[Congressional Record (Bound Edition), Volume 151 (2005), Part 19]
[Senate]
[Pages 26072-26111]
[From the U.S. Government Publishing Office, www.gpo.gov]




             PENSION SECURITY AND TRANSPARENCY ACT OF 2005

  The PRESIDING OFFICER. Under the previous order, the Senate will 
proceed to the consideration of S. 1783 which the clerk will report.
  The assistant legislative clerk read as follows:

       A bill (S. 1783) to amend the Employee Retirement Income 
     Security Act of 1974 and the Internal Revenue Code of 1986 to 
     reform the pension funding rules, and for other purposes.

  The PRESIDING OFFICER. Under the previous order, the managers' 
amendment at the desk is agreed to. The bill will be considered 
original text for further amendment.
  The amendment (No. 2581) was agreed to.
  (The amendment is printed in today's Record under ``Text of 
Amendments.'')
  Mr. ENZI. Mr. President, this is a very exciting day. We are here to 
the debate on the pensions bill. Every day hard-working Americans go to 
their jobs, they are confident we here in Washington are looking out 
for them and doing everything we can to assure that they will be able 
to retire some day and live the life they have always dreamed about. 
For our Nation's older workers and those who have already retired, 
there are few things more important to them than the health of their 
pension plan and the protection it provides. It involves younger 
workers, too.
  I am glad we are at this point. This may be one of the biggest bills 
that has ever been covered with as little debate as we will have today. 
Part of the reason for that is how detailed it is and how many moving 
parts there are. I congratulate all of the people who have worked on 
this bill and worked cooperatively, both sides of the aisle. We have 
even had some conversations with the other end of the building in order 
to be able to get it to this point at this time.
  I particularly have to commend Senator Kennedy and his staff and my 
staff. August is normally a time when we are at recess and traveling 
our States, as I was and Senator Kennedy was. It is normally a time our 
staff can catch up on things. It was not. It was a time they were 
heavily involved in negotiations to come up with the best possible 
package for protecting the retirement of the people of this country, 
and they worked virtually around the clock during the entire month of 
August. Senator Kennedy and I were on the phone several times working 
out some of the big issues and trying to keep the focus on the 
direction it needed to go.
  I also have to specifically congratulate Senator Isakson. He has been 
our coordinator with airlines on this whole thing, and had the airlines 
not had a crisis, I am not sure we would be here today debating 
pensions. It was enough of a focal point, enough of an impetus that it 
got us on the track of solving all of the pension issues, in all of the 
aspects, and I think we have a very complete reform package here.
  Of course, I would be remiss if I did not mention Senator Lott and 
Senator Coleman, who also were strong advocates on getting a solution 
for airlines so we would stop seeing the airlines go into bankruptcy 
over their pension problem. We have a team of them here today to add 
one more amendment that will make sure we will have airlines and to 
make sure that airline employees will have a solvent retirement 
package.
  I also have to thank Senator DeWine and Senator Mikulski, the 
chairman and ranking member of the Subcommittee on Pensions on Health, 
Education, Labor and Pensions. They held a number of hearings that set 
up the data so we would actually have information on which to base this 
pension reform. They have done a tremendous job, not just with the 
committee but also representing particularly people in manufacturing 
across this country who also have some very special problems at this 
point in time.
  I would also mention Senator Stabenow and Senator Levin, who have a 
majority of those manufacturing workers. In fact, they probably 
represent more manufacturing workers than there are people in the whole 
State of Wyoming. But the team of people worked together and put 
together a bill for the Health, Education, Labor and Pensions 
Committee. Senator Grassley and I, and the members of the Budget 
Committee, had an amendment in the budget bill that required that the 
HELP Committee and the Finance Committee merge a bill. I have to 
congratulate Senator Grassley and Senator Baucus for their tremendous 
work with the Finance Committee to put together a separate bill that 
covered all the jurisdictional areas of the Finance Committee, and then 
their effort with us to merge a bill, which is the bill that is here 
today.
  I have to tell you there were a lot of people betting that, first, 
neither committee would be able to report a bill out of committee and, 
secondly, that we would never be able to merge the two bills. It has a 
lot to do with Senator Baucus and Senator Grassley and their staffs 
being extremely involved and working again in this detailed, ``many 
moving parts'' bill. That is the reason we are here today and have a 
rather comprehensive bill, and it is one that people have been 
scrutinizing and working on through all of the months of this year.
  I think it is a tribute to all of the people who have worked on it 
that we have limited debate on S. 1783. Only two amendments are being 
offered, and then we will have a final vote. That is a lot of agreement 
for this body of 100

[[Page 26073]]

people who usually have a lot of disagreement.
  I have some other comments, but I will make them later and allow 
people to get on with describing the actual workings of this bill to 
the point where we can do a final vote.
  I yield to my neighbor from Montana.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, first, I thank my colleague, Senator Enzi 
from Wyoming, the chairman of the HELP Committee. As he has indicated, 
his committee, along with Senator Kennedy, the ranking member of that 
committee, Senator Grassley, chairman of the Finance Committee, and 
myself, the four of us worked together to be where we are today. 
Clearly we are where we are today because a lot of employees, a lot of 
retirees are very worried about their pension benefits. The essential 
way to help address that situation is to make sure these plans are more 
fully funded so as the promise is made, the promise is kept and, 
second, to make sure the backstop of the PBGC is also there when 
companies facing incredible pressures worldwide feel they have to no 
longer live up to their pension obligations and those obligations are 
passed on to the PBGC.
  It is worldwide competitive pressures that big American companies and 
smaller American companies are facing as well as the Enron collapse 
which has forced us to take a good, hard look at this to try to find 
some good solutions. I thank Senator Enzi, Senator Grassley, and 
Senator Kennedy for their very good work.
  It is important to say a little bit about this bill so Americans know 
what we are doing today. Millions of workers clearly have worked very 
hard over their lifetime. American workers, when they work, feel they 
are playing by the rules. They want to play by the rules and they want 
to do what is right. This bill, frankly, is about making sure that the 
retirement benefits are there when people need them, more likely to be 
there than a lot of people think.
  As we start the debate, let's remember why we are here. We are here 
to protect workers' pension benefits, plainly and simply. That is why 
we are here. This need was highlighted recently by cover stories in 
Time magazine and the New York Times Sunday magazine. Their titles were 
``The Broken Promise''--that was Time magazine--and ``The End of 
Pensions'' in the New York Times magazine. I highly recommend all 
Members of this body read these articles. I read them both. They are 
very thorough and very perceptive in stating the problems and some of 
the solutions to the problems Americans face in having retirement 
benefits.
  The Pension Benefit Guaranty Corporation, PBGC, was established to 
protect workers' pensions, but there are limits on PBGC's guarantees. 
Many participants have been promised benefits in excess of those 
guaranteed by the PBGC. When a company fails and the pension plan 
terminates with unfunded benefit promises, these workers and retirees 
pay severely for pension underfunding with part of their own hard-
earned retirement benefits.
  For example, the PBGC--and that is the outfit that takes over failed 
plans--has estimated that almost 7,000 United Airlines workers will 
lose 50 percent or more of the benefits they had earned under their 
pension plans. Another 28,000 United Airlines workers will lose between 
a quarter and half of their benefits. Clearly, as a result, promises to 
those employees are not being kept. We are here to try to help make 
sure those promises are better kept, and this bill will help move in 
that direction.
  The most basic building block of pension funding is the interest rate 
used to determine the present value of benefits to be paid for the plan 
in the future. This bill provides a permanent replacement for the 30-
year Treasury rate which has been used basically for this purpose--that 
is, determining the interest rate--under current law.
  Under this legislation, we will change that. It is true Congress did 
pass a temporary substitute last year. This bill is to enact a 
permanent interest rate calculation. This bill would extend the current 
temporary interest rate--a corporate bond rate--for an additional year, 
and then begin phasing in a permanent solution known as a modified 
yield curve of interest rates. Using a yield curve to determine the 
value of future benefit payments is more accurate than using a single 
interest rate because the yield curve recognizes that you get a 
different interest rate on a 5-year loan than, say, on a 15-year loan, 
and that is relevant because clearly more people work longer than 
others, so their retirement is a different period of time.
  This bill simplifies that yield curve by breaking it into three 
segments--retaining the improved accuracy of a yield-curve measurement, 
while making it easier to apply the rates.
  There are other key changes to the funding rules.
  Unfunded benefit liabilities would have to be paid off over a 7-year 
period. Ideally, every plan would be 100 percent funded every year, but 
with fluctuating asset values and interest rates, that is not 
practical.
  Large companies could base cost calculations on their own mortality 
experience. Workers in some industries do not live as long as the 
general population. That affects the cost of providing lifetime 
pensions and should be reflected in an accurate measurement of funding 
obligations.
  The increased utilization of early retirement subsidies that occurs 
when troubled companies start downsizing is reflected in a special at-
risk liability calculation. This will ensure that companies begin 
funding for subsidized benefits before it is too late.
  The at-risk calculation is not a penalty imposed on companies when 
they are down and out. It is a reflection of increased costs. Someone 
has to pay those costs. The question is who. Should other companies pay 
through increases in PBGC premiums? Should workers pay through lost 
retirement benefits? Or should we, as I believe, require the company 
that made the promise fund the promise?
  Failure to recognize the real cost of benefits is one reason for the 
system's funding problems. Another is that current law actually would 
have penalized many employers if they had contributed more to their 
pension plans.
  Employer after employer has told us that we need to allow companies 
to contribute and deduct more in good times to build a cushion for bad 
times. This bill does that. It allows companies to deduct contributions 
that would fund the plan up to 180 percent of the cost of benefits 
already earned and allows employers to maintain a prefunding account 
with these extra contributions, which is sort of a rainy day fund, to 
help them meet contribution requirements when cash is a little tighter.
  Our goal is retirement security, assuring workers that benefits they 
had been promised will be paid. There are two sides to keeping that 
promise--funding what is promised by the company and also not promising 
more than a company can afford to pay.
  This bill limits increases in a plan's benefit formula if the plan is 
less than 80 percent funded. If a plan is less than 60 percent funded, 
then no more benefits can be earned until funding improves. Employers 
would have to fund up collective bargaining plans to keep these 
limitations from kicking in.
  To make sure poorly funded plans do not become even more unfunded, 
this bill limits the portion of a benefit that can be paid in a lump 
sum if a plan is less than 60 percent funded. Lump sum payment of 
pension benefits can drain plan assets and hurt other workers. No 
benefits would be forfeited. The difference would be paid as an 
annuity. Retirement benefits are the largest asset of many workers, and 
they deserve timely, complete information on the state of their 
investment. Under this bill, most workers and retirees will receive 
detailed funding information within 90 days after the end of the year. 
That is new.
  There was a time when pension plans paid monthly benefits at normal 
retirement age, usually based on years of service and some average 
compensation. The benefits were heavily weighted to workers who spent 
their entire career with one company. But in today's competitive world, 
that is not

[[Page 26074]]

likely to be the future. Today many companies have moved to cash 
balance plans or other hybrid arrangements that are structured more 
similar to 401(k) plans, defined contribution plans. Benefits are 
earned more evenly over a worker's career and are more portable--easier 
to move from one job to another--than the traditional pension benefit. 
There has been uncertainty surrounding these plans, and litigation is 
ongoing. If defined benefit plans are to be a viable, attractive option 
in the future--and there is a real question whether they can be, and we 
are trying to make sure we can be--we must bring some certainty to the 
rules governing these arrangements. That is cash balance and hybrids.
  This bill lays down the rules for moving forward with these plans. It 
recognizes the legitimacy of the basic design. It also provides 
protections for older workers when a traditional plan that rewards a 
lifetime of hard work is converted to one of these hybrid arrangements 
that is designed for a more mobile workforce. I think we have done a 
good job of protecting participants without putting too onerous a 
burden on employers.
  Let me emphasize that this is a prospective provision; it is not 
retroactive. We do not step into the legal quagmire that exists with 
regard to the past. I want to make it clear that this bill offers 
neither side an inference as to interpretation of existing rules.
  Some of the provisions in this bill that provide participant 
protections were in a bill we introduced in the 107th Congress, a bill 
designed to help prevent another Enron.
  We all remember Enron. Thousands of workers lost their jobs. Because 
their 401(k) accounts were heavily invested in company stock, these 
workers lost most of their retirement savings as well. In February 
2002, ``60 Minutes'' did a segment called ``Who Killed Montana Power,'' 
about my own State's experience with employers behaving badly and havoc 
wreaked on employees and their savings. The story reported one worker 
had lost $350,000 in his 401(k) plan because of the crash of employer 
stock. He certainly was not alone.
  This is not to say company stock is a bad investment. Sometimes it is 
a wonderful investment. So this bill does not prohibit investment in 
employer stock. It simply puts the choice where it should be--in the 
hands of participants who are building up their retirement savings.
  To help make that decision, we give workers tools to make good 
decisions and understand the consequences of their actions. We require 
more frequent benefit statements, and we provide a safe harbor to make 
it easier for employers to make independent investment advice available 
to plan participants if they want independent investment advice.
  This bill has a number of other provisions that will make it easier 
for a worker to move retirement plans from employer to employer or from 
an employer plan to an IRA. There are also provisions that make it 
easier to administer retirement programs.
  All of us are fortunate to have the benefits of the Federal 
retirement system. We have good pensions. We have good retiree health 
benefits, and I might add the PBGC does nothing to health benefits. 
This legislation does nothing to health benefits. It is only pension 
benefits. Health benefits is something that has to be addressed clearly 
and solidly at a not-too-distant date.
  Imagine, however, if the Government all of a sudden said: Sorry, we 
can't afford that retirement, all you folks in Federal Government; we 
are going to cut it back; you will have to learn to live on less. That 
would be a problem, and it is a problem for many Americans.
  That is what many of America's older workers and retirees are facing. 
Our steel workers, our airline workers, and many others have had the 
rug pulled out from under them. It is no one's fault, certainly not 
theirs. America's companies are competing in a cutthroat world. It is 
important to remember that. They have problems too.
  What we are trying to do today is ask everyone to be more responsible 
and strike the right balance. We need a system where companies put 
enough money aside to pay for what they promise. And we need a system 
where workers who carry out their part of the bargain do not have to 
worry that a pension was more dream than substance.
  This is a tough challenge. The bill is not perfect. It is a 
compromise. But I believe it is a good bill and should become law. The 
retirement security of millions of workers deserves our attention. I 
urge my colleagues to support keeping promises, to support protecting 
workers' retirement benefits. I urge my colleagues to support the bill.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. Who yields time? The Senator from Georgia.


                           Amendment No. 2582

(Purpose: To modify pension funding rules related to airlines, and for 
                            other purposes)

  Mr. ISAKSON. Mr. President, I call up my amendment at the desk and 
ask for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Georgia [Mr. Isakson] proposes an 
     amendment numbered 2582.

  Mr. ISAKSON. Mr. President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The amendment is printed in today's Record under ``Amendments 
Submitted.'')
  Mr. ISAKSON. Mr. President, I ask unanimous consent that the 
following Senators be added to the amendment as cosponsors: Senators 
Lott, Coleman, Rockefeller, DeWine, Alexander, Bennett, Burns, Hatch, 
and Chambliss.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ISAKSON. Mr. President, it is a privilege for me to introduce a 
Member of the Senate who has been instrumental in bringing this 
amendment to the floor, Senator Coleman from Minnesota. I yield him 4 
minutes.
  The PRESIDING OFFICER. The Senator is recognized for 4 minutes.
  Mr. COLEMAN. Mr. President, it is a pleasure to work with the Senator 
from Georgia. I wish to talk about a piece of this amendment. Before I 
do, I thank Chairman Enzi and Ranking Member Kennedy for the work they 
have done on this bill. I represent Minnesota, Big 10 football, big 
ground game, not fancy passes. The Senator from Wyoming is not a 
rabbit, not fast on his feet, but, boy, is he solid, steady, and 
consistent. This is a great bill.
  There is a piece particularly important to the folks in my State and 
actually throughout the country. This is not just about my State. 
Pension reform provisions relating to the airline industry take the 
burdens off the taxpayers. That is what this is about.
  Let me be clear, when airlines cannot meet their pension obligations, 
the Pension Benefit Guaranty Corporation, PBGC, is saddled with the 
responsibility. Who is the PBGC? It is the American taxpayer. That is 
who is saddled with the responsibility.
  In my State alone, Northwest Airlines is struggling to meet its 
obligations and make good on their promises of pensions to its 
employees. Minnesota has almost 22,000 people who depend on Northwest 
Airlines pensions. As the Senator from Montana said a minute ago, this 
is about promises made and about promises being kept.
  The Federal law defining underfunded defined pension benefit plans is 
seriously broken and must be fixed. A number of airlines have already 
terminated their defined benefit plans in bankruptcy and transferred 
them to PBGC. Other carriers may well suffer the same fate.
  I am not going to go into detail as to why it happened--stock market 
declines, low interest rates, September 11, record oil prices--but as a 
result, the deficit reduction contribution rules kick in. They require 
that Northwest and other carriers make massive additional contributions 
to its defined benefit plans that they cannot afford.
  It is difficult to overstate how profoundly these DRC rules have 
impacted the funding of pensions. It would be akin to telling 
homeowners with 30-year mortgages that if the value of their homes drop 
below 80 percent of

[[Page 26075]]

the purchase price, for whatever reason, their loan will be accelerated 
such that the balance will become due in 3 to 5 years. This is a 
problem. Common sense is not in play. This amendment provides common 
sense to pension laws.
  This amendment provides some protection to the taxpayers. This 
amendment provides protection to the employees. They should get what 
they have worked for. Promises made, promises kept.
  Northwest has worked with the labor unions. They developed a proposal 
contained in this compromise bill allowing them to proceed in a way to 
stop adding to the underfunding of airline plans by requiring airlines 
and their affected unions to freeze their plans, ceasing future benefit 
accruals, and protect the PBGC by freezing the PBGC guarantee. It would 
fix the broken DRC rules by extending the term of the pension 
``mortgage'' from its current 3-to-5-year amortization period to a 
longer amortization period.
  Under this proposal, retirees and plan participants would receive the 
benefits they earned to the date of the freeze. Retirees would be 
protected. In addition, the PBGC will be in better shape financially 
since its liability will be capped, and each airline payment that an 
airline makes to the plan will reduce that liability.
  The bottom line is this: Northwest and other airlines are not seeking 
a subsidy, they are not seeking a bailout from the Government. Just the 
opposite. They are asking for a responsible alternative to current law 
that lets them pay their pension liabilities versus shifting those 
obligations on to a Government agency.
  It is the right thing to do. It is a fiscally responsible thing to 
do. It is the right thing to do for the employers and taxpayers. I urge 
my colleagues to support this amendment.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Georgia.
  Mr. ISAKSON. I yield myself 5 minutes.
  Mr. President, I first thank Senator Coleman for his remarks and 
associate myself with those remarks. I particularly thank Chairman Enzi 
of the HELP Committee, as well as Senator Kennedy. They have made sure 
that this stayed alive during the course of this session.
  I thank Senator Grassley and Senator Baucus for the efforts they made 
on pensions and particularly thank Senator Coleman and Senator Lott for 
their untiring efforts to bring this to reality today.
  I wish to go back to one thing Mr. Coleman said briefly by 
acknowledging what brings us to this point in terms of airlines. In the 
past 5 years, there have been five things that have happened, none of 
which would be in control of the aviation industry: the decline of the 
stock market early in this decade, the tragic events of 9/11 which 
grounded American aviation, the unprecedented historically and 
continuously low interest rates, the hurricanes that hit the United 
States and shut down refineries and petroleum and closed major airline 
markets for transportation, and not the least of which is petroleum 
going to $70 a barrel and aviation fuel tripling in its cost.
  If we take all of those and combine them with the constraints of the 
current formula on pensions, one can understand why the aviation 
industry has had the difficulties it has had and how employees of 
legacy airlines will lose their pension benefits unless we adopt 
reasonable and appropriate amendments such as the amendment we propose 
today.
  Very simply, this amendment does a couple of things. One is for the 
aviation industry. It allows the amortization of the obligation over a 
20-year period of time, an amount that is manageable, an amount that is 
doable, an amount that for all intents and purposes will ensure 
employees will get the pensions they have earned. Failure to adopt this 
amendment will almost guarantee that those employees of airlines such 
as Delta, Northwest, and others will not ultimately get the pension 
benefits they have earned. The major consequence of that will be the 
taxpayers of the United States of America, through their surrogate, the 
PBGC, the Pension Benefit Guaranty Corporation, will have the 
additional liability those pensions will thrust upon the PBGC.
  In this amendment, we have met the challenges the aviation industry 
has before it. We have looked responsibly at the right formula and the 
way in which to calculate that formula to ensure the benefits are paid. 
We have addressed the concerns of the industry and its individual 
airlines, all of which have similar unique but some different problems.
  In particular, what we do is give hope for the employees to get their 
benefits. We cap the liability of the PBGC, and we ensure that one of 
the most important elements of the U.S. economy, the aviation industry, 
is not forced by laws that are out of sync to unfund, defund, or 
jettison their pension plans for the employees who have made those 
airlines fly throughout their careers and throughout their history.
  We have some time remaining on our allocation for the amendment, to 
which Senator Lott was to speak but was called away. I reserve the 
remainder of our time on the amendment for Senator Lott upon his 
return.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Who yields time?
  The Senator from Maryland.
  Ms. MIKULSKI. I ask unanimous consent to speak up to 10 minutes under 
the time controlled on the Democratic side.
  The PRESIDING OFFICER. Is there objection? Without objection, it is 
so ordered.
  Ms. MIKULSKI. I note that the distinguished chairman of the Finance 
Committee has come to the Chamber, and I know he is eager to speak on 
the bill and has many demanding responsibilities.
  I compliment both Senators Enzi and Kennedy, as well as Senators 
Grassley and Baucus, on the outstanding job they have done in 
developing this legislation and putting two bills together. Pension 
reform is one of the most important issues facing the American people, 
and Congress must rise to the challenge of passing legislation. Reform 
is needed to protect workers' pensions, to protect good-guy businesses, 
and also to protect the American taxpayer, who often ends up being the 
safety net for so many pensions.
  The bill before us today is generally a very good bill. Yes, I do see 
some yellow flashing lights about two provisions of the bill regarding 
the use of credit rating and something called smoothing. That is why 
Senator DeWine and I had originally wanted to offer an amendment to 
avoid the unintended consequences that might push companies to drop 
their pension plans and leave workers in desperation.
  In recent days, we have made a lot of progress. Senator DeWine and I 
have had very constructive conversations with Senators Grassley and 
Baucus. Senators Enzi and Kennedy have been particularly helpful in 
brokering a resolution to some of the issues. The process seemed far 
less ominous when their wise heads and hands got involved in it. Their 
help was invaluable in ironing out some of the wrinkles. I believe we 
have a commitment to work together in conference to address our 
concerns because I truly believe that the Senate bill is in many ways a 
superior bill to those in the House. This is why I am eager to see this 
bill move ahead.
  Throughout my career, everyone knows I have been fighting for the 
little guy. This is no different. Pensions are part of the American 
dream. People believe that if one works hard, they can get ahead, but 
also if they work hard, they are going to have a pension. A pension has 
to serve as one of three legs of an increasingly wobbly stool 
supporting older Americans in retirement. That is why we are so 
concerned about the fragility of so many pension plans in our own 
country.
  We have worked from the beginning on a bipartisan basis. Senator 
DeWine and I are the chair and ranking member of the Subcommittee on 
Retirement Security and Aging in the Health, Education, Labor, and 
Pensions Committee, of which Senator Enzi is the chair and Senator 
Kennedy is ranking. We held a series of hearings, and they were 
outstanding. I wish

[[Page 26076]]

the American people could have seen them. They were content rich, and 
they were also characterized by civility, particularly among members. 
The hearings demonstrated the need for comprehensive reform that 
addressed not just single-employer plans, but multi-employer plans and 
cash balance plans as well.
  What I like about the bill is that we have a smart bill, we have a 
good bill, and we have a bipartisan bill. When we looked at it, part of 
our bipartisan framework was to let us do no harm either to the people 
who need pensions or to the people who provide the jobs and the 
business. We need to make sure workers do not lose their pensions. We 
had to look out for good-guy businesses that are doing everything they 
can to fund their pensions. We also had to protect the taxpayer and 
ensure that the Pension Benefit Guaranty Corporation was solvent. It 
must not be used as a dumping ground for those companies that want to 
walk away from their pensions even though there was no need to. I 
believe we accomplished so much in those principles: do no harm, 
protect the worker, protect good-guy businesses, and look out for our 
taxpayers.
  When the HELP bill was merged into the finance bill, many 
improvements were made, but there were several provisions that, as I 
said, had yellow flashing lights. One is the issue of credit rating and 
the other is the issue of smoothing.
  There are those within the HELP Committee--and my colleague, Senator 
DeWine, and I count ourselves as two of them--who are concerned that a 
company's credit rating is being used as an indicator of its pension 
plan's health. Companies with bad credit ratings could be forced to put 
in extra payments, even if they had been responsible in making regular 
payments to their generally well-funded plans.
  Credit rating is a blunt instrument. Data from Moody's, one of the 
Nation's leading credit rating companies, should help explain this. 
Moody's looked at companies that were sub-investment grade and followed 
them for a full 20 years. After these 20 years, a majority of the 
companies had not defaulted on their bonds. This tells us that the 
companies had not gone bankrupt.
  Some people are worried that weak companies will go into bankruptcy 
and dump their pension plans. The facts say otherwise: a majority of 
companies in junk-bond status won't go bankrupt. Forcing struggling 
companies to make new draconian payments could end up pushing many 
companies to terminate their plans or enter bankruptcy. We have to take 
that into consideration. This means in fact this language would bring 
about exactly what it is designed to protect against.
  Auto manufacturers and tech companies, many of whom are just now 
regaining their financial stability, could be among those hit hardest 
by these provisions. We should encourage these viable businesses to 
continue making contributions to their plans, not push them into 
bankruptcy.
  Such an unintended consequence could well cost many Americans their 
jobs and their pensions. Senator DeWine and I wanted to make a targeted 
change to the bill to help prevent this, substituting the actual 
measure of a plan's health in place of credit ratings.
  The other issue that concerned me is limitations on smoothing. 
Smoothing is the process of averaging estimates of assets and 
liabilities and is used because pensions are by nature long-term 
investments. Smoothing improves predictability and makes it easier for 
companies to plan their budgets around their pension contributions.
  Under current law, companies can average estimates of assets and 
liabilities over 4 or 5 years to smooth fluctuations in the stock 
market and in interest rates. Senator DeWine and I wanted to tighten 
this to 3 years, which is more restrictive than current law but more 
effective than the merged bill's one year. Numerous experts have said 
that one year is just not enough.
  I also want to highlight a key transparency provision in the merged 
bill that requires companies to issue a snapshot, unsmoothed picture of 
their assets and liabilities each year to participants and the PBGC. 
This new disclosure addresses the criticism that smoothing can hide 
problems in plan funding for several years. Now, many problems should 
be apparent just 90 days after the end of the plan year.
  Last Wednesday, the House Ways and Means committee passed Chairman 
Thomas' bill. Like the HELP bill and like Chairman Boehner's bill, the 
Ways and Means Committee didn't include credit rating and allowed 3 
years of smoothing.
  I continue to feel strongly about the need to make changes to the 
legislation before us today. I also believe it is imperative to 
continue moving through the legislative process so we can pass this 
much needed reform. The Ways and Means Committee has acted, and we now 
know that the House of Representatives is sure to have a good position 
on these issues. There are too many other good provisions in this bill 
that we must pass.
  I am not going to go into all the details of the bill. I note that 
the chairman of the Finance Committee wishes to speak. We want to move 
this legislation. I want to pass this bill so we can get to conference. 
We want to say to the House: They sometimes think the Senate is the 
body that talks more than it gets done. We challenge the House to pass 
this bill before they leave the way the Senate is going to do it and to 
do it the way we did it--working on a bipartisan basis.
  I cannot say enough about the appreciation I have for Senator DeWine 
of Ohio, who was the chairman of the subcommittee. We worked together, 
and we really looked out for those jobs that have a defined benefit 
plan, particularly in the older manufacturing corporations. It was a 
delight to work with him, and I look forward to that on many other 
issues.
  Senator Enzi, with his accounting background, provided a steady hand 
and again has worked to create a culture and climate of civility that 
is becoming a hallmark of our committee. I have also appreciated 
working with Senators Grassley and Baucus to achieve the melding of two 
very good bills. We thank them and we thank their staffs for their 
collegiality and consultation.
  I look forward to voting for this bill. I look forward to being a 
conferee, and I look forward to bringing a bill back to the Senate not 
only that the Senate can be proud of but that people who need pensions 
can rely upon and that business does not fear. Government must be part 
of the solution rather than the problem.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  The Senator from Wyoming.
  Mr. ENZI. Mr. President, I thank the Senator from Maryland, Ms. 
Mikulski, for her tremendous work. She showed such tremendous concern 
for the workers and the companies, both of which are multiple in her 
State, and she did a great job of brokering for both to make sure the 
businesses would continue and the employees would get their pensions.
  The Senator showed the depth of understanding that she already had 
and that she got from the hearings which were conducted. We appreciate 
the bipartisan way she has worked on this to get us to this point.
  I yield to the Senator from Iowa.
  The PRESIDING OFFICER. The Senator from Iowa.
  Mr. GRASSLEY. Mr. President, before I give my reasons to my 
colleagues for why they should support this legislation and why it came 
out of my committee, there are several thank-yous I would like to give, 
first to Senator Baucus because this is truly a bipartisan bill that 
came out of committee. In fact, I think it came out totally unanimous. 
Over a period of many months working with Senator Baucus, we were able 
to put something together to get that kind of bipartisan support.
  Then later on, the HELP Committee reported a bill. There was 
extremely great cooperation between Senator Enzi and Senator Kennedy 
with Senator Baucus and me. I do not say this tongue-in-cheek, I say it 
as a matter of fact: I think if one can get Senator Enzi and Senator 
Grassley together on one side of the aisle and Senator

[[Page 26077]]

Baucus and Senator Kennedy together on the other side of the aisle, 
there ought to be something that ought to pass this body.
  I also lend compliments and support for helping move this bill along 
to Senator Mikulski and Senator DeWine because they had a very 
controversial amendment--they may not have thought it was 
controversial--and we were able to work out some understandings beyond 
the action on this floor to accomplish that. So we would not be here 
today doing this bill without Senator Mikulski and Senator DeWine's 
cooperation. I thank the Senator from Maryland for that, and Senator 
DeWine as well.
  I am very pleased that the Senate now is turning their attention to 
what we call the Pension Security and Transparency Act, 2005. It is a 
bipartisan bill, and I support it. I think every Member of the Senate 
ought to be proud to support this bill and, of course, only a rollcall 
will show that.
  This is a bill that is about one thing--improving the retirement 
security of all Americans. It will improve Americans' retirement years 
in many different ways. Much of the public focus on this legislation 
has been on the comprehensive pension funding reforms that are in the 
legislation. Those reforms are very important, but before I talk about 
those, I wish to spend a couple of minutes talking about other 
important provisions in the bill.
  No. 1, the bill represents a completion of the post-Enron retirement 
plan reform that I have worked out with my good friend Senator Baucus, 
Democrat ranking member. We all remember that when Enron spiraled into 
bankruptcy and the value of that company's stock evaporated, Enron 
employees had 401(k) plans locked in Enron stock. They had no chance of 
diversifying their 401(k) portfolios, and they were blocked from 
selling Enron stock at the time top executives were cashing that stock 
out with big gains for them. This bill would say that Enron practice is 
unacceptable for any company in the future. Employees should not be 
forced to stuff their 401(k) plans with company stock. Diversification 
is the most fundamental principle of sound investment strategy. The 
bipartisan legislation before us today then guarantees that employees 
have the right to diversify their 401(k) accounts.
  This bipartisan bill also seeks to increase savings by adopting new 
rules to promote automatic enrollment in 401(k) plans. Very often, I am 
afraid, the hardest dollar to save is that first dollar. Once people 
begin to save, it can become a habit that lasts a lifetime. Automatic 
enrollment means that saving that first dollar will be easier, less 
redtape, and it means that millions of Americans then will be saving 
many times more than what they save today. Obviously, every month we 
get statistics on savings that say Americans are almost, throughout the 
entire globe, the ones who save the least.
  The bipartisan bill before us today also simplifies retirement plan 
rules, making it easier and less burdensome for employers to give 
retirement plans to their employees. These types of changes will be 
particularly helpful to small businesses, which are often discouraged 
from sponsoring a retirement plan because of the costs, administrative 
costs particularly, and the redtape burdens. The bipartisan bill before 
us today would allow small businesses to combine a defined benefit plan 
with a 401(k) plan, and they would do this into one simple plan called 
DB(k). This type of combined plan will give employees the best of both 
worlds at the same time.
  Speaking of combining the best of both worlds, the bipartisan bill we 
are considering today provides long-needed clarifications that cash 
balance and other types of hybrid pension plans are not inherently age 
discriminatory. Hybrid pensions combine positive features of both the 
traditional pension plan and the defined contribution plans. These 
plans have long provided meaningful retirement benefits to employees. 
Today we will help to lift the cloud of legal uncertainty over these 
plans. At the same time, we also ensure that the rights of participants 
are protected and that the plans truly do meet the needs of today's 
mobile workforce by requiring faster vesting of employees' benefits in 
those particular plans.
  Finally, then, I will refer to the pension funding changes in this 
bill, those things that really have gotten the most attention and maybe 
are somewhat controversial. This bill honors a promise that we made way 
back in 1974, before I came to Congress, when the law governing plans, 
called ERISA, was enacted. That promise was made that the pensions of 
rank-and-file employees should not depend on the financial solvency of 
their particular employer. ERISA, the law, says that it is OK for a 
nonqualified pension of senior management to be exposed to the 
company's risk of bankruptcy. But then when it comes to the rank-and-
file employee, people who probably had as much to do with making the 
company as the manager, people who worked hard all their lives in hopes 
of a good retirement, and a pension being a part of that good 
retirement--those people's golden years should not be ruined because of 
their employer falling on hard times.
  ERISA is meant to protect against that, and we are making some 
changes to make sure that ERISA does what it was originally intended to 
do in 1974, without using the taxpayer as a possible backstop. ERISA, I 
hope people believe, has worked pretty well for the last 30 years. But 
we found that in recent years there are times that the promise of ERISA 
is not honored. So, today, we are here to fulfill the promise and to 
let the American people know that if you have been promised a pension, 
we are going to make sure that you receive it.
  The pension funding reform in this bill also stands for another 
bedrock American principle that if you make a promise, you are 
responsible for your own promise. We all know that most companies fund 
their pension plans in a very responsible manner. Unfortunately, there 
are a few--and it only takes a few bad apples to ruin the whole barrel 
of apples--but a few bad apples who have abused loopholes. Those are 
loopholes that are in the current rules to avoid funding pensions in a 
way that shows that they are responsible for their own promises.
  Those few who have taken advantage of these loopholes have often, in 
the end, dumped their pension plans on the Pension Benefit Guarantee 
Corporation, the Government agency that was set up to provide the 
insurance; let's say in a sense like the Federal Deposit Insurance 
Corporation does, for savers in bank accounts. These companies have 
essentially said we cannot pay our bills. Someone else is going to have 
to pay them for us. That is the PBGC.
  Unfortunately, the people they want to pay are other employers who 
have done the right thing and have guaranteed their employees the 
pensions they promised. They are able to deliver on those promises. 
Those employers who are honest and upright get stuck with the bill, in 
the form of higher premiums to the Pension Benefit Guarantee 
Corporation.
  I think we would all agree that is not fair, and it is no way to run 
a pension system. Even more unfair is the concept of a taxpayer bailout 
of the PBGC. One thing that I am for in this legislation is the attempt 
to make sure this does not happen, that the taxpayers are not laid bare 
for this obligation that the corporation ought to pay, but that goes 
back to the irresponsible actions of a few bad apples who do not fund 
their pensions adequately. I do not want another savings and loan 
situation like we had in the late 1980s coming out of bad policy in the 
PBGC.
  As we have watched the financial condition of this Government 
corporation deteriorate rapidly in recent years, the prospects of such 
a bailout become increasingly real--in other words, a taxpayer bailout, 
a savings-and-loan-type bailout that we do not want to let happen. In 
other words, we ought to show that we have learned a lesson, and 
hopefully this bill is a good step showing we have learned a lesson.
  The bipartisan bill we have before us today will reverse the decline 
over time by improving pension funding and bringing additional premium 
revenues

[[Page 26078]]

into the corporation, the Pension Benefit Guarantee Corporation. This 
bipartisan bill represents a huge leap forward for retirement security.
  Let me say I am cognizant of the fact that we in Congress are saying 
that it is a huge leap forward. I think it ought to be known to all of 
my colleagues that the President and his staff, who were interested in 
this legislation, would say it is not good enough in this direction and 
maybe there are opportunities, hopefully along the way, for 
improvement.
  I think, once again, in closing, I need to give thanks, as I have 
already given. I start with Senator Baucus for his dedication in this 
legislation. He has been a great partner to work with me to advance 
this bill to where it is now. I also thank Chairman Enzi and Senator 
Kennedy. I think we have had a partnership working together as two 
committees on legislation because we share jurisdiction. I have to 
commend their dedication to important reforms that they put in their 
bill. They have been tireless in their efforts to get us to this point. 
I look forward to working closely with them and all my colleagues in 
the Senate as we continue to work towards the goal of getting this 
bipartisan legislation to the President for his signature.
  I yield the floor.
  Mr. ISAKSON. Mr. President, I would like to turn the wheel back on 
our time allotted to the Isakson amendment and yield that time to the 
Senator from Mississippi and, in so doing, repeat my acknowledgment of 
my thanks to Senators Grassley, Baucus, Enzi, and Kennedy for their 
cooperation in allowing this amendment of the aviation portion of the 
pension bill to come before the Senate today, and the distinguished 
Senator from Mississippi for his untiring effort to bring us to this 
point today.
  The PRESIDING OFFICER. The Senator from Mississippi.
  Mr. LOTT. I thank the distinguished Senator from Georgia yielding me 
that time. Might I inquire, what is the time remaining?
  The PRESIDING OFFICER. The Senator has 7 minutes.
  Mr. LOTT. Mr. President, first of all, I point out this is a classic 
example of how we can work together to get an agreement to move needed, 
necessary, balanced legislation. There have been a lot of glitches 
along the way, but there has been persistence by the Finance Committee 
and by the HELP Committee to report out the legislation, to have 
hearings, to listen to the arguments from the administration, from the 
private sector, from those who are experts in this field of the PBGC. I 
am very proud of the work that was done by the chairman of the Finance 
Committee, working hand in hand with the ranking member, Senator 
Baucus, to get the legislation passed and to allow an amendment in 
which I was very interested dealing with the airline pension situation. 
They could have said ``don't do it'' or ``we will do it later,'' but 
they allowed the process to work its way through.
  Then, also, I have to give tremendous credit to the chairman of the 
HELP Committee, Senator Enzi. He did not give up on it. He was dogged 
and he was working on trying to get this unanimous consent agreement on 
how we consider this legislation, and our leadership on both sides of 
the aisle were able to come together. There were a lot of people who 
had amendments they wanted. They had objections, there were holds here, 
holds there, yet here we are. So I hope we can look at this and see if 
we cannot do this again in the future.
  There is no question we need reform in this area. There is real 
exposure across the board. American workers all over this country, and 
management, and the leadership in the administration or in the PBGC are 
very worried about where we are headed with these pensions. Are we 
going to keep our commitment to the workers and to the people involved 
in these pensions? We have an exposure, according to an article this 
morning in the newspaper, this PBGC organization, of approximately $26 
billion.
  Where are we heading in this regard? Part of the problem with regard 
to pensions is the requirements that the law places on them are 
inverted. If you get into difficulty, if you are losing altitude, your 
payments to the agency, PBGC, go up, making it more likely you are 
going to continue to plunge into the ground. Conversely, if you are 
doing well, you pay less. How did we ever allow the law to get into 
that shape? Reform clearly is needed. If we do not do it, and do it in 
the right way, more companies are going to go into bankruptcy and are 
going to wind up dumping their pensions. The people who earned these 
pensions or had agreements for their pensions are going to get less 
than they thought they would get or in some cases even less than they 
should be getting.
  We can debate whether or not these pensions have been too inflated, 
but we have to transition. I personally think we have to get away from 
these defined benefit plans. We have to go to the defined contribution 
plans. But I think this legislation is a good compromise. We need it 
and we certainly should get it done before we complete this session of 
Congress.
  I also congratulate Senator Coleman from Minnesota for working on the 
aviation provisions, and especially Senator Isakson, the great Senator 
from Georgia, for his efforts to stay behind this legislation and to 
offer the amendment that is going to be voted on before we complete the 
legislation.
  The language in the bill says airlines that freeze their defined 
benefit plans can amortize any funding shortfalls over a 14-year 
period. That was a compromise agreement. The chairman had some concerns 
about what that number would be. The language we have from Senator 
Isakson is slightly broader than that, broader than the base bill.
  It allows airlines that freeze their plans and airlines that prefund 
their plans 20 years over which to amortize their funding shortfalls. I 
think that is the right number. I would like to have seen it more than 
14. I support this amendment. I must say that I know it is critical to 
some of our airlines that we have this language. I have worked on the 
language in the pension reform package on airlines. I have worked on 
supporting this amendment, and I have worked on checking the votes. I 
want the Record to show, in case there is a voice vote, that I believe 
there are probably over 80 votes in the Senate that would be for this 
amendment.
  I want to make it clear for the future and for the Record and for the 
conference that this amendment is going to be handled in the way it is 
going to be handled because of the overwhelming support it has. We 
could have a lot more resistance to it by the leadership, but they 
continue to be reasonable in their handling of this legislation.
  I support the Isakson amendment. I certainly believe it will be 
accepted by an overwhelming indication of support in the Senate, and 
that is the way it should be.
  I believe, as a result of this legislation, that companies--
particularly airline employees--the PBGC, and ultimately, most 
importantly, the U.S. taxpayer will be better off.
  This bill is not perfect. It will probably be better as we go along 
through the conference, but it will never be perfect. But it is a major 
step forward and one we should be proud of. It is not the kind of thing 
you will read about in the local newspaper or, congratulations, you did 
a good job, unless you are the hub of an airline. It is not something 
you are going to read a lot about in most places in Wyoming. But this 
is the right thing to do, and the exposure is cataclysmic if we don't 
deal with it.
  I am delighted to support the legislation and the Isakson amendment.
  I yield any remaining time at this point. I thank the Senator for 
yielding.
  Mr. ROCKEFELLER. Mr. President, I am very pleased to offer an 
amendment with my colleagues: Senator Isakson and Senator Lott. Our 
amendment provides important pension relief to the airline industry, 
which has struggled financially as a result of the September 11 
terrorist attacks and dramatically higher fuel costs. In the last few 
years, we have seen United Airlines and US Airways terminate their 
pension plans and turn over their liabilities to the Pension Benefit 
Guaranty Corporation. Our amendment is designed to avoid this unhappy 
outcome

[[Page 26079]]

for airlines that are still struggling with large pension debts.
  Throughout the work on this legislation, my goal has been to protect 
the employees and retirees who have worked hard to earn retirement 
benefits. Whenever underfunded pension plans are dumped on the PBGC, 
everyone loses. Employees and retirees lose benefits that they deserve. 
Companies struggle with sour employee relations. And the PBGC and 
ultimately, perhaps someday the taxpayers--gets stuck with a bill for 
the portion of the pensions that is guaranteed but not funded.
  I am very appreciative of the cooperation that we have had from the 
bipartisan leadership of both the Finance Committee and the HELP 
Committee. The legislation we are considering today would allow 
struggling airlines to pay off old pension debts over a 14-year period 
using reasonable interest rate assumptions. Unfortunately, given the 
rising fuel costs and the need to attract bankruptcy financing, the 
relief provided in this bill is insufficient to help Delta Airlines. 
That is why the Isakson-Rockefeller-Lott amendment, which extends the 
repayment period to 20 years is so important. The amendment would also 
allow airlines, such as American and Continental, to benefit from 
relief without terminating their pension plans, as long as any new 
obligations were fully funded.
  I am very pleased that this amendment has the support of Delta, 
Northwest, Continental, and American airlines. This amendment does not 
pick winners or losers within the airline industry. Rather, it focuses 
on maintaining defined benefit pension promises, and any airline that 
offers defined benefit plans would be able to benefit from this relief.
  I understand the skepticism of Senators who are concerned that in 
spite of any relief Congress provides, airlines may still terminate 
their pension plans. I cannot say that this is an unreasonable fear.
  However, the amendment we are offering would make it more difficult 
for airlines to dump their plans. Without sufficient funding relief, 
airlines may convince a bankruptcy court that the plans must be turned 
over to PBGC in order for the airline to emerge from bankruptcy. 
However, if the law requires reasonable-sized payments, stretched out 
over 20 years, an airline's argument that it cannot make such payments 
loses credibility.
  As a West Virginian, I have seen the tragic consequences of 
underfunded plans. I am not interested in letting employers off the 
hook for pension promises they made to workers.
  The point of this amendment is to make sure that employers fulfill 
their obligations. In light of the current financial situation of 
several airlines, it is unrealistic to expect them to maintain their 
pension plans under normal funding rules. The reality of the situation 
calls for reasonable funding relief in order to make sure that the 
companies continue to make substantial payments to their plans. 
Providing a 20-year period for airlines to repay their pension debts is 
the best way to protect workers' benefits and reduce unfunded 
liabilities covered by the PBGC.
  For the sake of the airline employees who have earned a secure 
retirement and for the sake of the millions of workers who depend on a 
strong PBGC, I ask my colleagues to support the Isakson-Rockefeller-
Lott amendment.
  Mr. CHAMBLISS. Mr. President, I rise today in support of Senate 
amendment No. 2582 offered by my good friend Senator Isakson to S. 
1783, the Pension Security and Transparency Act of 2005.
  The retirement security of millions of Americans participating in 
single employer defined benefit pension plans depends on employers 
keeping their pension promises. Unfortunately, in recent years those 
promises have not been kept. Defaults of pension plans in the airline, 
steel and auto-parts industries have raised concerns about the health 
of existing plans and the possibility of a taxpayer bailout of the 
Pension Benefit Guaranty Corporation, PBGC.
  The current system does not ensure that pension plans are adequately 
funded. When under-funded plans terminate, as several have done 
recently, they place an increasing strain on the pension insurance 
system. As of September 30, 2005 the PBGC showed a deficit of $22.8 
billion for pension plans sponsored by a single employer. While the 
PBGC will be able to pay benefits for years to come, the solvency of 
the pension insurance system is in jeopardy. It is estimated that the 
PBGC will run out of cash within the next 20 years.
  The airline industry in particular has been faced with its own 
specific set of economic challenges. The attacks on September 11, 2001 
coupled with a stock market decline and record oil prices have placed a 
significant burden on the airline industry, forcing them to make tough 
choices. The unfortunate reality of our current economic climate is 
that some businesses, particularly the airlines, are taking devastating 
financial losses as a result of unforeseen circumstances.
  As many of my colleagues know, Delta Airlines is headquartered in my 
home State of Georgia. Delta has a longstanding history of service to 
airline passengers throughout the world and has been a great corporate 
citizen for the State of Georgia. Delta's some 31,000 employees, like 
many other hardworking Americans, have devoted years to working for 
companies like Delta. We need to ensure that they receive the pension 
benefits they were promised and deserve.
  The Joint Committee on Taxation estimates that this amendment would 
raise $14 million over the period 2006-2010 and $30 million in Federal 
revenues over the period 2006-2015. Changing the amortization period 
for airline pension plans such as Delta's, from 14 years to 20 years 
would take the burden off the PBGC while ensuring that the thousands of 
workers employed by the airline industry would receive the benefits 
that they have earned.
  This common sense amendment, of which I am a cosponsor, will not 
relieve the airlines of pension liability, nor will it prohibit 
airlines from meeting pension obligations sooner than 20 years. It 
discourages airlines from relying on the PBGC and the taxpayers' 
dollars by allowing them time to fulfill their pension obligations. 
This amendment complements the purpose of the overall pension reform 
bill by taking the necessary steps to ensure that American workers 
receive every penny they have earned, while holding companies 
accountable and simultaneously reducing the burden on the PBGC.
  American workers deserve the security of knowing that their pensions 
will be there when they retire. I also want to help ensure the job 
security of the employees of great companies like Delta, while allowing 
passengers and our economy to benefit from the continued use of our 
airlines. As we continue this debate, I am committed to passing 
meaningful pension reform.
  The PRESIDING OFFICER (Ms. Murkowski). The Senator from Montana.
  Mr. BAUCUS. Madam President, I understand the majority manager favors 
the Isakson amendment. I control time on this bill, as well as the 
Senator from Georgia. I support the amendment. Given all of that and 
the support on both sides, I am prepared to yield back the remainder of 
time we have on this amendment so we can then prepare to vote on the 
amendment.
  The PRESIDING OFFICER. All time is yielded.
  Is there further debate on the amendment? If not, the question is on 
agreeing to the amendment.
  The amendment (No. 2582) was agreed to.
  Mr. BAUCUS. Madam President, I move to reconsider the vote.
  Mr. ENZI. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. ENZI. Madam President, I yield to the Senator from Ohio.
  The PRESIDING OFFICER. The Senator from Ohio.
  Mr. DeWINE. Madam President, first, let me congratulate my colleague 
from Georgia for this amendment, as well as my colleague from 
Mississippi.
  I also commend the chairman of the Finance and the HELP Committees 
and

[[Page 26080]]

ranking members Senators Grassley, Baucus, Enzi, and Kennedy for their 
hard work on the legislation that is before us today, for their hard 
work in forging the compromise pension reform bill.
  While I appreciate all of the hard work that went into this 
legislation that is before us today, I would like to discuss some grave 
concerns that I have about this bill. Historically, a defined benefit 
pension has been the cornerstone of a worker's retirement, along with 
personal savings and Social Security. However, with the movement away 
from defined benefit plans and personal savings, many Americans are 
relying mainly on Social Security for their post-retirement income.
  That is a very disturbing trend. This is an alarming trend. The 
defined benefit pension system is an important part of a worker's 
retirement, but unfortunately, an increasingly rare one. The number of 
defined benefit plans has decreased from over 114,000 in 1985 to just 
over 28,800 in 2004. Since 2001, almost a quarter of Fortune 500 
companies have frozen or considered freezing their defined benefit 
plans.
  As chairman of the Subcommittee on Retirement Security and Aging, 
along with my good friend and colleague from Maryland, Senator 
Mikulski, I chaired a hearing to examine the issue of PBGC funding and 
the effect that reforms to shore up the PBGC may have on the defined 
benefit system, which is the financial backbone of many workers' 
retirement. At that hearing, we heard testimony acknowledging the need 
to strengthen pension funding rules, but we were warned that going too 
far would force employers to leave the defined benefit system through 
freezes and terminations of plans, and in the worst case, could force a 
company into bankruptcy.
  There is no question that something must be done to maintain the 
solvency of the PBGC. The agency has estimated that its deficit is 
$22.8 billion and CBO projects a much larger deficit than that over the 
next 10 years. A taxpayer bailout of the PBGC is a terrible option. 
But, I also do not believe it is a good option to drive companies out 
of the defined benefit system. It is important that we balance rules to 
improve funding of plans without going too far and forcing plan 
sponsors to abandon their plans or declare bankruptcy.
  I believe that the bill that we passed out of the HELP Committee in 
September by an 18 to 2 vote struck such a balance. The Defined Benefit 
Security Act amended the funding rules so that companies would fully 
fund their plans, while at the same time increase the premiums that 
companies pay to the PBGC to better fund the pension insurance system.
  Unfortunately, I believe the bill that we have before the Senate 
today is a step backwards from the HELP Committee bill. While I commend 
Chairmen Enzi and Grassley and ranking members Kennedy and Baucus for 
their efforts to reach a compromise on two very different bills, I am 
seriously concerned about the impact several of the provisions of the 
compromise bill will have on plan sponsors and participants. I am 
concerned about the impact it will have on job creation in the future 
and on job creation.
  First, I am concerned about the 3-year transition to the new funding 
rules, including the new 100 percent funding standard. For many 
companies, this will require a significant increase in pension funding 
in a short amount of time. I also have concerns about decreasing the 
amortization period from 10 years to 7 years. My biggest concerns, 
however, are credit rating and smoothing. Senator Mikulski and I 
proposed an amendment that would replace S. 1783's provisions on credit 
rating and smoothing with the provisions of the HELP bill.
  Using credit ratings to determine plan funding would result in a loss 
of jobs. It is a simple calculation. Using a company's credit rating 
will put additional pressures on a company experiencing a downturn in 
their business cycle. They will have to put more money into their plans 
at the very time they cannot afford to do so. These are funds that 
could be used to modernize facilities or roll out new product lines--
activities which could help a company actually pull out of a downturn.
  The at-risk rules can increase a company's required pension 
contribution by hundreds of millions of dollars, and in some cases, by 
billions of dollars. Struggling companies experiencing a business 
downturn cannot absorb that type of additional burden. There is little 
doubt that if this legislation becomes law, far more struggling 
companies will be forced out of business as a result of their pension 
obligations. Their employees will lose some of their pension and their 
job. This is not in anyone's interest. This hurts the employees, the 
plan, the company, and the PBGC. We best protect the PBGC and retirees 
by helping struggling companies recover, so that they can contribute 
more when they are healthy.
  I would also note that the proposed DeWine-Mikulski amendment would 
have increased the smoothing period for asset valuation and interest 
rates to three years from the twelve months included in S. 1783.
  One of the clearest messages that we have received from the business 
community is that they need to be able to predict their funding 
obligations so that they can make necessary business plans. If they 
cannot predict those obligations with reasonable certainty, they will 
not maintain defined benefit plans.
  This is not idle speculation. As I stated before, companies have been 
leaving the defined benefit plan system in droves and the reason given 
is the unpredictability of the funding obligations. So, what should we 
expect if this bill, in its current form, becomes law, dramatically 
limiting the smoothing rules and thus limiting predictability? We can 
expect an even faster exodus from the defined benefit plan system. That 
would be very sad news for the retirement security of millions of 
Americans.
  In conclusion, while the changes that the DeWine-Mikulski amendment 
sought to make were not incorporated in the bill before us today, both 
Senator Mikulski and I will be conferees and have the opportunity to 
help shape the final bill in a way that can be beneficial for 
participants, plan sponsors and the PBGC. And, I look forward to 
working with my colleagues on the conference to work on these issues.
  Quite frankly, what is at stake is the future of businesses--real 
companies. What is at stake are future jobs in our home States, whether 
it be Maryland, whether it be Ohio or the other States in the Union. 
What is at stake is job creation in the future. What is at stake is job 
retention now.
  The issues that Senator Mikulski and I have brought before the 
American people and before the Senate will have to be addressed in 
conference because the issues are simply about jobs.
  I thank the Chair. I yield the floor.
  Mr. BAUCUS. Madam President, I see that the ranking member of the 
HELP Committee is now on the floor and also the Senator from Hawaii, 
Mr. Akaka. I wonder if the Senator might allow the ranking member to 
speak, and then we could be at a point to bring up the amendment of the 
Senator from Hawaii.
  Under the unanimous consent agreement, I believe we have about 30-
some minutes remaining. I yield as much time as the Senator from 
Massachusetts desires. When the Senator finishes, I urge the Presiding 
Officer to recognize the Senator from Hawaii for an amendment which he 
has to offer.
  Mr. KENNEDY. If the Senator will withhold, my friend is ready to go 
and make his presentation. After that presentation, if I could then 
have a chance perhaps to talk about the importance of this legislation, 
the history and development of it, that would be agreeable with me.
  Mr. BAUCUS. Whatever works out for the two Senators.
  Mr. KENNEDY. That is fine.
  I thank the Senator from Montana for his typical courteousness, and I 
welcome the opportunity to hear the Senator from Hawaii.
  The PRESIDING OFFICER. The Senator from Hawaii.
  Mr. AKAKA. Madam President, I thank the Senator from Montana and the 
Senator from Massachusetts for providing this time for me.

[[Page 26081]]




                           Amendment No. 2583

  Mr. AKAKA. Madam President, I call up my amendment and ask for its 
immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Hawaii, [Mr. Akaka], for himself and Mr. 
     Specter, proposes an amendment numbered 2583.

  Mr. AKAKA. I ask unanimous consent the reading of the amendment be 
dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

  (Purpose: To compute the actuarial value of monthly benefits in the 
form of a life annuity commencing at age 60 for certain airline pilots)

       At the end of title IV, add the following:

     SEC. 4__. AGE REQUIREMENT FOR EMPLOYERS.

       (a) Single-Employer Plan Benefits Guaranteed.--Section 
     4022(b) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1322(b)) is amended in the flush matter 
     following paragraph (3), by adding at the end the following: 
     ``If, at the time of termination of a plan under this title, 
     regulations prescribed by the Federal Aviation Administration 
     require an individual to separate from service as a 
     commercial airline pilot after attaining any age before age 
     65, paragraph (3) shall be applied to an individual who is a 
     participant in the plan by reason of such service by 
     substituting such age for age 65.''.
       (b) Multiemployer Plan Benefits Guaranteed.--Section 
     4022B(a) of the Employee Retirement Income Security Act of 
     1974 (29 U.S.C. 1322b(a)) is amended by adding at the end the 
     following: ``If, at the time of termination of a plan under 
     this title, regulations prescribed by the Federal Aviation 
     Administration require an individual to separate from service 
     as a commercial airline pilot after attaining any age before 
     age 65, this subsection shall be applied to an individual who 
     is a participant in the plan by reason of such service by 
     substituting such age for age 65.''.
       (c) Effective Date.--The amendments made by this section 
     shall apply to benefits payable on or after the date of 
     enactment of this Act.

  Mr. AKAKA. Madam President, I rise today to offer my amendment to the 
pension bill to correct an injustice. I want to thank my cosponsors, 
Senators Specter, Feinstein, Salazar, and Inouye, for working with me 
on this amendment. I also want to thank the cosponsors of my stand-
alone bill S. 685, which include Senators Isakson, Kennedy, Harkin, 
Obama, Durbin, Salazar, and Feinstein.
  The Federal Aviation Administration, FAA, requires commercial airline 
pilots to retire when they reach the age of 60. Pilots are therefore 
denied the maximum pension benefit administered by the Pension Benefit 
Guaranty Corporation, PBGC, because they are required to retire before 
the age of 65. This significant reduction in benefits puts pilots in a 
difficult position. With drastically reduced pensions and a prohibition 
on reentering the piloting profession because of age, many pilots are 
subjected to undue hardship. For plans terminated in 2005, the maximum 
benefit for someone that retires at 65 is $45,614 a year. For those who 
retire at 60, the maximum is $29,649.
  While I believe that Congress needs to address the issue of 
underfunded pension plans, I believe that it is also important for us 
to address this inequity. We must adopt this amendment to assist pilots 
whose companies have been or will be unable to continue their defined 
benefit pension plans. My amendment will slightly alter title IV of the 
Employee Retirement Income Security Act of 1974 to require the PBGC to 
take into account the fact that pilots are required to retire at the 
age of 60 when calculating their benefits.
  If pilots want to work beyond the age 60, they must request a waiver 
from the FAA. It is my understanding that the FAA does not grant many 
of these waivers, and I have even heard from some pilots that the FAA 
has never granted these waivers. Therefore, most of the pilots, if not 
all, do not receive the maximum pension guarantee because they are 
forced to retire at age 60. Pilots already lose substantial amounts of 
their promised pensions when the PBGC takes over their pension plans, 
but this needless penalty makes the pension cuts even harder to adjust 
to after a termination.
  This amendment would benefit US Airways and United Airlines pilots in 
addition to other legacy carriers whose pensions were absorbed by the 
PBGC. In my home State of Hawaii, I have 91 United and US Airways 
pilots in the Air Line Pilots Association data base. I also have 305 
active or retired Aloha Airlines pilots in Hawaii. Aloha Airlines 
recently filed to terminate its pension plan. Other States, such as 
North Carolina and Virginia have 1,064 and 1,014 United and US Airways 
pilots respectively. As I look at the financial difficulties 
confronting Delta Airlines and Northwest Airlines, I am troubled by the 
prospect of even more pilots losing their plans and being subjected to 
this unfair penalty.
  I ask unanimous consent a letter of support from the Air Line Pilots 
Association be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                    Air Line Pilots Association, International

                               Washington, DC, September 28, 2005.
     Hon. Daniel K. Akaka,
     U.S. Senate,
     Washington, DC.
       Dear Senator Akaka: On behalf of the 64,000 members of the 
     Air Line Pilots Association, I am writing to express our 
     strong support for your legislation, S. 685, The Pilots 
     Equitable Treatment Act, which would put airline pilots on an 
     equal footing with non-pilots with respect to guaranteed 
     benefits payable from the PBGC if a defined benefit pension 
     plan is terminated. I also understand that you plan to offer 
     the language of S. 685 as a floor amendment to pension 
     overhaul legislation that is expected to be considered by the 
     Senate in the next few days. We heartily support and endorse 
     that action as well.
       As you know, your legislation would change the PBGC rules 
     so that airline pilots, who by FAA regulation must stop 
     flying at age 60, are protected from having their pension 
     benefits actuarially reduced by the PBGC if their defined 
     benefit retirement plan is terminated. S. 685 is bold and 
     innovative legislation that calls for pilots to receive 
     benefit guarantees at age 60 that are calculated as though 
     they already had reached age 65.
       Your legislation will provide some measure of pension 
     protection for those thousands of airline pilots who have 
     already lost and/or will likely lose retirement benefits they 
     had worked for and counted on for years. These employees who 
     have given so much to their companies already deserve no 
     less.
       We greatly appreciate your leadership on this important 
     matter, and pledge to work with you and your staff to assist 
     in any way to secure inclusion of the language of S. 685 in 
     pension reform legislation.
           Sincerely,
                                                  Duane E. Woerth,
                                                        President.

  Mr. AKAKA. I urge my colleagues to support the amendment so pilots 
are not unfairly penalized for having to retire early by FAA.
  I call for the yeas and nays on my amendment.
  The PRESIDING OFFICER. Is there a sufficient second? There is a 
sufficient second.
  The yeas and nays were ordered.
  Mr. KENNEDY. As I understand it, it has been the request of our 
leaders we give notification to our colleagues when we are likely to 
have a vote. It is agreeable with the Senator from Hawaii that we have 
this vote just prior to the time we have the final passage. I certainly 
yield to my friend and colleague.
  Mr. ENZI. I understand this has been cleared on both sides. I ask 
unanimous consent when all time is used or yielded back on the 
amendments and the underlying bill, the measure be temporarily set 
aside; provided further that at 2:30 today the Senate proceed to a vote 
in relation to the Akaka amendment, to be followed by a vote on passage 
of the bill, as amended, to be followed by a vote on the adoption of 
the conference report to accompany the Commerce-Justice-State 
appropriations bill.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Massachusetts.
  Mr. KENNEDY. Madam President, I yield such time as I might use.
  At the outset, I thank our Senate leadership, Senator Frist and 
Senator Reid, for arranging the Senate schedule so we would have an 
opportunity to consider this extremely important legislation. I thank 
my colleague and friend, my chairman, Senator Enzi, for

[[Page 26082]]

his commitment to getting good legislation passed at a very important 
time in the entire history of the evolution of the pension system in 
our country. This is a very important piece of legislation. His 
diligence, attention to detail, and persuasiveness has permitted the 
Senate to move this legislation forward in a timely way. I am very 
grateful to him for all of his good leadership.
  I thank our friends on the Committee on Finance, Senator Baucus and 
Senator Grassley. We have worked together at other times on the pension 
legislation. We did work closely together over a year ago and received 
the overwhelming support of the Senate in a bipartisan way. We worked 
very closely with the members of the Committee on Finance. As a result 
of both committees working, we have a stronger legislation. This is a 
bipartisan effort in a very important area of public policy. I am 
grateful to all who brought the Senate to where we are at this time.
  Mr. KENNEDY. Madam President, the retirement security of millions of 
hard-working Americans is at risk. Millions of our fellow citizens have 
worked hard all of their lives, played by the rules. They have been 
dedicated and loyal workers only to find their promised pensions 
disappear when they retire. They worked faithfully, assuming their 
retirements would be their golden years. But then suddenly it all 
disappears. The pension plan is in financial trouble and their 
retirement dreams are being wiped away. This is exactly what has 
happened to millions of loyal American workers.
  In the past 5 years, 700 pension plans have gone into crisis, and 
millions of workers have lost $8 billion in pension benefits that they 
had been promised. It is a crisis. We see it with our airline workers. 
We see it with our workers in manufacturing industries. We see it with 
our construction workers and sales clerks at the store and so many of 
our neighbors. It is a crisis, and this bill responds to it by saving 
their pensions.
  Large numbers of Americans are increasingly concerned about their 
retirement security and rightfully so. Each leg of the three-legged 
stool of retirement--private pensions, private savings, and Social 
Security--is in jeopardy.
  Many Americans find they are unable to save anything toward their 
retirement. In fact, the personal savings rate has now fallen below 
zero. Americans are spending more than they earn. It is no wonder when 
wages are stagnant and costs are soaring for basic necessities such as 
energy, housing, health care, and education.
  The Bush administration continues to propose to privatize Social 
Security, which would put the reliability of future benefits in that 
landmark and highly successful program in jeopardy.
  Many workers have no private pension at all. Only half of American 
private sector workers have a pension through their job. And 2.7 
million fewer private sector workers have a pension today than in 2000. 
Listen to that: 2.7 million fewer private sector workers have a pension 
today than in 2000. Most workers who do have a pension today have only 
a 401(k) account as their pension, but many have nothing saved in these 
accounts. Even those who are saving do not have enough to live on in 
retirement. More than half of the workers approaching retirement have 
less than $43,000 in their 401(k), and workers who rely on these 
accounts face the constant risk of investments that perform poorly.
  These problems make pensions with defined benefits more critical than 
ever because they are secure. They provide a known monthly benefit for 
life. They are ensured by the Federal Government. But they are becoming 
much rarer today, as businesses shift away from them.
  In the early 1980s, almost 40 percent of American workers were 
covered by secure pensions. Today, that number is only 20 percent. Yet, 
while workers' pensions are being cut, executives' pensions are 
increasingly generous.
  A recent study found that 25 percent of the CEOs of 500 large 
companies had been promised retirement benefits of more than $1 million 
a year. Why should Ken Lay of Enron or Bernie Ebbers of WorldCom walk 
away with millions of dollars in guaranteed pensions after driving 
their employees' pensions into the ground?
  On this chart, we see this rather dramatic decline in terms of what 
is happening to workers, particularly in defined benefit programs. We 
find that the CEOs are being well taken care of. Here is Ken Lay. Enron 
required the employees to invest in the company stock and then lied to 
the workers, lied about the state of the company's finances. As stock 
prices plunged on the news of the corporate mismanagement, employees 
were blocked from selling their stock. This is an area we have dealt 
with, I think, quite effectively in our reforms. And 11,000 employees 
lost $1 billion in retirement savings during that period of time. We 
have the example of the WorldCom CEO. Bernie Ebbers was given a $1.5 
million-a-year pension. He was later convicted of accounting fraud. 
Thirty percent of the employees' 401(k) money was invested in the 
company stock. When WorldCom stock plunged in value, 93,000 workers and 
retirees with WorldCom 401(k) accounts lost hundreds of millions of 
dollars in their retirement savings.
  These are issues that are enormously important. I think when we were 
getting started, in terms of the debate on pension reform, most 
Americans were wondering what the Congress was going to do about these 
issues. They were less aware of the fact that the defined benefit 
programs have been gradually in decline, the kind of pension program 
that provides the best kind of security to American workers. And they 
were not familiar with other factors: the drop in the savings accounts, 
the fact that so many of the 401(k)s have been buffeted around by the 
stock market and have not been enough to provide for a secure income.
  But they are increasingly aware now. I think as the debate took place 
earlier this spring about the solvency of Social Security, people have 
focused on the solvency of Social Security and have also thought about 
their retirement. When they think about their retirement, obviously, 
they are concerned about their pensions.
  But we have also seen that workers have lost dramatically over the 
period of these past several years. In the last 5 years, workers have 
lost $8 billion. That is $8 billion workers have lost in the last 5 
years. For those pensions, workers give up an increase in their pay, 
they give up maybe a reduction in the amount of hours they have to 
work, they give up other kinds of benefits. That is in order to put 
something aside in terms of pensions they are allegedly going to be 
guaranteed at the time they finish working for their company. And 
still, we have seen that amount of money--$8 billion--that has been 
relied on by American workers effectively wiped out and disappeared. 
That is why the legislation we have is so important.
  When a major pension plan fails, it places a strain on the entire 
system. The Pension Benefit Guaranty Corporation, which ensures these 
pension plans, has moved from a surplus in 2001 to a deficit of $23 
billion today. Our pension insurance system protects the retirement 
earnings of over 43 million Americans, and we must do what it takes to 
see that it is there for the years to come.
  These are serious problems that require immediate action by Congress. 
The pending bill adopts a broad approach, with stronger rules for 
funding, expanded disclosure, so workers are going to know the 
stability and the financial security they have with their pension. It 
includes other new protections for American workers: It strengthens the 
existing pension plans by requiring companies to fund their pensions 
that workers have earned. It takes steps to prevent future pension 
failures and recognizes that workers who are increasingly in charge of 
investing their own retirement savings need additional help--two very 
important points.
  There is going to be the help and assistance, through the PBGC, to 
help companies, as they are looking at sort of more financial 
difficulty, to make sure these pensions are going to be safe and 
secure. A front-end warning system built into this legislation with

[[Page 26083]]

flexibility for negotiations--that is very important. And information 
that is going to be made available to workers about their own 
retirement--that is enormously important.
  The reforms in this bill allow troubled pension plans the leeway they 
need to get back on their feet. The current rules would require 
companies to pay large amounts into their troubled pension plans right 
away. That is unrealistic and could force many companies to drop their 
pension plans altogether. That would hurt workers. Our reforms allow 
companies to save their troubled plans by increasing payments gradually 
over a longer period of time. We provide a realistic payment schedule 
but strengthen the current rules for single-employer pension plans over 
time by requiring companies to fund 100 percent of their pension 
promises to workers. These workers have earned their pensions over a 
lifetime of hard work, foregoing raises and other benefits. Yet current 
law allows many companies to lag behind in paying for them. Our 
legislation solves this problem by requiring companies to pay more into 
their pensions in a fair and predictable way.
  Our legislation also recognizes the power of public disclosure and 
the urgent need for more effective oversight of pension plans. Under 
current law, workers receive little financial information about their 
pensions, and what they do receive is often years out of date. They 
have earned these pensions, and they deserve to know whether these 
funds are there to pay them. That is very important and one of the most 
important changes to the current system: giving the notification to 
workers.
  Our bill ensures that workers and retirees receive up-to-date 
information each year. The bill also provides incentives to keep 
pensions financially healthy by tying executive compensation to pension 
health. Executives should not be able to feather their own retirement 
nests while workers lose their nest eggs. Our legislation prohibits 
corporate executives from putting company funds into their own 
retirement trusts when the pensions of rank-and-file workers are 
underfunded. That is very important. It should be obvious. Justice 
demands it. But we will make sure that it is implemented.
  Recent headlines show that many companies are using bankruptcy courts 
to abandon their pension plans. Hundreds of thousands of workers and 
retirees at companies such as United Airlines, US Airways, Bethlehem 
Steel, and LTV Steel are now without the pensions they worked so hard 
to earn.
  The bill also contains specific provisions to save airline pensions 
by offering companies a specialized payment program. And I know that 
has been reviewed earlier in the debate.
  In addition, our legislation addresses the needs of nearly 10 million 
workers and retirees who receive pensions through multiemployer plans. 
These are the workers who clean our office buildings and hotel rooms, 
sell us our groceries, build our homes and schools and highways and 
deliver goods across the country. Many of them are in industries where 
they have to move from job to job and would not be able to earn a 
pension at all without these multiemployer plans, since their 
employers, particularly small businesses, could not afford to offer a 
pension plan of their own.
  The majority of these plans are in strong financial shape. But the 
recent economic downturn and weak stock market have put some of these 
plans in financial difficulties similar to those facing single-employer 
plans. We owe it to these employees to protect their pensions now, 
instead of acting only when they are about to fail.
  Hybrid pension plans, including cash balance plans, have a growing 
role in our retirement system. They have a number of advantages. They 
provide secured, guaranteed pensions. They are attractive to younger 
workers and those such as parents caring for children. But older 
workers can lose out when their companies switch to these plans because 
they lose a large portion of the benefits they were promised. Our 
legislation requires companies that are going to switch to these plans 
to protect the benefits that workers have already earned. That is 
enormously important.
  I want to highlight another very important area and that is the 
legislation also includes very important provisions from the Women's 
Pension Protection Act that I introduced with Senator Snowe. Retirement 
security is essential for all Americans, but too often we fail to meet 
the needs of women on this basic issue. Women live longer than men, but 
they continue to earn far less in wages over their lifetimes. They are 
also much less likely to earn a pension. These factors translate into 
seriously inadequate retirement income for vast numbers of women.
  The realities of this injustice are grim. According to the most 
recent data, only 28 percent of women age 65 and over are receiving 
private pension income, and for those who do, the average is only 
$3,800 per year, compared to $8,100 for men. Minority women are in even 
more desperate straits. Only 20 percent of African-American women and 9 
percent of Hispanic women receive a pension. These disparities are a 
major reason why nearly one in five elderly single women lives in 
poverty.
  Our legislation gives them much greater retirement security. Widows 
will receive more generous survivor benefits. Divorced women will have 
a greater ability to receive a share of their former husband's pension 
after divorce. These are long-overdue improvements in the private 
pension system so retirement savings programs will be more responsive 
to the realities of women's lives and careers.
  American workers and their families rightly expect Congress to 
protect their hard-earned pensions. This legislation is an important 
start to meeting this challenge. Madam President, I note the Senator 
from Pennsylvania is in the Chamber. I want to quickly review this 
legislation, again.
  On this chart is effectively a description--I know the writing is 
small for those who are watching--but this is really the backbone of 
this legislation. It requires companies to fund their promises. It 
helps prevent future pension failures. I have outlined, very briefly, 
in my comments how that is done--by greater flexibility and 
negotiation. It gives workers timely and accurate information on 
pension plan finances. That does not exist today. Well, it exists but 
not in an efficient or effective manner. Many times it takes months or 
even years to get that timely information. This legislation will 
provide it in a timely and accurate way, which is enormously important 
for workers.
  It protects the workers and businesses in multiemployer pensions. We 
have the single pensions, as we mentioned, and now also in the 
multiemployer pensions they face different issues. But we have 
strengthened and provided and followed a number of recommendations that 
were made from the business community and the worker community to 
strengthen those programs.
  It protects older workers in cash balance plan conversions. I have 
outlined the advantages of cash balance plans to younger workers, but 
to older workers it can work disadvantageously. This legislation 
provides a very important way of protecting those who have been reliant 
on existing programs rather than a cash balance plan. That is 
enormously important. Otherwise there could be some significant 
injustice.
  It gives workers access to independent investment advice to avoid the 
kind of Ken Lay situation where they had the requirement of investing 
in the corporation and were refused, when the company was going south, 
the ability to sell employer stock, and the workers took a bath. That 
was true in my State with Polaroid, a similar kind of situation and a 
tragic situation that involved abuse of the pension system at a time 
when a number of the executive branch did exceedingly well. We are 
giving access to independent investment advice, and workers can make 
their judgments. These are what we call the Bingaman proposals. They 
have been worked out in a bipartisan way and have solid support in the 
Senate.
  It adopts the post-Enron worker pension protections. It stops 
corporate executives from lining their pockets

[[Page 26084]]

when workers' pensions suffer. This is to deal with the issue I 
mentioned briefly before, where the corporate executives can make out 
while the workers are losing.
  It provides greater retirement security for widows and former 
spouses. This is enormously important because of the injustice with 
regard to women and the pension system, which is extraordinary. Senator 
Snowe and I have been working for a number of years to try to address 
that. I am grateful to our chairman, Mr. Enzi, for reviewing these 
matters in great detail and including these provisions. This is 
enormously important.
  This is an important piece of legislation. It doesn't solve all of 
the problems, but it will certainly do a great deal in terms of 
ensuring workers in the future of the security of their pensions. We 
are very hopeful, with the strong bipartisan support we have been able 
to develop in the Senate, that we can carry these very important 
protections for workers, for companies, for women, for the single 
employer pensions, for multiemployer pensions, through and have them 
enacted into law.
  I reserve the remainder of my time.
  The PRESIDING OFFICER. Who yields time?
  Mr. ENZI. Madam President, I thank the Senator from Massachusetts for 
his comments and the outstanding way he summarized the principles we 
have been working on. It is a very good job, considering that this is a 
730-page bill. He got into significant details. It has been the details 
that have been holding it up for literally years. You notice that 
nobody is speaking in opposition to this bill, so that means the 
bipartisan effort has paid off.
  I yield 10 minutes to the Senator from Pennsylvania.
  The PRESIDING OFFICER. The Senator from Pennsylvania.
  Mr. SANTORUM. Madam President, I thank the chairman of the HELP 
Committee, as well as the ranking member, for the excellent work they 
have done on this legislation and for the tremendous cooperation they 
have shown me, as well as Senator Baucus, and my chairman Senator 
Grassley, on the issue of multiemployer pensions, which has been my 
area of focus on this legislation. It is a very important issue--and I 
will lay out here--it is critically important that we make sure these 
plans survive. Because unlike the single-employer plans, the backstop, 
the insurance for a plan that gets dumped into the PBGC is actually 
less than one-third of what a single-employer plan would be. It is even 
more important for us to have healthy multiemployer plans from the 
standpoint of the beneficiary than it is to have healthy single-
employer plans.
  Again, I thank the chairmen and ranking members of both committees. 
They have made the case--I have listened to some of the debate--that 
the need for reform in both these areas is clear. I come from the State 
of Pennsylvania, which unfortunately has seen its share of plans being 
dissolved and thrown into the Pension Benefit Guaranty Corporation. We 
have a lot of steel companies. We have an airline that has done that. 
We have, unfortunately, tens of thousands of retirees who are now 
receiving their benefits through the PBGC and who were promised more 
generous benefits under their contracts with the steel companies and 
the airline, who are now living, in many cases, very much hand to 
mouth. We need to do a better job for future workers and retirees. We 
need to address this problem in a climate where increasingly we are 
seeing concern about not only the dumping of these plans onto the PBGC, 
and the transfer of defined benefit plans to defined contribution 
plans, we are increasingly seeing that trend in a lot of industries. I 
believe there is a place for defined benefit plans and that we need to 
have a structure in place to make sure they are adequately funded and 
safe for pensioners to rely upon as they enter into their retirement 
years.
  Again, I don't want to repeat all that has been said about the state 
of play of how bad the system is as far as the deficits and the 
problems with the single-employer plans. I want to focus on the 
multiemployer plans because that is an area on which I have been active 
in trying to make sure it was included in this bill and that many of 
the reforms I put in place in the legislation I introduced with Senator 
Stabenow a few weeks ago were included in the mark. Again, I thank the 
chairmen of both committees and the ranking members for working with us 
to see that happen.
  The importance of making sure multiemployer plans are safe is because 
the maximum guarantee for a multiemployer participant with 30 years of 
service is less than $13,000 a year. That means if you worked for the 
IBEW and you were a tradesman, an electrician, and you built some of 
the greatest buildings in Philadelphia, for example, if the IBEW 
pension plan goes belly up, the maximum benefit you would receive would 
be less than $13,000 a year. That is a horrific end for many people 
from the standpoint of what they would otherwise have been promised 
under their plan. Contrast that with a retiree covered by a single 
employer plan with the same record. They are looking at about $45,000 
and in some cases up over $100,000. So the fallback, if these plans 
should fail, is substantially lower in the multiemployer world. That is 
why it is vitally important that we have remedies and things to improve 
the overall picture. There are plans that are in bad shape. We have 
plans that are funded as low as 50 percent. One plan is $20 billion 
underfunded. We have problems out there. The consequences if a single-
employer plan failing pale in comparison to the devastation to 
pensioners if multiemployer plans fail.
  I have worked hard with a coalition to try to put together a piece of 
legislation that I mentioned before, S. 1825. Senator Stabenow has 
worked hard on this issue. Many of the reforms we put in place are 
included in this mark. We worked together with a coalition of 
management and labor and met over a period of months to come up with a 
bipartisan and cooperative agreement between those who are on opposite 
sides of the bargaining table. We have had everybody here--from the 
building trades, the Teamsters, the food and commercial workers union, 
the IAM, to the grocery manufacturers, a whole host of grocery chains, 
as well as freight companies, UPS, contractors, et cetera--and have 
worked together over a period of months to come up with a bill that, as 
Chairman Enzi mentioned, has strong bipartisan support because we were 
able to negotiate. We haven't gotten everything, candidly, we wanted in 
this legislation.
  I ask unanimous consent to print in the Record the list of folks 
supporting this multiemployer bill.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

       Senator Santorum worked with the Multiemployer Pension Plan 
     Coalition to develop S. 1825, the Multi-Employer Plan Funding 
     and Deduction Reform Act of 2005. The coalition members are:
       Albertsons; American Federation of Musicians; American 
     Federation of Television and Radio Artists; American Trucking 
     Associations; Associated General Contractors of America; 
     Bechtel Construction Company; The Building and Construction 
     Trades Department, AFL-CIO; Carhaul; Food Marketing 
     Institute; Finishing Contractors Association; International 
     Association of Machinists; International Brotherhood of 
     Teamsters; International Council of Employers of Bricklayers 
     & Allied Craftworkers; Kroger; Mechanical Contractors 
     Association of America; Motion Picture Association of 
     America; Motor Freight Carriers; National Electrical 
     Contractors Association; National Coordinating Committee for 
     Multiemployer Plans; Recording Industry Association of 
     America; Safeway; Sheet Metal & Air Conditioning Contrators' 
     National Association; Supervalu; NEA/The Association of Union 
     Constructors; United Food & Commercial Workers Union; UPS; 
     U.S. Chamber of Commerce; and Yellow Roadway Corporation.

  Mr. SANTORUM. I have worked with my constituents. I have had I don't 
know how many meetings with members of labor unions across Pennsylvania 
to talk about this issue and get their input as to how we can deal with 
the problem of multiemployer plans to make sure we improve their 
solvency and increase the reliability of those plans for our 
pensioners. It was an unprecedented effort. I thank Jen Vesey from my 
staff for the work she has

[[Page 26085]]

done. I thank in particular the folks from the Pennsylvania building 
trades and Teamsters who have been terrific in trying to work through 
some of these very tough issues to get a consensus bill that I am 
hopeful we can not only pass here in the Senate, obviously in the next 
hour or two, but also to get something passed permanently by the end of 
the year.
  One of the key concepts folks were concerned about was the concept of 
an early warning system for multiemployer plans. Under current law, too 
often we don't know about economic conditions of these plans until they 
are facing extreme financial pressure. As we have said, sometimes the 
remedies are too late to solve the problem, and we end up with the 
situation of people not having sufficient retirement. In this bill, we 
do address this problem. However, I have heard from labor and 
management representatives of the multiemployer plans. They have 
expressed concerns about the approach to this taken in S. 1783.
  It is important that we keep in mind in a multiemployer world, these 
pension plans typically operate in tandem with health plans. There is a 
concern the dollars that otherwise could go to maintain important 
health benefits may be unnecessarily diverted to pensions because of 
overly stringent performance benchmarks. I have heard about those 
benchmarks. I have heard about those concerns. We will continue to work 
on this. It is important that we continue to work toward a solution 
that imposes discipline, which is what this legislation does, without 
imposing undue burdens on the plans, particularly how they might affect 
health benefits.
  I am pleased my colleagues have accepted most of the changes we 
proposed and certainly remain committed to working on these important 
issues to strengthen multiemployer pensions to protect these folks.
  This is an important piece of legislation. This is a great victory 
for working men and women across the country that the Senate is about 
to act on. As we head into the holidays, where you want to feel good 
about your financial security, if we are able to get this accomplished 
by the end of this year, we will provide a whole host of people across 
America a better feeling about not just their holiday plans but the 
security of future holidays after they have finished their working 
years.
  The PRESIDING OFFICER. The time of the Senator has expired.
  The Senator from Wyoming.
  Mr. ENZI. Madam President, I thank the Senator from Pennsylvania for 
his diligent effort, particularly in the multiemployer area. He checked 
with us and gave suggestions several times a month during the process 
when we were putting together the HELP bill. That was extremely 
helpful, particularly since he was also on the Finance Committee which 
had some jurisdiction in this area. His coordination between the two 
committees was invaluable. His tenaciousness and base of knowledge on 
that issue were particularly helpful. I thank him for his efforts.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. Madam President, I want to mention in particular my 
colleague and friend on this side of the aisle, Senator Barbara 
Mikulski, who is ranking member on the Retirement and Aging 
Subcommittee on the HELP Committee and has attended all of the hearings 
in the subcommittee and in our full committee and has been a tireless 
advocate on this issue. I have learned a great deal from her. I am 
enormously grateful to her for all of her efforts. She has been a great 
ally.
  I also thank my friend Tom Harkin. This is one in a range of issues 
in which he has been involved and about which he cares deeply.
  He is enormously knowledgeable about it, and he was very committed in 
terms of the defined benefit programs and how we can strengthen those, 
concerned about the relationship between the cash balance and the 
defined benefit programs, whether there is going to be fairness to 
workers, and he made a great contribution to the development of our 
legislation.
  Jeff Bingaman had reforms and worked those out in a bipartisan way.
  As we are coming into the final moments, I want to make a few 
comments.
  This legislation is strongly bipartisan. We don't have final 
legislation over in the House of Representatives. I hope our colleagues 
and friends in the House of Representatives would at least take some 
inspiration from what we have been able to achieve over here working in 
a bipartisan way under Republican Chairs to come up with a product 
which is going to move through the Senate at 2:30 or 3 o'clock this 
afternoon, which will make a major difference in terms of protecting 
workers and also be sensitive to some of the economic challenges. We 
have not had a finished product over in the House, and I am concerned 
it has been rather fractured over there in terms of the nature of the 
debate and discussion.
  I hope the leadership over there will take a page from the Enzi and 
Grassley book about how to work their committees in ways to develop 
bipartisanship on the committees and also between those committees as 
it is enormously important.
  Finally, Mr. President, why this is important: We see that our Social 
Security bedrock of retirement now is being reviewed; some believe 
under attack. We have private pensions. Only 50 percent of our workers 
have pension coverage at work. Only 21 percent have a secure defined 
benefit. So it is a three-legged stool: Social Security, pensions, and 
then private savings, and the private savings count, as shown on this 
chart in terms of the current savings, negative six-tenths of 1 percent 
of income--a decline in savings. They have virtually dried up. The 
reason for that is because, as shown by this chart, of the increased 
costs of gasoline, health insurance, housing, and college.
  People just cannot afford to save. They have to provide for their 
families in these areas. And when it comes to the very end of the day 
it is the squeeze on that pension retirement. Living in the richest 
country of the world, in our democracy, being able to retire with a 
sense of dignity is certainly a value all of us hold dear. We are in 
real danger of losing that very important value. This legislation is a 
very important downpayment to make sure that value is going to be there 
for millions of our fellow Americans.
  I am enormously grateful to the staff: Rohit Kumar with Senator 
Frist; Bob Greenawalt, Senator Reid; Jon O'Neill, Senator Grassley; 
Judy Miller, Senator Baucus; Stu Sirkin, Finance Committee; Katherine 
McGuire, Ilyse Schuman, Greg Dean, Diann Howland, and David Thompson, 
Senator Enzi; Karla Carpenter, Senator DeWine; Ellen-Marie Whelan and 
Ben Olinsky, Senator Mikulski; and Michael Myers, Holly Fechner, Portia 
Wu, and Terri Holloway from my staff. As always they have done a 
terrific job.
  I also want to thank particularly Jim Fransen and Stacy Kern from the 
Senate Legislative Counsel's office, who worked day and night to draft 
this bill. And thanks also to Carolyn Smith, Patricia McDermott, Nikole 
Flax, and Allison Wielobob of the Joint Committee on Taxation.
  I yield the floor, Mr. President. I see my colleagues here, and I 
understand we are going into morning business. If not, I am glad to 
yield time to them.


                           Order of Procedure

  Mrs. CLINTON. Mr. President, I ask unanimous consent to speak for 
such time as I may consume remaining for the Democratic side on the 
pension bill, and then for an additional 20 minutes as if in morning 
business.
  The PRESIDING OFFICER (Mr. Thune). Is there objection?
  Mr. ENZI. Reserving the right to object, we still have some time 
remaining on the bill, and there is a vote at 2:30. I guess I did not 
understand exactly the time being requested. It sounded like 35 
minutes.
  Mrs. CLINTON. I think we will be finished by 1:30.
  Mr. ENZI. Then I would ask the remainder of the time until 2:30 go to 
this side of the aisle.
  Mr. STEVENS. I object. Mr. President, reserving the right to object, 
I seek time before the vote to raise a

[[Page 26086]]

point of personal privilege concerning a comment made about me in the 
Chamber today. I desire 5 minutes but before the vote.
  Mr. ENZI. I was reserving in that time time for the Senator from 
Alaska to speak.
  Mr. STEVENS. If that is agreed to, I won't object to the time until 
that time being allocated to the Senator from New York.
  The PRESIDING OFFICER. Is there objection? The Chair hears none, and 
it so ordered.
  Mrs. CLINTON. I thank the Chair. And I thank the managers of the 
pension bill.


                      Hurricane Katrina Commission

  Mr. President, I come to the floor today to discuss a topic that many 
on the other side of the aisle, as well as in the administration, hope 
will just go away as we near the end of this session--the creation of 
an independent bipartisan commission to examine the State, local, and 
Federal response to Hurricane Katrina. We all know that nearly 3 months 
ago Katrina struck Louisiana, Mississippi, and Alabama, wreaking havoc 
on cities along the coast and most especially in New Orleans and the 
surrounding parishes. Thousands of residents had to flee, and thousands 
more saw that the levees were breached and cataclysmic flooding wiped 
out the city's infrastructure causing extensive damage far beyond the 
boundaries of New Orleans. Along the gulf coast the hurricane force 
winds destroyed so many of the communities that had been there for 
years.
  Americans were horrified by the images on television of this 
catastrophe unfolding before our very eyes. It was followed by an 
equally catastrophic failure of Government in its uncoordinated, failed 
response.
  I remember my own visit to Houston in the days immediately following 
the hurricane where I met with people who had fled Louisiana and 
Mississippi for shelter in Texas. They were desperately searching for 
lost relatives and to try to regain some semblance of order in their 
lives.
  Mr. President, our response at all levels of Government was nothing 
short of shameful, and the victims of Hurricane Katrina, as well as all 
Americans, deserve to know why that response was such a colossal 
failure. Who was in charge? Was it the President, the Director of 
Homeland Security, the FEMA Administrator?
  Why were Government assets not more readily available or 
prepositioned better? Why was there no plan to deal with an event that 
had been predicted for years? What went wrong at the Federal, State, 
and local levels? Why were declarations delayed?
  But even more important than the answers to these questions is what 
do we need to do to fix it so this never happens again in our country? 
Who is in charge now? What more must be done to fix the problems that 
plague our national system of disaster, response, and recovery?
  On September 11 we lost nearly 3,000 people, and the families of 
those left behind demanded to know what went wrong. Thanks to their 
dedication, we finally convinced the President and Congress to 
establish the 9/11 Commission. It was the right thing to do because 
over 218 years ago the signers of the Constitution pledged themselves 
on behalf of all Americans to provide for the common defense. So when 
we hear things such as the fact there was only one FEMA employee in the 
entire city of New Orleans from August 27 through 30, we see e-mails 
from the FEMA Director that he was distracted with his wardrobe when 
people were drowning in their own homes, waiting for rescue from the 
roofs of those homes, and the national response plan that is supposed 
to guide our national response was basically totally ignored, we have 
to ask ourselves how could we be so unprepared especially after 
September 11?
  Because I believe the victims of Hurricane Katrina and, indeed, all 
Americans deserve answers to these questions and a way forward that 
merits the confidence and trust of the American people, I introduced 
legislation cosponsored by my friend and colleague from Colorado to 
establish a Katrina commission, modeled after the 9/11 Commission, 
intended to be nonpartisan, independent, designed to study the Federal, 
State, and local response to Hurricane Katrina.
  We have 17 cosponsors of this legislation, and I am, frankly, 
outraged we cannot get an up-or-down vote on it. The cameras may have 
left the area of destruction but the devastation and the devastated 
lives remain. We owe it to the thousands of people who are still 
displaced, who lost loved ones, who are still finding bodies in homes 
that people are returning to, to understand what went wrong, what needs 
to be fixed, and where the responsibility really resides. Over 80 
percent of the American people believe a Katrina commission is the 
right and necessary thing to do. Yet the Republican leadership of the 
Congress is afraid to allow an up-or-down vote. Why? Because they know 
what I know--that a lot of Republicans will vote for this. They were 
equally dismayed. They saw the same television pictures. They worry 
about what might happen next with an earthquake, a forest fire, massive 
tornadoes like just whipped through the central-southern part of our 
country. But even more significantly, the reason this is important is 
because of the potential of a terrorist attack that could happen again. 
And I have to say it appeared that our Federal response based on 
Katrina is nowhere near ready. We cannot accept the status quo. We must 
fix FEMA and the Department of Homeland Security.
  My friend from Colorado is a cosponsor of that legislation, and I ask 
him does he believe a Katrina commission is still needed?
  The PRESIDING OFFICER. The Senator from Colorado.
  Mr. SALAZAR. I thank my colleague from New York for her leadership on 
this very important issue for our Nation. I deeply share her belief 
that a Katrina commission is, in fact, needed and that we ought not to 
wait.
  The headline on the New Orleans Times Picayune editorial page this 
Sunday was ``Forgotten Already.'' ``Forgotten Already.'' It is about 
how Washington has already forgotten that Katrina is still an ongoing 
crisis. It is a shame that Washington has such a short attention span.
  In the days following the storm, Congress moved quickly to pass a $70 
billion hurricane relief effort. We held hearings and we grilled the 
officials from FEMA. However, because the storm waters have receded, 
many politicians in Washington feel they can roll their sleeves back 
down and declare the job is done, the mission is accomplished.
  That is not the case. Tell the 1,154 children who are missing or who 
are looking for their parents that our job in Katrina is done. Tell the 
129,000 Louisiana residents, 129,000 Louisiana residents who still do 
not have electricity, that the Federal Government task is done. Tell 
the 196,000 Katrina evacuees who are currently unemployed, who do not 
have jobs, that our mission is accomplished.
  Our job is far from done. We need to do much more to ensure that the 
individuals and communities along the gulf coast recover, and we have 
to do a lot more to plug the homeland security vulnerabilities that 
Hurricane Katrina exposed.
  What Senator Clinton's legislation would do is establish a Hurricane 
Katrina commission, similar to the 9/11 Commission. The commission 
would investigate what went wrong in the Government's response to 
Katrina and what steps we need to take to make things better.
  I remember a number of years ago meeting with President Bush and 
then-Homeland Security Adviser Ridge at the White House shortly after 
9/11 with attorneys general from States around the country. At that 
time, the President was opposed to the creation of a department of 
homeland security. Later, the President relented, taking the position 
that in the post-9/11 world, a department of homeland security was 
necessary for us as a nation to make homeland security a greater 
priority to protect America.
  A few years later, I came to Washington as a U.S. Senator to help on 
that agenda. I want to make protecting our Nation and our homeland a 
greater priority. Yet 4 years after 9/11, Katrina

[[Page 26087]]

slapped the Nation with reality. We are not prepared to protect our 
homeland, even when we have days of warning that American citizens are 
in the path of the gravest danger. That reality is a shame on the 
efforts of the last 4 years, but it would be an even greater shame for 
our Nation not to learn from our failure in the preparation and 
response to Katrina. We need to learn from those lessons.
  My colleague's proposed bipartisan commission would help us make sure 
we prevent failures in homeland security in the future. Therefore, I am 
proud to stand here with Senator Clinton and 16 other cosponsors in 
demanding accountability from the Federal Government. I am proud to 
stand with them for a stronger America.
  The PRESIDING OFFICER. The Senator from New York.
  Mrs. CLINTON. Mr. President, I thank my friend for his support. He 
knows a lot about what he is speaking of today. He was an attorney 
general. He had law enforcement responsibilities. He knew how essential 
it was to coordinate services throughout the State of Colorado. I am 
very grateful for his support and his eloquence on behalf of this 
bipartisan commission and his vigilance in working toward the 
establishment of a Katrina commission.
  I have said before that I agree that our established congressional 
committees should conduct their own oversight roles, but an independent 
commission is absolutely necessary to get this right.
  The Katrina commission would be made up of individuals with the 
expertise and credentials to do the work; namely, people who have 
experience with emergency preparedness, mitigation, and cataclysmic 
planning. The commission would build upon previous investigations and 
issues we know exist. For example, on 9/11, one of the problems our 
emergency response system faced was the lack of interoperable 
communications; namely, the police radios couldn't talk to the fire 
department radios, couldn't talk with people coming from other parts of 
New York or even outside New York to be helpful at the site of Ground 
Zero where the Towers collapsed. Yet 4 years later, we find people 
responding to Katrina faced the same problems. We have not yet solved 
the problem of interoperable communications.
  How long are we going to let this go on? When the 9/11 Commission 
issued its report, the majority leader applauded the Commission for its 
tremendous act of public service and patriotism and looked forward to a 
time when we could work together to ensure America grew stronger and 
better prepared. Let's ask ourselves, Are we stronger today and better 
prepared?
  Although I applaud my colleagues on both sides of the aisle who are 
conducting the committee hearings into what happened, I do not believe 
this disaster has the attention or the right mix of people 
investigating it that will give us both answers and a roadmap for the 
future.
  Some of the statistics are frightening. FEMA ordered over 125,000 
trailers or mobile homes to provide housing for an estimated 600,000 
people. Media reports indicate that as of the beginning of November, 
hundreds of thousands of people are still in hotel rooms, relatives' 
rooms, shelters, and even in tents. Now we hear FEMA is going to move 
these people out of their hotels as of December 1. Where are they going 
to be moving them? What is going to happen to them? I think these are 
questions that add to the urgency of such an investigation. There are 
thousands of churches and other faith-based institutions, as well as 
nonprofits, that have yet to hear from FEMA as to whether they will get 
any help in continuing the assistance they are providing.
  I cannot help but agree with the Senator from Colorado, who pointed 
out that we went through this after 9/11. He spoke about his meeting 
with the President. He spoke about the resistance to a department of 
homeland security, to any kind of investigation.
  This Katrina commission will eventually be put into operation. It 
will have to be because people are not getting the answers they need. I 
hope we will come to a realization that this Katrina commission, an 
independent commission, is the way to proceed.


                   Unanimous Consent Request--S. 1748

  Mrs. CLINTON. Mr. President, I ask unanimous consent that the Senate 
proceed to the consideration of Calendar No. 220, S. 1748, a bill to 
establish the Katrina commission investigation, that the bill be read a 
third time and passed, and that the motion to reconsider be laid upon 
the table.
  The PRESIDING OFFICER. Is there objection?
  Mr. STEVENS. Mr. President, I object.
  The PRESIDING OFFICER. Objection is heard.
  Mrs. CLINTON. Mr. President, there we have it. We are once again 
hearing objections. The status quo wins the day. FEMA will not change. 
The Department of Homeland Security will not change. We will never get 
to the bottom of what happened and what we need to do to fix the 
obvious flaws unless we have this independent commission.
  I ask my friend from Colorado if he agrees that the only way we will 
get the answers we need is through an independent commission.
  The PRESIDING OFFICER. The Senator from Colorado.
  Mr. SALAZAR. Mr. President, I agree with my friend and colleague from 
New York. The Republican leadership should allow this Senate to have a 
vote on whether we establish an independent Katrina commission. This 
ought not be a partisan issue. This is not about Republicans and 
Democrats and Independents. This is not about assigning blame. It is 
about learning from our mistakes and building a stronger Nation.
  I hope that President Bush, Senator Frist, and Speaker Hastert will 
join us and move forward in developing this independent Katrina 
commission so we can make our homeland even more secure, because what 
Katrina taught us, without a doubt, is that we as a nation are not 
prepared. Every day we go without this commission is a day lost. It 
puts us a day further from finding answers for the victims of Hurricane 
Katrina, a day further from identifying the gaps in homeland security, 
a day further from a safer America.
  I want to say that I, too, have been involved as an attorney general 
looking at difficult issues that have occurred in my State. I walked 
through the carnage of Columbine High School, the bloodiest school 
shooting in America. And so many years later, the answers we sought 
about why that happened and how it could have been prevented, how we 
could have improved on interoperable communications, those lessons have 
not yet been placed on the table.
  I daresay that without the efforts of the 9/11 Commission, the 
lessons learned from that most horrific attack on America on 9/11 would 
not have been learned. In the same way, as we move forward to determine 
whether we have a Department of Homeland Security that is up to the job 
of protecting Americans, protecting the homeland, protecting our 
citizens, it is a major mistake on the part of the United States of 
America not to undertake this independent review which has been 
presented in a bill by my colleague from New York.
  I thank Senator Clinton again for her advocacy for this legislation. 
I vow to work with her and to try again and again with my colleagues on 
both sides of the aisle. I do not believe we can adjourn this Congress 
without finishing the job on a Katrina commission.
  Mr. STEVENS. Mr. President, will the Senator yield?
  Mrs. CLINTON. May I finish, Mr. President?
  Mr. STEVENS. I misunderstood the time sequence, and the 
Parliamentarian tells me the Senator has until 2:30 p.m.?
  Mrs. CLINTON. No, 1:30 p.m.
  Mr. STEVENS. I remove my previous objection. The Senator should 
continue to have her time until 1:30.
  The PRESIDING OFFICER. The Senator from New York.
  Mrs. CLINTON. Mr. President, I thank my colleague from Alaska. I will 
wrap this up.
  I wish to serve notice to my colleagues in the Senate that my good

[[Page 26088]]

friend from Colorado and I will be back again and again and again, as 
we were with the 9/11 Commission. He was not in the Senate at that 
time. He was serving his people in Colorado from a position of trust 
and responsibility as attorney general, but he watched from afar, 
understood the tragedy that befell us, and, like so many of us who are 
given the public trust of public office, wanted answers. He came to 
this body to help find those answers.
  When Katrina struck and it became so apparent that we were not yet 
prepared, the Senator from Colorado was among the very first to say we 
need those answers and we need them yesterday because no place is 
prepared, no place is ready if the Federal Government is not in a 
position to provide the assistance and the assets and the support that 
is needed in the face of a large manmade or natural disaster.
  We will be back again and again, as we were with the 9/11 Commission, 
until this commission is established. It is the right thing to do. The 
country deserves to have it and, most of all, the people along the gulf 
coast deserve the answers and deserve to know what did occur to them, 
what could have been prevented, and then the rest of us should act on 
that information to make sure our Nation is prepared in the future.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Alaska.
  Mr. STEVENS. Mr. President, how much time remains for the minority at 
this time?
  The PRESIDING OFFICER. Four minutes.
  Mr. STEVENS. Mr. President, if no one seeks that time, I ask that I 
be permitted to start the majority time at this time.
  The PRESIDING OFFICER. Is there objection?
  Mr. BAUCUS. No objection.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Alaska.


                      POINT OF PERSONAL PRIVILEGE

  Mr. STEVENS. Mr. President, I have sought the floor now to speak on 
what I consider to be a matter of personal privilege. It has been 
brought to my attention that the Senator from Illinois unfairly 
maligned my character in direct violation of rule XIX of the Standing 
Rules of the Senate.
  Rule XIX states:

       No Senator in debate shall, directly or indirectly, by any 
     form of words impute to another Senator or to other Senators 
     any conduct or motive unworthy or unbecoming a Senator.

  The Senator from Illinois apparently takes exception to the fact that 
witnesses who appeared voluntarily before the joint hearing of the 
Senate Commerce and Energy Committees last week were not sworn in. I 
would like to set the record straight about the events of that day.
  The request by Senator Cantwell to swear in the witnesses was 
delivered to my office at 8:10 a.m. on the morning of the hearing. It 
was leaked to the press before it was ever delivered to me. As a matter 
of fact, the Seattle press that morning had reported that I had already 
rejected the request before I had even received it or read it.
  While I have accomplished many things in my 37 years in the Senate, 
the ability to see into the future or read into the minds of other 
Members is not one of them. Had the Senator from Illinois read the 
transcript of that hearing, he would have a better understanding of why 
I took the actions I did as the chairman opening that hearing.
  I made this opening statement:

       I remind the witnesses as well as the Members of these 
     committees, Federal law makes it a crime to provide false 
     testimony. Specifically section 1001 of title 18 provides in 
     pertinent part: ``Whoever in any matter within the 
     jurisdiction of the legislative branch of the Government of 
     the United States knowingly or willfully makes any material 
     false, fictitious, or fraudulent statement or representation 
     shall be fined under this title or be imprisoned not more 
     than 5 years, or both.''

  I continued my statement at that time:

       Having reviewed the rules of the Senate and the rules of 
     the Commerce and Energy Committees and the relevant 
     provisions of title II of United States Code, there is 
     nothing in the standing rules of our committee rules or in 
     the Senate which requires witnesses to be sworn. The statute 
     has the position that everyone appearing before the Congress 
     is in fact under oath. These witnesses accepted an invitation 
     to appear before our committees voluntarily. They are aware 
     that making false statements and testimony is a violation of 
     Federal law whether or not an oath has been administered. I 
     shall not administer an oath today.

  Earlier, Senator Durbin of Illinois came to the Chamber and said--and 
I quote from the Record that has been provided to me:

       You probably heard about the hearing before the Senate 
     Commerce Committee. Senator Maria Cantwell of Washington 
     insisted these oil company executives be sworn in, testify 
     under oath, just as the third base company executives were a 
     few years ago. But Senator Stevens, the chairman of the 
     committee, refused to allow them to be sworn in. Why? So they 
     couldn't be held accountable if they didn't tell the truth.

  Mr. President, I believe Senator Durbin's comments are a direct 
violation of rule XIX. I did not swear in witnesses who appeared before 
our committee because they are required to tell the truth under law.
  Those are the rules of the Senate, the rules of our committees. To 
suggest I did not administer an oath to these witnesses to help them 
lie to Members of Congress is false, inexcusable, and in violation of 
rule XIX, the longstanding practice of Senatorial courtesy, and I 
expect an apology from the Senator from Illinois.
  What is the status of the time now in terms of control of time?
  The PRESIDING OFFICER. The time until 2:30 is controlled by the 
majority.
  Mr. STEVENS. Mr. President, under the conditions that if the Senator 
from Montana would yield to our colleagues on this side if they come to 
make a statement on the bill, I yield to the Senator from Montana.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The Senator from Montana is recognized.


               Commerce-Justice-Science Conference Report

  Mr. BAUCUS. Mr. President, first, I thank my friend from Alaska for 
his courtesy in working out this accommodation.
  I rise to speak on the Commerce-Justice-Science appropriations bill 
conference report that might be coming before us later on this day for 
a vote.
  I must say I am outraged. This bill makes further cuts to critical 
programs that help local law enforcement fight methamphetamine 
nationwide. These cuts--and they are dramatic--have a particularly 
damaging impact on my State of Montana. Why? Because we are a rural 
State. We have very limited resources.
  When I ask Montana law enforcement officers what is the No. 1 law 
enforcement problem they are facing, an open-ended question, they all 
come back with the same answer: methamphetamine. That is the biggest 
problem Montana law enforcement officers have.
  The Byrne grant program and similar programs support most of the 
proactive drug enforcement in the 56 counties of my State, and I dare 
say that is true for a majority of States in this Nation.
  Why is Byrne grant money so important? Again, it is because we are 
spread so thin across a vast area in Montana, a small population with 
an international border. An adequately funded Byrne program, 
particularly when combined with a high-intensity drug trafficking area, 
or HIDTA program, is essential. These programs are critical to help us 
maintain our seven multijurisdictional regional drug task forces, which 
have been a huge boon to successful efforts in Montana to fight 
methamphetamine.
  Let me give an example. In eastern Montana, we have what is called 
the Eastern Montana Drug Task Force that is based in Miles City, MT. We 
also have the Tri-Agency Drug Task Force in Havre that is near the 
Canadian border. We have a third drug task force in our State, and that 
is the Big Money Drug Task Force based outside of Wolf Point. They all 
rely entirely on Byrne funding. These task forces also happen to cover 
some of the most open, most rural areas in my State where meth 
enforcement is particularly challenging.
  This Commerce report that is soon to be before us guts the Federal 
Government's commitment to State and local

[[Page 26089]]

law enforcement. It funds the Byrne grant program at just $416 million 
for this next fiscal year. That $416 million may sound like a lot of 
money, but it represents a nearly 35-percent cut over current year 
funding. We are cutting this law enforcement program by 35 percent.
  Is that bad? That is terrible. But it is even worse because that 35-
percent cut is on top of a 26-percent cut in funding in reallocation of 
local law enforcement resources that occurred in 2005. First we had a 
26-percent cut last year. Now this is a 35-percent cut on top of the 
26-percent cut.
  This bill cuts the Community Oriented Policing Services, otherwise 
known as COPS. That is cut by one-third and provides no funding for 
communities to hire additional police officers.
  According to the president of the Montana Association of Chiefs of 
Police, COPS funding is necessary to maintain an adequate number of 
police in the field to protect our communities. One law enforcement 
officer back home told me that without COPS funding, the number of 
crimes, especially violent crimes, begins to rise again. Currently, 
there is no other alternative to the COPS Program. He tells me that the 
COPS Program is one of those programs that works, one of those programs 
that is directly responsible for protecting our communities and for 
getting officers out on the street to protect us all. COPS works. We 
all know the COPS Program has worked, particularly for us in rural 
States.
  So I ask, where are our priorities? The Senate did its job. We sent 
over a bill to the House that contained nearly $900 million for the 
Byrne program, yet somehow we will end up later today with a conference 
report that funds this program at close to a paltry $348 million. We 
had $900 million. The conference report comes back at $348 million.
  Where were our Senate conferees? Why did they not stand up for the 
Senate version? Why did they not stand up for the Senate?
  The Montana Narcotics Officers Association has told me that if the 
House version of the CJS bill is passed, this would gut Montana's meth 
enforcement abilities, especially in rural areas. They told me this 
would result in an elimination or a dramatic reduction in services 
provided by Montana's regional drug task forces.
  The 26-percent cut in Byrne funding in this last fiscal year resulted 
in nearly a 50-percent cut in Byrne funding for the entire State of 
Montana, and that is because of a block grant allocation which has that 
result.
  I frankly cannot believe we are being asked to support a conference 
report that has cut law enforcement, especially in the areas to fight 
methamphetamine enforcement, as much as we are asked to.
  I am also very disappointed that this conference did something else 
which I think is a very bad idea. What did they do? They did not accept 
the Senate-passed combat meth bill. What was that? That bill would put 
certain methamphetamine ingredients behind pharmacy counters 
nationwide. We all know that the precursors of methamphetamine over the 
counter in drugstores are a big inducement for meth manufacturers to 
take these ingredients and go to local labs out in rural areas and make 
methamphetamine. It only makes sense that these methamphetamine 
precursors not be sold over the counter but only sold by prescription 
or at least behind the counter so there is much more control over the 
purchase of those ingredients. We passed that in the Senate. What did 
the conference do? No, they did not adopt it.
  Let us look at what this conference report says with respect to rural 
States that are trying to fight methamphetamine. I might say it is not 
just rural States; it is most States trying to fight methamphetamine.
  First, it did not take up and agree to the combat meth bill. The 
precursor provisions are not in here anymore. Willy-nilly, they are out 
of there. It also dramatically cut the Byrne grant money, which is so 
important.
  I made a good part of my job in the Senate devoted to fighting 
methamphetamine. I have gone to a lot of these drug task force 
meetings. I go to many assemblies in Montana with high school and 
middle school students. I put on these programs that show how bad 
methamphetamine is. I have law enforcement officers there during these 
sessions with middle school and high school students. I have counselors 
there. We go over what has to be done to fight methamphetamine.
  Again, a reminder, methamphetamine is the No. 1 law enforcement 
problem in the State of Montana, and I am sure that is true in a lot of 
other States as well.
  I ask for a show of hands at these assemblies. These are schoolwide 
assemblies. I ask: How many of you here know of somebody who is on meth 
or recently on meth? Fifty to 70 percent of the students' hands go up. 
It is such an outrage. We talk about pandemics with the Asian flu. I 
might say we certainly have an epidemic with methamphetamine. In a 
certain sense it may be a pandemic. It is a huge problem.
  If we are going to fight it--and I hear in my State of Montana, and I 
am sure the Presiding Officer hears the same thing in his home State of 
South Dakota--we need to have dollars out in the field to fight 
methamphetamine. There are all kinds of ways to attack this problem, 
but certainly dollars out in the field on the law enforcement side are 
absolutely critical. It is essential, and they are not in this bill.
  We need a lot more prevention efforts. That is clear. We need more 
counseling efforts. That is clear. We need drug counseling and other 
ways to get people off of methamphetamine. We also need the law 
enforcement there to catch the bad guys who are doing it.
  In a certain sense, this conference report is a huge victory for the 
druggies. It is a huge victory for those who are peddling 
methamphetamine in America because they know if there is much less law 
enforcement, if the dollars are not there to stop them, they have an 
open field. They are not dumb. The big drug manufacturers and peddlers 
are not stupid. They know where they can go. They know where there is 
law enforcement and where there is not.
  When I talk to local drug task forces in my State, it is so clear to 
me how desperately they need these dollars. They beg me for these 
dollars. That is why I have offered amendments in this body to provide 
funding to fight methamphetamine.
  We passed legislation in the Senate. We have been doing our job. But 
for the Senate conferees to come back with a conference report which 
allows all of these antimethamphetamine efforts to be gutted and to be 
diluted and cut back and ask us to vote for that conference report I 
think is an outrage. For that reason, I strongly oppose this conference 
report. It is a bad idea. It is going to allow more methamphetamine in 
our country, one of the biggest problems this country has.
  This is a victory for the drug dealers. It is a big victory for drug 
dealers. They know where they can deal drugs. They know where there is 
law enforcement and where there is not. When we start to cut back 
money--not status quo but cut back law enforcement dollars--that is 
going to be a huge problem. I very much hope this Congress finds a way 
to redress this imbalance, to deal with this problem so we can 
adequately fight methamphetamine.
  I have all kinds of PSAs running in Montana, public service ads, 
against methamphetamine. I have been working in schools to get rid of 
methamphetamine. There are other people in Montana who are paying a lot 
of dollars out of their own pockets, with very effective 
antimethamphetamine ads. Part of the solution is to make sure we have 
adequate law enforcement. I strongly urge my colleagues to not agree to 
this conference report until this problem is solved.
  I ask unanimous consent that a letter from the National Sheriffs' 
Association be printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

[[Page 26090]]

                               National Sheriffs' Association,

                                Alexandria, VA, November 10, 2005.
     Hon. Thad Cochran,
     Chairman, Committee on Appropriations, U.S. Senate, 
         Washington, DC.
       Dear Mr. Chairman: On behalf of the National Sheriffs' 
     Association (NSA) and our 23,000 members, I am writing to 
     express our extreme disappointment and concern over the lack 
     of funding for the Edward Byrne Memorial Justice Assistance 
     Grants Program (JAG) in H.R 2862, the Science, State, 
     Justice, Commerce and Related Agencies Appropriations Bill.
       The JAG program, which was formed by consolidating the 
     Edward Byrne Memorial Grant program and the Local Law 
     Enforcement Block Grant program, is one of the primary 
     Federal assistance programs for State, tribal and local law 
     enforcement agencies. State and local law enforcement 
     agencies, including the 3,087 sheriffs' offices across the 
     country, rely heavily on JAG funds for critical operational 
     activities. JAG funds support many of our counter-drug 
     activities, particularly drug task forces. Without these 
     funds, our sheriffs will not be able to sustain the task 
     forces or even fight the war on drugs!
       Local law enforcement agencies from all across the country 
     are already out-manned and out-gunned by the drug cartels and 
     street gangs in our communities. Over the last several years 
     we have been forced to deal with the loss of personnel, 
     because of budget cuts to the COPS program. Now the COPS 
     Universal Hiring Program has been zeroed out by Congress, 
     thus abandoning an effective program, and the JAG Funds are 
     being cut as well. These cuts will put an end to any progress 
     that has been made and destroy any hope we might have of 
     winning the war on drugs or ridding our communities of 
     methamphetamine!
       For more than a decade, the resources provided under the 
     JAG program have allowed law enforcement agencies to expand 
     their capabilities and make great strides in reducing the 
     incidence of crime in communities across the nation. It is 
     our belief that the lack of Federal support for local law 
     enforcement will surely result in increased crime and drug 
     abuse!
       The conference agreement would provide just $416 million 
     for the Byrne Memorial Justice Assistance Grants, of which 
     only $321 million is available for local law enforcement 
     assistance. This represents a cut of more than $217 million 
     or 34 percent, from FY 2005 levels. We find this level of 
     funding to be unacceptable and believe that Congress is 
     failing to adequately recognize the mission of law 
     enforcement!
       Cuts of this magnitude seriously inhibit law enforcement's 
     abilities and endanger the safety and well being of our 
     communities! In order to keep communities safe from crime and 
     free of drugs, law enforcement agencies must be given the 
     resources they need! The FY06 SSJC appropriations bill does 
     not provide for those resources.
       At a time where law enforcement and securing the homeland 
     should be of the highest priority, Congress has chosen to 
     completely dismiss them as a priority! With the rise of 
     terrorism, and the fact that methamphetamine use and abuse 
     has risen to epidemic proportions, Congress should embrace 
     law enforcement, support the JAG program and COPS Hiring 
     Program, and increase their funding, not cut their funding!
           Sincerely,

                                              Thomas N. Faust,

                                            Executive Director and
                            Retired Sheriff, Arlington County, VA.

  Mr. ISAKSON. Mr. President, I ask unanimous consent that Senators 
Carper, Salazar, and Nelson be added as cosponsors to the Isakson 
amendment on the pension bill.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ISAKSON. I yield the floor.
  Mr. ENZI. Mr. President, I yield 10 minutes to the Senator from 
Texas.
  The PRESIDING OFFICER. The Senator from Texas is recognized for 10 
minutes.
  Mrs. HUTCHISON. Mr. President, I thank the distinguished chairman. I 
appreciate very much the chairman bringing this pension reform bill to 
the floor. As a Senator from a State that has several major airlines, 
three headquartered in my home State of Texas, I know this is very 
important for them. It has been worked on for a long time. I appreciate 
the efforts of the distinguished chairman in this regard.


                              Judge Alito

  I also want to take this opportunity to answer some of the things 
that have been said in the Chamber today, particularly about Judge 
Alito, who is the President's nominee for the Supreme Court of the 
United States.
  It has been implied in the Chamber today that maybe he doesn't 
deserve an up-or-down vote. After all, Harriet Miers didn't get one.
  I am the perfect person to say I think Harriet Miers should have 
gotten one. I do believe Harriet Miers was qualified for the Supreme 
Court. If she had been allowed to open her mouth and say what she 
believed and talk about her experience, she would have been confirmed, 
and she would have been a superb Justice.
  However, Harriet Miers didn't get an up-or-down vote because she 
withdrew her nomination. She withdrew it voluntarily. It was her 
decision. I was sorry she did. I didn't want her to make that decision. 
But to imply that all of a sudden now we have a new standard, that 
Judge Alito doesn't deserve an up-or-down vote, is absolutely wrong and 
it must be refuted. Judge Alito does deserve an up-or-down vote just as 
every nominee for the Supreme Court of the United States who has gone 
through the committee and come out deserves an up-or-down vote. The 
idea that seems to be creeping in here is that, maybe for the first 
time in the history of the United States, there might be a filibuster, 
a partisan filibuster of a judge, a nominee to be Justice for the 
Supreme Court of the United States. That would be a terrible thing for 
the United States of America, for the President, and for the Senate of 
the United States. It would be wrong for everyone concerned. It would 
set a precedent that I believe would cause partisanship in this body to 
escalate to a degree that we do not want to see happen.
  Partisanship has already escalated in the Senate. I am sorry that it 
has. But I think there are many instances where we work in a bipartisan 
way in the Senate, and we accomplish a great deal when we do. So I 
think the idea of throwing a bombshell into the Senate and breaking all 
tradition and all precedent and filibustering on a partisan basis a 
nominee for the Supreme Court who is reported out of committee is 
wrong, and I hope the hints of that happening are wrong. I hope they 
are put to bed. I hope we will give this judge his due.
  This man is qualified for the Supreme Court of the United States by 
any standard. He has an academic record that is excellent. He has years 
of experience as a circuit court judge. He is very well regarded as a 
circuit court judge. His opinions are reasoned. He has even gone 
against what are his stated personal beliefs in order to adhere to 
precedent and give great respect to the law of the land. He is 
everything we are looking for in a Supreme Court nominee.
  When he has his hearings and he has the chance to answer the 
questions of the Judiciary Committee and he is then voted out of that 
committee, even a suggestion that he doesn't deserve an up-or-down vote 
is outrageous. I hope we can stamp out those little feelers, say this 
was a misunderstanding, that Judge Alito most certainly is a nominee 
deserving of an up-or-down vote in the Senate if he is, in fact, voted 
out of the committee.


                   Amendments To The Iraq Resolution

  I also want to take this opportunity to discuss an amendment that was 
agreed to yesterday by the Senate regarding the Iraq resolution. There 
has been a statement on the floor today saying that this was a rebuff 
of the President's policies. The rebuff was to the amendment that was 
put forward that would set a timetable for a withdrawal, that would 
call on the President to say on a date certain we are going to withdraw 
troops from Iraq.
  I have been one in the past who has said we should have a game plan. 
We should have an exit strategy. I have said that when we were in 
Bosnia. I said it as we are in Iraq. I said it about Afghanistan. It is 
a legitimate role for the U.S. Congress to say: Mr. President, give us 
an update on where we are and give us what we can expect to see. That 
is exactly what happened. It was not unusual.
  When we are in a conflict overseas with our troops on the ground, it 
is not unusual that the Congress would ask for a report on the status 
of the conflict. Most certainly it is fair to ask for a report. The 
President welcomed that because he knows the role of Congress, just as 
we do. Those who would characterize that as a rebuff are wrong. The 
President knows how tough this situation is. All of us do. Every one of 
us

[[Page 26091]]

grieves when we lose one American life. But I will say I could not be 
more proud than I am of our Armed Forces, our men and women who are 
fighting for our freedom today as we speak in this Chamber, because 
those with boots on the ground know that if we set a time prematurely 
when we would exit, we would embolden the enemy they are facing today. 
We would say to the enemy: Have at it. No matter what happens, we are 
out of here on a date certain.
  Don't you think that puts the lives of those troops who are on the 
ground right now in jeopardy? The idea that we would do something like 
that is appalling. The Senate didn't do it. The Senate voted down an 
amendment. The Senate rebuffed that amendment because it was wrong. 
Instead, we did what is the role of the Senate to do, and that is we 
asked the President for a status report. We asked the President for the 
game plan for the future. Of course, the President is going to do that. 
He has been doing that. We have had briefs on the situation in Iraq and 
briefs on what the next step is ever since we went in to Iraq.
  Of course it is the right of Congress and the role of Congress to ask 
for this. The President understands that and actually said he was very 
pleased that the Congress did that and that he would, of course, do 
that type of report as he has been doing on a regular basis in various 
ways, through the Secretary of Defense, through the Joint Chiefs, the 
Chairman, and the Ambassador to Iraq from the United States. We have 
had reports from all of these people on the status. We have seen the 
votes that have been taken in Iraq. We have seen the progress.
  I think it is important that we set the record straight. On this 
floor this morning, I think there have been some statements that needed 
to be refuted, and that is what I have attempted to do.
  I thank the chairman of the committee for allowing me this time and 
thank him for bringing this pension bill to the floor. It is a very 
important bill. It will mean a lot to the employees in my State and the 
employees throughout our country in airlines that are struggling right 
now. This is an industry we need to protect.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. ENZI. I yield myself such time as I might consume. I thank the 
Senator from Texas for coming to the Chamber and making the comments on 
pensions, and I appreciate all the work she has done, particularly in 
the airline area. I don't think there is a single airline that doesn't 
fly into Texas. I appreciate all the concern she has shown over all the 
various issues. There are certainly a lot of them in this 730-page 
bill.
  I also thank her for the comments on the other topics because, while 
the time today was supposed to be for debating the pension bill, I 
guess the disadvantage of having one that is as bipartisan as this and 
as much concern to all the employees and businesses of this country is 
that we didn't have that much opposition today. So people came in with 
other topics.
  I want to address one of those that came up that disturbs me a little 
bit, and that is the comments about a Katrina Commission.
  The Katrina disaster and the others that followed it were bigger than 
anything we had ever had in this country. I have to tell you that I 
think there is enough blame to go around on it. If people want to point 
fingers, it goes the whole circle. The biggest problem with it was we 
had never seen that many displaced people in one single disaster. There 
were a million people displaced in that disaster, and 200,000 was the 
previous record--not that those are the kinds of records we like to 
keep.
  A couple of weeks before Katrina, there was a tornado in Wright, WY, 
38 miles south of my hometown. I happened to be there at the time. I 
spent a lot of time in Wright seeing how the recovery went and seeing 
what FEMA did. I didn't have much of an idea what FEMA is supposed to 
do. It was kind of astounding to me. They are the group who comes in 
after the disaster. They are not the prevention group. They are the 
after-disaster folks. They come in and register all of the victims of 
the disaster. Then they help those victims get coordination to find 
every source of help they possibly can.
  This disaster was a lot different than any of the ones before. A lot 
of times, when there is a disaster in one town and people are displaced 
from that town, they can move to their friends and relatives in the 
next town. But in this one, not only did their town get wiped out but 
the towns of their friends and neighbors and relations got wiped out as 
well; and so did the next town and the next town. They wound up moving 
to completely different States.
  You can't see those boundaries of States when you drive down the 
road. There is usually a sign that says ``Welcome to Wyoming'' or 
Louisiana, whatever State it is. There isn't any physical line that is 
drawn, but in everybody's mind there is a tremendous mental barrier of 
crossing a State line and being in unfamiliar territory.
  That happened in this instance, and States are saying those are 
residents of another State that we are supposed to take care of; people 
from another State are saying, I am not real comfortable being here, 
but I am here. What can you do to help me? It was even hard to locate 
people.
  The size of the disaster was tremendous. I think I am in a position 
to complain about anybody complaining about how it all went because I 
am from the committee that proposed legislation and actually moved it 
through the Senate floor. I think the only legislation that has dealt 
with the Katrina disaster is student displacement, which we had in the 
deficit reduction bill. We have a health package we are working on, and 
we hope to be able to move it as well.
  There are unprecedented problems with this. We have the opportunity 
for some unprecedented solutions. They are not the best solutions, but 
they are the best we can come up with on short notice.
  Rather than trying to figure out whose fault it was, I think the 
whole country has a big problem with this ``whose fault it is.'' We 
have gotten to the point where, if we fall down, we wonder who caused 
that and who should pay. We want some kind of retribution for it. What 
we are doing with that is eliminating some personal responsibility. 
Everybody has to watch out for themselves and their neighbor and help 
get ready particularly for events they can see coming. I think people 
are going to be a lot more responsible on that in the future because of 
some of the things that happened. But to try to place blame doesn't do 
much except build divides. We are trying to bring people together.
  That is what the pension bill is working to do--bring people together 
so they can have a secure future, so they can know what is going to 
happen with their savings and their pensions and how it all comes 
together. This bill does do that.
  It is extremely complicated, with many moving parts. It is hard to 
have unanimous agreement on anything, but this is pretty close to that. 
It is because it solves a huge problem. Here again we could talk about 
what the blame is for the problem.
  I actually want to talk a little bit about how we got to the point 
where there was a problem with pensions. I am not going to go into some 
of the things mentioned before about how the negotiations went and 
drove up the amount of benefits people were receiving. Instead, I want 
to talk a little bit more about the core problem we have; that is, 
after September 11, 2001, the economy went in a little different 
direction than we had anticipated--in fact, drastically different than 
anticipated.
  Two things happened at the same time: Both the interest rates and the 
stock market went down. Usually, when interest rates go down, the stock 
market goes up and people take their money out of the low-interest 
mechanisms and put it into the stock market which grows faster because 
there is more money coming in there, which is driving up the price of 
the stock. But after 2001, both the interest rates and stocks went 
down. There was no possibility of taking the money from the

[[Page 26092]]

pension and hedging it anywhere, of moving it so they would have more 
income. So the income dropped drastically and investments dropped 
drastically. That put the companies in a position where those who had 
fully funded plans no longer had fully funded plans. It wasn't because 
they stopped putting money in or taking money out. It was because it 
didn't grow at the rate that had been anticipated before. That created 
a lot of problems. That is not to say there weren't some problems, but 
primarily the problem came from the stock market and the interest rates 
dropping at the same time. The good news is that interest rates, as far 
as pension plans--and some senior citizens' savings and other people's 
savings--the good news is the interest rate has been going up. That has 
not been a help to the stock market, but that has been a help to those 
people who have money in savings accounts. It has been a help to 
pensions because the annual statement that just came out by the PBGC 
for their fiscal year 2005 financial results show they actually had a 
net gain of almost $.5 billion for last year. That isn't because the 
PBGC was better. That is because firms were able to generate more 
revenue for their pension funds. There are a lot of things at work in 
this.
  Another thing that was mentioned this morning that I want to clear up 
a little was a relationship people draw--the relationship between the 
Pension Benefit Guaranty Corporation and the savings-and-loan debacle. 
We have two different ways of paying out here. They are dramatically 
different. For one thing, when people have money that is ensured by the 
FDIC and a bank fails, people take their money now. It is an immediate 
crisis--to the total value of their ensured deposits. With the Pension 
Benefit Guaranty Corporation, they are guaranteeing that people will 
get a portion with a cap of what they have coming in pension at the 
time they would have received it. It is long term. It isn't an 
immediate disbursal of whatever money they have in that account. It is 
a disbursal over time at the rate at which they would have received the 
pension, which would be the rest of their lifetime, as opposed to an 
immediate withdrawal like savings and loans.
  We have another problem that is coming up here shortly. That is when 
the stock market and the interest rates both went down, they created a 
crisis. It was not a crisis of bad management as much as this 
difficulty with the stock market. Recognizing that crisis, we passed 
some legislation. But it was temporary legislation to allow for some 
recovery of the economy and the market and that sort of thing, to get 
things back in balance. That temporary piece of legislation runs out 
December 31 of this year. We need to have in place something that will 
continue to encourage the companies to put more into their pension 
funds, to add to the solvency of their pension funds, to bring them up 
to the level they are supposed to be, without putting them out of 
business. We need something that will fill in for these temporary rules 
that are running out, something that does the job, I hope, better.
  We have had some time to review the whole situation and come up with 
this bipartisan solution.
  One of the difficulties during this discussion was over an item 
called ``credit rating.'' There is a provision in the bill that calls 
for companies to have to put in considerably more money once they get a 
bad credit rating. I am counting on that being something we work on in 
conference committee. We all operated on a principle, and the principle 
we operated on was we want to know when a company is having difficulty, 
and we want to know it early. We want to have them make sure their 
pension for their employees is protected at the time the business 
starts to go bad.
  That was the principle from the White House, that was the principle 
of the HELP Committee, that was the principle of the Finance Committee, 
and we tried to arrange a way to do that.
  One of the things on the surface that looked like a good idea was 
credit rating. When they get a bad credit rating, it forces them to 
bring more solvency into their fund. The idea is once they get a bad 
credit rating, they cannot put more money in the fund. They are in a 
very bad situation when they are listed as a junk bond situation 
already. In fact, one of the difficulties with the credit rating is it 
is not done by people in the company or people in the Government. It is 
done by some other experts who look at what they have access to and 
make decisions about the company. Sometimes they probably get it 
extremely right, and sometimes they can get it wrong. But that doesn't 
matter. What matters is if a company gets rated at a junk bond status, 
they can virtually never get out of that. Why can't they get out of it? 
One reason is the person who analyzed the thing and who may have 
replaced a new employee is a little bit reluctant to sign his name to 
say this company is OK. It is the ``protect yourself'' kind of 
attitude. So you don't let them out of the junk bond status, which 
forces them to make the payments perhaps longer than they ought to have 
to at that rate, and in fact keeps them in junk bond status. It is a 
kind of cart-and-the-horse sort of situation--they keep getting one in 
front of the other and impeding the progress toward what we don't want.
  What I am hoping we can do in the conference committee is to find 
another way that is not the credit rating way but a way that the 
company will realize and start to correct on this point where they were 
starting to go downhill, and then also be able to know when they have 
recovered so we don't force them into bankruptcy. We are asking people 
for solutions, and we have had a number of them suggested.
  Again, I thank Senator DeWine for his efforts in this area. Senator 
DeWine and some of the folks--particularly some manufacturing companies 
that are involved in this kind of a situation, where some of them even 
have 100-percent funded plans, but they are in junk bond status. 
Consequently, even though their funds have a lot of funds, they get 
different requirements that will escalate the problem and not provide a 
solution.
  That is one of the things particularly I am expecting we will take a 
look at when we get in conference committee. I think there is a way for 
all of us to come up with a solution that will work and meet that basic 
principle of locating companies when they begin to have trouble and 
make sure that as much solvency is put into the pension plans as 
possible.
  I also will mention that in the deficit reduction bill we passed last 
week, there was a section that dealt with pensions. I want to reassure 
everybody that there is the clause in the deficit reduction bill that 
says if we pass the full pension bill--that means the House and the 
Senate actually conferring and coming to an agreement and getting a 
full pension bill signed--that what is in there will modify the 
pension.
  Under deficit reduction, our hands were kind of tied on the options 
we have to meet the requirements of reconciliation. Under those 
requirements, all we could do was raise rates to the company. We had to 
do that considerably higher than we would have had to, had we some of 
the tools which we have under the full pension bill.
  Now, there may still have to be some numbers tweaked on that to meet 
the requirement that we set for ourselves. We set in the budget a 
requirement we need to have a $6.6 billion deficit reduction on the 
Pension Benefit Guaranty Corporation. We needed to reduce potential 
outlays by the corporation so that it would be solvent or moved toward 
solvency.
  I mentioned this tale that there is on pensions so there was not a 
need to come up with $22 billion this year. It can be done over a 
period of years. In that deficit reduction bill, there is a paragraph 
that says if we pass a full bill, the full bill takes precedence over 
the deficit reduction package, so it will not be nearly as much of an 
increase for the company using that as if we went with the deficit 
reduction.
  I thank everyone for the cooperation we had on the deficit reduction 
part and in coming up with that.
  I want to add my words to Senators Kennedy and Mikulski as they 
challenge the House to get their bill done.

[[Page 26093]]

Getting our bill done by itself does not complete the process. It 
requires that the Senate and the House pass a bill that is the same 
which means they have to hurry and pass one; we have to conference it 
and, hopefully, have this done when we come back shortly in December. 
If not, very quickly after the first of the year. As I mentioned, 
December 31st is the expiration of the previous formulas.
  I need to thank and commend a few people. This has been a lot more 
complicated and a lot more difficult than the discussion today might 
seem to indicate. The reason we have had as little discussion and as 
little opposition today is because people put in a lot of hours to 
understand what was going on and focusing on principles so we could 
arrive at a solution for pensions. I commend the work of the staff on 
this bill. Particularly, I commend my HELP Committee staff. Katherine 
McGuire is the director of the committee and did an outstanding job of 
juggling multiple interests and bills. Somebody suggested that we were 
not a committee, we were a bill factory. If you look at the work that 
has come out of the committee under Katherine's direction and the 
cooperation of both sides--near unanimous consent on almost every 
bill--we have had a very productive year. This bill is one of those 
indications.
  When the President listed his top 10 priorities, my committee had 21 
of them. That is largely because in the HELP area he listed one 
priority, and that turned out to be 16 bills in my committee. We are 
progressing through those, as well. We are hoping to be able to come up 
with lower cost health care but with better quality and access. That is 
a major challenge of this country. We have had double-digit inflation 
on health care for years. I have a lot of faith in the committee and in 
staff in what we have been able to do so far.
  I also commend Diann Howland and David Thompson. These are my two 
experts in this area of pensions. I mention that one of them had a lot 
of experience on the Committee on Finance staff and one of them had a 
lot of experience on the HELP Committee staff. It was fortuitous we 
brought these people together with this expertise and have them on the 
same side working to both come up with the ideas and merge the bill. 
They probably have, combined, about 20 years' worth of experience on 
this bill alone.
  I congratulate Gregg Dean, who brings the banking knowledge to the 
debate, and Amy Angelier, who brings the budget expertise to it. Ilyse 
Schuman does an outstanding job with the legal work we have to do on 
the bill. I also commend Portia Wu, Holly Fechner, and Terry Holloway 
of Senator Kennedy's staff; John O'Neill of Senator Grassley's 
Committee on Finance staff; Judy Miller and Stuart Sirkin from Senator 
Baucus's staff. We all owe our thanks to Jim Fransen and Stacy Kern of 
the Legislative Counsel's Office, who drafted numerous versions of this 
bill and all of its predecessors. A very special thank you is owed to 
the staff of the Joint Committee on Taxation for their advice and 
guidance. The staff of the Joint Tax includes Carolyn Smith, Patricia 
McDermott, Nikole Flax, and Allison Wielobob. Last, but not least, I 
thank Karla Carpenter of Senator DeWine's subcommittee for her 
diligence and Ellen-Marie Whelan and Ben Olinsky of Senator Mikulski's 
staff for all of their hard work. That subcommittee did an absolutely 
marvelous job.
  The way we have our subcommittees set up is pretty much along the 
lines of the title of our bill. We have some spectacular subcommittee 
chairmen and ranking members who are out there working on projects. 
That is the only reason we are able to produce as many bills with as 
much bipartisanship as we have done.
  I also thank Glee Smith, Mike Quiello, and Ed Egee of Senator 
Isakson's staff for their fine work on this airline amendment.
  We are about at the point where we will vote on the amendment. I 
express my opposition to the amendment because I don't think it is fair 
to the other people who would be getting pensions. I appreciate Senator 
Akaka's tremendous effort to try and find a solution for pilots. But as 
we find the solution, we have to be sure we are finding the solution 
for everyone. I ask Members to vote against that amendment and for the 
pension bill as a whole.
  I have some remaining time, and I am happy to yield some to the 
Senator from Massachusetts, who has been absolutely wonderful to work 
with on this issue. He has tremendous institutional memory on this and 
has worked on parts of this problem for years. There were numerous 
times I went to him and asked: What would you do in this situation? And 
he told me. I think we found that the shortest distance between two 
points is a straight answer. We have been able to come up with some 
answers together and I appreciate that cooperation.
  I yield to the Senator from Massachusetts.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. I know we will be voting soon. This is a reflection of a 
legislative process working and working well. We have been fortunate in 
our committee with Senator Enzi, at the beginning of this whole 
process, examining the pension issues which have not been dealt with 
seriously since 1994, at the time of the GATT agreements. So much has 
changed since then.
  We had an openness and a process that has worked through the 
Committee on Finance in a similar kind of way, Republicans and 
Democrats working alike. And now, in a short period of time, we are 
going to pass legislation this evening that is going to give millions 
and millions of Americans and hundreds of thousands of companies a real 
sense of hope about their retirement future.
  I certainly hope the House of Representatives recognizes the strong 
bipartisan support we have had for this proposal and follow a similar 
path.
  Finally, we know that workers have enormous insecurity today. They 
are concerned about the increased costs of gasoline, their health care 
costs, their job security, the education security of their children, 
and the security of their retirement. This legislation is focused on 
retirement security. We all believe in a strong Social Security Program 
and we all believe in savings. But we all know those savings are down 
and Social Security is going to need focus and attention over the next 
years.
  This legislation is the backbone to providing help and assistance and 
assurances to workers about the safety of their retirement programs. It 
provides innovative and creative ways to deal with the challenges women 
have presented in terms of the workplace, a much greater sense of 
equity, much greater protection and information for workers so they can 
make the appropriate decisions, help and assistance so the good 
companies can meet their responsibilities to their workers.
  We are very much in debt to all of those on our committees--the 
Senator has mentioned them--and Senators Mikulski, Harkin, and Bingaman 
on the HELP Committee, and our Republican colleagues. I again thank our 
chairman of this committee. It is a very important piece of legislation 
that will make a big difference. I thank him and I thank the chairman 
of the Committee on Finance, Senator Grassley, and my friend, Senator 
Baucus, as well. We have been able to work together.
  It is difficult enough around here to get people in your own party to 
agree on something, I find, and then to get both parties to agree and 
then two committees to agree on something is remarkable.
  All Members understood the importance to American families in this 
country. They are being challenged about their retirement security. It 
brought out the best in the membership. I strongly support this 
legislation. I thank my chairman for all he has done.
  To review quickly, this requires the companies to fund all of their 
pensions. It gives the workers timely and accurate information on the 
pension plan. It protects older workers in cash balance plan 
conversions. That is enormously important. It gives independent 
investment advice so workers can have information to make solid 
judgments.

[[Page 26094]]

It guards against the exploitations we have seen in too many instances, 
where the CEO's have looked after themselves and failed to look after 
workers. And it does provide the retirement security for widows and 
former spouses, which is enormously important. Senator Snowe, myself, 
and others have been working on that issue for years.
  This is a balanced, well-formulated program that is addressed to meet 
the needs. I urge my colleagues to support it.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. ENZI. I yield myself a couple of minutes. I thank Senator Kennedy 
for his outstanding charts and summary of what we are about to do. I 
thank Senator Baucus for the outstanding work he has done in dealing 
with this issue this morning and on the Committee on Finance. I thank 
Senator Grassley. It has been great teamwork to get to this point. I am 
looking forward to the vote we have in about 2 minutes.
  I yield a minute to Senator Baucus and then a minute to Senator Akaka 
so he can summarize his amendment.
  Mr. BAUCUS. Mr. President, I reinforce a theme that has been in the 
Senate, working together in bipartisanship. I have thought I am one of 
the luckiest Senators here because the chairman is Senator Grassley, a 
great Senator to work with. We work very closely together. That is not 
rhetoric. That is true. That is accurate.
  The same is also true with Senator Enzi, the chairman of the HELP 
Committee, and Senator Kennedy. They work very closely together. Not 
only do they work well together, here are two committees working well 
together.
  A lot of Americans think there is a lot of partisanship in 
Washington. There is. There is too much. But there are also pockets of 
cooperation. We are witnessing today one of those pockets, one of those 
times when we are working together. I take my hat off to the chairman 
of the HELP Committee, the chairman of the Committee on Finance, 
Senator Kennedy, and the staffs. This is an effort to solve a problem 
in a nonpartisan way.
  I thank the chairman.
  The PRESIDING OFFICER. The Senator from Hawaii.


                           Amendment No. 2583

  Mr. AKAKA. Mr. President, my amendment corrects a wrong. Pilots have 
their promised pensions significantly reduced when the PBGC takes it 
over. The FAA mandates that the commercial pilots retire at 60. We must 
take the steps necessary to ensure that the PBGC will have resources to 
be able to help pilots whose retirement security has been threatened 
due to the pension takeover and prevented from continuing their 
careers. This penalty combined with the FAA mandate produce an overly 
harsh result that hurts pilots and their families when they lose their 
pension plans.
  My legislation only affects pilots. Pilot plans have been some of the 
largest pension plan terminations in history. Again, the FAA mandates 
that they retire at 60 and the PBGC's early retirement penalty occurs 
because they cannot continue to fly past age 60 commercially. My 
amendment will bring about much needed relief for United Airlines, US 
Airways, Aloha Airlines, TWA, Eastern Airlines, and Braniff pilots. It 
is important to note that pilots are the only private sector employees 
required to retire at the age of 60. I urge my colleagues to support my 
amendment.
  I thank my cosponsors, Senators Specter, Feinstein, Salazar, and 
Inouye, for working with me on this amendment.
  The PRESIDING OFFICER. The Senator from Wyoming.
  Mr. ENZI. Mr. President, I allot myself some time in opposition to 
the amendment. I appreciate Senator Akaka proposing the amendment, but 
I have to rise in opposition to it for a number of reasons. The biggest 
reason is the amendment changes how the Pension Benefit Guaranty 
Corporation calculates benefits for any one class of workers, which 
would be airline pilots. It is unfortunate that so many airlines have 
gone into chapter 11 bankruptcy and so many pilots have seen reductions 
in their pensions. Flight attendants and ground workers also deserve 
our attention, not just pilots. This carveout for pilots, who are some 
of the most highly paid professionals in our country, is unfair to 
other workers who also retire early but happen to have devoted their 
work lives to other positions in the industry.
  Pilots are not the only workers who have expectations of subsidized 
early retirements. Many machinists, steelworkers, and autoworkers have 
early retirement benefits which are reduced under the ERISA guarantees. 
A retiree from any one of these industries has the same complaint as a 
pilot when his or her company goes bankrupt and dumps its pension plan 
on the Pension Benefit Guaranty Corporation. The steelworker or the 
auto parts maker has less notice that a problem could arise if the 
company went broke. Pilots know, when they start their careers, that 
they will not work past age 60 and pilots can plan accordingly.
  The shortfall confronting pilots of bankrupt companies is not the 
result of a change in law. The limit on the PBGC guarantee has been on 
the books for years. Commercial airline pilots who are universally 
unionized have negotiated over these benefits with their airlines. The 
fact they retire at age 60 is factored into the structure of their 
plans. Pilots know they will likely stop flying before reaching normal 
retirement age of 65. That is why they negotiate rich retirement 
benefits on top of their high salaries.
  It is too harsh to suggest that they in any way assumed the risk that 
their plans would fail, but it is well known that pilots are some of 
the most cautious and savvy investors. Risk is something they always 
anticipate.
  On the merits, therefore, the Akaka amendment is unfair to other 
similarly situated workers and overlooks the fact that they have been 
before the parties for many years.
  But, more important, this amendment at this time is kind of the 
ultimate non sequitur. This amendment on this legislation just does not 
follow. It does not fit. The Akaka amendment actually increases the 
deficit of the Pension Benefit Guaranty Corporation on a bill designed 
to save the agency from insolvency.
  The PBGC estimates that if this provision were applied just to the 
United Airlines pilots plan, the unfunded guaranteed benefits in the 
plan would increase by more than $400 million. Additionally, if United 
pilots would cost $400 million, the cost to the PBGC for all pilots 
plans would probably exceed $1 billion. Ultimately, the cost is not 
borne by the PBGC, nor is it borne by the U.S. taxpayers. I hope my 
colleagues are well aware by now that the full faith and credit of the 
United States does not stand behind the PBGC. The additional $1 billion 
in new debt that the Akaka amendment would impose on the PBGC would be 
borne by all the other companies that sponsor and fund defined benefit 
pension plans. In this bill, we are already increasing the burden on 
those companies by about $4 billion through new premiums. Adding 
another $1 billion in debt is unfair and irresponsible, so I urge my 
colleagues to oppose the Akaka amendment.
  The PRESIDING OFFICER. The Senator's time has expired.
  The Senator from Wyoming.
  Mr. ENZI. Mr. President, I ask unanimous consent for 30 seconds.
  The PRESIDING OFFICER. Is there objection?
  Without objection, it is so ordered.
  The Senator from Wyoming is recognized.
  Mr. ENZI. Mr. President, I made a grave error. I mentioned the 
tremendous juggling job that Katherine McGuire, my committee director, 
has done, but I failed to mention Michael Myers, who is the staff 
director for Senator Kennedy, who has been part of the juggling act on 
all of these bills as well, and has done a fantastic job. I apologize 
for that grave oversight and do want to thank him for his efforts.
  I yield the floor and yield back any time.
  The PRESIDING OFFICER. Under the previous order, the hour of 2:30 
having arrived, the vote occurs on the Akaka amendment, on which the 
yeas and nays have been ordered.
  The question is on agreeing to the amendment.

[[Page 26095]]

  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from New Jersey (Mr. Corzine) 
is necessarily absent.
  The PRESIDING OFFICER (Mr. Martinez). Are there any other Senators in 
the Chamber desiring to vote?
  The result was announced--yeas 58, nays 41, as follows:

                      [Rollcall Vote No. 327 Leg.]

                                YEAS--58

     Akaka
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Burr
     Byrd
     Cantwell
     Carper
     Chafee
     Chambliss
     Clinton
     Coleman
     Conrad
     Dayton
     DeWine
     Dodd
     Dole
     Dorgan
     Durbin
     Feingold
     Feinstein
     Harkin
     Hatch
     Hutchison
     Inouye
     Isakson
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Landrieu
     Lautenberg
     Leahy
     Levin
     Lieberman
     Lincoln
     Lugar
     Mikulski
     Murray
     Nelson (FL)
     Nelson (NE)
     Obama
     Pryor
     Reed
     Reid
     Salazar
     Santorum
     Sarbanes
     Schumer
     Specter
     Stabenow
     Talent
     Warner
     Wyden

                                NAYS--41

     Alexander
     Allard
     Allen
     Baucus
     Brownback
     Bunning
     Burns
     Coburn
     Cochran
     Collins
     Cornyn
     Craig
     Crapo
     DeMint
     Domenici
     Ensign
     Enzi
     Frist
     Graham
     Grassley
     Gregg
     Hagel
     Inhofe
     Kyl
     Lott
     Martinez
     McCain
     McConnell
     Murkowski
     Roberts
     Rockefeller
     Sessions
     Shelby
     Smith
     Snowe
     Stevens
     Sununu
     Thomas
     Thune
     Vitter
     Voinovich

                             NOT VOTING--1

       
     Corzine
       
  The amendment (No. 2583) was agreed to.
  Mr. AKAKA. Mr. President, I move to reconsider the vote.
  Mr. BINGAMAN. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.
  Mr. BURR. Mr. Chairman, the proposed Treasury regulation ``safe 
harbor'' in the Pension Security and Transparency Act of 2005 states:

       The accrued benefit determined under this subparagraph 
     shall be determined under regulations prescribed by the 
     Secretary which are consistent with the purposes of this 
     paragraph and which may require a plan to provide a credit of 
     additional amounts or increases in additional account 
     balances in amounts substantially equivalent to the benefits 
     that would be required to be provided to meet the 
     requirements of subparagraphs (B) or (C).

  Mr. Chairman, am I correct in my understanding that the intention of 
this provision authorizing Treasury regulations is that the Secretary 
be given the widest latitude possible to approve cash balance 
conversions falling within the spirit of the conversion requirements?
  Mr. GRASSLEY. The gentleman from North Carolina is correct in his 
understanding of the provision, that Congress intends for Treasury to 
have wide latitude and flexibility in determining which plans could 
qualify for safe harbor protection.
  Mr. BURR. Mr. Chairman, do you agree that the provision is intended 
to allow Treasury to consider for purposes of the regulatory safe 
harbor cash balance plan conversions that are announced 5 or more years 
in advance, allow employees to continue to accrue benefits under the 
old formula until the conversion date and thereafter provide full 
protection for previously accrued benefits as well as the opportunity 
to ``grow into'' early retirement subsidies under the old formula; and 
that provide full cash balance plan accruals after conversion without 
wear away?
  Mr. GRASSLEY. The cash balance plan conversion described by the 
distinguished gentleman would indeed be within the scope of the 
authority intended for the regulatory safe harbor.
  Mr. BURR. I thank the distinguished chairman for this important 
clarification and for his hard work in developing this important 
legislation.
  Mr. HARKIN. Mr. President, I appreciate that this is a tough, complex 
bill. I know that the HELP and Finance Committees have worked hard to 
make this a bipartisan measure and worked to include important 
provisions to help multiemployer pensions alongside single employer 
pensions, and I appreciate those efforts. There are some very useful 
provisions, here, that will help employers to fund pension plans 
predictably and fully--and to do so when times are good, so we can 
avoid crash landings when times are bad.
  I rise to address the provisions in the bill on an issue very close 
to my heart: protecting workers in conversions to cash balance plans. I 
am pleased that we were able to reach a general consensus in this 
legislation on the cash balance issue. Of course, this compromise is 
not 100 percent of what I wanted, nor is it 100 percent of what my 
colleagues on the other side of this issue may have desired. But it is 
a solid bipartisan compromise. I am coming to the floor, today, to 
state why I strongly support the provisions in the bill before us, and 
to explain why I will do everything in my power to oppose any effort to 
weaken this legislation by giving retroactive approval to cash balance 
plans that have already been adopted, no matter how badly workers were 
treated in the conversion.
  This is not a hypothetical conversation. Unfortunately, over the last 
decade, literally millions of employees have seen their traditional 
defined benefit plans converted into cash balance plans. And, in the 
process, many have seen their benefits significantly eroded. This 
erosion of benefits falls primarily on the backs of older workers, who 
can have their benefits reduced by many thousands of dollars.
  The HELP-Finance compromise measure would fix this problem by 
requiring that, in the future, all cash balance plans must have a 
strong basic structure that provides some predictable level of wage 
replacement for workers, and by prohibiting companies from ``wearing-
away'' or eroding the value of the benefits of their older workers, 
including early retirement benefits. Furthermore, the HELP-Finance 
compromise recognizes the problem workers face when they find the 
pension plan they had long counted on has suddenly been turned on its 
head, and gives people a grace period to continue to accrue benefits in 
the old plan while they make decisions for the future.
  I should back up here, and describe this very complicated issue. In 
the early 1990s, a groundswell of companies started changing from 
traditional defined-benefit pension plans to ``cash balance'' pension 
plans. A cash balance pension is a hybrid between a defined benefit and 
defined contribution plan. Like a defined benefit plan, it is insured 
by the Pension Benefit Guarantee Corporation, and an employer 
automatically contributes some percent of an employee's pay to a 
hypothetical guaranteed account for the worker. This account then earns 
interest. Most defined benefit plans, however, calculate your benefit 
at retirement as some percent of your final average pay multiplied by 
the number of years you worked for the company.
  Cash balance plans are different: in a cash balance plan an employer 
contributes a certain percentage of your paycheck to an account and 
then credits that account with interest. In that regard, a cash balance 
plan looks a lot more like your typical 401(k) plan, since you have a 
hypothetical account that you can watch grow over time.
  As I noted earlier, during the 1990s, many companies began moving 
away from traditional defined benefit plans, and toward cash balance 
plans, for a variety of reasons. Many companies said cash balance plans 
would be easier for benefits managers to calculate, and easier for 
workers to understand. We were told the plans would better serve our 
Nation's new, more mobile workforce.
  Unfortunately, many workers found there was often a different 
motivation for the conversions: to cut benefits. Older, retiring 
workers covered by these conversions learned, too late, that their 
retirement benefit was far less than they had expected.
  The pension conversions eroded the benefits employees thought they 
had already earned. One way to erode benefits was to base benefits on a 
career average instead of highest years of pay average. It throws pay 
from when an

[[Page 26096]]

employee was younger and earning less money into the average used for 
the pension. The motivation here is obvious. This will reduce the 
benefits that workers can expect to get toward the end of their lives. 
Then, it will ``wear away'' the benefits that workers already earned.
  What is wear-away? Right now, under pension law, an employer cannot 
take away money an employee has already earned. If I leave a company 
tomorrow, I'll get the full value of everything it promised me up to 
that point. But in a cash balance conversion, as some employers have 
done the shift from a defined benefit plan to a cash balance plan, they 
have set up the new account balance at a lower level than the worker 
had previously accrued or earned in the old defined benefit account. 
Wear away happens when no new pension funds are added to what was 
already accrued till the value of the old pension is worn away to reach 
the level it would have been under the new cash balance plan. The 
effect? An older worker effectively earns nothing towards their pension 
for years, while younger workers do.
  The length of time it takes for an employee to make up what has been 
lost is a long time because the wear-away is so significant. Here is a 
helpful chart from the GAO. This chart shows in the first column, a 
hypothetical 45-year-old's early retirement subsidy. It is frozen, 
because the plan is converted. Now, look where she started out under 
the cash balance formula. It takes her all these years to finally catch 
up to what she had in the first place. All I am saying is that she 
should start out in the new plan at the same place she left off in the 
old plan. Her 30-year-old coworker is getting money added to his 
account. Why shouldn't she?
  The other problem in converting from a traditional plan to a cash 
balance plan is a complete reversal of the plan formula--so people lose 
a big chunk of their expected benefits. This is how benefits are 
accrued under a cash balance plan versus a regular plan. Can you 
honestly look at these rates of accrual and say that no one thought 
that there might be a problem for older workers who get caught in the 
middle, here, and get the downside of both plans? They get the front 
end of a back-loaded plan, and the back end of a front-loaded plan. 
Maybe these CFOs are just really bad at math--went to Wharton Business 
School, but still can't add. I don't know.
  Employers are claiming that these are great plans for workers. Sure, 
they are better than plan termination. But, they turn traditional 
pensions on their head, taking benefits from older workers and 
redirecting them to younger folks. Then they say these plans are so 
terrific for younger workers, but in reality 40 percent of people in 
these plans never see any benefit at all because they didn't even work 
at a company long enough to vest.
  This is, was, and always will be age discrimination. And it is 
something that Congress has never before acted to approve. After these 
injustices were exposed in 1999, I introduced legislation to ban wear-
away. While it did not pass, it raised the profile of this problem. 
That September, the Treasury Department stopped issuing letters of 
determination stating that these plans meet some basic IRS standards 
out of concern over how workers were losing out in conversions.
  In 2000, the Senate unanimously passed my sense of the Senate 
resolution saying that it is unfair for older workers to see the 
benefits they have worked for eroded or worn-away in cash balance 
conversions. That sense of the Senate state that: ``For a number of 
years after a conversion, the cash balance or other hybrid benefit 
formula may result in a period of ``wear away'' during which older and 
longer-service participants earn no additional benefits.''
  It said: ``Federal law should continue to prohibit pension plan 
participants from being discriminated against on the basis of age in 
the provision of pension benefits.''
  The Senate agreed, in 2000, that: ``It is the sense of the Senate 
that the levels in this resolution assume that pension plan 
participants whose plans are changed to cause older or longer-service 
workers to earn less retirement income, including conversions to ``cash 
balance plans,'' should receive additional protection than what is 
currently provided, and Congress should act this year to address this 
important issue. In particular, at a minimum: (1) all pension plan 
participants should receive adequate, accurate, and timely notice of 
any change to a plan that will cause participants to earn less 
retirement income in the future; and (2) pension plans that are changed 
to a cash balance or other hybrid formula should not be permitted to 
``wear away'' participants'' benefits in such a manner that older and 
longer-service participants earn no additional pension benefits for a 
period of time after the change.
  In 2003, the House and Senate both passed an amendment to the 
Treasury-Transportation Appropriations measure to block Treasury from 
promulgating a proposed rule that would have blessed these plans, 
because they left room for age discrimination. That provision was 
changed in conference to instead direct Treasury to propose legislation 
that would help workers caught up in these conversions, and Treasury 
did so. Treasury sent up a bill that said you can convert to a cash 
balance plan, but only if you don't wear away currently accrued 
benefits, and only if you allow people to accrue benefits in the old 
plan for 5 years after the conversion. Now this legislation did not go 
quite as far as my bill, but it did firmly state that wear away is 
unacceptable. It also acknowledged that these conversions result in a 
serious loss of expected benefits, and some transition period is 
necessary to help older workers.
  Prior to Treasury Secretary John Snow's confirmation vote, Senator 
Durbin and I asked him to come to the Senate and talk with us about his 
intentions on cash balance. He said that fairness and equity would 
guide the rule of law, and that he would work to protect the workers. 
After all, when he was CEO of CSX railroad, he put in a cash balance 
plan. But he gave everyone who worked there a choice between the old 
and new plans.
  His proposed legislation was much fairer to workers than the 
regulation that had been proposed during the gap between Secretary 
O'Neill's tenure and Mr. Snow's nomination.
  The HELP-Finance bill continues to uphold the principle that has long 
been supported here in Congress: Cash balance conversions should only 
be allowed if they are done right, without allowing companies to gouge 
older workers.
  The bipartisan compromise in this bill guarantees this by prohibiting 
wear-away in future conversions. It requires employers to give older 
workers a grace period during which they can continue to accrue 
benefits in the old plan. It says that, because cash balance plans 
weren't in fact as portable as advertised, we need to make them vest 
faster so that they actually do provide the benefits to younger workers 
that have been advertised.
  This compromise is very similar to the legislation proposed by the 
Treasury Department that I outlined above. It is the exact same 
language as the Frist-Grassley-Baucus-Lott amendment in the Finance 
Committee's pension markup. It is an excellent example of finding 
common ground, which is exactly what we should do on this issue. This 
is not a partisan issue. Retirement security matters to everyone. 
Keeping promises to workers is critical to our workplace climate. 
Likewise, it is important for workers to be loyal to their employers. 
Preserving this tradition is critical to maintaining a skilled, 
productive workforce.
  Turning to another issue, I am pleased that the managers of this bill 
have decided not to accept any proposals that would amend the fiduciary 
standards in ERISA to allow pensions to invest in riskier investments, 
and engender conflicts of interest for pension fund managers. These 
proposals will expose the retirement income of millions of pension plan 
participants and beneficiaries to the risk of loss from self-dealing, 
conflicts of interest and other abuses that have been prevented by 
ERISA for the last 30 years.

[[Page 26097]]

Under current regulations, if 25 percent or more of a hedge fund's 
assets come from employee benefit plans, including private-sector, 
public-sector and foreign benefit plans, the investment manager must 
comply with ERISA. The hedge fund industry would like to weaken that 
standard greatly by no longer counting public and foreign plan assets 
and increasing the threshold to at least 50 percent--and as much as 75 
percent in some cases.
  Part of the reason Congress enacted ERISA in the first place were 
numerous findings by Congress of pension fund mismanagement. We put 
fiduciary standards in place to prevent exactly these kinds of 
conflicts of interests and dangerous financial dealings. I can't 
understand why at a time when we clearly need to tighten those 
standards how anyone could work to loosen them.
  For too long, pension funds have been seen as a cash cow for CFOs to 
play with to help bolster the bottom line. Questionable enough when 
times are good, these methods can be disastrous when investment schemes 
don't pan out.
  I would like to call my colleagues' attention to an excellent article 
in Congressional Quarterly from September 3, 2005. This article really 
lays out the basis for much of the so called ``perfect storm'' we are 
facing today with pension funding. For the past few years, there have 
been numerous reports about money evaporating from pension plans. 
According to those reports, pension funds were being depleted through 
no fault of those who managed them, but simply because liabilities were 
increasing exponentially because of the sinking 30-year Treasury rate 
and the drop in the stock market.
  What these stories left out, however, is the fact that decisions made 
by pension managers contributed significantly to the problem. Beginning 
in the early 1990s, stocks began to make up a much bigger share of plan 
assets than they ever had in the past. Stocks went from making up 44 
percent of pension plan investments in 1980 to 62 percent in 2004.
  Why the shift? According to Bradley Belt at PBGC, interest rates in 
the 90s were generating 25 percent to 30 percent returns to plans--in 
other words, investing in stocks were generating so much revenue that 
on paper, these plans no longer looked like a cost to the company, but 
instead appeared to be generating profits.
  But as we all know, what goes up must often come down. This gamble 
with the pension security of millions of Americans resulted in massive 
losses when stocks fell. The PBGC is now in crisis in large measure 
because of these investment decisions--which is why we are here on the 
floor trying to figure out how to shore it up.
  Why do I bring this all up? Some of my colleagues are talking about 
making it even easier to invest in even riskier investment vehicles. 
The irony of pushing a proposal backed by the hedge funds onto a bill 
to rescue a drowning PBGC and revive a struggling defined benefit 
pension system is beyond comprehension.
  This is absolutely not the time to weaken requirements on pension 
asset investments. It's no secret that we are in the position we are in 
because of lax standards in the past. Loosening them in the future will 
be absolutely disastrous.
  Mr. ALLARD. Mr. President, today, I come to the floor of the Senate 
to briefly state my thoughts about a component of the bill under 
consideration, the Pension Security and Transparency Act of 2005. I 
commend both the Senate Finance and HELP Committees for their hard 
work, and tireless efforts to work towards a bill that we all can 
support.
  A variety of Colorado companies, including Arch Coal, IBM, Gates 
Rubber, and Qwest Communications, have been carefully following the 
debate on pension reform. These companies are significant employers in 
Colorado, and they contribute to the State's economy in countless 
measures. Many companies, including these, have been affected by the 
recent court decision Cooper v. IBM, and in turn I have been paying 
particular attention to the development and treatment of so-called 
hybrid pension plans. Hybrid pension plans, a combination of a defined 
benefit and defined contribution, were ruled illegal by one judge, 
saying that they were discriminatory based on age, since younger 
workers had more time to accrue more value in their pension than older 
workers. Since the court decision, IBM and many other companies with 
similar hybrid plans have been trying to interpret the court's ruling, 
and the future direction of their pension plans. These companies are 
trying to do the right thing for their workers. Currently, they are 
caught in a situation that does not give them any clear guidance or 
direction on how to help their employees.
  As this bill is currently written, it does not provide the necessary 
validation for the 1,700 existing hybrid pension plans and their 9 
million participants and opens the door for more litigation for more 
companies. If new conversion mandates are put into place, many of these 
employers may be forced to leave the defined pension system altogether, 
possibly reducing retirement security for workers. As everyone knows, 
the defined benefit system is a voluntary system. When companies first 
started offering defined benefit plans for workers it was an excellent 
benefit for workers and for their companies. However, now many 
companies are forced to give up offering defined benefit and the hybrid 
pension plans because of the legal uncertainty.
  While I commend Chairman Grassley and Chairman Enzi for working with 
their committees and reaching a compromise, I cannot help but point out 
that this issue is not completely addressed in S. 1783. My hope is that 
once this bill reaches the conference committee, hybrid pension plans 
will be a point of focus. I would be happy to work with my colleagues 
on this issue. It is important to Colorado, and important to many other 
companies nationwide.
  Mr. REED. Mr. President, the Senate is undertaking a long awaited 
debate on the need to strengthen the private pension system. It is 
imperative that current and future retirees are assured that they will 
receive the pension benefits they have been promised so they are able 
to enjoy a secure retirement.
  I am deeply concerned about the growing economic insecurity of 
today's workers. Despite recent economic growth, a healthy jobs 
recovery has yet to take hold, wages are failing to keep pace with 
inflation, income inequality is growing, employer-provided health 
insurance coverage is falling, and private pensions are in jeopardy. 
Indeed, strong productivity growth has translated into higher profits 
for businesses, but not more take home pay for average workers. The 
stagnation of earnings in the face of soaring prices for gasoline, home 
heating, food, and health care is squeezing the take home pay of 
workers.
  Any wage gains we have seen seem to be concentrated at the top of the 
earnings distribution, while the largest losses are at the bottom. Over 
the past 4 years, average household income has fallen for all income 
groups except a small slice at the very top of the distribution. Those 
developments stand in sharp contrast to what happened in the 1990s, 
when wage and income gains were strong for all income and earnings 
groups.
  At the same time that earnings are stagnating, the average worker's 
retirement prospects are more uncertain than ever. Twenty years ago, 
most workers with a pension plan could expect to receive a defined 
benefit based on years of service and salary. Today, defined 
contribution plans--which shift most of the investment risk and 
responsibility onto workers--have become the dominant form of pension 
coverage. As a result of this increased risk and responsibility, 
average workers may end up with inadequate retirement savings.
  Despite the shift away from traditional pensions, defined benefit 
plans remain a critical source of retirement support, with 44 million 
workers and retirees relying on such plans as a source of stable 
retirement income. However, as we have seen by the recent pension 
terminations in the airline industry, the real risk of defined benefit

[[Page 26098]]

plan defaults further exacerbates workers' uncertainty and concern 
about their retirement prospects.
  The Pension Benefit Guarantee Corporation estimates that total 
underfunding in PBGC-insured pension plans is about $450 billion, more 
than $100 billion of which is in plans sponsored by financially weak 
companies and at reasonable risk of default.
  And what of the status of PBGC itself, which serves as a backstop to 
the defined benefit pension system? At the end of 2005, the PBGC 
reported a cumulative deficit of $22.8 billion in its single-employer 
program. That figure is a slight improvement from a year earlier, when 
the shortfall was $23.3 billion which is the largest deficit in the 
program's 30-year history, and a sharp deterioration from only a few 
years ago when the single-employer program was in surplus. The deficit 
is expected to get worse in 2006, as PBGC will account for additional 
liabilities that it has taken over for the new fiscal year resulting 
from a number of major airlines and manufacturing companies who have 
defaulted on their pension obligations.
  While the PBGC has sufficient assets to pay benefit obligations for a 
number of years, without changes in funding, the agency will eventually 
run out of money. The Congressional Budget Office estimates that PBGC's 
cumulative deficit will increase to $87 billion over the next 10 years, 
and suggests that there is a significant likelihood that all of PBGC's 
assets will be exhausted within the next 20 years.
  The increased number of pension defaults means lost benefits for 
participants whose earned benefits exceed the statutory maximum benefit 
guarantee; premium increases for healthy plan sponsors remaining in the 
system; and ultimately the risk of a taxpayer bailout of the PBGC.
  Clearly, the private pension funding system needs reform and the bill 
before us today, S. 1783, the Pension Security and Transparency Act of 
2005, is movement in the right direction. I know that Chairman Enzi, 
Ranking Member Kennedy, Chairman Grassley, Ranking Member Baucus, and 
their staffs worked long hours to get to this point.
  The bill tightens the funding rules to ensure that defined benefit 
plans are adequately funded. Limiting the use of credit balances to 
prevent companies with unfunded plans from avoiding plan contributions 
and requiring an accurate accounting of each plan's true financial 
condition are important steps.
  But we must also avoid imposing unnecessarily burdensome funding 
requirements on plan sponsors that are playing by the rules. An asset 
valuation approach that doesn't allow for short-term fluctuations in 
the stock market will only exacerbate the inherent volatility in 
pension plan funding and increase funding burdens during economic 
downturns when companies can least afford them.
  The bill also requires truth-in-funding disclosures for companies 
with underfunded pension plans so participants and other stakeholders 
can learn the true financial condition of their pension plans, as well 
as the potential loss of benefits if the plan terminates. This is an 
especially important safeguard for workers whose pension benefits 
exceed the PBGC's maximum benefit guarantee limit.
  In order for the PBGC to remain a viable insurance program that 
continues to protect workers and retirees, its current funding gap must 
be closed. Recognizing this, the bill increases PBGC premiums to $30, 
while ensuring that companies whose plans pose the greatest insurance 
risk actually pay the additional premium for that risk.
  S. 1783 would also prohibit companies from funding nonqualified plans 
under certain circumstances, including bankruptcy, significant 
underfunding of regular pension plans, or the termination of an 
underfunded regular pension plan. This is a positive development in 
addressing inequities of what has become a two-tiered pension system. 
Too often, the executives of those companies that default on their 
pension obligations escape with padded executive retirement packages 
while the average worker is left holding the bag. Companies that 
underfund or default on their regular pension obligations should be 
prohibited from funding and paying out benefits from special executive 
pension plans.
  Finally, as new types of defined benefit plans evolve, we must ensure 
that older workers are protected and don't lose the benefits they have 
been promised.
  The Pension Security and Transparency Act makes positive strides 
toward ensuring that workers will receive the full pension benefits 
they have earned. While the bill reflects difficult compromises, it is 
important that we act now to preserve the financial health of defined 
benefit pensions. I urge my colleagues to not stop here. We must 
continue work to improve our pensions system to ensure that Americans 
who work their entire lives have the financial security they deserve 
and worked so hard for when they retire.
  Mr. GREGG. Mr. President, we must get serious as a Congress and a 
nation about across-the-board retirement reform. It is time every 
American worker has a sense of ownership over his or her retirement 
income and the promises that have been made.
  To do so requires valid information about the security of his or her 
future retirement income, and current and relevant information to be 
able to make smart choices when options are available.
  Beneficiaries must be timely notified when their retirement income is 
in jeopardy; workers must be assured that the law doesn't allow and 
even encourage hollow promises. Employers and union leaders should be 
prohibited from offering rank-and-file members benefit increases that 
cannot be paid for, particularly when a company is below investment 
grade.
  The law must place a tangible price on all plan underfunding to limit 
the moral hazard of shifting risk to beneficiaries, the PBGC, and other 
companies paying premiums. Accounting schemes that paper-over massive 
funding shortfalls must be outlawed, and interest rate policies should 
be straightforward to administer and consistent with each plan's 
liability payout schedule.
  Continuing the underlying 30-year-old pension law is not an option. 
It is a law without transparency where union bosses and irresponsible 
management are allowed to go into back rooms and make promises they 
know cannot be kept.
  If we continue the status quo, we will move ever closer to the 
precipice of the slippery slope to a taxpayer bailout of the pension 
insurance system.
  Those who make and then break their promises have now pushed us to 
the edge of a raid on the U.S. Treasury.
  The Budget Committee held a hearing back in June where we heard 
testimony from the Congressional Budget Office, CBO, and the 
administration that confirmed the Nation is already in the midst of a 
retirement crisis. I am not speaking of the crisis in Social Security 
but of private pension plans and the program that insures benefits when 
sponsors default on their promises.
  Since then, the CBO has prepared two additional reports analyzing the 
current state of health of defined benefit pension plans and the 
Pension Benefit Guaranty Corporation the Government insurance agency 
that insures them. Employer groups, think tanks, and the financial 
press have also widely reported on the poor health of America's single 
employer defined benefit pension system. The consensus is indisputable 
that we have a crisis on our hands on our watch if you will.
  The PBGC already has a serious deficit and a cash crisis looming with 
a clock that will toll 20 or 30 years sooner than what we expect in the 
Social Security system. While many criticized the PBGC over the last 
year as being overly pessimistic in projecting a $23 billion deficit, 
we learned just yesterday with their year end reporting that not only 
was the PBGC surprisingly accurate--posting a deficit of $22.8 billion, 
if recent events that occurred right after the end of the fiscal year 
had been included, the deficit in the single-employer program would 
have been posted at $25.7 billion--a 10 percent increase.
  Furthermore, because accounting standards require the PBGC to 
disclose

[[Page 26099]]

additional information on the change in its net position, we learned 
that PBGC's exposure to losses from plans sponsored by weak employers 
has risen to $108 billion from $96 billion just a year ago--that is an 
increase of 13 percent in a year when sponsors would have had us 
believe things are not as bad as they seem.
  Just last year, there were 120 defaults requiring the PBGC to assume 
responsibility for pension benefits of an additional 232,000 workers 
and retirees. In just 3 short years, the PBGC has taken on more 
workers' retirement responsibilities than the previous 27 years 
combined.
  We are obviously in a crisis and something must be done. 
Unfortunately, the bill before us today is only a very modest and 
incomplete step toward addressing the issue.
  With regard to the PBGC's health, modification to premium levels fall 
$1.7 billion short over 5 years from what was reported just last month 
by the HELP Committee in meeting its budget reconciliation instruction, 
comparatively lowering the level of resources available to the PBGC to 
take on the responsibilities of plan defaults.
  With regard to the health of pension plans themselves, the 
administration has analyzed the funding rules in the bill and reports 
that its provisions do not improve the underlying funding requirements 
for plan sponsors over current law.
  With regard to innovative retirement programs offered by employers, I 
continue to have serious reservations about the measure before us today 
and its failure to provide comprehensive clarification of the law 
applicable to cash balance and hybrid pension plans.
  The Congress should be able to enact legislation stating 
unequivocally that providing interest on employees' pensions is an 
important benefit protection and is not and never has been age 
discriminatory, and that Federal law does not and never has required 
any type of pension plan to pay out lump sum benefits that are much 
larger for younger employees than for identically situated older 
employees.
  At best, the bill half heartedly recognizes these principles only as 
to the future and then only subject to numerous qualifications and 
benefit mandates--apparently trying to dance around the concerns of 
some who would try to repeal laws of mathematics, specifically the 
effect of compound interest.
  The failure to acknowledge the legitimate status of plans already in 
place leaves companies that provided generous pension benefits to their 
employees, many of them with favorable determination letters from the 
IRS, facing hundred of billions of dollars in potential liabilities and 
continues a legal landscape for frivolous lawsuits and attempts by the 
plaintiff bar to extract unreasonable settlement agreements.
  The numerous qualifications and benefit mandates in the bill applying 
to hybrid plans are more likely to discourage employers from continuing 
innovative pension plans. Indeed, the only parties that clearly benefit 
from these provisions as currently drafted are trial lawyers who will 
gladly file frivolous lawsuits and extract settlement agreements with 
no basis in underlying Federal law.
  On the plus, side, the bill does improve transparency and more-timely 
notification to participants regarding their retirement plan's health--
a significant step in moving toward making more information public and 
allowing the marketplace to more reliably take into account funding 
decisions of plan sponsors.
  Fortunately PBGC payments are generally not made on a lump sum basis 
unlike withdrawals on a savings & loan. Nevertheless, the pension 
insurance fund will first run short on cash in just under 5 years. It 
will take roughly another 15 years to liquidate its remaining assets to 
pay claims but then all its resources are gone.
  If Congress allows shortcomings in current law to remain, more 
defined benefit pension plan terminations will happen, and millions of 
workers will receive only a fraction of the retirement they were 
promised.
  Consider that in 1986 there were over 170,000 defined benefit pension 
plans. That number has dropped to roughly 56,000. Just since 1999, 
7,500 defined benefit plans were terminated--a drop of 19 percent in 
just 3 years. Continuing a broken system and the uncertainty about 
promising opportunities to preserve creative defined benefit approaches 
to retirement plans such as cash balance plans will only increase this 
trend.
  Specifically, absent stronger funding rules, clarifying the 
legitimacy of innovative plans, improved transparency and increased 
premiums, employers will have little incentive to restore faltering 
pension plans to financial stability, and the PBGC deficit will 
continue to grow, posing an ever greater risk that taxpayers will be 
asked to step in and bail out the private defined benefit system long 
before social security goes in the red.
  To be very clear, we are very close to the slippery slope of no 
return from a default crisis of a magnitude that cannot be handled 
alone by premium increases on employers to shore up the PBGC.
  I am disappointed that the measure we have before us today does not 
solve the defined benefit pension crisis and at best only postpones a 
political fight about the advisability of a taxpayer bailout of pension 
promises made by American companies to American workers. But we must 
move the legislative process forward.
  If Congress doesn't act, the PBGC will need to charge even higher 
premiums for companies that remain in the system, significant economic 
losses affecting beneficiaries and investors will result, and pressure 
for a taxpayer bailout will be seen as a commonplace solution to the 
crisis, resulting in the likely demise of defined benefit pension plans 
altogether.
  While I commend the chairman and ranking member for a significant 
amount of hard work and progress on these challenging issues, there are 
still important areas that I believe require a great deal of work. I 
strongly encourage the chairman to ensure that the shortcomings in this 
bill that I have identified today be corrected as it moves through the 
remainder of the legislative process.
  An incomplete fix to these issues will have a devastating effect on 
companies, current workers, and retirees. I understand that this bill 
is a work in progress and my concerns will continue to be addressed as 
this legislation proceeds through the legislative process. For the 
retirement security of millions of American workers and taxpayers, I 
hope so.
  Mr. KERRY. Mr. President, today we are debating the Pension Security 
and Transparency Act of 2005 which is the culmination of the efforts of 
the Finance Committee and Health, Education, Labor, and Pensions 
Committee to improve the funding of both single and multiemployer 
defined benefit plans. I commend Senators Grassley, Baucus, Enzi, and 
Kennedy for their efforts in reaching bipartisan compromise 
legislation. We all agree that defined benefit plans are underfunded 
and that this issue needs to be addressed.
  At the end of fiscal year 2005, the Pension Benefit Guarantee 
Corporation had $22.8 billion in underfunding in its single employer 
program. The PBGC's liabilities for fiscal year 2006 are expected to be 
much higher. If other liabilities that the PBGC assumed after the end 
of the fiscal year were counted, the 2005 deficit would have been $25.7 
billion.
  We cannot allow the underfunding of pensions to continue. This 
legislation takes the right approach by striking the appropriate 
balance. We want to protect employees, but we do not want to make 
defined benefit plans so restrictive that employers will not offer 
them.
  The focus of the Pension Security and Transparency Act is to improve 
the funding of pension plans and to provide more disclosure, but this 
legislation does address other important pension issues. The Senate 
Finance Committee has reported out pension legislation in past 
Congresses that was not addressed by the full Senate. The first 
reiteration of Senate Finance pension legislation focused on defined 
contribution issues that arose in light of the collapse of Enron. Along 
with Senator Snowe, I introduced legislation

[[Page 26100]]

which strengthened defined contribution plans by requiring 
diversification and disclosure. Many of the provisions from this bill 
were incorporated into the Finance bill.
  Even though the collapse of Enron is behind us, the lessons learned 
remain. It is important for defined contribution plans to be required 
to allow workers to diversify their contributions out of employer 
stock. The rank and file employees of Enron do not want anyone else to 
have the same experience that they had. These provisions are overdue.
  Other lessons can be learned from the Enron debacle. Back in 2001, we 
were all repulsed by the stories of corporate greed and how executives 
crafted elaborate schemes to falsify the true financial status of the 
companies. Enron reminded us about the problems with excessive 
executive compensation.
  Unfortunately, excessive executive compensation remains an issue 
today. Due to the work of the Finance Committee on executive 
compensation an end has been put to some abusive practices, but some 
still remain. One in particular that I find troubling is the funding of 
nonqualified deferred executive compensation prior to the funding of 
the corporation's pension plan.
  In recent years, a number of large companies set aside millions of 
dollars to fund the pensions of top executives, but they do not bother 
to fund their pension plans. Companies that chose to do this were not 
violating laws by doing so, but this legislation will change this. 
Under this legislation, for the first time the funding of nonqualified 
deferred executive compensation will be linked to the funding of 
pension plans.
  Executives of financially weak companies will no longer be able to 
take care of themselves. We repeatedly hear about executives that 
negotiate deferred compensation to ensure that they have a lucrative 
nest egg, even if the company is struggling or about to go bankrupt. We 
cannot stand for this any longer.
  This legislation includes a provision which I worked to have included 
in the Finance Committee bill. Financially weak companies will no 
longer be able to fund executive compensation unless their pension plan 
is 80 percent funded. Initially, the Finance Committee restricted the 
funding of deferred executive compensation for companies with plans 
that are funded at 60 percent or less. I thought 60 percent was too low 
because a plan is already in trouble at this point. In addition, no 
benefit increases will be allowed if a plan is funded at 80 percent or 
less. There is no valid reason why deferred executive compensation 
should be funded if a pension plan is funded at a level at which 
benefit increases are restricted.
  Employers have a responsibility to fund pension plans. They should 
not make promises to their employees and fail to keep them, while they 
are taking care of their own retirement.
  The bill before us today does the right thing by restricting the 
funding of deferred executive compensation for financially weak 
companies that have pension plans funded at 80 percent or less and for 
all companies that have pension plans funded at 60 percent or less.
  In June, the PGBC released data on the underfunding of pension plans 
with more than $50 million in unfunded pension liabilities. This data 
shows that these plans have an average underfunded ratio of 69 percent. 
Back in 2000, the average funding ratio was 82.8 percent.
  While pension funding has been on the decline, deferred executive 
compensation is increasing. We need to send a message to corporate 
executives that they need to fund the pension plans of their workers 
before they reward themselves with extremely generous benefits for 
life. I see this not as punitive, but as meeting our responsibility to 
demand better performance from the executives who can do the most to 
put pension funding on track. Ultimately, this proposal will protect 
the taxpayer.
  The Pension Security and Transparency Act of 2005 includes provisions 
which make slight modifications to the funding rules for interstate bus 
companies. I worked to have these provisions included in the Finance 
Committee bill. These provisions address a unique situation in which 
the average age of the participant of the plan is much older than 
participants in other plans. Congress has addressed this issue before 
on a temporary basis and the provision in the chairman's modifications 
would make this relief permanent. It will help retirees in my home 
state of Massachusetts, and it is an equitable outcome.
  Not only does this legislation address single employer plans, it 
strengthens multiemployer plans. The Pension Security and Transparency 
Act of 2005 includes important provisions which strengthen the funding 
rules for multiemployer pension plans. Multiemployer pension plans play 
a vital role in our pension system. Multiemployer pension plans are 
collectively bargained arrangements between a labor union and a group 
of employers in a particular trade or industry. These plans provide a 
way for workers in industries where job changes are frequent to save 
for retirement. Pension coverage continues when an employee changes 
jobs if the new employer is with a participating employer.
  The Pension Security and Transparency Act would require troubled 
plans to improve their finance condition and severely underfunded 
pension plans would be required to adopt a ten-year rehabilitation 
plan. This legislation requires the Secretary of the Treasury, and the 
Executive Director of the Pension Benefit Guaranty Corporation to issue 
a study on the state of multiemployer funding in five years.
  I proposed an amendment which was added to the bill. This provision 
requires the study to look at the effects that the new funding rules 
have on small employers and other issues that they face, including the 
impact of withdrawal liability. Employers that wish to discontinue 
their cosponsorship of a multi employer plan are required to pay a 
withdrawl liability, which represents the sponsors' pro rata share of 
the plan's underfunded liabilities.
  Recently, I heard from a small business owner in Massachusetts who 
contributes to a multiemployer plan and he explained how his withdrawal 
liability has increased rapidly over the last five years. Some of this 
is due to corrections in the stock market, but part of it is due to a 
decrease in companies paying into plans. This small business described 
withdrawal liability as a ``vicious death spiral''--as more companies 
go out of business or otherwise withdraw from the pension fund, 
withdrawal for the remaining employers rise.
  This provision would require the impact of withdrawal liability on 
the financial status of small employers to be studied. In addition, the 
study would look at the role of the multi employer pension plan system 
in helping small employers to offer pension benefits.
  The multiemployer pension system serves an important role in our 
pension system and we do not want to make these plans a burden for 
small businesses. If withdrawal liability continues its vicious spiral, 
it will be difficult for multi employer plans to attract new employers 
and existing employers could be faced with a situation in which their 
withdrawal liability exceeds their assets.
  In addition, the Pension Security and Transparency Act would 
incorporate provisions from the Save More for Retirement Act of 2005 
which I have cosponsored. These provisions will encourage workers to 
participate in retirement plans by providing innovative incentives for 
employers to modify their existing plans to add provisions that will 
increase savings. Employers will be able to automatically enroll their 
employees in 401(k)s upon being hired unless the employee notifies the 
employer that he or she does not want to participate. Studies have 
shown that this simple change will dramatically increase participation 
rates. This is a simple improvement that should increase our 
drastically low national savings rate.
  We might not all agree with every single provision in this bill, but 
overall it reflects a balanced approach to a problem that needs to be 
addressed. Plans need to be adequately funded. The rules cannot be 
draconian and lead

[[Page 26101]]

to the termination of pension plans by employers.
  Pensions are a central part of our retirement system and we need to 
ensure continued participation by employers. Retirement is based on 
three components: personal savings, employer provided pensions, and 
Social Security. All three components are necessary for a sound 
retirement system that is able to provide for most of America's retired 
workers.
  Our current pension laws are inadequate. Employers have not properly 
funded their pension plans, workers have been promised more than their 
pension plans can possibly 3 deliver, and the PBGC can not be expected 
to cover the difference. At the same time, the financial burden of 
employer-provided pensions is real, and it threatens some of our major 
companies and the jobs they provide today.
  This issue is not going away. The PBGC estimates that its shortfall 
could approach $100 billion dollars based on the underfunding of plans 
which have been classified as reasonably possible of termination.
  We should avoid a subsidy or bailout with general revenues. The PBGC 
operates with no taxpayer assistance today and it was designed to be 
financially independent of the Federal Government. We should maintain 
that.
  Passing the Pension Security and Transparency Act of 2005 is a step 
in the right direction to preserving our defined benefit pension 
system.
  Mr. ROBERTS. Mr. President, I commend my colleagues on both sides of 
the aisle for crafting this comprehensive pension reform measure to 
strengthen the defined benefit pension system and ensure the solvency 
of the Pension Benefit Guaranty Corporation.
  One provision that I am pleased we were able to find bipartisan 
agreement on and include in S. 1783 is language that recognizes the 
special nature of multiple-employer defined benefit plans. These 
multiple-employer plans are sponsored by rural electric, rural 
telephone, and agriculture-related cooperatives. Nationwide, more than 
1,700 cooperatives participate in a multiple-employer plan, providing 
benefits for over 109,000 workers and retirees. In Kansas, more than 
160 cooperatives will benefit from the multiple-employer provisions in 
this bill.
  These cooperatives are not-for-profit, and provide at-cost services 
to their consumer owners. Multiple-employer defined benefit plans allow 
cooperatives to pool experience and expenses by maintaining a single 
plan as opposed to single-employer defined benefit plans that cover 
just one company's employees.
  For companies that sponsor a single-employer plan, if that company 
goes out of business, the pension plan terminates, and if underfunded, 
creates risk to the PBGC. Multiple-employer cooperative plans are 
different because the pension plan continues to operate even if some 
cooperatives go out of business. Most importantly, no liabilities shift 
to the PBGC. These cooperative plans are ongoing plans that can outlive 
many of their participating employers, and are treated as such under 
this bill.
  The Health, Education, Labor and Pensions Committee, of which I am a 
member, and the Finance Committee, both recognized the special nature 
of multiple-employer plans, and their lack of risk to the PBGC, in 
their respective pension bills. During consideration of the HELP 
Committee's pension bill, the Defined Benefit Security Act, an 
amendment I offered to clarify the treatment of multiple-employer 
cooperatives was approved by unanimous consent. The Finance Committee 
adopted a different approach to recognize the unique nature of 
multiple-employer plans.
  As the committees worked to bring a bill to the Senate floor, I, 
along with several of my colleagues, shared our concerns about the need 
to include multiple-employer cooperative language in a final bill in a 
letter to the chairmen and ranking members of the HELP and Finance 
Committees.
  While different from the provisions of both the HELP and Finance 
Committee bills, the multiple-employer provisions in S. 1783 achieve 
their goal. S. 1783 provides a 10-year delayed effective date for these 
rural cooperative plans, continues to exempt these plans from the 
bill's at-risk rules, and provides special funding and premium rules 
during this 10-year period. With regard to funding, these plans will 
use the four year weighted average of the third segment rate of the 
corporate bond yield curve created in this bill. For purposes of the 
premium rules, these plans will use a spot version of the third segment 
rate.
  Mr. President, I urge the inclusion of the multiple-employer rural 
cooperative provisions contained in S. 1783 when a final pension reform 
bill is sent to the President for his signature. These provisions have 
bipartisan support, recognize the special nature of rural cooperatives, 
and provide an important benefit for over 109,000 employees and 
retirees across the country.
  I ask unanimous consent to print the letter to which I referred in 
the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                                  U.S. Senate,

                               Washington, DC, September 23, 2005.
     Hon. Michael B. Enzi, Chairman,
     Hon. Edward M. Kennedy, Ranking Member,
     Committee on Health, Education, Labor, and Pensions, Russell 
         Senate Office Building, Washington, DC.
     Hon. Charles Grassley, Chairman,
     Hon. Max Baucus, Ranking Member,
     Committee on Finance, Dirksen Senate Office Building, 
         Washington, DC.
       Dear Chairman Enzi, Chairman Grassley, Senator Kennedy and 
     Senator Baucus: We write to urge you to continue recognizing 
     the special nature of rural cooperative ``multiple-employer'' 
     defined benefit plans sponsored by the National Rural 
     Electric Cooperative Association, the National 
     Telecommunications Cooperative Association and the United 
     Benefits Group (agriculture-related cooperatives), as you 
     work toward an agreement on comprehensive pension reform. By 
     design, these rural cooperative plans are different because 
     they would continue to operate even if some cooperatives go 
     out of business. Most importantly, no liabilities shift to 
     the Pension Benefit Guarantee Corporation (PBGC).
       Both the Health, Education, Labor and Pensions Committee 
     and the Finance Committee have recognized the special nature 
     of ``multiple-employer'' defined benefit plans of these rural 
     cooperatives. We believe that any bill sent to the floor for 
     consideration should include both Committees' provisions.
       These rural cooperatives are not-for-profit, and provide 
     at-cost services to their consumer-owners. Their defined-
     benefit plans permit them to pool experience and expenses by 
     maintaining a single plan for hundreds of employers, as 
     opposed to single-employer plans that cover only one 
     company's employees. We have concerns that unless these 
     specific cooperative provisions are included, these entities 
     may be forced to either reduce benefits to their employees or 
     pass along substantially increased costs to their member-
     owners.
       For companies that sponsor a single-employer plan, if that 
     company goes out of business, the pension plan terminates, 
     and if underfunded, creates risk to the PBGC. Again, these 
     rural cooperative plans are different because the pension 
     plan continues to operate even if some were to go out of 
     business, and no liabilities shift to the PBGC. In fact, none 
     of the liabilities of these rural cooperative ``multiple-
     employer'' plans have ever been shifted to the PBGC.
       These rural cooperative plans are ongoing plans that can 
     outlive many of their participating employers, and they 
     should be treated as such under any bill that goes to the 
     floor. Again, we urge you to include both Committees' 
     provisions in any bill sent to the floor to recognize the 
     special nature of rural cooperative plans, their ongoing 
     nature, and their lack of risk to the PBGC.
       Thank you for your consideration of this request.
           Sincerely,
         Pat Roberts, Lamar Alexander, Johnny Isakson, Gordon 
           Smith, Craig Thomas, Tom Harkin, Jeff Bingaman, Ron 
           Wyden, Tim Johnson, John Thune.

  Mr. LEVIN. Mr. President, the issues addressed in this pension bill 
are complex. We are treading into a swamp of technical terms and 
complicated plans. But the core issues are simple matters of fairness. 
Will retirees receive the benefits they were promised? And will the 
companies who are trying to do

[[Page 26102]]

right by their workers be encouraged rather than unfairly penalized?
  About half of all private sector workers participate in one of two 
general types of employer-sponsored retirement plans: a defined-
contribution plan or a defined-benefit plan.
  Defined-contribution plans, such as a 401(k) plan, are much like 
individual savings accounts into which employers and employees 
contribute. These funds are then usually invested into stocks and bonds 
with the hope that the investment will grow as the worker approaches 
retirement. When the worker does retire, the balance of the account is 
available for him or her to withdraw.
  Defined-benefit pensions, by contrast, guarantee an employee a 
certain amount of retirement benefits, typically based on years of 
service and salary level. To pay these promised benefits, the employer 
sets aside money in a combined pension fund, which is then invested. 
The employer decides how that fund is invested and retains control over 
the funds until dispersed to the retirees.
  It is this second category, defined-benefit pensions, that are facing 
a crisis today. Due to swings in the stock market, complex funding 
rules, changes in the business climate, or unforeseen developments, 
companies' defined-benefit pension plans are underfunded. Some 
companies have declared bankruptcy to get out of their pension 
obligations, and there is reason to worry that this disturbing trend 
will continue.
  When a company sloughs off its pension obligations in bankruptcy, the 
Federal pension insurance agency, the Pension Benefit Guaranty 
Corporation PBGC, steps in to ensure retirees receive benefits, up to a 
maximum of about $46,000 per year for employees who retire at age 65. 
The PBGC is self-funded through insurance premiums and fees paid by 
companies with defined-benefit plans. With the PBGC taking on more 
companies' pension obligations, however, there is less money coming 
into the PBGC and more money going out. The PBGC announced just 
yesterday that it is running a deficit of $22.8 billion.
  Ultimately, if the long-term health of the PBGC continues to decline, 
many people are concerned that only a taxpayer-financed bailout would 
allow retirees to receive the benefits they were promised.
  We need to strengthen the defined-benefit system so that that does 
not happen. We must encourage the recovery, rather than the 
termination, of underfunded and vulnerable pension plans. If we can 
shore up these plans without doing undue harm to the companies, the 
concerns about PBGC's fiscal problems will be addressed.
  To do so, companies should be required to adequately back up the 
promises they have made to their workers. And changes in Federal 
pension policy should help them. For example, we need to reduce 
uncertainties for employers making a good faith effort to meet their 
obligations. We also need to ensure that we do not give incentives to 
employers who offer hybrid pension plans to either jettison their 
retirement plans entirely or offer only defined-contribution plans.
  In this way, I believe it is possible to improve retirement security 
while also reducing the long-term exposure of the PBGC.
  However, I have serious concerns that the bill before us today will 
do some significant harm in the effort to do positive things.
  One provision of particular concern would require the pension plans 
of companies with plans that are less than 93 percent funded who also 
have declining credit ratings to be considered ``at-risk.'' Once 
considered ``at- risk,'' companies must use different actuarial 
assumptions that require them to sock away significantly more money 
into their pension trusts. That provision alone could require companies 
to put unnecessarily high amounts of additional dollars into their 
pension plans. These are dollars that could otherwise be used to boost 
research and development or doing other activities that could create 
jobs.
  Another provision of concern deals with an actuarial method known as 
``smoothing.'' Under current law, how much money companies have to put 
into their plans is determined by using a 4-year weighted average of 
the values of pension assets and/or liabilities. It is generally 
recognized that 4-year smoothing has led plans to become underfunded by 
masking the diminished current fair market value of a plan's assets.
  The original bill from the Health, Education, Labor, and Pensions 
Committee would have shortened smoothing to 3 years. The House Ways and 
Means Committee and House Education and Workforce Committee bills also 
allow 3 years. The HELP/Finance Committee compromise, however, takes a 
12-month average. Three years is a fair approach that would tighten 
current law but still allow some necessary cushion against volatility 
for employers; twelve months would significantly increase the 
volatility and unpredictability for employers. This shorter time frame 
would unwisely add significant volatility for companies when they are 
determining how much money they need to set aside for the pension 
plans.
  For months, Senators Mikulski and DeWine have been urging an 
amendment that would have addressed these two problems. The amendment 
they wanted to offer, which I co-sponsored, would have adopted the HELP 
Committee's 3-year position on smoothing. Their amendment also would 
have replaced the use of credit ratings in determining whether a 
company has to abide by ``at-risk'' funding requirements and would 
instead measure ``at-risk'' by how well-funded the pension plan is.
  I am disappointed that we were not able to vote on the DeWine-
Mikulski amendment. I am hopeful, however, that these problems with the 
Senate bill will be adequately addressed in conference. I hope the 
conferees will come back with what the House committees adopted on 
those issues.
  I am also concerned about the overall effect that the bill will have 
on the defined-benefit plan system. Some of the actuarial changes that 
may be appropriate on their own may become problematic when packaged 
together. The changes required by this bill would require companies to 
fund their long-term pension obligations somewhat too quickly, and 
would make the amounts of their required contributions fluctuate 
unpredictably. The short-term financial impact might push companies 
with underfunded plans to terminate the plans, rather than working to 
bring their funding levels up. A survey of chief investment officers 
for large pension plans found that 60 percent thought significant and 
rapid changes, such as those in the House or Senate bills, would lead 
to benefit reductions or plan termination.
  I also hope that in the final conference report the Senate's position 
on credit balances prevails over the unwise House provision. The House 
bill would penalize companies that prefunded their plans, by making 
additional, non-required contributions, to subtract these prefunded 
amounts from the calculations of their plans' assets. This change would 
trigger unfair financial penalties for the companies and would deter 
future prefunding, which we should encourage, not discourage.
  On a positive note, I am pleased that this bill will give airlines 
extra time to fund their plans. In the wake of Northwest and Delta 
airlines declaring bankruptcy, Congress must help companies do the 
right thing and keep their plans when they emerge from bankruptcy, 
rather than turning their obligations over to the PBGC.
  Also, I am pleased that Senator Stabenow's work to address problems 
with the multiemployer pension plan system is reflected in this bill. 
These multiemployer plans provide millions of employees of small firms 
with the opportunity to be covered by a defined benefit plan.
  Finally, I am pleased that this bill protects older workers in cash 
balance plan conversions, and that it gives guidance regarding some of 
the uncertainties surrounding hybrid plans. Legal questions surrounding 
hybrids like cash balance and pension equity plans should not stand in 
the way of companies offering the best pension plans that they can.

[[Page 26103]]

  Pension reform is a critical issue for Michigan. Michigan's 
manufacturing workers have always planned for the future by forgoing 
some short-term wages in order to provide for themselves and their 
families when they are no longer working. Likewise, those in other 
industries, including employees of Northwest Airlines, also rely on 
defined-benefit pension plans.
  The retirement security of Michigan workers and workers across the 
country would be significantly weakened if we drive guaranteed benefit 
pension plans out of business, and that is what I am concerned that 
this bill could do. I will vote no on this bill, because on balance it 
does not ensure that companies striving to do the right thing are not 
unfairly penalized and because workers in those companies must also 
receive the retirement benefits they were promised. I truly hope the 
final bill reported by the conference committee will repair the defects 
I have identified.
  Mr. ENZI. Mr. President, the calculation of lump sum distributions 
has been hotly debated. Some have been worried that the bill would 
shortchange participants in their lump-sum distributions. That is not 
the case. In fact, this bill has been very careful to avoid the 
problems that occurred after the enactment of the pension reforms on 
the GATT in 1994.
  Under S. 1783, it is intended that plans may use different 
assumptions--that is, interest rates and or mortality tables--to 
determine lump sum distribution amounts so long as the plan provides 
that a participant's lump sum distribution amount is no less than the 
present value determined in accordance with the requirements of the 
bill.
  Mr. BURR. Mr. President, I rise today to speak on the pension reform 
legislation we have been working on for months. Many have said that the 
policy goal of any major reform to the current pension system is to 
ensure that the defined benefit system remains a viable option for 
companies and that employers keep the retirement promises they have 
made to their employees. In these discussions, one often hears about 
the proposed new rules and mandates concerning funding rules or asset 
and liability valuations. Given that the pension statute has not 
received a major overhaul since the 1970s, new rules are certainly 
necessary to ensure that past and present employees and the American 
taxpayer are protected from financial loss.
  Nevertheless, what is often left unsaid in our discussions is the 
fact that the defined benefit system is a voluntary, not a mandatory, 
system. While rules and mandates exist for companies that choose to 
participate in the defined benefit system, no such rules or mandates 
exist requiring companies to participate. Thus, if strengthening the 
defined benefit system is the basic premise behind this proposed 
legislation, it is critical that we ask ourselves if the proposed rules 
and mandates might have the unintended consequence of driving companies 
out of the voluntary defined benefit system once and for all.
  Alternatives to the voluntary defined benefit system do exist. For 
many companies and employees, they are good alternatives, such as the 
defined contribution system and its 401(k)s. However, the personal 
savings rate of Americans remains one of the lowest among the 
industrialized nations, and the average balances in 401(k) accounts are 
quite modest. There is no question that without defined benefit plans, 
fewer Americans would be able to retire comfortably. Further, the 
disappearance of defined benefit plans, including hybrid defined 
benefit plans, could very well result in increased pressure on Federal 
entitlement and income maintenance programs, not to mention an increase 
in old-age poverty.
  Given these troubling facts, the value of defined benefit plans to 
many American families is clear. Sadly, we have seen a decline in 
defined benefit plan sponsorship, and these are perilous times for the 
defined benefit system. Employers are leaving the system for many 
reasons. Among these are uncertainty about how future pension 
liabilities will be measured, new pension funding rules that are 
complicated and unpredictable, the worry over new and more onerous 
pension funding and premium requirements, upcoming changes to the 
pension accounting rules, and, of course, legal questions regarding 
hybrid pension plans.
  I appreciate the efforts of my Senate colleagues to craft meaningful 
defined benefit pension reform legislation. The proposed legislation, 
however, will have the unintended consequence of driving away company 
after company from the defined benefit system and further exacerbate 
the looming deficit of the Pension Benefit Guarantee Corporation, PBGC, 
thereby passing an unnecessary financial risk on to the American 
taxpayer. Rather than strengthening the defined benefit system, this 
proposed legislation contains elements that could negatively affect the 
retirement security of the current 44 million participants in defined 
benefit plans. Further, workers coming behind them are at risk if the 
legislation is not done in a way that encourages plan sponsors to stay 
in the voluntary defined benefit plan system. I wish to highlight a few 
of the provisions contained in the proposed legislation I believe will 
lead employers to opt out of the voluntary defined benefit system.
  To plan business investment and operations, employers must be able to 
anticipate required pension contributions several years into the 
future. Required contributions cannot be too volatile; otherwise, they 
will be too difficult to accommodate in cash flow operations of the 
business. To determine the amount of money an employer must contribute 
to its pension plan, assets in the plan are compared to the liabilities 
of the plan. Under the bill, plans would determine the amount of their 
funding liability using an interest rate averaged over only a 12-month 
period and asset values also averaged over just a 12-month period. This 
will make it very difficult for businesses to plan and will force them 
to set aside assets in the event they are needed for liabilities due to 
spikes in interest rates. The alternative is to force companies to 
shift assets out of the equity markets and into fixed income markets 
which could hike costs and discourage plan sponsorship. This is bad 
policy.
  The proposed legislation also sets a new target liability--100 
percent of liabilities promised under the plan. This is a significant 
increase from the current law target--90 percent. If companies must 
meet this new target too quickly, sharp upticks in contributions may be 
required for many companies that are currently considered well-funded. 
Because the new interest rates will adjust liabilities for some 
companies, companies that are currently at their maximum funding level 
could be facing very large contributions. Since obligations are due 
over a very long period in many instances, these contributions will be 
unnecessary. Pensions could be frozen, other benefits could be frozen, 
costs of goods and services could increase, and jobs could be lost as a 
result. The 3-year phase-in of the new target is insufficient to avoid 
harmful consequences to American workers and the economy.
  Another very troubling provision of the proposed legislation relates 
to credit ratings. A company's credit rating, determined by private 
ratings agencies and not the Federal Government, should not determine a 
pension plan's liability. The credit rating of a company does not 
determine the funded status of a plan. A company can have a below 
investment grade credit rating and pose absolutely no risk to the PBGC. 
It serves no policy goal to impose new liabilities on a company because 
it is financially weak. That will simply make it more difficult for a 
company to recover, leading to potentially lower credit ratings, and 
could result in death-spirals and plan terminations that the 
legislation seeks to avoid. Furthermore, the credit rating provision 
would introduce a whole new concept--credit rating of private companies 
by the Government. If an at-risk liability is to be imposed, it should 
be based solely on the funded status of the plan.
  A final concern I wish to raise relates to one of the most urgent 
crises in retirement security--clarifying the outstanding issues 
regarding hybrid pension plans. Hybrid defined benefit pension plans 
such as cash balance and

[[Page 26104]]

pension equity plans were developed to meet the needs of our highly 
mobile workforce by combining the features of both traditional defined 
benefit plans and defined contribution plans, such as 401(k) and other 
individual account plans. Traditional defined benefit plans are most 
effective for employees with long careers with only one employer. Yet, 
according to the Bureau of Labor Statistics, very few employees are 
spending a full career with just one company. Today's workers need a 
pension benefit that is portable and that will produce meaningful 
benefits, even if they don't stay with one employer for their entire 
career. In light of these facts, nearly 30 percent of the Nation's 
largest companies with defined benefit plans have moved to a cash 
balance or other hybrid plan design. As of 2003, the PBGC reported that 
there are estimated to be between 1,200 and 1,500 of these plans 
providing benefits to around 8 million Americans and their families.
  Employees know that cash balance and other hybrid plans contain many 
of the positive features of traditional defined benefit plans such as 
the safety of an employer-funded, PBGC-insured benefit where the 
company bears the risk of the investment, while at the same time 
providing defined contribution plan features such as individual account 
balances, portability, and a more even benefit accrual pattern. Many 
people who criticize hybrid plans do not realize that they are defined 
benefit plans, and as such, they provide a tremendous benefit to 
Americans, helping them achieve better retirement security.
  Hybrid plans also provide greater benefits than traditional pensions 
for the majority of employees. This is because hybrid plans accrue 
benefits ratably, rather than toward the end of a long career, which is 
typical in a traditional pension plan design. For the minority of 
workers for whom a conversion from a traditional defined benefit plan 
to a hybrid plan design may result in future benefits that could be 
less generous than under the old plan, employers have employed a 
variety of transition assistance techniques to boost their benefit 
formulas. And of course, benefits earned by employees for service they 
have already put in are fully protected under the law.
  Despite the value that hybrid plans provide to workers, current legal 
risks threaten their continued existence. One court case has placed all 
hybrid pension plans, both cash balance and pension equity plans, into 
doubt. Three other courts have found to the contrary, that hybrid 
pension plans do not violate the age act and are permissible under law. 
Yet it is this one single decision on which opponents of the hybrid 
pension plan hang their arguments. To preserve the retirement security 
of millions of Americans, it is essential that Congress comprehensively 
clarify for existing and future plans that the design of hybrid plans 
is not age discriminatory.
  In Cooper v. IBM, 274 F. Supp. 2d 1010, S.D. Ill. 2003--a District 
Court judge held, in the face of legal authority to the contrary, that 
cash balance and pension equity plans are age discriminatory. This 
decision was based on the fact that younger workers have more time to 
earn compound interest on their pension benefit than older workers. 
Compound interest is a feature of all defined contribution plans and of 
all savings plans. The logic behind declaring compound interest age 
discriminatory in defined benefit plans is seriously faulty and would 
nullify many longstanding defined benefit pension plan designs, 
including contributory defined benefit plans common in the Federal, 
State, and local government sectors.
  As a result of the Cooper decision, every hybrid pension plan sponsor 
today finds itself in potential financial and legal jeopardy. It is a 
pity that we have come to this state. I say this because policymakers 
should be working to create an environment that promotes hybrid plans--
not subjects them to greater risk. I had hoped that Congress would have 
responded to the Cooper case by providing legislative certainty and 
clarity for hybrid pension plans, both retrospectively and 
prospectively, to prevent widespread abandonment of these programs by 
employers.
  I do not want my colleagues to think that I have not heard the 
critics of hybrid plans. I have. However, I believe that the majority 
of the criticisms of the plans are unfair. Let me review some of these 
criticisms and rebut them.
  Some critics of hybrid plans have claimed that the plans are 
discriminatory on the basis of age. It is true that there has been one 
single court case that found that compound interest is age 
discriminatory in the hybrid plan context. As I said, three other 
courts have found to the contrary, yet critics give credence to this 
odd case. Hybrid plans provide the same or greater wage and interest 
credits for older participants than for young participants. Because 
older workers under these plans are treated the same as or better than 
similarly situated younger workers, the plans cannot possibly be in 
violation of the Age Discrimination in Employment Act, ADEA.
  Others have criticized the ``wear away'' or benefit plateau that 
occurs in some hybrid plans. This has generated numerous questions and 
concerns through the congressional review of the hybrid plan issue. It 
is important to understand that parallel rules in ERISA and the 
Internal Revenue Code protect all benefits that an employee has already 
earned for service, to date. Thus, despite assertions to the contrary, 
existing benefits are not reduced in a hybrid conversion. ``Wear away'' 
is the term used for the benefit plateau effect that some employees can 
experience in conjunction with a cash balance conversion.
  Still others criticize hybrid plan conversions because they 
frequently eliminate an early retirement subsidy, although they do so 
only prospectively. Some have complained about allowing employers to 
eliminate any benefits in their retirement plans. My own feeling is 
that employers must be able to maintain their flexibility to eliminate 
early retirement subsidies, but only on a prospective basis, as is the 
case under current law.
  Early retirement subsidies are a better alternative to layoffs in 
many workplaces and they can help a company to manage its workforce. On 
the other hand, if an employer's right to eliminate early retirement 
subsidies on a prospective basis is not protected, no employer would 
ever adopt such an early retirement program in the first place. It 
makes no sense for employers to encourage highly productive workers to 
take retirement in their fifties by paying a premium for them to leave 
the workforce. While current law protects any subsidy that employees 
have already earned for their service to date, it allows employers to 
remove those incentives from their plans going forward.
  The conclusion that all hybrid plan designs are inherently age 
discriminatory also raises the question why the Internal Revenue 
Service, IRS, issued determination letters for many years specifically 
permitting the hybrid designs and why it issued proposed regulations 
providing that the cash balance plan design is not inherently age 
discriminatory. The Cooper decision completely ignored this regulatory 
history. Of even more interest is that the Cooper decision disregarded 
the legislative history of the pension age discrimination laws adopted 
in 1986. That conference report made it clear that intent of Congress 
was limited to prohibiting the practice of ceasing pension accruals 
once participants reached normal retirement age, i.e. the so-called 
post-65 pension accrual.
  The Cooper decision emboldened cash balance critics to demand an 
appropriations rider that prohibited the Treasury Department from 
finalizing its age regulations addressing hybrid plan designs and 
conversions. At that time, Congress directed the Treasury Department to 
publish a legislative proposal regarding conversions from traditional 
to cash balance plans. In the legislative history, the conference 
report did state that ``[t]he purpose of this prohibition is not to 
call into question the validity of hybrid plan designs (cash balance 
and pension equity). The purpose of the prohibition is

[[Page 26105]]

to preserve the status quo with respect to conversions through the 
entirety of fiscal year 2004 while the applicable committees of 
jurisdiction review the Treasury Department's legislative proposals.''
  While the Cooper case is a rogue decision, there is significant 
authority to the contrary concluding that hybrid plans are age-
appropriate. Unfortunately, the Cooper case has led to what are called 
copycat lawsuits both in the Southern District of Illinois and 
elsewhere in the Nation. The Cooper case has also had a chilling effect 
on the plan sponsor community. Concerns over potential damages from 
these cases are causing CEOs and CFOs to have very sober discussions 
regarding the future of their plans. There seems to be a slow, but 
steady, domino effect of freezing hybrid pension plans as a result of 
concerns over potential liability from fallout of the Cooper case. This 
is occurring despite a general belief that the Cooper case could be 
overturned on appeal. I fear that if Congress fails to bless the hybrid 
pension plan design in short order, these voluntary plans could all 
become frozen.
  If we can conclude that the design of these plans is consistent with 
the ADEA, but the conversions to hybrid plans raise questions, why 
can't we legislate in this area to simply bless the hybrid plan design? 
Clarifying only the legality of prospective plans does not address any 
of these problems; it does nothing to eliminate the potential for 
devastating suits directed at the prior operation of hybrid plans. 
Retroactive legislation is needed because the consequences of inaction 
or prospective-only legislation could be disastrous. If retroactive 
legislation is not adopted and the Cooper case is decided adversely on 
appeal, the liabilities of hybrid plans would triple if companies are 
forced to pay the enormous windfalls created under Cooper. This would 
impose such enormous costs on employers that large numbers of them 
would have no choice but to eliminate future benefits in their defined 
benefit plans. Many companies will not be able to absorb those 
additional liabilities, causing business declines and bankruptcies, as 
well as widespread damage to the economy.
  Many have ignored the taxpayer interest in the outcome of 
retroactivity legislation. As we contemplate the precarious state of 
the PBGC, it is important to consider the potential impact of failing 
to provide retroactive relief on that troubled agency's solvency. 
Conservative estimates of the national liability attributable to the 
Cooper theory of age discrimination are well in excess of $100 billion. 
Many employers would undoubtedly be forced into distress plan 
terminations by this liability, shifting the liability to the PBGC. 
Other employers would simply terminate their plans, resulting in a 
precipitous contraction of the PBGC's premium base. The PBGC reports 
that for 2004, 24.6 percent of the participants in covered single 
employer plans are in hybrid plans; this means that such plans generate 
almost a quarter of the single-employer flat-rate premiums. Both 
developments would make a taxpayer bailout of PBGC far more likely.
  I must also raise an additional issue regarding the hybrid pension 
plan provisions of the bill before us. As you know, it is the cash 
balance pension design that has been at the center of the congressional 
discussion about the need to provide legislative clarity for hybrid 
plans. Yet, another leading variety of hybrid plan, called the pension 
equity plan, is in equal need of congressional attention. In a pension 
equity plan, employers provide credits for each year of employee 
service and these credits are multiplied by an employee's final pay to 
produce a lump sum figure. Typically, the benefit credits given to 
employees increase with age and/or years of service, making this design 
an attractive one for older and long-service workers. Dozens of large 
employers around the country offer pension equity plans, including a 
number of very large employers in my state.
  Pension equity plan sponsors and participants face the same risks and 
are in need of the same legislative clarification as cash balance 
plans--that their basic design is not, in fact, illegal and does, in 
fact, satisfy our age discrimination rules. To achieve this objective, 
the legislative provision clarifying the age discrimination rules for 
hybrid plans must specifically reference pension equity plans in the 
statutory language. The legislation before us does not do this. Rather, 
it leaves the issue of whether pension equity plans receive the same 
beneficial clarification as cash balance plans up to the Treasury 
Department in later administrative guidance. This will simply prolong 
the legal uncertainty that is driving many employers to consider ending 
their pension equity plans altogether. I believe this must be 
remedied--that we must give pension equity plans the same explicit 
statutory treatment as cash balance plans. I hope that, along with 
applying the clarification of the hybrid designs to existing plans 
under current law, we can explicitly address pension equity plans as we 
move toward conference on this pension bill.
  I likewise hope that we can make several other refinements to the 
bill's hybrid provisions so that these provisions more appropriately 
address some of the unique issues surrounding pension equity plans. For 
example, the bill currently has a requirement that hybrid plans pay 
certain minimum interest rates. Yet, unlike in cash balance plans, the 
benefits in pension equity plans grow with pay increases, as 
traditional defined benefit plans do, rather than with interest, so 
this requirement really does not make sense in the pension equity 
context. In addition, conversions to pension equity plans are typically 
handled differently than conversions to cash balance plans, and this 
needs to be acknowledged in the legislation. Finally, just as there are 
unique differences between cash-balance and pension equity hybrid plans 
that we must acknowledge, we must also recognize and support unique 
differences among cash-balance and pension equity plans respectively. 
No two plans are identical, nor should they be. Congress should not be 
so overly prescriptive in the rules for hybrid pension plans that it 
prohibits sponsors from adding unique features that may better serve 
their employees in retirement. I hope that during the conference on 
this bill, for example, we can recognize that there are cash balance 
plans that have returns based on equity indices. Such plans may provide 
returns that do not fall within the interest rate corridor established 
in this bill because their returns may be greater or lesser than 
required under this bill for the plan to be considered a qualified cash 
balance plan. While I do believe it is good policy for these plans to 
have a principal protection feature, to ensure workers are guaranteed 
upon retirement to receive the investment credits they have earned, I 
also believe that we should not discourage plans which provide 
participants the opportunity to receive higher returns that are 
attainable through the equity markets.
  I would like to finish my statement by thanking the chairmen and 
ranking members for their work on the prospective hybrid language. 
While the bill does not address existing plans, serious discussions 
have begun to do so. It is imperative that these discussions continue 
so that we can clarify the validity of the hybrid pension designs, both 
cash-balance and pension equity, under current law.
  Hybrid defined benefit plans play an invaluable role in delivering 
retirement security to millions of Americans and their families. To 
prevent total abandonment of hybrid plans by employers and the 
resulting harm to employees, I hope Congress will quickly provide 
legislative certainty and clarity for existing cash balance and other 
hybrid pension plans such as pension equity plans. Waiting for the 
Cooper case to be resolved on appeal is not the answer; as time goes 
by, more companies are reacting to the current uncertainty and 
potential liability by freezing or terminating their plans. At the same 
time, more and more companies are being dragged into copycat 
litigation. The losers in this terrible failure to act are my 
constituents in North Carolina and workers across America who will lose 
the opportunity to be covered by an employer-provided pension plan. 
Failure to resolve the status

[[Page 26106]]

of hybrid defined benefit plans comprehensively is a betrayal of 
employers who are trying to do the right thing by their employees and 
the millions of workers who are counting on a pension for their 
retirement.
  Mr. LIEBERMAN. Mr. President, I rise to express my support for S. 
1783, the Pension Security and Transparency Act. This bill will make 
much needed reforms to our pension security system. It takes important 
steps to address the deteriorating financial condition of the Pension 
Benefit Guarantee Corporation, PBGC, to ultimately protect the defined 
benefit plans of millions of American workers. My purpose in coming to 
the floor today is to make note of a number of provisions in this bill 
that I believe are particularly important to our system of retirement 
security, and I am pleased that this bill incorporates these 
provisions.
  First, the bill includes measures to encourage companies to implement 
so-called auto-enroll 401(k) plans. In plain English, this will 
accomplish a relatively simple, but tremendously effective change to 
ensure that more Americans are saving for their retirement. Currently, 
under most retirement plans, employees must take affirmative steps to 
join a company's 401(k) plan. Under an automatic enrollment system, new 
employees would automatically be included in an employer's 401(k) plan, 
and would have to take affirmative steps to withdraw from the plan. In 
essence, the choice of whether to participate in a retirement plan is 
still entirely with the worker, however, the default would be 
participation in the plan: workers could ``opt out'', rather than 
having to ``opt in'' to be covered.
  Many studies have indicated that automatic enrollment is remarkably 
effective in raising participation rates among eligible workers, 
particularly for lower income workers. One study, for example, found 
that automatic enrollment increased participation from 13 percent to 80 
percent for workers making under $20,000 a year. The fact is that 
without automatic enrollment, many workers don't take advantage of the 
savings opportunities available through 401(k)s. Sometimes it is 
because of inertia, or because of the more immediate demands of work 
and family, or because the options appear intimidating and confusing. 
The automatic 401(k) is a relatively simple concept that has the power 
to enhance retirement savings for millions of American workers. Earlier 
this year, I joined Senator Bingaman in introducing S. 875, the Save 
More for Retirement Act, to encourage such auto-enrollment plans. Our 
bill also included provisions to encourage plans to add a feature 
whereby employees' contributions would automatically increase each year 
until certain thresholds were met. We sought to address the concern 
that many who do participate in company plans don't take full advantage 
of the savings opportunities and therefore may be ill-prepared for 
retirement. I am pleased that the bill before us includes both the 
automatic enrollment and automatic increase provisions.
  I am also pleased that the bill includes a number of provisions often 
referred to as the ``post-Enron'' measures. We on the Governmental 
Affairs Committee heard devastating testimony of how thousands of Enron 
workers saw their retirements savings plummet over the course of weeks. 
The bill today seeks to address these concerns by ensuring that workers 
do not have all their eggs in one basket. It encourages diversification 
of pension investments from employer stock. It also calls for workers 
and retirees to get regular statements showing the market value of 
pension investments. In addition, it encourages employers to provide 
workers with access to unbiased investment advice as to how to invest 
their pension retirement accounts.
  There are many much needed reforms in this bill to ensure that 
defined benefit plans are adequately funded and that the PBGC remains 
solvent. It is not perfect, but it represents an effective compromise 
on a complex matter. I anticipate that additional modifications will be 
made in conference. I rise here today, however, to make note of these 
particular provisions that I believe will encourage and protect 
retirement savings for millions of Americans.
  Mr. BOND. Mr. President, thank you for giving me the opportunity to 
speak on the floor today. First, I thank Chairmen Grassley and Enzi and 
Ranking Members Baucus and Kennedy in crafting this important 
legislation. The pension issues we take up today are notoriously 
complex and could have a significant financial impact on both American 
families and American businesses. The leaders of the committees have 
done an impressive job in bringing us to this point, and I congratulate 
them on their efforts.
  One of the issues we address in this legislation is the validity of 
the so-called hybrid plans. Hybrid plans whether cash balance or 
pension equity--are a modern form of defined benefit plan that combines 
the best features of defined contribution plans, such as 401(k)s, with 
the best features of traditional defined benefit programs. Hybrid plans 
keep defined benefit plans relevant for workers in our contemporary, 
mobile economy. Indeed, these hybrid plans have been popular with both 
employers and employees, and today an estimated 8.5 million workers are 
earning secure retirement benefits through these plans.
  For the past several years, these hybrid plans have been called into 
question. These turn of events came about when one of our Federal 
district court judges determined in the infamous Cooper v. IBM decision 
that the hybrid plan designs are illegal because they pay compound 
interest. Somehow, this judge believes that it is age discriminatory 
for employers to pay interest on their employees' pensions. I, for one, 
have found his position hard to fathom. The judge reached this 
conclusion despite the fact that the Internal Revenue Service had 
approved interest-paying hybrid plans for 15 years and despite the fact 
that every other court addressing the issue found that these plans 
satisfy the age discrimination rules.
  In classic fashion in our litigation-happy society, this lone and 
misguided court decision has spawned a string of copy-cat class action 
suits. In these suits, plaintiffs assert hundreds of millions--even 
billions--of dollars in ``damages'' (over and above the benefits they 
have earned under the plan--to ``correct'' compound interest.
  So, the issue we need to address in the legislation before us is to 
make clear that this lone judge got it wrong and that the IRS and all 
those other judges got it right. Compound interest in a defined benefit 
pension is not illegal, and the hybrid plan designs satisfy our age 
discrimination rules.
  The legislation before us makes this important clarification but 
unfortunately only with respect to the future. While addressing the 
hybrid issue prospectively is constructive and must be done, failing to 
clarify the legal regime for the more than 1,500 or so existing hybrid 
plans and their 8.5 million or so participants will have a number of 
seriously adverse consequences.
  First, employers will continue to face the threat of truly business-
busting litigation, which will drain resources from productive use and 
hamper their competitiveness. Ironically, despite the good efforts of 
our Senate committee leaders to insert ``no inference'' language in 
this bill, judges may read the legislation's prospective-only approach 
as suggesting the illegality of current plans, thereby worsening the 
litigation risk faced by employers.
  Second, in light of the unresolved threat to current hybrid plans, 
employers are increasingly likely to abandon their pension plans, 
denying additional retirement benefits to millions of American families 
and leaving new hires at these companies with no pensions whatsoever.
  Third, as the healthy companies that sponsor hybrid plans leave the 
pension system, they will aggravate the financial troubles of the 
Pension Benefit Guaranty Corporation, PBGC. Indeed, hybrid plan 
sponsors today pay 25 percent of the per participant premiums received 
by the PBGC. So, unfortunately, while this legislation is designed to 
shore up the PBGC, we have left unaddressed one of the central threats 
to that agency's solvency.

[[Page 26107]]

  In addition, while clarifying the age discrimination rules for hybrid 
plans prospectively and retroactively, it is my hope that the future 
conferees of this legislation will considering making a specific 
reference to pension equity plans--a type of hybrid plan other than 
cash balance plans--in the statutory language. The reason for this need 
is that the Cooper v. IBM decision deemed not only cash balance plans 
to be illegal, but pension equity plans as well.
  The legislation before us does not address pension equity plans, 
specifically. Rather, it leaves the issue of whether pension equity 
plans receive the same beneficial clarification as cash balance plans 
up to the Treasury Department in later administrative guidance. This 
will simply prolong the legal uncertainty that is driving many 
employers to consider ending their pension equity plans altogether. 
This leading variety of hybrid plan--the pension equity plan--is in 
equal need of the same congressional attention as cash balance plans. I 
urge the future conferees to address this accordingly and to be mindful 
that the conversion process in pension equity plans is typically 
different than that of cash balance plans.
  Mr. President, it is my sincere hope that as this important bill 
moves through the legislative process we can address the hybrid design 
issue in a comprehensive way. We must do so in order to remedy the 
significant harms to workers and employers that will result if we only 
address the issue prospectively. In addition, we must give equal 
consideration to both cash balance and pension equity plans as two 
legal regimes of hybrid plans. I look forward to working with Chairmen 
Grassley and Enzi, Ranking Members Baucus and Kennedy, and the future 
conferees on this bill to ensure a solution that will enhance rather 
than endanger the retirement security of American families.
  Mrs. CLINTON. Mr. President, I would like to begin by expressing my 
gratitude to Senate Health, Education, Labor and Pensions Committee 
Chairman Enzi and the HELP Committee's ranking member, Senator Kennedy, 
for working together, and with our colleagues on the Senate Finance 
Committee, to address the wide spectrum of pension issues in the 
bipartisan bill that is before the Senate today. Their tremendous hard 
work and conscientious approach to this legislation--and that of their 
staffs--is commendable. They have had to balance many factors.
  Enhancing the retirement security of Americans is one of my 
priorities in the Senate. Retirement security is, simply put, one of 
the most important challenges facing our Nation. Single-employer and 
multiemployer pension plans play an essential role in providing 
retirement security for so many New Yorkers and millions of Americans 
around the Nation.
  For a variety of reasons, we have recently seen defined benefit plan 
terminations that have jeopardized the retirement security of many 
Americans and placed additional burdens on the defined benefit system. 
I have heard from New Yorkers who are gravely concerned that they will 
not see the benefits they worked so hard to earn.
  A recent report by the Government Accountability Office, GAO, 
highlights some of the deeply troubling trends facing the defined 
benefit pension system. GAO notes that ``the nation's private defined 
benefit, DB, pension system, a key contributor to the financial 
security of millions of American workers and their families, is in 
long-term decline.'' The GAO report describes a sharp drop in the 
number of single-employer DB plans in recent years, down to less than 
35,000 in 2002 from more than 95,000 25 years ago. According to the 
GAO, the same period of time has seen ``the number of active 
participants in such plans dropping from 27.3 percent of all national 
private wage and salary workers in 1980, to about 15 percent in 2002.''
  In addition, the GAO report notes that ``structural problems in 
industries like airlines, steel, and auto parts have led to large 
bankrupt firms terminating their DB plans, with thousands of workers 
losing some of their benefits and saddling the Pension Benefit Guaranty 
Corporation, PBGC, with billions of dollars in unfunded benefit 
guarantees.'' Moreover, the PBGC reported in 2004 that the ``rapid 
decline'' in the net financial position of its single-employer program 
from 2000 to 2004 ``resulted from several very large losses (primarily 
from steel and airline industry plans), lower interest rates that 
raised the value of PBGC's liabilities and declining stock prices.''
  A look at the finances of the PBGC provides a snapshot of the 
aftermath of these trends. According to the PBGC, in 2004 it insured 
more than 34 million single-employer plan participants and more than 
9.8 million multiemployer plan participants. The PBGC reported that its 
single-employer program swung from a surplus of $9.7 billion in 2000 to 
a $23.3 billion deficit in 2004, and that its multiemployer program 
showed a deficit of $236 million in 2004. Yesterday, the PBGC reported 
its financial results for fiscal year 2005. According to the PBGC, the 
single-employer program deficit as of September 30, 2005, was $22.8 
billion, and the multiemployer program deficit had grown to $335 
million. While at this time it appears the PBGC will be able to pay 
benefits for some time to come, it is incumbent upon us, as elected 
representatives, to take meaningful steps to address these challenges 
to the survival of the defined benefit system and the dangers these 
challenges pose for workers, retirees, and their families who are 
depending upon the viability of that system.
  A central goal of that effort should be ensuring that employers 
offering single-employer pension plans keep pension promises and have 
incentives to remain in the defined benefit system to provide good 
pensions to their employees. Additional goals include protecting older, 
longer term employees from unfair changes in their pension plan, 
enhancing financial transparency, and shoring up the PBGC. It is also 
important to work to maintain and strengthen the multiemployer pension 
system.
  The Pension Security and Transparency Act of 2005 takes important 
steps towards these goals, including: transitioning to a full funding 
target; offering incentives for companies to contribute more in good 
times to help plans get through economically challenging times; tools 
for the government to use in an effort to help preserve pension plans 
facing financial challenges; rules intended to help airlines preserve 
their pension plans; reforms intended to improve multiemployer plan 
funding; prospective-only rules for cash balance pension plan 
conversions, with protections for older and longer serving workers; and 
enhanced disclosure of pension plan finances.
  In addition, the defined contribution autoenrollment provisions 
included in the bill are an important first step in ensuring that 
employees start saving today. It has widespread support among employers 
and employees, and is a commonsense provision that I will work to 
ensure is included in the final conference agreement.
  As is usually the case with new legislation of this scope, I believe 
there is room for improvement and refinement, particularly with respect 
to ``at risk'' plan funding. I hope that in conference the legislation 
may be brought in line with the approach to ``at risk'' funding taken 
in the legislation approved by the Senate HELP Committee in September. 
We should support efforts of companies that are acting responsibly to 
preserve their defined benefit pension plans and fund them adequately, 
in the face of financial distress or cyclical downturns, and we should 
strive to avoid actions that may, however unintentionally, have the 
opposite effect of that intended.
  Working men and women are counting on the security provided by the 
benefits they earn through their pensions. Some of the most important 
decisions of their lives depend on these benefits being there for them 
when they need them. I am glad that the Senate is acting today on 
comprehensive pension reform legislation and addressing a wide variety 
of challenges facing the defined benefit pension system. I will 
continue to work with my

[[Page 26108]]

colleagues to enact legislation designed to maintain and strengthen the 
defined benefit pension system for generations to come.
  Mr. KYL. Mr. President, today the Senate is considering long-delayed 
legislation to reform our defined benefit pension system. While reforms 
are certainly needed, I must say that I am disappointed with how 
watered down this legislation has become since we passed it out of the 
Finance Committee earlier this year.
  Obviously, the current system is in dire straits, with the Pension 
Benefit Guarantee Corporation, the Federal corporation that insures 
traditional pension plans, running a $22.8 billion deficit for fiscal 
year 2005. Moreover, the PBGC said that if events that occurred just 
after the fiscal year's end had occurred a few weeks earlier, the 
deficit would have been $25.7 billion. If the Government is going to 
continue to operate a pension-plan insurance program, we must make sure 
that employers fulfill their pension promises appropriately so that 
taxpayers are not asked to bail out the PBGC.
  This legislation makes a first step toward requiring more realistic 
funding of pension promises, and it tries to assess more accurately 
which companies are in such financial difficulty that they are likely 
to declare bankruptcy and shed their pension plans as part of their 
reorganization, leaving it to the PBGC to cover their remaining 
obligations. While I believe the provisions approved by the Finance 
Committee were stronger and more responsible, I understand that 
compromises had to be made as the Finance bill was combined with the 
bill reported out by the Health, Education, Labor, and Pensions 
Committee. I hope these provisions will be retained and reinvigorated 
when this legislation is reconciled with the House pension-reform bill.
  My primary concern about this legislation has to do with the special 
provisions for legacy airlines. The bill reported out of the Finance 
Committee allows certain airlines to freeze their existing defined 
benefit pension plans so that no new participants can be added and 
benefits will not increase in any way. Then it allows these companies 
an additional 14 years to pay off what they owe on these frozen plans. 
I agree that it makes sense to allow the airlines to freeze their 
pension plans so that their liabilities do not get any worse. Further, 
if giving the airlines extra time to pay their obligations will keep 
them from shifting the debts to the PBGC, then I believe we are acting 
responsibly to protect the American taxpayers. I must say, however, 
that this special treatment is unfair to those airlines that have been 
responsible about funding their pension liabilities or that have 
different, and more affordable, retirement savings plans for their 
employees.
  Nor is that all we are apparently going to do to provide special 
relief for the legacy airlines. On the floor, an amendment will be 
offered, and will likely pass, that will lengthen the amortization 
period for the so-called ``hard-freeze'' provision to 20 years and to 
provide separate funding relief to certain other legacy airlines that 
will not be taking advantage of the ``hard freeze.'' This separate 
funding relief will allow these particular airlines an extended period 
to pay their pension obligations, but will not require the airlines to 
freeze completely their pension plans. Rather, this so-called ``soft-
freeze'' would not allow new participants, but would allow benefit 
accruals if the company funds those accruals. This is terrible policy; 
if the airlines have the resources to fund benefit accruals, they 
should fund their existing obligations on a timely basis instead of 
taking on new obligations. Congress should not grant any company the 
ability to amortize its obligations over a longer period of time 
without requiring it to freeze its pension plan completely. Further, 
increasing the 14-year ``hard freeze'' to 20 years is overly generous 
and provides a one-size-fits-all plan for two legacy airlines that have 
very different financial situations. I am pleased that Chairman 
Grassley will oppose this amendment.
  Finally, with respect to the Akaka amendment, I opposed this measure 
because it would exacerbate the already terrible fiscal problems facing 
the PBGC. Unfortunately, Federal regulations dictate that individuals 
age 60 and older may not serve as airline pilots. I am one of 20 
Members of this Chamber who have cosponsored Senator Inhofe's bill to 
remove this blanket prohibition, a stricture which I have concluded 
cannot be justified as a safety measure. I am heartened that the Senate 
Commerce Committee will have the opportunity at their next markup to 
rectify the inequitable treatment of older pilots the right way--by 
removing the arbitrary mandatory retirement age. Unfortunately, the 
Akaka amendment would proceed the wrong way--by swelling the PBGC's 
deficits by raising the ceiling on allowable benefits.
  Overall, this legislation moves forward the process of reforming our 
badly broken defined benefit pension-plan funding system, and for that 
reason I will support it even though I am very opposed to its special 
funding relief for certain legacy airlines. I hope, as the conference 
committee meets to work out a final version, that the conferees will 
work for the best possible funding requirements for all companies that 
participate in the system; that they will keep some kind of a benchmark 
to identify struggling companies; and that they will keep the legacy 
airline relief as responsible as possible. We must remember that the 
American taxpayer will be asked to bail out the PBGC if the system, 
which is supposed to be self-funding, cannot sustain itself. And a 
taxpayer bailout is an outcome that I know none of us wants to happen.
  Mr. HATCH. Mr. President, I rise today in support of the pension 
reform bill we are now considering. This bill is the product of a great 
deal of work by members of both the Committee on Finance and the 
Committee on Health, Education, Labor, and Pensions. As a member of 
both of these committees, I congratulate the chairmen and ranking 
Democratic members for their leadership and hard work. It is not often 
that Senate committees share jurisdiction of an issue the way that the 
Finance and HELP Committees share the jurisdiction of pensions. 
Bringing the bill to this point required an unusual procedure where the 
separate bills approved by the two committees, which were quite 
different in many respects, were combined into one bill for floor 
consideration.
  The resulting bill, which is before us today, is complex, 
controversial, and imperfect. It is also very much needed. Traditional 
pension plans, also known as defined benefit pension plans, are facing 
a crisis today. The number of defined benefit pensions is in decline. 
In 1980, around 40 percent of private sector jobs offered pensions to 
their employees. Today, only 20 percent do.
  Since 1985, the number of defined benefit plans backed by the PBGC 
has declined from 114,500 to fewer than 32,000. Clearly, our economy, 
and the retirement options for our workforce, are undergoing rapid 
evolution. This is due to a number of complex factors, but prominent 
among them is the high expense of starting and maintaining these plans, 
and the uncertainty and volatility of funding them. The rules governing 
defined benefit pension plans are among the most complex of all U.S. 
laws.
  Another factor in the debate about pensions is that the American 
workforce is changing in a fundamental way. No longer is the idea of 
going to work for one employer and remaining with that company for 
one's entire career considered the norm. Increasingly, workers are 
mobile and find themselves changing companies and even careers several 
times over the course of their work lives. For these workers, the 
traditional pension plan is not necessarily the ideal. For many such 
workers, and for most companies in younger industries, hybrid pension 
plans are more beneficial.
  Unfortunately, these hybrid pension plans are under a legal and a 
legislative cloud today. So what could be a pretty good answer in 
today's world to the problems of cost, complexity, and inflexibility of 
a defined benefit plan has been practically halted by legal challenges 
and by political controversy

[[Page 26109]]

over how to best clarify the status of hybrid plans.
  One of the biggest concerns, however, is that the Pension Benefit 
Guarantee Corporation (PBGC) is under increasing financial strain as 
more and more companies with defined benefit plans have defaulted on 
their pension obligations and left this agency to carry the load. Just 
yesterday, the PBGC released in its annual report that it had only 
$56.5 billion in assets to cover $79.2 billion in liabilities. In 
addition, the report showed the PBGC's exposure to losses from pension 
plans sponsored by financially weak employers rose to $108 billion from 
$96 billion the year before.
  When I earlier said this pension bill is complex, controversial, and 
imperfect, it is because, to be effective, the bill must walk the very 
narrow path between two important public policy objectives. On the one 
hand, we need to ensure that when an employer establishes a pension 
plan, and makes inherent promises to its workers, it provides the funds 
necessary to secure those commitments. Failure to do so does great harm 
to the millions of employees and their families who depend on those 
pensions for a secure retirement. It also does harm to our economy, and 
it puts the PBGC, and possibly the American taxpayer, at great risk.
  On the other hand, we must not forget that employers have no legal 
obligation to offer such pension plans to their employees. These 
benefits are voluntary, and they must stay so. The Congress has an 
obligation to ensure that the pension laws provide rational and 
sensible rules that encourage employers to offer these benefits to 
their employees. This means they should be understandable, predictable, 
and easy to administer. If we place unreasonable or overly aggressive 
requirements on employers, many or most will simply terminate their 
pension plans, leaving employees without the benefits they might have 
had.
  I believe we must be careful to ensure that pension plans that are 
currently fully funded and are sponsored by strong employers are not 
weakened inadvertently by the reforms in this legislation. However, 
this is not as easy to accomplish at it may sound.
  I believe the bill before us goes a long way toward accomplishing the 
goals of strengthening the pension system, shoring up the PBGC, and not 
discouraging employers from staying in the system. However, it has 
certain provisions that, in my view, may not lead us in the direction 
we need to go. I hope that as the bill goes to conference that it can 
be further improved.
  More specifically, I remain concerned about the provision in the bill 
that would require certain plan sponsors with credit ratings that have 
fallen below investment grade to fund their plans faster than they 
would otherwise have to do. While this provision has improved from its 
first version in the Finance Committee, I believe it is still too 
onerous.
  I am also very concerned about the impact of this bill on the 
struggling airline industry. We simply must provide relief to the 
airlines in funding their pension obligations or many will have to turn 
their obligations over to the PBGC. Therefore, I am supporting the 
amendment of the Senator from Georgia, Mr. Isakson, and I hope our 
colleagues will also support it.
  There is much to be said in favor of this combined bill. I am very 
pleased to see that many of the defined contribution provisions that 
the Finance Committee has long worked on getting enacted have made 
their way into this bill. I am also glad that certain protections were 
added for the multiple employer pensions plans that are very important 
to many of the electrical and telephone cooperatives that are common in 
many rural States, including my home State of Utah.
  I am also pleased to see that the managers' substitute amendment also 
includes a provision on which I have been working for several years now 
with the chairman and ranking Democrat of the Finance Committee. This 
provision, which is important to many associations around the Nation, 
including the Utah Auto Dealers Association, ensures that they will not 
unfairly have to give up their health plans, upon which many employers 
and their families now rely.
  And I am happy that we have finally included language that makes it 
much easier for firms to enroll automatically new employees into a 
firm's 401(k) plans. One thing we know about human behavior is that 
inertia is a powerful force--change of any sort can be difficult for 
even the best of us. The beauty of automatic enrollment is that it uses 
this inertia to our advantage. The firms that have used automatic 
enrollment thus far have reported vastly higher savings rates, and 
employees have been quite pleased with the result.
  While nearly everyone on both sides of the aisle supports making 
automatic enrollment easier for firms, we differ on just how much 
easier we should make it. There have been a number of proposals that 
would have made it much easier for firms that offer automatic 
enrollment of new employees to meet the convoluted pension distribution 
requirements that deter many smaller firms from even offering 401(k) 
plans. Unfortunately, the version currently embodied in this bill does 
not, in my view, adequately address this problem. Still, half a loaf is 
better than none, and I welcome anything that clears the way for firms 
to offer automatic enrollment.
  I would like to take another couple of minutes to address more fully 
the issue of hybrid pension plans, which combine elements of defined 
benefit and defined contribution plans. I think that corporate America 
is recognizing the importance of these plans. At the same time, there 
is a cloud of legal uncertainty hanging over them. My hope is that we 
address this uncertainty in the conference.
  Although the defined benefit pension system has helped generations of 
Americans achieve retirement security, we have witnessed a decline in 
these plans during the last several years, as I mentioned. While the 
modern workforce remains interested in the security of employer funding 
and Federal insurance guarantees, it also demands portability and a 
greater level of control regarding retirement benefits. Given these 
diverse criteria it is easy to see why so-called hybrid pension plans 
have become so popular. These cash-balance and pension equity plans, in 
which over 9 million Americans currently participate, incorporate the 
attractive features of a defined contribution plan while offering much 
of the security associated with traditional defined benefit plans.
  Hybrid pension plans are nothing new. In 1991 the Treasury issued 
regulations that described a safe harbor testing method for cash 
balance pension plans under nondiscrimination rules. Five years later, 
the IRS issued Notice 96-8 describing the structure and operation of 
cash balance pension plans as well as citing the previous safe harbor 
rule. This notice and prior regulation stood as the official authority 
from Treasury and IRS on how a cash balance pension plan should be 
designed and operated. Many plan sponsors even received favorable 
determination letters from the IRS that their converted cash balance 
pension plans met all requirements to be qualified to preferred tax 
treatment under the Internal Revenue Code, including all relevant 
nondiscrimination requirements. More recently, in 2002 the Treasury 
issued proposed regulations that clearly established hybrid pension 
plans and plan conversions as nondiscriminatory against older workers. 
Most employers who made these plan conversions did so as part of a 
good-faith effort to protect the retirement security of their 
employees.
  Although many courts have ruled that these plans do not discriminate 
based on age, they continue to come under attack. The bill we are 
currently considering does a good job of establishing the principles 
for evaluating whether post-effective date conversions of a traditional 
defined benefit pension plan to a hybrid pension plan are permissible. 
However, the bill does not clarify that employers who previously 
adopted hybrid pension plans in good faith, based on generally accepted 
legal principles and in reliance on guidance issued by the Internal 
Revenue Service, should not be disadvantaged compared

[[Page 26110]]

to employers who adopt hybrid pension plans in the future.
  If Congress does not clarify the legality of pre-effective date 
hybrid pension plans and plan conversions, it is likely that these 
plans will be abandoned in favor of programs that shift investment risk 
for retirement savings back to participants, such as 401(k) plans. The 
uncertain climate for hybrid pension plans has already had a profound 
adverse effect on defined benefit plan formation and continuation. I 
hope that in conference we can consider some moderate and fair 
retroactive provisions in order to give some legal clarity to these 
plans.
  This bill should not be considered the final word on this issue. It 
represents good progress, and I am encouraged that those who had placed 
holds on its consideration have agreed to release them. By approving 
this legislation, we can move into conference where I believe we can 
improve the bill even further.
  Again, I thank those who have worked so hard on this legislation, and 
I urge my colleagues to join me in supporting it today.
  Mr. SMITH. Mr. President, I would like to commend Chairman Grassley 
and Senator Baucus on their leadership in passing the Pension Security 
and Transparency Act of 2005. It accomplishes a great deal in 
reinforcing the security and financial viability of the defined benefit 
pension system. Americans have worked very hard to earn their pension 
benefits, and this bill does a lot to ensure that their retirements 
will be secure.
  A number of important reforms will also improve the defined 
contribution system. In particular, I am proud that a number of these 
defined contribution reforms were taken from the retirement package 
that Senator Conrad and I introduced earlier this year.
  S. 1783 included a key piece of our legislation promoting automatic 
enrollment in 401(k) plans. Automatic enrollment has been shown to 
increase participation rates in these retirement plans significantly--
especially among low and moderate income individuals.
  S. 1783 also clarifies the fiduciary rules with respect to defined 
contribution plans and annuities. Today, very few employers offer 
annuity distribution options in their defined contribution plans partly 
due to confusion surrounding the appropriate fiduciary standard. I 
believe we need to provide retirees with the option to turn a portion 
of a lump sum into a guaranteed stream of income so that we can ensure 
they do not outlive their savings as they enter the increasingly long 
retirement phase of their lives.
  On this front, I believe that there is much more we can do to 
encourage individuals to provide themselves with a guaranteed stream of 
income for life by providing tax incentives for annuiti-
zation.
  In particular, we need to provide incentives for retirees without 
employer provided retirement plans to save. Because many workers 
benefited from employer provided retirement plans, they may have little 
saved for retirement. Aside from Social Security, almost one-half of 
all Americans have only their personal savings to fall back on in 
retirement. Therefore, I believe we must offer additional encouragement 
for these retirees to choose retirement income that is guaranteed to 
last as long as they live, and will not decrease based on their 
investment results.
  I look forward to working with my colleagues to ensure that all 
Americans have a secure retirement.
  Mr. ROCKEFELLER. Mr. President, I am very pleased that the Senate is 
finally taking action on much needed pension reforms. As the Senate 
does its work today, there are more than 44 million Americans working 
hard to earn traditional pension benefits. Steelworkers, coal miners, 
flight attendants, autoworkers, carpenters, grocery store employees--
workers of every description are putting in long hours, in part, 
because they have been promised that when they retire, they will 
continue to receive some income from their employers.
  Traditional, defined benefit pension plans have been an important 
part of workers' compensation for generations. Guaranteed retirement 
income protects workers from the risks of the stock market. And with a 
steady monthly check, retirees know they cannot outlive their income. 
We owe it to all of those workers to be sure that the pension benefits 
they are earning today will be there for them in the future.
  Unfortunately, our pension system has failed too many people already. 
And in West Virginia, sadly, we understand all too well what happens 
when pension benefits are not paid as promised. Last year, more than 
11,000 West Virginians received a pension check from the Pension 
Benefit Guaranty Corporation, because their employer had terminated 
their pension plan.
  There are another 313,000 West Virginians still participating in 
traditional pension plans. We have an obligation to fix the pension 
system so that those workers and retirees will receive what they have 
been promised. Companies must be encouraged to continue to promise 
these valuable benefits, but we cannot accept empty promises. Companies 
must adequately fund the retirement benefits workers earn.
  I believe that, on balance, the bill before the Senate today 
strengthens the retirement system. This legislation requires companies 
to better fund pension benefits. It provides workers more information 
about the status of their retirement plan, and it improves the 
financial position of the PBGC, which will continue to play an 
important role as Federal safety net for failed pension plans.
  The bill also makes some important improvements to the defined 
contribution pension system. As Enron collapsed, many employees lost 
all of their retirement savings because they had heavily invested in 
their company's stock. I am pleased that Congress is finally acting to 
better protect employees by giving them more information about their 
investment options and more rights to diversify those investments.
  I am also pleased that the legislation includes a provision to enable 
the UMWA's Construction Workers Pension Plan to excess assets to cover 
health care costs for retirees, just as many single-employer private 
pension plans already do. The Construction Workers Pension Plan 
currently has more than twice the assets needed to cover pension 
benefits, while retirees have been forced to pay large premiums for 
health coverage. With this change, the resources set aside to benefit 
retired construction workers can be used to best advantage--including 
helping to cover health care costs.
  Yet while I believe there are many positive provisions in this bill, 
it is not a perfect bill. The bill calls for very difficult 
compromises. Companies are concerned that the funding rules will be 
difficult to live by. Workers are concerned that benefits may be 
limited if employers do not adequately fund the pension plans. I 
appreciate these concerns. And I am interested in improving this bill.
  I had hoped to have the opportunity to support an amendment by 
Senators DeWine and Mikulski to ease some of the funding requirements 
imposed on struggling employers. Without fundamentally upsetting the 
balance struck in this bill, the amendment would have made pension 
plans easier to maintain. Because a company's credit rating is an 
imperfect indicator of whether the pension plan is sound, I do not 
believe that we should impose strict new funding requirements on 
companies with lower credit ratings. I believe that the managers of 
this legislation have already crafted so many important improvements to 
the funding rules that the payments associated with low credit ratings 
are not necessary to guarantee appropriate pension contributions. 
Rather, the credit ratings rules may limit employers' willingness to 
offer such benefits.
  The reforms contained in this legislation will dramatically improve 
the health of the Nation's pension system. Improved pension funding 
rules are necessary to protect the many workers who have been promised 
pension benefits, and to shore up the Federal pension insurer. As the 
final legislation is worked out with the House, I will be working with 
my colleagues to improve this bill even further.

[[Page 26111]]

  The PRESIDING OFFICER. The question is on the engrossment and third 
reading of the bill.
  The bill was ordered to be engrossed for a third reading and was read 
the third time.
  The PRESIDING OFFICER. The question is on passage of the bill.
  Mr. ENZI. Mr. President, I ask unanimous consent that the next two 
votes be limited to 10 minutes each.
  The PRESIDING OFFICER. Is there objection? The Chair hears none, and 
it is so ordered.
  The question is on passage of the bill.
  Mr. ENZI. Mr. President, I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There appears to be a sufficient second.
  The clerk will call the roll.
  The legislative clerk called the roll.
  Mr. DURBIN. I announce that the Senator from New Jersey (Mr. Corzine) 
is necessarily absent.
  The result was announced--yeas 97, nays 2, as follows:

                      [Rollcall Vote No. 328 Leg.]

                                YEAS--97

     Akaka
     Alexander
     Allard
     Allen
     Baucus
     Bayh
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Brownback
     Bunning
     Burns
     Burr
     Byrd
     Cantwell
     Carper
     Chafee
     Chambliss
     Clinton
     Coburn
     Cochran
     Coleman
     Collins
     Conrad
     Cornyn
     Craig
     Crapo
     Dayton
     DeMint
     DeWine
     Dodd
     Dole
     Domenici
     Dorgan
     Durbin
     Ensign
     Enzi
     Feingold
     Feinstein
     Frist
     Graham
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Hutchison
     Inhofe
     Inouye
     Isakson
     Jeffords
     Johnson
     Kennedy
     Kerry
     Kohl
     Kyl
     Landrieu
     Lautenberg
     Leahy
     Lieberman
     Lincoln
     Lott
     Lugar
     Martinez
     McCain
     McConnell
     Mikulski
     Murkowski
     Murray
     Nelson (FL)
     Nelson (NE)
     Obama
     Pryor
     Reed
     Reid
     Roberts
     Rockefeller
     Salazar
     Santorum
     Sarbanes
     Schumer
     Sessions
     Shelby
     Smith
     Snowe
     Specter
     Stevens
     Sununu
     Talent
     Thomas
     Thune
     Vitter
     Voinovich
     Warner
     Wyden

                                NAYS--2

     Levin
     Stabenow
       

                             NOT VOTING--1

       
     Corzine
       
  (The bill will be printed in a future edition of the Record.)

                          ____________________