[Congressional Record Volume 151, Number 48 (Wednesday, April 20, 2005)]
[Senate]
[Pages S4033-S4034]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ISAKSON (for himself and Mr. Rockefeller):
  S. 861. A bill to amend the Internal Revenue Code of 1986 to provide 
transition funding rules for certain plans electing to cease future 
benefit accruals, and for other purposes; to the Committee on Finance.
  Mr. ISAKSON. Mr. President, today I join with Senator Rockefeller to 
introduce the Employee Pension Preservation Act of 2005. This bill 
seeks to eliminate the threat that airline employees are facing to 
their earned pensions as a result of funding laws that make pension 
funding schedule volatile and unpredictable. The Employee Pension 
Preservation Act of 2005 would allow their employers to make the 
required pension payments in a more predictable and manageable way. 
This common sense, industry specific approach is supported by airline 
employees and their employers.
  We are giving airlines the ability to fund their pension obligations 
to their employees on a more manageable and stabilized 25-year schedule 
using stable long-term assumptions. It is analogous to refinancing a 
short-term adjustable rate mortgage to a more predictable long-term 
fixed rate mortgage. It protects the interests of the American taxpayer 
by capping the Pension Benefit Guarantee Corporation's liabilities at 
current levels, and ensures that a uniform evenhanded policy is taken 
with respect to the entire industry. Finally, this must be a joint 
decision made by the airline and its employees.
  We are establishing a payment schedule for unfunded liabilities that 
is both affordable and practical, while properly protecting the 
interests of airline employees, airlines, and the American taxpayer. I 
commend Senator Rockefeller for joining me in introducing this 
important legislation, and look forward to its passage so that we can 
provide stability to airline employees with regards to the funding of 
their earned pensions.
  Mr. ROCKEFELLER. Mr. President, the U.S. airline industry continues 
to teeter on the brink of financial collapse. The industry lost over $9 
billion in 2004 and the airlines are expected to lose another $1.9 
billion in 2005. Our Nation cannot afford to let this vital part of our 
economy collapse. Our economic prosperity is tied to a healthy and 
growing aviation industry.
  As we saw after the events of September 11, 2001, the shutdown of our 
aviation systems caused a massive disruption to the flow of people and 
goods throughout the world. Without a healthy airline industry, our 
economy will not grow. I do not believe the significance of aviation to 
our economy can be overstated. I do not think many in Congress and 
across the country realize that over 10 million people are employed 
directly in the aviation industry. For every job in the aviation 
industry, 15 related jobs are produced. In my State of West Virginia, 
aviation represents $3.4 billion of the State's gross domestic product 
and directly and indirectly employs 51,000 people.
  The airline industry has been hard hit in recent years by high oil 
prices, weak revenue, and low fare competition. Since 2001, the airline 
industry has lost more than $30 billion collectively, and while 
aviation analysts expect 2005 will be a significant improvement over 
recent years, most estimates assume oil prices drop significantly from 
current levels--a matter that increasingly remains in doubt.
  Many airlines have aggressively cut costs through a number of means, 
most notably by reducing labor expenditures and through decreasing 
capacity by cutting flight frequencies, using smaller aircraft, or 
eliminating service to some communities.
  Despite the airlines' efforts, they have not been able to return to 
financial stability. The Federal Government is faced with serious and 
difficult choices in how to ensure both the short-term and long-term 
viability of the Nation's aviation industry. The one choice we do not 
have is the choice not to act. Although Congress cannot restore 
profitability to the airline industry with a law, we can create the 
atmosphere for the industry to succeed, grow, and bring people back to 
work. If we fail to act, tens of thousands of employees will lose their 
jobs on top of the 200,000 that have already lost their jobs, small 
communities will lose their

[[Page S4034]]

air service, and the United States will lose its global leadership in 
aviation.
  One of the greatest threats to the future financial viability of the 
airlines is pension funding. Congress needs to reform the pension rules 
to provide the tools airlines need to maintain their pension plans. As 
a step in the right direction, I am pleased to introduce legislation 
today with Senator Isakson that protects the retirement plans airline 
employees depend on.
  The Employee Pension Preservation Act of 2005 provides critical 
pension funding relief to the commercial airline industry by allowing 
the airlines to fund their pension obligations over a 25-year time 
horizon. Last year, recognizing that the airlines were facing 
extraordinary circumstances, Congress provided airlines a temporary 
reprieve from deficit reduction contributions.
  However, when that temporary relief expires at the end of the year, 
airlines will face immediate and crushing pension bills. Congress needs 
to provide permanent, appropriate remedies that enable airlines to 
maintain their pension plans. If we do not provide any flexibility in 
paying the pension obligations, then certainly more airlines will be 
forced to terminate their plans altogether. The legislation that 
Senator Isakson and I are offering enables airlines to meet all of 
their pension obligations on a reasonable schedule.
  Some people may worry that by granting airlines an extended payment 
period we are increasing the risks to the Pension Benefit Guaranty 
Corporation, which insures the airlines' defined benefit plans. 
However, I am hopeful that by making the funding rules more flexible 
this bill will actually decrease the likelihood that pension plans will 
be terminated and the PBGC saddled with unfunded obligations. Let me be 
clear, this legislation requires airlines to fully fund all of their 
past and future pension promises. It merely provides a more reasonable 
schedule for recovering from the recent downturn that hurt many pension 
plans.
  Moreover, the bill includes provisions to limit the liability 
potentially faced by the Government insurance agency. In contrast to 
the status quo, any pension plans that take advantage of the funding 
relief offered by our legislation would accrue no additional PBGC 
obligation. To the extent that any additional pension benefits are 
earned by employees, the benefits would have to be immediately and 
fully funded by the employer.
  As a member of the Senate Finance Committee, I have been working for 
years to improve our defined benefit pension system. I recognize that 
there are few easy answers or quick fixes. And I do not suggest that 
the legislation we are introducing today is a silver bullet for the 
airlines' defined benefit plans. Still, I am pleased to support this 
bill because it is a responsible compromise agreed to by both the labor 
and management representatives in the airline industry. That is very 
important to me, because this legislation will require some difficult 
sacrifices especially on the part of workers who may no longer accrue 
guaranteed benefits. While I have reservations about any agreement to 
limit the PBGC guarantee of pensions, I have been assured that in this 
particular case employees support this compromise and see it as the 
best opportunity to save their hard earned retirement benefits.
  I hope that my colleagues will carefully examine this proposal and 
join Senator Isakson and me in a debate about how we can better secure 
the pensions of airline employees. I appreciate that our legislation is 
not likely to pass the Congress without negotiation and compromise. 
Indeed, I welcome opportunities to improve this legislation. But I do 
not believe that we can ignore the plight that the airlines face, and I 
will work to enact prudent reforms as soon as possible.
                                 ______