[Congressional Record Volume 146, Number 139 (Sunday, October 29, 2000)]
[Senate]
[Pages S11320-S11322]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                            TAX LEGISLATION

  Mr. GRASSLEY. Mr. President, last week, we started to debate a tax 
bill and it had to be brought down because there wasn't consent to move 
ahead on it. Before we adjourn and go home, hopefully, we will pass a 
tax bill. But there are a lot of provisions in that bill that are very 
good; common sense dictates them; and a lot of these are very 
bipartisan. So the President has threatened to veto the tax bill. I 
want to bring up some of these issues and ask the President why he 
would veto something as good as these provisions, where there is 
bipartisan consensus that we ought to pass them.
  Obviously, this bill doesn't contain everything I would like to see 
in it as a Member of the Senate. As a member of the Finance Committee, 
we have a chance to be on the ground floor of the drafting of the 
legislation coming out of that committee. On the other hand, no one 
person, even a member of the committee, can get everything he wants in 
the bill. There are even some things in this bill that I don't like, 
but on balance it will do a lot of good for a lot of people. Therefore, 
I think it should be enacted.
  To begin with, the bill contains a number of provisions I authored or 
coauthored with some colleagues and these are the bipartisan provisions 
that I am thinking about. For instance, on the issue of pensions, I 
worked very closely with Senator Graham of Florida--several critical 
pension provisions. As we anticipate the upcoming retirement of the 
baby boomers, we are always astonished at how much it is going to cost 
during their retirement. Retirement is expensive, not only due to 
rising life expectancy but also because inflation and taxes must be 
factored into the cost of retirement.
  We keep insisting that baby boomers--now 10 years away from their 
retirement--must do more to prepare for that retirement. How can they 
do that if we don't give them the tools they need? This bill has a lot 
to do with that because it would make small but significant steps to 
improve the ability of baby boomers and subsequent generations to 
prepare for retirement. This bill will increase retirement savings and 
the national savings rates by allowing workers to save more in their 
pension plan or in their individual retirement account.
  How can the President find disagreement on that point--the necessity 
of having better pension systems, the necessity for updating the 
individual retirement accounts so more can be saved in those accounts 
and so more people can be encouraged to save in those accounts?
  Our bill would restore section 415 limits for pension contributions 
closer to--not all the way, I am sorry to say--where they were before 
the 1993 tax increase bill was passed.
  You remember that 1993 tax increase bill? As Senator Moynihan said on 
the floor of the Senate, it was the largest tax increase in the history 
of the world after Bob Dole said it was the largest increase in the 
history of the country.
  That was a pretty significant tax increase in 1993. You remember that 
it passed on the tie-breaking vote of Vice President Gore as he sat 
right there in the chair. He cast the tie-breaking vote to pass a tax 
bill that most all Republicans thought was bad for the country. Even 
some Democrats thought it was bad for the country. When Republicans 
were in the minority, it would have still died on a 49-to-49 vote--
except for the tie-breaking vote of the Vice President.
  This bill will restore some of the bad aspects that the 1993 tax bill 
had on pensions contributions with these 415 limits. This bill 
increases existing IRA contribution limits because under this bill 
Americans would be able to contribute $5,000 annually. That is an 
increase up from the current $2,000 maximum contribution. This IRA 
limit has not been increased in the 18 years since the last time it was 
effective.
  For workers without a pension, a pretax individual retirement account 
is one of the best ways they can save for retirement. This limit is 
being increased for traditional IRAs and Roth IRAs.

[[Page S11321]]

  Why would the President want to veto that for people who don't have 
anything other than individual retirement accounts with the present 
$2,000 limit? You can see what has happened to that $2,000 limit 
because of inflation. After 18 years, it is not anywhere near the 
incentive for savings that it was in 1982.
  Increasing it to $5,000 would be a tremendous incentive for people 
who don't have pensions to save on their own for retirement, in 
addition to a baby boom generation that is not going to get out of 
Social Security as much as my generation will get out of Social 
Security when they retire.
  Consequently, that helps make up for some of the shortcomings of the 
Social Security surplus for the baby boom generation.
  Further, the bill encourages more people to save through an IRA by 
accelerating the scheduled increases in IRA income eligibility 
requirements. Individuals making up to $50,000 and couples making up to 
$80,000 could participate in an IRA. And the bill allows catch-up 
contributions for IRAs of an additional $1,500 for those age 50 or 
over.
  That will give people an opportunity who have been hit by the 
inflation-lessening value of the $2,000 individual retirement account 
now that they are 50 and over to put aside an additional $1,500 to make 
up for some of the shortcomings of Congress not keeping the $2,000 
limit adjusted for inflation.
  Why would the President want to veto a bill that gives people who are 
saving an opportunity to make up for some of the shortcomings of 
Congress over the last 18 years, or even the negative impact of the 
1993 tax bill on some of these pension provisions?
  This bill also encourages small businesses to start and maintain 
pension plans.
  One of the problems with the pension law is that there is tremendous 
discouragement for companies with under 100 employees to go to the 
expense of setting up a pension plan. For employers with over 100 
employees and with the overhead that companies such as that have, it is 
not such a problem. You find larger corporations have pension plans--
not small businesses.
  The provisions encouraging expansion of coverage are vital and 
overdue improvements in pension law.
  I will give you an example. The bill modifies the top-heavy rules 
which only apply to small businesses. The top-heavy rules have been 
rightly criticized because they place burdens on small business pension 
plans. Those same requirements are not applicable to big business. The 
top-heavy rules make sponsoring a pension plan expensive, complicated, 
and out of reach for many small employers. In fact, the ERISA Advisory 
Council in this administration even supported the outright repeal of 
these top-heavy rules.
  This bill does not repeal the top-heavy rules, as much as we should, 
according to the Advisory Council's recommendation. It simply modifies 
the most onerous aspects of the rules to make having a plan more 
attractive for small firms.
  The bill also reduces plan costs and PBGC premiums for small 
businesses and eases administrative burdens by streamlining onerous 
pension regulations. These changes help to make the experience of 
maintaining a plan less difficult for small companies. Further, the 
bill simplifies annual reporting requirements, eliminates IRS user fees 
for new plans. These provisions encourage small businesses to provide 
pension coverage. When small businesses start up new plans, American 
workers win!
  The bill contains many provisions which will help rank and file 
workers specifically.
  For example, this bill enables workers aged 50 and over to make so-
called catch up contributions to their retirement plan.
  That may sound like something that is new and we shouldn't do. But we 
allow State and local government workers to make these catchup 
contributions under current law if they are within 3 years of 
retirement.
  I know of no reason why we should not make the benefit of catchup 
contributions available to all workers--not just for those of State and 
local governments. We would do so in this bill for workers in for-
profit businesses and also not-for-profit businesses.
  Unfortunately, this bill will not allow workers who make $80,000 or 
more to make these ``catchup'' contributions despite the fact there is 
not such an $80,000 limit on the current law for State and local 
employees.
  This is a further inequitable situation--something we give State and 
local government employees but we don't give employees in the private 
sector. We make up some of that in this legislation but not 100 
percent, I am sorry to say. I regret that the bill made this 
restriction necessary because of negotiations that were going on 
between the House and Senate.
  The bill reduces the vesting period for receipt of the employer's 
matching contribution and defined contribution plans--such as a 
401(k)--from 5 years to 3. Make no mistake about it; this is a huge 
help to many workers. This will particularly help women, maybe because 
of taking care of an elderly relation, or maybe to start a family or 
women who are in and out of the workforce or maybe even in some cases 
men who are in and out of the workforce, but they are more apt to be 
women.
  This will give them an opportunity to enhance their match so they can 
make up for lost time because of not being in the workforce.
  This bill makes another important change to law that will help low- 
and modest-income workers. The bill repeals the 25 percent of 
compensation limit on savings and defined contribution plans.
  That is a savings barrier that frustrates those of modest income. 
Most workers in this Nation will be saving through section 401(k) plans 
or section 403(b) plans or section 457 deferred compensation plans. In 
a 401(k) plan, for example, the limit for saving is 25 percent of 
compensation or a maximum of $10,500. Our bill repeals the 25 percent 
of compensation for the benefit of low and modestly paid workers who 
could be very thrifty people but are prohibited from saving more. They 
may want to sacrifice during their work years to have a better quality 
of life in retirement, but the present limit of 25 percent will keep 
them from doing that. We ought to make it possible for people who want 
to look ahead to do more for enhancing their retirement and have more 
savings for that retirement to be able to do it. This legislation does 
that.
  I don't know why the President wants to veto such good provisions for 
low- and modest-pay workers. In Iowa and much of the Midwest, people 
are not only thrifty but they are very frugal. Let them save their 
money if they want to; that money belongs to them, not to the 
government.
  The bill also greatly enhances pension portability. Because of these 
provisions, workers will be able to take their pension money with them 
when they leave one job to go to another job. Their retirement plan 
contributions will not be stuck in the plan of their previous employer. 
When more of those matching contributions are vested as I just 
mentioned a minute ago, a larger account can be rolled over to an IRA 
and to the retirement savings plan of a subsequent employer, regardless 
of whether the employer is for profit, not for profit, or a government 
employer.
  Under current law, you can't make those rollovers. The pension 
portability provisions of this bill are a great way to reduce pension 
plan leakage. The issue of leakage is real, and I hope we get to 
examine it in more detail next year and even improve it more than this 
present legislation does.
  The business also improves pension funding so benefits will be more 
secure over the long term. Good pension funding is one of the very 
foundations of the ERISA law. Most plans are well funded but some are 
not funded properly at all. We need to be taking a closer look at the 
underfunded plans and shine the spotlight on them.
  I want to look at the reasons why some plans have not been better 
funded, and I hope to look at the status of the underfunded plans in 
greater detail next year.
  Finally, I take note for my colleagues and cosponsors that this bill 
does not include everything I would have liked, and I hope we will be 
able to do more for pensions according to what Senator Graham of 
Florida and I suggested in our legislation, which had many cosponsors.
  When all is said and done, there are a lot of good provisions in this 
bill, particularly those that deal with women who are in and out of the 
workplace so

[[Page S11322]]

they can make up lost time on their pensions if they want to pay more 
into it. It does an awful lot for low- and medium-paid employees so 
that they can make up for the fact, if they want to save more for 
retirement, that the present 25-percent limit doesn't allow them to do 
that.
  The bottom line is, why would any President want to veto such a good 
bill?
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Ohio.
  Mr. VOINOVICH. Mr. President, in keeping with the back and forth, 
would it be all right for me to speak for up to 15 minutes?
  Mr. REID. Mr. President, I want to be as agreeable as possible, but 
the Senator from Idaho took 15 minutes instead of 10 minutes, and the 
Senator from Iowa took 15 minutes rather than 10 minutes, and I called 
my friend from Wisconsin, who rushed over here and dropped everything 
to speak.
  Mr. FEINGOLD. Mr. President, I ask if I could have unanimous consent 
to speak for 30 minutes after the conclusion of the remarks of the 
Senator from Ohio.
  The PRESIDING OFFICER. Without objection it is so ordered. The 
Senator from Ohio is recognized.

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