[Congressional Record (Bound Edition), Volume 150 (2004), Part 1]
[Senate]
[Pages 355-356]
[From the U.S. Government Publishing Office, www.gpo.gov]




                                PENSIONS

  Mr. KENNEDY. Mr. President, it is Friday. We had a good discussion 
yesterday about this very important pension funding amendment which is 
presented to the Senate by the chairman of the Finance Committee, 
Senator Grassley, and the ranking member, Senator Baucus; they have 
shared jurisdiction on a number of pension matters with our committee, 
the Health, Education, Labor, and Pensions Committee, chaired by 
Senator Gregg and I as the ranking minority member.
  The two committees have worked very closely in recommending this 
legislation. I am very grateful to all and to Leader Frist for giving 
this a priority standing. By the early part of next week, the first 
part of the week, we will have final action. This will move very 
rapidly through the House of Representatives because it is of such 
importance to employers and employees. It is a temporary measure to 
meet the certain challenges of our time.
  To review again very briefly, the defined benefit pension plans are a 
key part of the retirement security of Americans. Americans have sort 
of a three-legged stool for retirement. They have Social Security, they 
have their savings, and they have their pension.
  While Social Security is certainly secure, there has been certainly a 
drawdown on the Social Security assets as a result of the excessive tax 
reductions of this administration. It is certainly secure at the 
present time.
  We have also seen that many who put savings in 401(k)s, with the 
slide of the market in a number of instances, have had their savings 
significantly reduced. Because of a combination of different events 
that have taken place in the economy, there is a real question about 
whether the pensions are going to be there for many of America's 
industries, the pension programs which have been supported both by 
their employer and the employee, paid into by workers with the 
guarantee that their pension would be there, would be available for 
them in the future. In many instances, they are threatened.
  This legislation is to provide breathing room into the current system 
to permit the system to get back on its feet and to be working again. 
We will take action and do it quickly.
  The defined benefit pension plans are a key part of retirement 
security for millions of Americans; they are promised a monthly benefit 
starting at retirement and continuing through their life. The combined 
plans are different from other pension plans. Only a defined benefit 
plan provides benefits backed by the Pension Benefit Guaranty 
Corporation. Workers rely on the guarantees to help in old age to pay 
for health benefits, needed medical care, college, education, and for 
their homes.
  This chart is an indication of how this whole program is established. 
There are nearly 35 million Americans covered by single employer 
defined benefit pension plans. And 9.7 million Americans are covered by 
multiemployer benefit plans. For example, in the construction 
industry--where workers move from one site to the other site--the 
process has been worked out through the employers, which is supported 
both by the employers and the workers, which gives a multiemployer 
benefit. But these are obviously workers who work hard, play by the 
rules, and have a similar kind of interest as the other 35 million. It 
is only the defined benefit plan that provides a secure monthly benefit 
backed by the Pension Benefit Guaranty Corporation.
  Why this legislation is necessary is because of what has been 
referred to earlier in the discussion and debate about a series of 
different economic conditions that are threatening the defined benefit 
pension plan. We call it a ``perfect storm'' of factors that is hurting 
the defined benefit pension plan funding levels.
  We have had a prolonged downturn of the stock market during the last 
3 years, the longest decline since the Great Depression. Then we have 
had

[[Page 356]]

extremely low 30-year Treasury bond interest rates. That may be good 
for those who are buying a new car or attempting to buy a new house, 
but if we are looking at how the pension plans were established and tie 
into the 30-year bond interest rates, we would see this factor, the 
decline of the stock market, the low interest rates and the general 
weak economic conditions, which mean that companies cannot afford to 
make additional payments and pay excise taxes imposed by our pension 
laws. These three elements combined have put the pension system 
generally, for some almost 45 million Americans, in serious jeopardy.
  We have come up with a bipartisan program. It is temporary, over a 2-
year period, which we believe can offer the relief to permit the 
programs to come back and survive.
  Late yesterday afternoon, my friend from Arizona, Senator Kyl, 
offered amendment No. 2234. Senator Kyl called this a ``hold harmless'' 
amendment for the Pension Benefit Guaranty Corporation. That 
description is misleading because this amendment is anything but 
harmless. In fact, it harms the workers who can lose pension benefits 
as a result of this amendment.
  The PBGC's mission is to preserve and protect the defined benefit of 
American workers. By paying premiums into the PBGC, companies and their 
workers are buying security. They are buying a secure guarantee, that 
if for some reason a company can no longer provide the promised 
benefit, workers receive a pension from the PBGC. This amendment 
undermines that security and strikes at the heart of the mission by 
taking away pensions that workers have earned. It would replace 
guarantees with broken promises.
  My colleague expressed concern that if the pension plans fail, it 
would hurt workers. The irony is his amendment would make those workers 
in failed plans even worse off than they are under current law. It 
would make workers pay the price for financial relief that companies 
are receiving. The companies receive the relief; the workers would pay 
the penalty.
  Our amendment explicitly applies to airline and steel companies. 
Employees in those industries have already made many sacrifices to keep 
their companies and pension plans afloat. We should not penalize them 
by taking away pension benefits they have earned.
  Finally, I am well aware of the need to preserve the PBGC's financial 
integrity. I know my colleagues on both sides of the aisle share my 
concern. None of us wants to put the Nation's pension system at risk. 
That is why our substitute amendment targets the DRC relief to where we 
think it is both needed and justified. Only companies that had well-
funded--well-funded--pension plans in 2000 would be provided with that 
relief. We exclude poorly funded plans where relief would simply expose 
the PBGC to increased deficits.
  So PBGC deficits will not be solved by taking benefits away from 
workers. Rather, we must seek to stabilize and expand our defined 
benefit pension system.
  As I say, this proposal and compromise has been carefully structured 
and carefully drafted to try to meet very special needs, and it is 
intended to do so. I believe the Kyl amendment would undermine that 
fundamental concept.
  The results of this ``perfect storm'' have not only had an enormously 
adverse impact and effect on the pension system but they are having a 
real adverse impact on the lives of many of our fellow Americans. I 
think it is important that we in this Chamber begin to understand this. 
The stock market may be going up with the profits, but what is 
happening out on Main Street should be the concern of every one of us 
in this body.

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