Airlines 
drew $378 million out of their pension fund in a reversion. Today, they 
are underfunded by $1 billion in their pension fund. Goodyear Tire 
bought out $400 million in a reversion in 1988. Today, their workers 
know that that pension program is underfunded by $388 million in 1995. 
The act of the matter is that this level is not sufficient to protect 
them.
  Ms. BROWN of Florida. If the gentleman will yield, it looks like the 
leader, the gentleman from New York [Mr. Solomon] has joined us.
  Mr. POMEROY. Mr. Speaker, reclaiming my time, maybe we can get some 
debate.
  But the 125 percent of current liability, among other things, does 
not address change in the relative position of the workers' advancement 
in position, all of which might require a heavier pension payout in the 
future. In other words, there are many that would tell you, including 
the Pension Benefit Guarantee Corporation, the Nation's pension 
regulator, that 125 percent of current liability is simply not 
sufficient.
  Mr. BARRETT of Wisconsin. Mr. Speaker, if the gentleman will yield, 
speaking of risky investments, maybe the gentleman can share with us 
what one of our other colleagues had to say on this issue.
  Mr. POMEROY. Mr. Speaker, another one of our colleagues on the 
Republican side of the House said after all, can you claim to stand for 
the American worker and at the same time advocate a risky investment 
strategy that undermines his or her retirement funds.
  As far as I am concerned, that question has only one answer: No. You 
cannot claim to stand for the American worker and allow a program that 
places at-risk retirement funds. Again, to be fair, in this case they 
were talking about the earlier issue relative to pensions where there 
was no threat. How someone could make this statement and then vote for 
a proposal that allows a $40 billion raid on pension funds is beyond 
me.
  Mr. BARRETT of Wisconsin. Mr. Speaker, if the gentleman will yield 
further, I think if we look at the current law where you have to have a 
minimum of 125 percent of current liabilities, and analyze that in the 
context of the current market and where we are right now, where we are 
at a situation in our history where the stock market is at an all-time 
high, if that stock market dropped 10 percent or 20 percent, the impact 
that that would have on a currently well-funded retirement plan would 
be devastating. If the assets went down 20 percent, your 125 percent 
cushion would be gone, it would be entirely gone.

  If, at the same time, the assets dropped 20 percent in value, the 
interest rate dropped 1 percent in addition, you would only be at 86 
percent. So all it would take is a little bit of a soft market and 
interest rates dropping 1 percent, and your 125 percent pension is down 
to funding at 86 percent.
  What we are doing, and when I say we, Congress, and unfortunately, we 
have not had an opportunity to vote on this measure in Congress as a 
separate, standing bill, but the Speaker and his followers, what they 
are doing without a vote, without a hearing, without any opportunity to 
talk about this issue before the American people, they are putting the 
pensions of literally millions of American workers at substantial risk, 
and that is wrong.
  Mr. POMEROY. Mr. Speaker, reclaiming my time, I think there is not 
even an internal consistency, because it is part of a budget plan which 
they boast will bring down interest rates. Now, what happens if they 
bring down interest rates? Well, if interest rates fall, we have 
resulting underfunding in the pension plans. So it is not even 
consistent internally. Part of their plan would expose worker pension 
plans at the very time that they brag on the other side about bringing 
down interest rates.
  Mr. BARRETT of Wisconsin. Mr. Speaker, the gentleman is absolutely 
correct, because even if there was no change in the assets, but the 
interest rate dropped 2 percent, a plan that is currently funded at 125 
percent would be funded at only 92 percent. So even if we accept their 
arguments that whatever action they take is going to have a positive 
effect on interest rates and bring interest rates down 2 percent, which 
is what we have heard time and time again, that means the big losers 
are the people who rely on pensions and whose employers have decided to 
bleed the money out of that fund. That is not what should be happening, 
and I share the concern of the gentlewoman from Florida [Ms. Brown] and 
the concern of the gentleman from North Dakota [Mr. Pomeroy] that we 
are setting the stage for another S&L-type debacle, or another return 
to the 1980s where we saw the go-go takeovers and the negative impact 
it had on millions of workers in this country.
  Ms. BROWN of Florida. Mr. Speaker, if the gentleman will yield, I 
just want to say that I think that time is running out, not just for us 
tonight, but for the American worker, and they need to wake up and 
contact their Congress person or contact their Senator on this issue.
  Mr. POMEROY. Mr. Speaker, I think that that point is extremely 
important. We are at the end of a very, very long day. I, like you, 
came to the Capitol earlier than 8 this morning, and it is now about a 
half past 11, and we are here tonight hammering on this issue because 
of the seriousness of the issue to American workers, but unfortunately, 
because of the continuing seriousness of the threat that this thing 
could actually be enacted. It is in conference committee now, and even 
though the Senate has overwhelmingly rejected it, it is in the House 
version.

  We had a motion to instruct conferees considered by this body that 
would have instructed our conferees to go with the Senate position, not 
stick with the House position. You know what happened to that motion, 
it was defeated.
  I am informed that there was a publication that carried news of this, 
even today, that they are still pressing ahead in spite of the Senate 
vote to make sure it is tucked quietly into the total picture. This 
would be a devastating result for the American worker.
  There is one final quote that I think we could wrap this up on, 
because it really does, in my opinion, sum it up. This was offered in 
the earlier pension debate, but how people could say this in one 
pension debate and then move to advance a $40 billion pension rate a 
short time thereafter absolutely confounds me. This one is by our 
majority leader, Dick Armey. He said, on September 11, ``Our message is 
simple: Keep your paws off our pensions.''

[[Page H 11936]]

  Well, I think that Americans all over the country would be very, very 
well advised to give that message unequivocally to every member of this 
body and every Member of the Senate: Keep your paws off of our 
pensions. Clearly, the future, the retirement future of the American 
worker is at stake, and they deserve no less.
  Final comments, Mr. Barrett.
  Mr. BARRETT of Wisconsin. There is a couple of comments that I want 
to make and I think that they are important enough that we should 
continue for a few more minutes on this.
  As you indicated early in your comments, this issue first came to the 
American public's attention in the early 1970's, and maybe we could go 
to that graph for a second, the very first graph, the one that you had 
in front of us. We had seen it once before, but I want to look at it 
again just for a second.

                              {time}  2330

  This issue first raised its ugly head in the early 1980's. As we saw 
in the period from 1982 to 1986, there were $16.5 billion that was bled 
out of pension funds. That is when Congress stepped in and decided that 
it should do something so that the American workers and really 
corporate stability in this country would not be negatively impacted by 
corporate raids based primarily on the value of a company's pension 
fund. So Congress came in and enacted a 10-percent excise fee.
  As you can see from that chart, the amount of reversions as they are 
called, I call it bleeding, dropped from $16.5 to $5.5 billion. In 1991 
again, early 1990's, Congress again acted and basically on a bipartisan 
basis understood that this is not good for the American worker, 
increased the excise tax and basically we saw it drop to a trickle, 
where essentially now corporations that take funds out of their pension 
fund are doing so for legitimate purposes, for health benefits, maybe 
for some other employee stock option or basically for health benefits.
  I think it is extremely important after we know what happened 12, 13 
years ago and saw what a scandal it was 12 or 13 years ago to have 
people who worked 30 or 40 years of their lives, dedicated to a 
company, to see their pensions taken away, to put that in context to 
what is being proposed today, is being proposed today as we can see 
from this chart, is more than double what occurred in the early 1980's 
and essentially double of that which happened during the entire decade.
  Again, you have to give credit where credit is due. This is a 
situation just as Willie Sutton used to say, ``You rob banks because 
that's where the money is.'' What we are seeing right here in this 
Congress is the majority is going after those pensions because that is 
where the money is, and they are not going to kid around with a $100 
million, $200 million, even $1 billion. They are going for $40 billion 
that belongs to the American workers, that the American workers have 
put into those funds.
  I think it is wrong. I think the majority leader was correct when he 
said earlier this fall, ``Keep your paws off that pension money.'' That 
is what we should be doing. We should be keeping our paws off that 
pension money. Fortunately, the Senate, at least in its first go 
around, recognized that, and I think that demonstrates the extreme 
nature of this body when it comes to this issue.
  As we have talked about for the last hour, we have tried over and 
over and over again to get a hearing, to get notification of workers as 
to what is going on, to go before the Committee on Rules and ask them 
to have a separate vote on this very important issue, and time and time 
and time again we have been told, ``Get away, kid, you bother me.''
  The Senate works a little differently. the Senate does allow free-
standing amendments, and when there was some light shed on this issue, 
when the U.S. Senate had the opportunity to look at this issue and had 
to be accountable to the American people, what did they do? They voted 
on a 94-5 vote to take this provision out of the Senate bill.
  We have not had that luxury here in the House of Representatives, 
because we cannot have a vote on it. That is why it is so important for 
the American people to let their Members of Congress know that they do 
not want Congress to put their paws on their pension money. The only 
way that is going to happen is if the American people contact their 
Congressmen and women.
  I want to thank you again for putting this together.
  I will turn it over to the gentlewoman from Florida [Ms. Brown].
  Ms. BROWN of Florida. Mr. Speaker, I thank the gentleman again.
  Mr. Speaker, I would tell the American worker that this reverse Robin 
Hood that is going on in Congress, robbing from the working people 
again, robbing from the retirees to give to the rich is the legacy of 
the 104th Congress.
  Mr. POMEROY. Mr. Speaker, in closing, we have spent the last hour 
trying to highlight what truly is the most substantial threat posed to 
workers' pension security ever considered by a Congress. It would be 
the complete elimination of protections on pension funds, keeping 
corporations from basically taking workers' pension money.
  The Republican majority has projected $40 billion would flow out of 
pension funds, and they think that is a good thing. I think it is a bad 
thing. It is a very bad thing for the American worker.
  I want to thank each of you for helping us highlight this issue 
tonight.

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