[Congressional Record Volume 154, Number 70 (Wednesday, April 30, 2008)]
[Senate]
[Pages S3554-S3559]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    FAA REAUTHORIZATION ACT OF 2007

  The ACTING PRESIDENT pro tempore. Under the previous order, the 
Senate will resume consideration of H.R. 2881 which the clerk will 
report.
  The legislative clerk read as follows:

       A bill (H.R. 2881) to amend title 49, United States Code, 
     to authorize appropriations for the Federal Aviation 
     Administration for fiscal years 2008 through 2011, to improve 
     aviation safety and capacity, to provide stable funding for 
     the national aviation system, and for other purposes.

  Pending:

       Rockefeller amendment No. 4585 in the nature of a 
     substitute.

  The ACTING PRESIDENT pro tempore. The assistant majority leader is 
recognized.
  Mr. DURBIN. Mr. President, it is my understanding under the agreement 
that I can proffer an amendment at this time to the bill?
  The ACTING PRESIDENT pro tempore. The Senator is correct.


                Amendment No. 4587 to Amendment No. 4585

  Mr. DURBIN. I send an amendment to the desk and ask for its immediate 
consideration.
  The ACTING PRESIDENT pro tempore. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Illinois [Mr. Durbin], for himself and 
     Mrs. Hutchison, Mr. Brown, Mr. Inhofe, Mr. Lautenberg, Mr. 
     Voinovich, Mr. Nelson of Florida, Mr. Cornyn, Mr. Menendez, 
     Mr. Harkin, and Mr. Bond, proposes amendment numbered 4587 to 
     amendment No. 4585.

  The amendment is as follows:

 (Purpose: To strike the provision relating to required funding of new 
               accruals under air carrier pension plans)

       Strike section 808.

  Mr. DURBIN. Mr. President, if you sat down this morning to design a 
system that would offer American workers the most secure retirement 
possible, where would you start? If you are starting from scratch, what 
principles would guide you?
  Here are a few I think you might begin with. First, you want to 
encourage companies to offer secure retirement benefits. That is 
obvious. Second, you want to ensure that companies keep their promises 
to their employees and retirees. That ought to be at the top of the 
list. Third, don't create circumstances under which employers decide 
they can't afford to keep offering decent retirement benefits without 
becoming uncompetitive as a business or insolvent. That is pretty 
sensible. Fourth, treat all the companies in an industry equally so as 
not to pick the winners and losers. Don't tip the scales.
  There are many other goals you might set out to achieve. Of course, 
we are not starting from scratch this morning, and this is not 
primarily a pensions bill, it is a reauthorization bill for the Federal 
Aviation Administration. But the substitute amendment we are now 
considering contains one pension provision that I think violates the 
principles I just laid out. That is why I am offering an amendment with 
Senator Hutchison of Texas, with a lengthy list of bipartisan 
cosponsors, to strike that provision of the bill.
  The impact of our amendment will be to provide retirement security 
for over 180,000 American workers and at the same time maintain air 
service for all of our constituents in over 300 cities in our Nation 
and around the world.
  Who supports this amendment dealing with the pensions of workers? The 
workers themselves. It is supported by the 135,000-strong Transport 
Workers Union of the AFL/CIO, and it is supported by a long list, a 
bipartisan list of cosponsors starting with Senator Hutchison, who will 
be speaking a little later on this amendment this morning, as well as 
Senator Brown of Ohio, Senator Inhofe of Oklahoma, Senator Lautenberg 
of New Jersey, Senator Voinovich of Ohio, Senator Bill Nelson of 
Florida, Senator John Cornyn of Texas, Senator Bob Menendez of New 
Jersey, and Senator Tom Harkin of Iowa. As you can tell from this list, 
this is a very diverse sponsorship--both sides of the aisle, all over 
the country. We have the support of the workers whose pensions are 
being affected, and we have the support of Senators from both sides of 
the aisle in a bipartisan fashion to strike this section of the bill.
  It is a little complicated, but for the record we need to get into 
the background of why we are here today.
  In 2006, we passed the Pension Protection Act, which established new 
rules for defining which companies were meeting their obligations to 
their employees and retirees and which companies were not. All the 
companies in America were, in effect, given 7 years to catch up on any 
underfunded pension plan, and rules were established regarding how the 
underfunding was to be estimated. That is only right and sensible 
because if we are going to offer a pension to an employee and the 
employee can count on that pension, they have to make sure the pension 
plan is adequately funded so when they call on that plan at the time of 
retirement, the benefits will be there, the benefits that have been 
promised over the lifetime of a worker.
  It affected all the companies in America except for airlines. We 
recognized at the time that the airlines were facing unique 
circumstances. They owed huge amounts of money to hundreds of thousands 
of workers and retirees, and yet they were facing a very

[[Page S3555]]

difficult struggle to profitability after 9/11. We all recall what 
happened. Airlines were shut down completely across the United States 
and then air travel was at least compromised if not inhibited for 
months and years afterward.
  We understood the airline industry needed special consideration, so 
we gave the airlines a special arrangement when it came to funding 
their pension plans. We said airlines had 10 years to make their 
pensions whole instead of 7 years, which gave them a little longer 
period of time. We allowed the airlines to assume a rate of return on 
their investments of 6 percent instead of assuming a lower rate based 
on the formula that other companies were forced to use--all airlines, 
that is, except for two, Delta and Northwest. These airlines had frozen 
their defined benefit retirement plans.
  What does that mean to freeze the benefit plan? It meant no new 
workers at those airlines could participate. It meant the workers then 
working were covered by their defined benefit pension plans; those new 
workers coming onboard at these airlines did not get that benefit; and 
no new benefits could be provided to existing workers and retirees. The 
current pension benefits were frozen, excluded new employees from 
coverage.
  So, in a way, Delta and Northwest were given special treatment. They 
were allowed to deal with their retirees in a different fashion than 
any company in America, than any airline in America. These airlines 
were told they could take 17 years to catch up on the payments instead 
of 10 years, and they could assume a rate of return of not 6 percent 
but 8.85 percent. It was a very generous deal.
  Let me restate that another way. Some airlines, but not all of them, 
could assume a far higher rate of return and spread their payments over 
a much longer period of time. What difference does it make? It meant 
those airlines, Delta and Northwest, had to set aside far less cash 
toward their pension plans each year than the other airlines with which 
they were competing.
  In a very competitive industry such as air travel in this country, 
this created a huge advantage for these two airlines, Delta and 
Northwest. To make matters worse, we rewarded the airlines that froze 
their pensions. Let's compare that result then to the principles I laid 
out at the beginning of the statement.
  Did we encourage, with this decision, companies to offer secure 
retirement benefits? No. It seems to me instead we encouraged companies 
to freeze their benefit plans.
  Second, did we ensure that companies keep their promises to their 
employees and retirees? I do not know about that. Does allowing 
companies to take 17 years to adequately fund their obligations ensure 
that they keep their promise? It is a fair question.
  Third, did we avoid creating circumstances under which employers 
might decide they could not afford to keep offering decent retirement 
benefits without becoming uncompetitive or even insolvent? I think 
trying to avoid this scenario was part of the rationale for giving 
airlines a bit more of a cushion. So perhaps we did.
  Did we treat all companies in an industry equally, so as not to pick 
winners and losers and create a competitive advantage for some airlines 
over others? We most certainly did not.
  Now, fast-forward to last year. On the first day of the new Congress, 
Senator Kay Bailey Hutchison of Texas introduced legislation to bring 
more balance to pension rules for the airline industry. We passed this 
legislation as part of the Iraq supplemental last spring, and I 
supported Senator Hutchison.
  What did the language do? It gave the airlines that have not frozen 
their pension plans--and let me be specific which airlines: American 
Airlines, Continental, Hawaiian, Alaskan, and US Airways--the 
opportunity to assume a better rate of return on their investments. 
They now can assume a rate of return of 8.25 percent.
  Remember, Delta and Northwest, under the law that we passed, can 
assume a rate of return of 8.85 percent, whether that, in fact, takes 
place. So even under the existing law before the bill that we have 
before us, those two airlines are going to benefit. They get a better 
break, better treatment, Delta and Northwest, than all the other 
airlines, and they can smooth out these payments over 17 years, not 10 
years.
  So did the change in the law on pensions benefit those two airlines 
initially? Yes. Is their benefit compromised by what we are doing with 
this amendment today? No. But does it bring the other airlines in the 
country closer to the same treatment? Yes, it does. So we still have 
not provided all of the industry players with parity. Delta and 
Northwest still do much better. The airlines that are still trying to 
provide their workers secure retirements through defined benefit plans 
that are not frozen are still getting a much worse deal than the 
airlines that froze their plans, but it is a bit fairer.
  So what was done years ago rewarded those airlines--struggling, I 
will concede--with better treatment in terms of funding their pension 
plans from a corporate point of view than other airlines. What we are 
doing today is lessening that advantage slightly but not at the expense 
of Delta and Northwest. In fact, what we are doing is maintaining what 
has been the law since last year. That brings us today to this 
substitute amendment which we are considering.
  Section 808 of the substitute amendment would place new 
responsibilities on only those airlines that we tried to help last 
year. This section would once again widen the disparity between the 
rules that apply to some airlines versus the rules that apply to 
others. That does not make any sense. This section would require only 
the five airlines that I mentioned to fully fund all new pension 
obligations this year and every year going forward, only those five 
airlines.
  Now, you might say, in a vacuum that seems reasonable, fully funding 
a pension. We want companies to pay their pension plans, right? Well, 
it is up to a reasonable point. There are three fundamental problems 
that I think are very important for my colleagues to understand. First, 
the provision in the bill which Senator Hutchison and I would strike 
penalizes the airlines that have worked the hardest to fully fund their 
pensions already. Don't we want companies to work hard to fully fund 
their pensions? If we do, why would we want this section of the bill 
which penalizes them for their effort to protect their workers and be 
fair in their pension plans?
  Take American Airlines, for example. According to the rules, American 
Airlines' pensions are 116 percent funded. To put it another way, the 
management has put more money into their pension plans than they 
actually need to put in to make sure they make all of the payments 
promised, 16 percent more. It is not as if American is 
underfunding their pensions; they are overfunding their requirements. 
The assets on hand, after assuming the investment rate of return over 
time, are worth more than what American Airlines has promised its 
workers and retirees. How can we ask for anything more than that?

  So why should American Airlines have to then fully fund all of its 
new obligations each year so it continually maintains 116 percent 
funding? Is not 100 percent enough?
  Second, this provision unnecessarily pushes these five airlines 
closer to bankruptcy. Is it really in our Nation's best interest that 
these five airlines pay an additional $2 billion into their pension 
funds over the next 5 years when they simply do not have cash laying 
around?
  As a national policy, is it better for us to have more airlines or 
fewer? Do we want more competition or less? Do we want fewer 
bankruptcies or more? And if we really care about the retirements of 
these hundreds of thousands of workers who are employed at these five 
major airlines, why would we push their companies closer to bankruptcy?
  Do you know what happens when a company goes into bankruptcy? Ask the 
employees of United Airlines what happened? The first casualty is their 
pension plan. I have been there. They are based in Illinois; they are 
based in Chicago. It was painful. And if you push more airlines into 
bankruptcy, you are not helping their workers and their retirement, you 
are jeopardizing it.
  If that sounds dramatic, I would like to show this chart to my 
colleagues who are following this debate. These are the bankrupt 
airlines, recent bankrupt airlines: Frontier Airlines filed for

[[Page S3556]]

bankruptcy, 6,000 employees were affected by that decision; ATA filed 
for bankruptcy, 2,230 employees affected; Skybus, 450 employees 
terminated; Aloha, 1,900 employees; EOS airlines, 450 employees.
  This is the reality of the airline industry today. By my count, over 
11,000 employees were affected by these bankruptcies. So why in the 
world would we put a provision in this bill which would require our 
airlines, these five airlines, to put dramatically more cash into these 
pensions, beyond what is required of other airlines, beyond what is 
required for 100 percent funding, and jeopardize them and endanger them 
so that they face bankruptcy?
  Let's look at the losses recently reported for the first quarter by 
some of the largest domestic carriers, just in case those who are 
critical of this amendment believe these airlines are flush with cash. 
Look at what happened in the first quarter of this year: Delta 
Airlines' first quarter losses, $274 million; American Airlines, $328 
million; and United, $537 million.
  If there is someone who believes--and I do not know who it might be--
that the airline industry is so flush with cash, that they are so 
strong they can handle this new pension requirement that is put in this 
bill, and it will not have a negative impact, they have not noticed the 
reports on the first quarter. In virtually every instance every airline 
in America has struggled and fallen behind because of jet fuel costs.
  Now comes this bill, not providing these airlines a helping hand 
through one of their most difficult periods in history where 
bankruptcies are rampant and losses are at record levels. This bill 
imposes new regulations on airlines struggling to survive.
  At a time where crude oil is threatening to reach $120 a barrel--it 
did last week--and jet fuel is pushing $160 a barrel, I do not think 
the airlines are in a position to add another $2 billion to their 
pensions which are already well funded.
  Remember, Delta and Northwest were given a privileged position when 
it came to the treatment of their pension plans under the law. They did 
not have to put as much money into their pension plans. They were given 
a longer period of time to pay out or to fund them, 17 years, and the 
rest of the airlines were given circumstances which were more demanding 
of them. They had to put in more money.
  What Senator Hutchison and I are trying to do is protect a difference 
but one that we think is reasonable. What the bill does is to push 
these airlines at exactly the wrong moment in America's business 
history into a position where they are going to have to surrender cash 
reserves and risk bankruptcy.
  Now, is that in the best interests of the workers and the pilots of 
those airlines? Eleven thousand workers at airlines are already 
bankrupt or out of work. There are over 180,000 workers in America who 
stand to lose nearly everything if we push these airlines into 
bankruptcy, and the over 300 cities that could lose air service and 
face higher fares? Why? Why do we want this?
  Third, and finally, this provision creates an even larger disparity 
between the way some airlines are treated and the way other airlines 
are treated. In this most competitive industry, why in the world are we 
trying to tip the scales to the advantage of some airlines and push 
others near bankruptcy? It does not sound right.
  Why are we demanding these five airlines to follow rules that no 
other company in America must follow? Why are we demanding these five 
airlines follow rules that two of their competitors do not have to 
follow?
  The amendment I have with Senator Hutchison and others would strike 
this provision from the bill and leave current law unchanged. I think 
this is important to all Senators. It is not just an issue for those of 
us whose home States entertain these airlines and have them as 
carriers. I urge every Member who is interested in providing equitable 
treatment under the law to all companies in a given industry to support 
our amendment.
  Do this for 180,000 workers who have weighed in, whose pensions are 
at stake and strike section 808. It is a bad idea. And let me also say 
this on behalf of the largest carrier affected, American Airlines. This 
legacy carrier is the only one left--of the larger carriers, I should 
say--that has not gone through bankruptcy. They have made sacrifices. 
They have cut back. They have tried to protect their workers and 
provide quality service. It has not been easy.
  Now they are facing recordbreaking jet fuel costs. That is a reality. 
They have tried to keep their word to their unionized workforce to keep 
them on the job, to pay them as promised, to give them the pension they 
promised. Why do we want to punish good conduct? Why do we want to 
punish an airline that has tried its level best to keep its word to its 
employees and retirees? That is a question not only asked by the 
management of American Airlines, it is being asked by the workers of 
American Airlines.
  They oppose section 808. They think it could be the end of their 
airline. What a legacy we would leave at the end of the day if we pass 
a bill that is supposed to pass to make air travel safer and jeopardize 
the existence of five major airlines in the process. That is exactly 
what section 808 would do.

  I urge every Member who is interested in giving their constituents as 
many options for flight travel as possible by keeping afloat as many 
airlines as we can to support our amendment. I thank the 135,000 
members of the transport workers unions whose pensions are at issue 
with this amendment. They have stood up in what I think is the best 
interest not only of transportation workers today but those retirees. I 
thank Senators Hutchison, Brown, Inhofe, Lautenberg, Voinovich, Nelson, 
Cornyn, Menendez, and Harkin for cosponsoring the amendment. I urge my 
colleagues to join us. Let's strip this section from the bill and then 
move forward to do what we need to do to make American air travel safe 
and to respect the companies and workers we count on every day.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Texas.
  Mrs. HUTCHISON. Mr. President, I thank the Senator from Illinois for 
taking the lead on this very important amendment. He and I are in 
complete agreement. I have never seen a time or an amendment or an 
issue before our Senate that has shown the companies fighting so hard 
to do the right thing for their employees; the employees standing with 
them in total solidarity, saying: This is something we should be 
encouraging companies to do, not discouraging companies from doing; 
that is, to provide the very best pension plan.
  These are huge corporations. American, Continental, US Air, these are 
big corporations. They are trying to do the very best. They are going 
the extra mile for their employees. Yet they can't rely on the Congress 
to make a law and then keep it.
  Let's go back a little bit in history. First, we settled this issue 
in a very hard-fought negotiation last year. We had airlines that chose 
to keep their defined benefit plans, doing the very best for their 
employees they could, making added contributions based on the law as it 
was. So they got ahead in their backup payments because, under the law 
as it was, anything in excess of their backup payments would help them 
offset their going-forward payments. They were in relatively good 
shape, as good shape as an airline could be last year. They had extra 
money. They poured it right into their pension plans. They overfunded 
their past obligations or the obligations they had for their past 
pension deficits. They did that, thinking that if they got into a 
cashflow problem, they would be able to offset those overages, which is 
what the law has been.
  Now, in an aviation modernization bill that is to modernize our air 
traffic control system, that will address the safety issues we want to 
make sure are the very best that we can provide for consumers and 
passengers, a bill that will provide a passenger bill of rights--when a 
passenger is in an airplane and it is delayed, there are going to be 
new rules; there will be plans that have to be submitted for airlines 
to take care of them--in a bill that has so much good, that came out of 
the Commerce Committee, of which I am the ranking member of the 
Aviation Subcommittee and Senator Rockefeller is the chairman, it came 
out with complete bipartisan support. Now we have in the

[[Page S3557]]

package that is going to be put forward a rehash of long negotiations 
that were settled last year.
  I will take a moment here to say that I had a very telling 
conversation with the CEO of a major international corporation based in 
America.
  I said: Why are you opening plants overseas instead of America? Why 
are you sending jobs overseas instead of America?
  This CEO said: Well, really, basically two things. One is, the 
regulatory environment is better overseas. And secondly, the regulatory 
laws are more stable.
  I said: More stable? This is America. What do you mean? There is a 
country overseas that has more stable regulations?
  He said: Absolutely. Because we can't count on the law being the law. 
We see time and time again Congress or a regulator coming in, after a 
law has been on the books, we have done things in compliance with the 
law, relying that it is the law, and Congress changes something that 
affects something that we have done in reliance on that law.
  I said: If there is one thing that the United States should be able 
to do, it would be leading in stability in laws and regulations. Maybe 
there are too many laws and regulations. Maybe there are too many 
taxes. But at least we should be able to be stable. We are the greatest 
economy on Earth.
  Yet here we have a prime example of a law that was passed, 
contributions were made from the company to these pension systems based 
on the law that was passed, thinking we had come to an agreement. It 
was hard fought. A deal is a deal.
  Let's go back and look at that law. In 2006, Congress passed the 
Pension Protection Act. Included in that legislation was a change in 
funding rules for airlines that had chosen to freeze their defined 
benefit pension plans. I argued strongly at the time that the playing 
field should be leveled for those carriers that continued to meet their 
obligations. There was virtually unanimous support for this view in the 
Senate. But in conference, the chairman of the Committee on Ways and 
Means of the House, who is no longer a Member of Congress, refused a 
provision that would level that playing field. Accordingly, we reached 
agreement with the leadership of the Senate at the time that we would 
take the first available opportunity in the next Congress to rectify 
this inequity. That is why on January 4, 2007, my colleague from Texas, 
Senator Cornyn, and I introduced S. 191. This bill was referred to the 
Committee on Health, Education, Labor, and Pensions. My staff also 
provided it to Finance Committee staff and personally briefed them on 
the bill on January 26, 2007.

  The bill, which was subsequently enacted into law, established 
funding rules that, while not as generous as those given to airlines 
that froze their plans, were at least more equitable and created a 
better unlevel playing field than we had seen in the 2006 bill. It was 
very clear, when we introduced this bill, that we had it out there for 
the purpose of everyone knowing that we intended to offer it when 
appropriate legislation came through. That is the way things work in 
the Senate.
  The provision adopted by the Senate and agreed to by the House is the 
exact language we drafted in S. 191. It should be a surprise to no one 
that we would offer that bill at the first available opportunity, which 
was the last omnibus appropriations bill. There has been something said 
in writing in opposition to our amendment, that this was a big surprise 
that was crammed into the supplemental appropriations bill. It was not 
a surprise. It was out there in the open. All of the relevant 
committees had been briefed and knew this was a bill that was pending 
that would be available for amending a proper vehicle. The proper 
vehicle was the appropriations omnibus, because there was not anything 
else that was going through.
  None of the airlines adversely affected by the proposed change in the 
pension laws has missed a pension payment under current law. The 
greatest risk to pensions is bankruptcy. I am not saying the proposal 
in the bill would necessarily result in bankruptcy of these carriers, 
although that has been brought up as one eventuality. But at the very 
best case, it is going to restrict their cash reserves precisely at a 
time when they need it the most. Jet fuel is now being sold at $160 a 
barrel. At these prices, it is a race against time for airlines to 
preserve their cash. For Congress to intervene now, undo a law that was 
passed and relied on by the airlines to restrict the flexibility of a 
few airlines that need the maximum flexibility to meet this crisis, 
would be irresponsible.
  It is as if maybe some of our Senators who I think have very good 
motives are not realizing the situation today, which is 10 times worse 
than it was last year when this legislation was passed. Prices of oil 
have gone up. Every airline is on its knees. Everyone is struggling. We 
are seeing the beginning of mergers, which I don't like, but it is a 
free world, and I don't think we have the right to intervene. But I 
don't want to have fewer airlines. I want our airlines to be robust, 
compete, and do the best for their employees they can possibly do.
  It is as if we are living in another world to think that this is not 
a crisis time for the airlines. I don't want to hurt the other airlines 
either. I have nothing against Delta and Northwest. I hope they 
survive. I hope they do very well, because the more airlines we have 
doing well, the better it is for consumers and passengers. But I want 
to make sure that airlines that have kept their defined benefit plans, 
that are trying to go the extra mile for their employees and do the 
very most they can, as they are at the same time struggling with the 
higher cost of fuel, especially, I don't think we ought to penalize 
them. I don't think we ought to retroactively change what they relied 
on and made contributions to their pension plans, relying that the law 
was the law, and that the Senate and the Congress was a body of 
intelligent people who could reasonably look at the economic news in 
the world and know this is not a time when we would destabilize and 
further hurt an industry that is so important to commerce and the 
overall viability of our country.
  Let's put it on the table. In the past 5 years, American Airlines has 
made $1.7 billion in contributions to its pension plans, when--I may be 
wrong; I am not saying that I know exactly--in the last 5 years, I 
might remember two quarters, maybe three, where they have actually 
shown a profit. Maybe it has been 1 year out of 5. But every time I 
pick up the papers, I am not seeing airlines with robust profits being 
reported at the end of a quarter. Last year alone, as oil prices were 
going up--and jet fuel is even more expensive than gasoline--they made 
a contribution of $386 million, which is more than they needed to make 
to keep their obligations current. Under the rules in place today, 
before this change would take place, they are 115 percent funded.
  Continental Airlines has made a $1.3 billion contribution to its 
defined benefit pension plan in the previous 5 years, including $336 
million last year--significantly above the minimum funding required. So 
if there is anything our Senate ought to be able to do, it is, No. 1, 
when a law is passed and relied on, that we would not retroactively 
change that law to penalize one company in an industry. It is not the 
place of the Senate to pick winners and losers. We are the model of 
free enterprise in the world, and we must keep that stability.
  Secondly, if the parts of the bill that are being added that are 
extraneous to the underlying FAA modernization bill stay in, it is 
going to bring down a great bill, a bipartisan bill, that my colleague, 
Senator Rockefeller, and I have worked on very hard, along with Senator 
Inouye and Senator Stevens, the chairman and vice chairman of the 
committee.
  We have all supported the bill that came out of Commerce almost 
unanimously. It has been a joy to work on a bill that provides a better 
consumer environment, a safer environment for passengers, that would 
modernize our air traffic control system even further, that would 
address the issues that have been raised in the last few months about 
passengers being held hostage on airplanes that are on the ground, and 
giving them rights, and requiring airlines to do right by them. It is a 
great bill.
  But if we do not strike this pension plan--which I do not think is 
right in any sense of the word--if we do not strike this from the bill, 
and if we do not take out some of the other extraneous tax provisions 
we will deal with

[[Page S3558]]

later that do not have anything to do with aviation, it is going to do 
great damage to the flying public and to commerce in our country.
  I urge my colleagues to look at the arguments and help us remain 
stable--as stable as an airline can be in this very volatile 
environment. Let's not change the rules. Let's not give advantages to 
one over another. Let's try to help all of the airlines make it, be 
profitable, be robust, provide competition, and, especially, give the 
very best benefits to their hard-working employees they can possibly 
do. And, please, let's do not penalize those that are going the extra 
mile and giving their employees what is becoming more and more rare in 
this country today, and that is defined benefits for their pension 
plans.
  Mr. President, I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I yield myself such time as I might 
consume.
  The ACTING PRESIDENT pro tempore. The Senator is recognized.
  Mr. BAUCUS. Mr. President, on the surface, this is a complicated 
matter. Pension law is complicated. It gets into whether a company has 
a defined contribution plan, a defined benefit plan, issues such as: 
What is the assumed interest rate that applies to the pension plan? It 
is backwards: the higher the rate, frankly, the less of an obligation 
by the company to contribute to the plan. I think on the surface we 
would think it would be a little bit of the opposite. It gets into 
length of years, the time within which companies are required to 
contribute to their plan to fully fund their plan. It is very 
complicated on the surface.
  It is very simple. This question we are dealing with here is very 
simple when you get down to what is going on around here. So I ask my 
colleagues to pay a lot of attention to the statistics and all the 
complexities at the surface, but pay more attention to what is going on 
here. After all the charts and all the statistics and all the stuff, 
what is going on here?
  I think Senators and their staffs will find, when they do that, what 
is going on here is the question of--there are two questions here--do 
we want to keep the playing field level among the airlines? Airlines 
are going through some difficult times today, clearly. Fuel costs are 
high. There are other problems facing the airlines. But do we want the 
playing field to be level? The second question: Do we want to help 
provide adequate protection to the pension plans, to retirees? Those 
are the two basic questions.
  So how did we get here? Back several years ago, after 9/11, and when 
the country was facing some economic difficulties, when pension plans 
were going belly up because companies, regrettably, were not adequately 
funding their pension plans--especially the defined benefit plans; to 
some degree, the defined contributions, but especially defined benefit 
plans--what did we do? We in the Congress exercised our responsibility 
to do something about all that. What did we do?
  In 2006, we passed a pension bill. What did that provide? Well, we 
were kind of caught in the middle--Congress was--especially with 
respect to airlines because after 9/11, airlines were not doing well at 
all because people were not flying as much, and they were under 
significant stress and strain, and, at the same time, pension plans 
were not in good shape generally--not just airline pension plans but 
other companies' pension plans.
  So we refined the law in 2006 to give much more protection to 
retirees in their pension plans because companies basically were not 
doing what they should have been doing back up to that time.
  We had another little problem on the side, and that was airlines 
because they were under a lot more financial stress than other 
companies in the United States generally. So what did we do? We said: 
Well, we want to help the airlines. We do not want to hurt the 
airlines. We also want to protect the pension plans. So we raised the 
pension plan requirements that all companies must face.
  But we gave a little break to the airlines. We gave a longer period 
of time in which they had to fully fund their plans. We said: For those 
that are in bankruptcy--there were a couple back then--you get a long 
time. You get 17 years. We will also give you a big, high interest 
rate. ``Big, high interest rate'' means it is computed at a greater 
rate of return on your assets so you do not have to contribute as much 
to the plan. We also gave a big break to the airlines that were not in 
bankruptcy. We gave them 10 years. The standard rule was 6 years for 
all other companies. We said: OK, you are in real stress. You get 17 
years. If you are in some stress--not as much--you get 10 years. Those 
are companies that were not in as much stress. Those are companies that 
did not freeze their plans, whereas, those that had 17 years did freeze 
their plans. We said: OK, after 10 years and 17 years, the playing 
field will be back to level again.

  A couple airlines with plans that were not frozen, that had the 10-
year requirement--remember, the standard rule is 6 years, but they got 
the 10 years, not the 17 years--said: Wait a minute, you are helping 
those who are in bankruptcy too much at our expense. They said they 
were doing the right thing. So we said: OK--that is what this bill 
does--OK, we will give you virtually the same interest rate as the 
others. What does that mean? It means you do not have to contribute to 
your pension plan. You do not have to.
  So we think that levels the playing field because now all companies 
will have to contribute to their plans, at least prospectively. We are 
saying to the other companies--the 10-year companies--you do not have 
to contribute to your plan up to today's date, up to 2008. You are 
free. You are off the hook.
  So these arguments you hear on the floor that this underlying bill is 
putting financial stress on certain companies are not true because 
those companies will not have any obligation to contribute more to 
their pension plan for past liabilities, but they will currently.
  We think that is a fair compromise. This is not a perfect world. But 
under our committee bill, it is clear it is basically a level playing 
field because all companies now will have the same computed interest 
rate to calculate what their assets are to indicate the degree to which 
they have to contribute to the plans.
  Now the Durbin amendment says: No. No. We want to give a bigger break 
to the companies that do not freeze their plans that are not in 
bankruptcy. The effect of the Durbin amendment will be that those 
companies will not have to contribute to their pension plans. They have 
not, and they will not have to for a couple years in the future because 
the Durbin amendment gives a higher interest rate, which, in effect, 
means they will not have to contribute.
  Well, if I am a retiree, and I work for one of these airlines, I 
would say: Wait a minute. I want to make sure I am protected too.
  So, as I said, there are two questions here. Is the playing field 
level? And, are we going to protect the pension plans?
  The effect of the committee bill is to level things off. It is not 
perfect, but it is almost perfect; where the effect of the Durbin 
amendment is to make it much less perfect and basically help a couple 
airlines that, as a consequence, will not have to contribute to their 
pension plans for past liabilities, and will not have to in the future 
either, because of the interest rate they provide for in their 
amendment, and other airlines will have to contribute into their plans.
  I say the right answer here--airlines are squabbling among themselves 
over all this--the right answer is to keep it fair for everybody, have 
the same law essentially apply for everybody. The committee bill does 
that.
  I might say also, we want to protect our pension plans because that 
was the whole purpose of the 2006 pension bill. The effect of the 
Durbin amendment is to say: No, these plans are not going to be 
protected as much under the Durbin amendment. That is not the right 
thing to do.
  There are some who say: Gee, this is going to cause bankruptcies in 
the poor financial condition the country is in right now. That is a 
bogus argument. We are saying: Keep the playing field level. That is 
all we are saying in this committee bill. It is not going to affect the 
bottom line. Our committee bill will not affect the bottom line of 
these airlines because, basically, it is a cashflow issue because cash 
is transferrable between the plan and the

[[Page S3559]]

company. So it is not going to affect the bottom line of these airlines 
at all--the committee bill--nor will the Durbin amendment affect the 
bottom line. That is a bogus argument.
  But the effect of the Durbin amendment is to give less protection to 
retirees--that is indisputable--less protection to retirees. And do not 
forget, under the 2006 pension bill, we were trying to give more 
protection to retirees.
  Also, the second effect of the Durbin amendment is to unlevel the 
playing field. It favors certain airlines at the expense of others. I 
think the best policy is to protect pensioners and to protect retirees, 
and also to keep the playing field level. That is why I think it is 
better to not adopt the Durbin amendment.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Illinois.
  Mr. DURBIN. Mr. President, I respect the Senator who is the chairman 
of the Finance Committee. It is one of the toughest assignments on 
Capitol Hill. He has adequately described what I think is the challenge 
of pension plans--how to make sure companies put the money in they 
promised, and to keep their promise to their retirees.
  What I am saying is, the approach the Senator brings to the floor, in 
section 808, is opposed by the retirees and workers. They do not 
believe it is in their best interest. They certainly do not think it is 
in their best interest if their airline goes into bankruptcy. They know 
what has happened repeatedly. When an airline goes into bankruptcy, the 
first losers are the retirees and the pension benefits of current 
workers. They are worried, and they should be. Look at how precarious 
this industry is, with the jet fuel costs and the record losses these 
airlines are facing.
  Secondly, I cannot quarrel with the chairman's premise about keeping 
the playing field level when it comes to airlines. But if that is the 
case, how can he explain to us that two airlines are treated so 
dramatically different than others? Delta and Northwest have 17 years 
to make their pension liability right. We assume they are going to earn 
8.85 percent each year on their investments regardless of what they 
actually earn.
  The airlines we are talking about have 10 years to make their pension 
liability right, and their assumption of interest is 8.25 percent. 
Doesn't sound like much. It has been dismissed a little bit here. But 
if you are talking about hundreds of millions of dollars that are being 
invested in pension funds, you can understand the impact this might 
have.
  The last point I wish to make is this: Senator Hutchison and I wish 
to keep the status quo. The section 808 amendment we want to strike 
changes it. Under the current status, the largest airline affected, 
American Airlines, has 115 percent of funding--115 percent. They are 
not falling behind; they are keeping their word to their employees and 
their retirees. That is why I hope my colleagues will support our 
amendment to strike section 808.
  Mr. President, I ask unanimous consent before yielding the floor that 
Senator Bond be added as a cosponsor of our amendment.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  The Senator from Montana is recognized.
  Mr. BAUCUS. Mr. President, I have some responses to the Senator from 
Illinois when we get back because they are bogus arguments.
  I yield the floor.

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