A bill to provide special minimum funding requirements for certain pension plans maintained pursuant to collective bargaining agreements.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I have an amendment No. 2236 at the desk.

Mr. President, I ask unanimous consent that further reading of the amendment be dispensed with.

Mr. President, I will describe the amendment briefly, the reason for the amendment, and set the stage here. Of course, the pending business is H.R. 3108, a bill the House passed, dealing with the requirements for businesses to pay into the pension fund to ensure that all of the promises they have made to their employees about pension benefits being there will in fact exist when the time comes.

What has happened is some Senators have offered an amendment to that bill which would provide what we call deficit reduction contribution relief. Deficit reductions are the amounts of money the companies are supposed to pay into the fund to ensure the fund will be able to compensate any employees on the pension that has been promised to them. We have had a deficit in that pension over the last few years because of the way the amounts due were calculated. That is being fixed. But in the meantime there has to be some kind of makeup payment to account for the deficit that has been created. This deficit reduction contribution will do that.

The problem is some specific industries are seeking relief from that so they don't have to pay in as much money. They are asking in effect for a waiver of the requirement that they pay this money into the pension fund so their employees will be able to collect when the time comes. Their argument is they don't have enough money. That should be our first clue that there is a problem. If they don't have enough money to pay their employees what they are due, we probably should not dig the hole any deeper by allowing them to continue to make promises and not pay into the fund what is necessary for them eventually to pay to their employees.

Some of the Senators have decided what we are going to do is grant a 2-year partial waiver just to certain airlines and two steel companies. One of the airlines, it is said, cannot afford to pay the premium that would be required, or the bond payment that would be required, if they sought a general waiver from the Treasury Department, which you can do. If you are having trouble making your payments, you can go to the Secretary of the Treasury and meet certain requirements and say I would like to have a general waiver. That could be granted. This company apparently doesn't even have the money to pay for the bond that would be required in order to seek that relief. But they are asking us to believe if we will just bail them out for 2 years, everything will be fine; they will have enough money, and the Government won't have to make up any of the difference.

The concern I and others have expressed is this partial waiver is going to result in the Government letting these companies off the hook, paying less money into the fund than is necessary, and a couple years from now, if they don't make it financially, it is the taxpayers who will be on the hook for that difference because we have not had them pay the full amount. In fact, they are only going to have to pay 20 percent of their obligation next year and only 40 percent the year after that. So it is a 2-year waiver of almost the entire amount.

I would say this ought to be of concern to us. I don't think it is a good idea to grant this waiver, and the three key people in the Bush administration who sit on the board that oversees this have said they would recommend a veto to the President if this deficit reduction contribution amendment causes any greater strain on the board to make payments.

What I have done is offer one amendment, and this is the second amendment, both of which will reduce that strain just a little bit, hopefully enough so the Bush administration will not veto this legislation, should it end up passing.

I urge colleagues, those who agree with me that this whole deficit reduction contribution waiver is not a good idea and those who think it is a good idea but might be a little bit concerned the administration might veto the bill over that provision, to support my amendments because they are designed to close the loophole a little bit so that at least the companies that are taking advantage of this 2-year waiver cannot take unfair or undue advantage of it.

Let me describe what the amendment specifically does. The amendment, which I have just offered, provides that a company which seeks to take advantage of this special waiver, where you would only have to pay 20 percent next year and 40 percent the year later, then would not, at the end of the 2-year period, also then be able to go to the Secretary of the Treasury and say: Now we want a general waiver. The law currently provides for a general waiver, and if you want a general waiver, you can apply for it.

This special waiver that is being granted is designed to be a substitute for the general waiver, not where you would add one on top of the other. I think it is a perfectly reasonable request.

I would ask, if anybody is against this, why? Is it because, after the 2-year special waiver, they then want to seek a general waiver? The question then would be, if that is the case, why don't you seek a general waiver right now?

I think it is a perfectly legitimate amendment. It obviously doesn't upset the whole process. The deficit reduction contribution amendment that has been offered will still be permitted to go forward, but what I would call a little bit of a loophole would be closed so the company that gets this 2-year holiday date from making their full DRC payments would not then afterward also be able to apply for a general waiver under the provisions of law that already permits that to be done. It is very simple.

By the way, just a word about the general waiver. You can apply to the Treasury Department for any or all of the normal required contributions to the pension fund, and the only part of the contribution Treasury cannot waive is an amortization payment of a previous funding waiver, which makes sense. To receive a waiver, a company must show there is substantial business hardship, which these companies all allege; that it is temporary, and they make that point: We are going to be healthy in 2 years, they say. Good. And it is reasonable to expect the plan cannot continue unless the waiver is granted. In other words, if they can't continue to pay into the pension fund unless a waiver is granted, as I say, a bond can be required of the Secretary to show their good faith.

I think it is a perfectly sound amendment. Those people who don't like the DRC waiver, like myself, and those who do should support the amendment.

For those who do like the waiver, it doesn't hurt the companies they are seeking to help, and it might actually prevent the bill from being vetoed by the President.

Let me tell you what I have in this regard. I understand my colleague from Illinois, Senator Fitzgerald, has already submitted into the Record this letter, so I will not do it, but I would like to make reference to the letter, dated January 22, 2004. It is on the letterhead of the Pension Benefit Guaranty Corporation, which is the Federal entity that guarantees Federal pensions. It is to Leader Bill Frist, and it is signed by Elaine Chao, the Chairman of the Board of Directors, John Snow, director, and Don Evans, director. You might also recall that Elaine Chao is Secretary of the Department of Labor; John Snow is Secretary of the Treasury; and Don Evans, of course, is Secretary of Commerce. These three important members of the Cabinet are the three board members of the PBGC or the Pension Benefit Guaranty Corporation.

What they said in their letter to Senator Frist, among other things, is this:

The PBGC reported a record single-employer program deficit

of $11.2 billion through the end of 2003--

One of my colleagues earlier said there was a $20 billion surplus in their fund. This letter from the directors notes an $11.2 billion deficit. They point out:

three times larger than any previously recorded deficit. Last

year, the General Accounting Office added the PBGC's single-

employer pension program to its ``high risk'' federal program

list. In addition, the PBGC remains exposed to $85 billion in

pension underfunding in single-employee plans sponsored by

financially weak employers. The PBGC also reported the first

multi-employer program deficit in two decades.

What this means is that the PBGC, which is the guarantor of employers' pensions, is in very bad financial condition--a $11.2 billion deficit. It is in the high-risk category of Federal programs. That means that if we add to the risk by reducing the amount that employers pay into the fund, then we are increasing the risk that taxpayers will have to bail these companies out because the fund will not have enough money to make the payments.

It is a little surprising to me that people who ordinarily like to present themselves as on the side of employees would be taking the sides of the employers here saying: Let's let them off the hook so they don't have to pay as much into this fund for the pensions of their employees.

The fund exists for the employees, and I would like to be sure there is enough money in those funds to ensure the employees are paid. But when we relieve the companies of paying their full obligation, we are creating a risk that the employees are not going to be paid.

The answer of the bill sponsors is: We will have the Government pick up that risk. After all, that is the job of the Pension Benefit Guaranty Corporation. The directors of the Corporation are saying: We are in financial trouble. We don't have enough money to do this. So guess who is going to have to make up the difference. You guessed it: our constituents, the taxpayers.

Haven't we heard a great deal recently about the fact the Federal Government is spending too much taxpayer money and we have to start reining in how much we spend? Right now we are committing to spend a whole lot more because the board that backs up the pension funds is in a deficit situation. The companies that are seeking relief say they don't have enough money to cover the obligations to which they have committed. That leaves only one party to make up the difference: the taxpayer. And that means either they pay for it in taxes that we collect or we have to go out and borrow it. Nobody likes the size of the deficit.

Mr. President, I say to my colleagues, those of you who are supporting this bill and this amendment--not my amendment but the underlying amendment--are guaranteeing that we are going to have a bigger deficit, more taxpayer funding of an obligation that corporations took on because the corporations don't have the money to do it themselves.

This amendment is asking that we relieve them of the full 100 percent of what they are supposed to pay in; that for 1 year, they only pay in 20 percent, and for the other year they only pay 40 percent of this makeup payment, this deficit reduction payment that is required to make up the full amount. We are doing it because they are pleading that they don't have enough money.

My observation is, when you are in a hole, the first thing you do to get out of it is to stop digging.

Today's edition of the Washington Post makes the same point. I understand Senator Fitzgerald also put this in the Record. But let me quote a couple lines from this editorial called ``Pension Perniciousness'' from the Washington Post today. They point out:

Not for the first time, Congress has muscled up to an

important problem, taken a good long look at it and resolved

to make it worse. The problem is the vast hole in the

nation's corporate pension schemes, and the perverse rules

that helped create them.

Then it talks about the bill that has been introduced by our colleagues ``to reward the hole diggers with what amounts to a $16 billion loan from taxpayers.'' That is why I say we are already in a hole. This old rancher friend of mine from Apache County said, if you are in a hole, the first thing to do to get out is to stop digging. We are digging the hole even deeper because instead of the companies trying to fill this hole, we are going to have a deeper hole with greater taxpayer exposure as a result.

They point out in the Washington Post editorial:

To pay for these future benefits--

That are promised to employees--

employers are supposed to put sufficient money into a pension

fund; the problem is they often don't. The gap between money

put aside and money needed in the underfunded pension plans

comes to an enormous $350 billion. When companies go bust,

the Pension Benefit Guaranty Corp., the Government-backed

entity that insures pensions, gets saddled with plans that

are in deficit. As a result, the PBGC itself has a deficit of

$11.2 billion, which taxpayers may have to plug eventually.

And then, down toward the end of the editorial, they say this:

There is, as Congress is demonstrating, no political

constituency for fixing this problem. Weak companies with

underfunded pensions lobby lawmakers for permission to

continue their imprudence; labor leaders from those same

firms lobby lawmakers in the same direction; nobody is on the

other side. In the deal currently being cooked up, a group of

hard-pressed companies led by the steel industry and the

airlines will be given a special break for two years; if any

of these firms goes bust in the meantime, the public will end

up shouldering the deficits, which is why the congressional

measure amounts to a taxpayer loan.

In the letter to leader Frist from the Pension Benefit Guaranty Corporation directors, the three Secretaries I mentioned earlier, are these two points. I quote now:

Pension underfunding threatens workers and retirees, who

depend on the defined benefit pension system to be

predictable and reliable. If the Congress urges firms to

underfund their pensions by substantially weakening funding

requirements, retirees could face pension cuts when a firm

terminates its defined benefit pension plan.

We believe that H.R. 3108 would best protect pensions and

pensioners if passed free of any provisions to alter the

Deficit Reduction Contribution rules--DRC rules.

Specifically, it would be irresponsible to amend the interest

rate bill with any additional provisions that would

significantly further exacerbate systemic pension plan

underfunding. If H.R. 3108 were amended to do so, we as the

PBGC board would recommend that the President veto the

legislation.

By the way, they note that the Office of Management and Budget has advised that this letter is consistent with the administration's program.

What you have here is a pretty firm warning from the key Secretaries in the Bush administration, the people who sit as directors on the board here of the Pension Benefit Guaranty Corporation, that if the underlying amendment that is proposed here passes, and it significantly ``further exacerbates the systemic pension plan underfunding''--which I think it is hard to argue would not occur--they would recommend a veto of this legislation.

The two amendments I have offered--the one I offered Friday which would hold the PBGC harmless for obligations incurred after this, that would be incurred during the time of and for 2 years after this DRC waiver plan, and the amendment I offered today which simply provides that a company that takes advantage of this DRC waiver not be able to apply also for a general waiver--these two amendments should make the DRC amendment slightly less

onerous. It may be enough for the administration, then, to decide to allow the amendment to go forward and not recommend a veto.

But I am afraid if my two amendments--both of which I think one could argue are not harmful to the companies but they might be just enough for the administration to conclude that it is willing to allow these to go to the President without a recommended veto--don't pass, one of two things will happen: Either the President will veto the legislation or, if he doesn't, the taxpayers are going to be required to make up a fairly large amount of money when these companies decide they can't make it in the long run.

I hope my colleagues will give consideration to this. It is my understanding that perhaps, after the lunches tomorrow, somewhere in the 2:45 timeframe, we may have a vote on these two amendments. We will have about a half-hour to discuss the two amendments, so anybody who has missed the discussion, the robust debate we are engaged in here, will have an opportunity to at least hear both sides of the argument and then we will vote on these at 2:45 tomorrow.

Again, I reiterate, I can argue that the DRC waiver that is being proposed here by the Senator from Iowa, the Senator from Montana, the Senator from New Hampshire, and the Senator from Massachusetts greatly jeopardizes the financial stability of the PBGC; the granting of a 2- year waiver of most of the payment obligations into the fund is a bad idea. I think a lot of our colleagues agree to that.

What I am saying is, even if you don't agree with that, if you support the two steel companies or the two airlines--I think there are two or three airlines that want to take advantage of this--if those are your constituents and you need to support them here, you need to try to give them some relief so they don't have to pay as much money in over the next 2 years--I understand why you would have to do that. But I would argue, A, don't saddle everybody else with that and, B, if you really want it to go into law, it would be important to make sure the President doesn't veto this legislation. Three Secretaries have already given you a pretty good idea this is what they are going to recommend if this DRC waiver is actually adopted by the Senate tomorrow.

What I am suggesting is that you can ameliorate the effect of that just a little bit by adopting these two amendments. One would ensure that, as I said about the amendment today, there are not going to be any additional waivers granted. The waiver you get for 2 years is it; You don't add a general waiver behind that. I think that is consistent with the intent of the authors here. I certainly hope they will be willing to support that. And, second, the Pension Benefit Guaranty Board would be held harmless for obligations that were incurred once a company began to take advantage of the special waiver provisions. That is only fair.

I hope my colleagues will support both of these amendments. Take a look at the Washington Post editorial of today. Certainly take a look at the letter from Secretaries Chao, Evans, and Snow, and consider whether a very slight amendment to the underlying amendment would not be appropriate in order to preserve the intention of what they are trying to achieve.

I appreciate the earlier comments from my colleague from Illinois, Senator Fitzgerald. I think he hit the nail right on the head. I note one of the airlines seeking to take advantage of this has reported a huge amount of cash on hand, over a couple of billion dollars of cash on hand. Yet it is saying it doesn't have enough money to make these modest payments into this fund. It seems to me either that corporation could apply for a general waiver, which it could get today, or it can afford to make the payments into the fund. It should not be up to the taxpayers of this country to be bailing out a company in that kind of position.

I urge my colleagues to think very carefully. We have just been home talking to our constituents, talking about their concerns about deficits, about the role the taxpayers are going to have to pay funding new spending of the Congress. Yet the very first thing we do this year out of the box is take on an additional liability that will, in fact, add to the debt if we have to make up the payments to the Pension Benefit Guaranty Corporation because companies that took advantage of this special waiver decided they could no longer remain in existence or went bankrupt.

I hope my colleagues will support these two amendments. I will discuss them again tomorrow right after the lunches.

At this time I suggest the absence of a quorum.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, I would like to address for a few moments the bill that is now on the floor, H.R. 3108, dealing with pension funding for defined benefit pension plans. The House passed this bill. In the House version of the bill, what it does is it mainly changes the interest rate assumptions that plans are required to use when figuring their actuarial liability for their pension plans and for their annuitants in their plans.

The House bill mainly addresses the situation that has arisen by virtue of the 30-year Government bond being done away with. A few years ago, the Treasury Department made the decision that it would no longer issue 30-year Treasury bonds and the interest rate for 30-year Treasury bonds had historically been what was used in calculating the liabilities for defined benefit pension plans. Now that there are fewer and fewer 30-year Government bonds in circulation, the interest rates for those bonds have gone down, and, of course, interest rates have been very low in general for the last couple of years.

So industries in sectors where defined benefit pension plans are common have come to Washington, asking for some relief in the way they calculate their unfunded liabilities, or their liabilities, and they have asked for the replacement of the 30-year Treasury bond with a benchmark that is, instead, made up of the yield of high-grade corporate bonds. By going to that different reference point, plans ultimately will have to put less money in their pension plans because they can assume a higher rate of return if they are using 30-year corporate debt or high-grade corporate debt as opposed to 30-year Treasury bonds.

In fact, right now companies in America, absent any legislation, would have to put about $170 billion into their defined benefit pension plans next year. If the interest rate relief alone in H.R. 3108 is passed, that will cut about 25 percent off the required payments that all companies with defined benefit pension plans will be required to make into their plans over the next 2 years. So the relief in this bill as it passed the House--and the only relief in the House bill is the interest rate relief--if that relief passes, it would cut about $40 billion per year off the amount that companies have to put into their defined benefit pension plans. Over 2 years, the life of the bill, it would cut $80 billion off of the required payments.

What has happened in the Senate is somewhat disappointing, to me. I could see the public policy rationale for changing the interest rate benchmark that companies use, now that we have done away with the 30- year Treasury bond. I can see the argument for coming up with a different reference. I can see the argument for changing the assumptions that would allow plans to put less money into their pension plans. But the Senate is going way beyond that. In addition to giving the interest rate relief that the House passed, the Senate now is on the verge of passing amendments that would provide special relief for airlines and steel companies.

The airlines and the steel companies would get further reductions in the amounts they have to pay into their pension plans. This is very troubling because airlines and steel companies, as we all know, tend to have the most woefully underfunded pensions of all industry in America. Obviously, they are asking for permission to dig their hole even deeper.

In addition, the Senate amendment that will be offered this week has a sweetheart provision for Greyhound Bus Company. I don't know why Greyhound Bus Company is singled out for this special treatment of all the companies in America, but it certainly must have some powerful friends here on Capitol Hill.

Also getting a sweetheart deal is CNF Trucking, which apparently gets some sort of relief in this bill and some limitation on liability that it might have to a former subsidiary that it spun off a couple of years ago.

So there are a couple of sweetheart deals, not just for some chosen industries, the airlines and steel companies, but also some rifle shots that would be put in here for two special companies, Greyhound and CNF Trucking.

In addition, and perhaps most discouraging, is that the Senate amendment will, in effect, go way beyond just the steel and the airline industries and allow all companies that have underfunded pension plans to go through a political process in applying for a waiver from their required contributions to their pension plans. All companies would be able to go to the Treasury Department and request a waiver.

If this provision becomes law, you can just imagine right before the election all the industrial companies in the Upper Midwest, in Michigan, Pennsylvania, Illinois, Wisconsin, and so forth, all those industrial companies in States that are critical for the upcoming election, they will all be going to the administration, asking for this special waiver from the Treasury Department. They will be making political threats at the same time, that if the administration doesn't give them this relief, they may just support someone else for President. It sets a very bad precedent because now there is a waiver process. But it is an apolitical one, and one for which you have to apply with the Internal Revenue Service and also with the Pension Benefit Guaranty Corporation.

As I said, if it were merely adopting the interest rate relief, we would be granting a 25-percent reduction in the

required contribution of all companies in toto in America to their defined benefit pension plans. We are going way beyond that. In the Senate amendment, we are threatening to grant them an additional about $17 billion a year, at least in reductions in required amounts going into pension funds.

There is also a provision in the Senate amendment in the managers' package that will allow all multiemployer pension plans--those are union-run plans which span employers--from having to make their full contributions.

All of these reductions in required contributions into the pension plans wouldn't be so troublesome but for one fact: In allowing these companies to dig the hole deeper for themselves, it is more likely that they will ultimately default on their pension obligations and turn those obligations over to the Pension Benefit Guaranty Corporation to take advantage of the Government guarantee. It wouldn't be so offensive if it were freezing the Government guarantees. But we are not.

There is a no hold harmless provision in this legislation. There are no reforms of pension funding trying to get tough on the companies that have considerably underfunded their pension plans. We are just allowing them to skip required payments into their pension plans. We are allowing the government guarantees to stay in place.

What is more, we are allowing the companies with underfunded plans to continue sweetening the benefits for their workers and raising their own pension liabilities while those pension liabilities are all guaranteed by the Federal Government.

I know pension funding is something that perhaps makes the eyes of the press glaze over. Not many members of the public understand the importance of this. This is a very roundabout way of transferring liabilities to taxpayers. It is not easy for people to understand. But if I were to make an analogy that the average American could understand about what we are doing here, imagine that you have someone who is behind in their credit card payments. Imagine that you said to that person, you are behind in making your payments on the credit card. You are only making the minimum payment. You are trying to make a minimum payment due each month. You have this huge balance. It is going to take years and years to pay off this deficit of what you owe the credit card company or the bank. Imagine if this person were to have their minimum payments lowered. Imagine that when they are already just barely making the minimum payments, you say: OK, we will even lower your minimum payment.

We are doing that here. But in addition, we are going beyond that. We are telling the credit card holder while you are lowering your minimum payments and digging the hole deeper so that you are likely never to get out of debt, we are going to go out and allow you to continue spending and add more to your credit card. Can you imagine a credit card company telling anybody that? That wouldn't be a way to advise a distressed consumer to try to get out of debt.

We are doing that and more here today in the Senate. We are not only allowing these companies to quit making their required payments into their pension plans, but we are allowing them to continue spending. We are allowing them, specifically if they are 60-percent funded, to keep sweetening the pension benefits for their employees and digging the hole deeper. That would be not only allowing the credit card holder to keep spending but encouraging the credit card holder to go out while they are behind in the payments on this one credit card and get some more credit cards and run up balances on those credit cards.

Obviously, if we pass this legislation we are going to make it hopeless for some companies ever to recover and to fulfill the promises they have made to their pension participants.

Right now, the Pension Benefit Guaranty Corporation--the Government corporation that guarantees pension benefits of people in defined pension plans--is in the worst financial condition of its entire history. It has at least a $11.2 billion deficit. Pension plans in America are now thought to be underfunded by at least $350 billion. This legislation would allow that collective underfunding in defined benefit pension plans in America to grow considerably.

The House was much more responsible. It only passed the change in interest rate assumptions. It passed the separate version of the bill that had the interest rate change, plus some relief for airlines. The Senate is poised to go much further. I am troubled by that. The administration has issued a threat to veto the legislation.

I refer to a letter. This is a Statement of Administration Policy that was issued on January 22. I ask unanimous consent that Statement of Administration Policy on H.R. 3108 be printed in the Record.

Mr. President, a couple of days ago, Elaine Chao, Secretary of the Department of Labor; John Snow, Secretary of the Treasury; and Don Evans, the Secretary of the Department of Commerce, the three board members of the Pension Benefit Guaranty Corporation, wrote a letter to our majority leader, Bill Frist, which asks that the Senate not go beyond amending the interest rate changes that were passed by the House. They said they would oppose it and recommend that the President veto any legislation that would further exacerbate the systemic underfunding of defined benefit pension plans in America.

I ask unanimous consent that this letter be printed in the Record.

Mr. President, I think the Washington Post editorial page had a very good editorial on this issue this morning. They dealt with the irresponsibility of allowing companies with underfunded pension plans to dig the hole deeper. They also talked about how it is troubling that in Washington there are always incentives for Members of the House and Senate to do what is wrong, to cater to the special interests--in this case, the airlines, the steel companies. This is a situation in which the airlines and the steel companies and their managers have conspired with their union members to come to Congress and allow dispensation which allows the companies to put less money into their pension plans. And no one in those companies cares because the pension plans are guaranteed by the taxpayers. So you have the labor unions and you have the managers coming here to Washington lobbying for this relief.

We have gone far beyond just the airline and steel companies. Apparently, in the Senate bill every company in America would be eligible to ask the Secretary of Treasury for a waiver from its pension contributions.

Allow me to read this editorial from this morning's Washington Post. It is called ``Pension Perniciousness.''

Monday, January 26, 2004, by the Washington Post:

Not for the first time, Congress has muscled up to an

important problem, taken a good long look at it and resolved

to make it worse. The problem is the vast hole in the

nation's corporate pension schemes, and the perverse rules

that helped create them. Congress's solution, championed in

the Senate by an alliance of Sens. Charles E. Grassley (R-

Iowa), Judd Gregg (R-N.H.), Max Baucus (D-Mont.) and Edward

M. Kennedy (D-Mass.), is to reward the hole-diggers with what

amounts to a $16 billion loan from taxpayers.

About one in five private-sector workers has a ``defined-

benefit'' pension, the sort in which an employer guarantees a

certain pension to its workers when they retire. To pay for

these future benefits, employers are supposed to put

sufficient money into a pension fund; the problem is they

often don't. The gap between money put aside and money needed

in the underfunded pension plans comes to an enormous $350

billion. When companies go bust, the Pension Benefit Guaranty

Corp., the government-backed entity that insures pensions,

gets saddled with plans that are in deficit. As a result, the

PBGC itself has a deficit of $11.2 billion, which taxpayers

may have to plug eventually. As more companies go bust, more

of the $350 billion problem out there in the private sector

will land on taxpayers' shoulders.

Why do companies run these pension deficits? Because

regulations perversely encourage them to do so. If a firm

gives workers a pay raise, it will have to pay for that

immediately; if it gives them an increase in their pension,

accounting rules allow it to defer the cost into the future.

This deferral is especially tempting for cash-strapped

companies--which often means ones with a strong chance of

going bust. Bethlehem Steel, for example, upped its pension

promises and declared bankruptcy three years later. Wobbly

companies that underfund their pensions would pay extra

insurance premiums if the insurer were a private company. But

the PBGC's rules do not allow it to price risk properly,

adding a further incentive for shaky companies to hitch a

free ride with the others.

There is, as Congress is demonstrating, no political

constituency for fixing this problem. Weak companies with

underfunded pensions lobby lawmakers for permission to

continue their imprudence; labor leaders from those same

firms lobby lawmakers in the same direction; nobody is on the

other side. In the deal currently being cooked up, a group of

hard-pressed companies led by the steel industry and the

airlines will be given a special break for two years; if any

of these firms goes bust in the meantime, the public will end

up shouldering the deficits, which is why the congressional

measure amounts to a taxpayer loan.

Yet taxpayer support for people in defined-benefit pension

plans is a perverse notion. Fully one in two private-sector

workers has no company pension plan whatever. Why should the

less fortunate bail out the lucky ones?

That was the editorial from this morning's Washington Post. It accurately summed up the imprudence of the bill that the Senate will be considering this week. Ideally, it would be great if the Senate did not pass such an irresponsible bill. Obviously, as the Washington Post points out, when you have labor leaders and CEOs of airlines and steel companies lobbying together, conspiring together to stick a liability of theirs off on the taxpayers, I fear they are probably going to win.

My hope, however, is that the House, which has been more responsible on this issue, and the White House, which is opposed to the vast expansion of underfunded liabilities that would be engendered by this legislation--my hope is that the White House and the House will prevail upon the conference committee to pass something more responsible than the legislation currently before the Senate.

One final point. The Washington Post editorial referred to this case of Bethlehem Steel and the editorial talked about how Bethlehem Steel was sweetening its pension benefits for the 3 years prior to its going into bankruptcy; then it just handed the pension plan and all its liabilities off on the Pension Benefit Guaranty Corporation and, by extension, the taxpayers.

That brings up another issue. Some people think the pension funding rules are too severe for companies in America and that we ask too much of companies in the ERISA law where we require them to fund their pension plans as well as possible. But it turns out that--I held a hearing on this issue over the summer and what I found was very troubling--the current rules are exceedingly lax. The law, ERISA, which was passed in 1974, requires defined benefit plans to be 90 percent funded. If they are not 90 percent funded, they have to make extra catchup payments. But that 90 percent funding level is referred to in ERISA as ``current liability.'' It turns out that the definition of current liability is not an actuarial definition. It is not the definition of how much would actually be owed to pay the benefits that have been promised. It turns out that the definition of current liability is actually a political definition.

To illustrate this, the Bethlehem Steel case probably is the best example of how woefully inadequate the current pension funding rules are. In its last filing with the Pension Benefit Guaranty Corporation, Bethlehem Steel claimed it was 84 percent funded on a current liability basis. That was Bethlehem Steel's last filing. Then they filed for bankruptcy and handed their pension plan over to the PBGC. It turns out that Bethlehem Steel's pension plan was not 84 percent funded; it was only 45 percent funded as a percentage of how much the PBGC actually had to pay, to pay the benefits that had been promised.

That example shows how the pension funding laws of this country are already woefully lax. We are allowing companies to make promises to employees that they have no hope of ever fulfilling, promises which risk that the taxpayers will ultimately have to pay

these pensions. This legislation the Senate is considering this week will make this lax funding of pensions in this country far more lax. It will do a lot of long-term damage.

I hope my colleagues in the Senate will think carefully about this notwithstanding the political pressures they will have from airline executives and from labor union leaders.

I yield the floor and suggest the absence of a quorum.

Mr. President, our Nation's States and health safety net are simultaneously facing a crisis. According to State budget officers, the states are facing a nearly $30 billion budget shortfall this year and an $80 billion gap in fiscal year 2004 due to the economic recession. At the same time, it is estimated that the number of uninsured increased from 41 to 45 million this past year. And, due to the State budget shortfalls, the numbers of uninsured may increase even further.

In fact, the lead paragraph in the New York Times in an article entitled ``Cutbacks Imperil Health Coverage for States' Poor'' on April 28, 2003, reads, ``Millions of low-income Americans face the loss of health insurance or sharp cuts in benefits, like coverage for prescription drugs and dental care, under proposals now moving through state legislatures around the country.''

The article continues, ``State officials and health policy experts say the cuts will increase the number of uninsured, threaten recent progress in covering children and impose severe strains on hospitals, doctors and nursing homes.''

As a result, I believe the Federal Government should take immediate steps to fundamentally reassert and reassert its role in helping the States with this fiscal crisis and rising Medicaid costs, lowering the number of uninsured, and finally, confronting infant and maternal mortality and morbidity statistics that are unworthy of our great Nation.

To address these issues, today and tomorrow, I will be introducing three relevant bills. The first addresses the fiscal crisis confronting States and the Medicaid program entitled ``Strengthening Our States,'' or the ``SOS Act.''

The second addresses our Nation's long-standing and growing crisis of the uninsured that is entitled the ``Health Coverage, Affordability, Responsibility, and Equity Act'' or the ``Health CARE Act.''

The final bill takes on our Nation's high infant and mortality rates and is called the ``Start Healthy, Stay Health Act.''

First things first. In any campaign--whether in sports, business, or politics--you have to have both offensive and defensive strategies. In trying to reduce the number of uninsured in our country, we must first, as an emergency room doctor would, stop the bleeding. Therefore, our first priority should be to support and strengthen the Medicaid program.

Unfortunately, the Center on Budget and Policy Priorities estimated in March that as many as 1.7 million Americans could lose coverage altogether under proposals advanced by governors or adopted by State legislative committees this year.

Therefore, I am introducing today with Senators Corzine, Clinton, Kerry, Lautenberg, Dayton, and Johnson legislation entitled the ``Strengthening Our States Act of 2003.'' This bill is a companion bill to that being introduced by Representative Dingell, Brown of Ohio, Waxman, and others and is aimed at improving Medicaid and providing support to States to enhance their ability to provide coverage to their uninsured residents in these difficult times.

The SOS Act uses a combination of approaches which: first, provide additional Federal fiscal relief to States; second, provide additional flexibility to States in administering and improving the Medicaid program; and third, provide incentives and assistance to stave off cuts to existing coverage, and facilitate coverage expansions in the future.

The legislation will simplify Medicaid and enable States to strengthen the program and stands in sharp contrast to the President's proposal to convert Medicaid into a block grant that would erode health insurance coverage.

In fact, the Administration's prescription is the wrong medicine for the wrong ailment. The Federal Government should be stepping up its commitment to seniors, people with disabilities, and low-income children rather than stepping away and leaving States holding the bag.

First and foremost, our legislation acknowledges and reflects on the important role that Medicaid plays in our entire health care system. As Diane Rowland and Jim Tallon of the Kaiser Commission on Medicaid and the Uninsured have noted: ``. . . it is hard to envision our health system and society without a program like Medicaid. Medicaid is the glue that helps hold our health system together and takes on the highest-risk, sickest, and most expensive populations from private insurance and Medicare. For low-income Medicare beneficiaries, Medicaid picks

up Medicare premiums and some cost sharing as well as filling the gaps in coverage for long-term care services, prescription drugs, and vision and dental care.''

Medicaid addresses the failure of the marketplace to deliver affordable health coverage to our Nation's most fragile and vulnerable citizens. However, there is no reason why it should also have to play the role of picking up the slack of the Medicare program. A central tenet of our SOS proposal is for the Federal Government to begin taking the steps to assume 100 percent of the costs associated with care and services in Medicaid for Medicare beneficiaries, also known as dual eligibles.

This, I would add, is in keeping with long-standing policy of the National Governors' Association, or NGA, and is in sharp contrast to the Administration's proposal to maintain the current Medicaid financing system for mandatory populations and services while block granting care of optional populations and services to States. Who are these optional populations? They are largely the elderly and people with disabilities, many of whom are dually eligible for Medicare and Medicaid.

According to the Kaiser Commission on Medicaid and the Uninsured, 83 percent of all Medicaid spending on the elderly is for either optional populations or services, such as prescription drugs and long-term care. In fact, according to Cindy Mann of Georgetown University and a former Medicaid director under the Clinton Administration, an estimated 35 percent of all State Medicaid costs are for so-called ``dual eligibles.''

Therefore, rather than stepping up to the plate, the Administration is instead stepping away from its commitment to the elderly and disabled, which should be our responsibility at the Federal level, by moving these groups and their health care services into a block grant. Groups representing the elderly and disabled communities have already spoken out against this.

As AARP Executive Director and CEO Bill Novelli says, ``This [Administration's block grant] proposal handcuffs states because it leaves people more vulnerable in future years as States struggle to meet increased needs with decreased dollars.''

The Consortium for Citizens with Disabilities adds, ``The Bush Administration proposal fails people with disabilities and dishonors the Nation's commitment to its residents--it is not in the national interest. . . . What the Medicaid program calls `optional' services are, in reality, mandatory disability services for the children and adults who need them. These services often are not only life-saving, but also the key to a positive quality of life--something everyone in our nation deserves.''

Again, the Federal Government should be stepping up its commitment to seniors and people with disabilities rather than stepping away, as the President's proposal does.

With respect to the fiscal crisis facing states, the Administration has long opposed fiscal relief to States as part of its economic stimulus package. Instead, the Administration points out that its Medicaid block grant proposal provides more funding up front to States, in the amount of $3.5 billion over one year and $12.7 billion over the first seven years to help States. But the proposal has strong elements of a typical bait and switch by yanking every dime of that money away starting in 2011. Secretary Thompson noted at the press conference that he would not be around at the time of the $12.7 billion in reductions eight years from now and the plan clearly counts on the fact that most of this crop of governors would not be either.

However, that is exactly when our Nation's baby boomers hit retirement age in rapidly increasing numbers and the long term care costs within Medicaid will significantly increase.

In sharp contrast, the SOS Act includes a temporary increase in the Federal matching assistance percentage, or FMAP, to state Medicaid programs in the amount of $15 billion and another $15 billion in additional aid to States--far more than the temporary $3 billion offered by the Administration.

Also, unlike a block grant, the current Medicaid matching rate is responsive to States in times of recessions by providing Federal matching funds to States for each additional person who becomes eligible for Medicaid. Moreover, our SOS Act recognizes the formula can be even more responsive by preserving coverage during difficult times and includes a General Accounting Office study of ways to make the formula more responsive to fiscal distress during either a national or State recession.

In addition, the Strengthening Our States Act would increase Federal payments for certain services critical for special populations or federally-imposed services. It would provide enhanced Federal funding for urban Indian health services, translation services, outstationed workers, and reimbursement to health providers for emergency services delivered undocumented individuals who are otherwise eligible for Medicaid. Again, the Administration's proposal simply block grants funding for these services and steps away from its Federal responsibility.

For example, services delivered to Native Americans by Indian Health Service providers and health organizations are reimbursed at 100 percent federal match currently in recognition of the Federal responsibility and role in delivering services to Native Americans apart from States. Under a block grant, the Federal match is eliminated and the Federal role in providing care to Native Americans is abandoned. This is contrary to longstanding Federal policy and its relationship with tribes and tribal organizations and to policy by the National Governors' Association.

And finally, with respect to giving States flexibility and assistance to expand upon existing coverage options, the Strengthening Our States Act is far better and responsive to states than a block grant. Block grants do not adjust for population changes, recessions, or efforts to expand coverage by States. At its unveiling, Secretary Thompson spoke about the added options the block grants offer States to expand coverage. However, it does so with no new funding. This offer of flexibility is, therefore, illusory.

In fact, because Federal funding is capped for optional opulations by the Administration's block grant, states cannot draw down additional Federal support when it chooses to expand coverage. Under current law and the SOS Act, they can. Some of the more ground-breaking efforts by states such as those by Vermont, Washington, Minnesota, Rhode Island, Hawaii, and even Wisconsin, would have likely never come to pass without that added Federal support.

Therefore, the SOS Act continues and expands upon that Federal support by giving States additional coverage options, such as to set uniform eligibility levels for families rather than covering parents and children separately. The SOS Act also would make States eligible for enhanced matching funds to cover low-income working parents under Medicaid.

States should also beware of the Administration's promise of 9 percent growth rates for the next 10 years. Earlier this year, the House of Representatives passed a budget that would have reduced Medicaid spending by $92 billion over 10 years. While that was rejected in conference, such efforts become much easier under the rubric of a block grant. Again, recent history contains many such promises and examples.

For example, as the NGA policy on the Social Service Block Grant notes, during passage of TANF, ``Congress and the Administration made a commitment to Governors to fund SSBG at $2.38 billion each year through fiscal year 2002, with the funding increasing to $2.8 billion in fiscal 2003 and each year thereafter.'' The reality is that funding has been reduced to $1.7 billion in fiscal years 2002 and 2003, 65 percent below the promised funding levels.

There is an old saying, which goes, ``Fool me once, shame on you. Fool me twice, shame on me.'' When members of Congress and future Administrations see 9 percent growth rates in these Medicaid block grants and have a particular tax cut, Medicare change, transportation program, or whatever they wish to fund, you can already hear them saying, ``What if we just reduce the growth rates to 8 percent or 7 percent or 6 percent or 5 percent. . . .'' Well, we all can see where this rapidly heads and we have all been fooled once before.

Some governors, including Secretary Thompson, seem to have a short memory on these matters. On April 14, 1997, 41 Governors, including Secretary Thompson, Bush Administration Cabinet Members Tom Ridge, and Christine Todd Whitman, wrote President Clinton, and said: ``We adamantly oppose a cap on federal Medicaid spending in any form. Unilateral caps in federal Medicaid spending will result in cost shifts to states, enabling the federal government to balance its budget at the expense of the states.''

What was true then remains true 6 years later.

Moreover, on behalf of the NGA, Governors Bob Miller of Nevada and Mike Leavitt testified before the Senate Finance Committee and made the following statement: ``. . . caps could result in states becoming solely responsible for unexpected program costs, such as a loss in a lawsuit on reimbursement rates or the development of expensive new therapies that drive up treatment costs beyond the federal allowable rate.

They added: ``. . . the cost shift resulting from a unilateral cap would present states with a number of bad alternatives. States essentially would have to choose between cutting back on payment rates to providers, eliminating optional benefits provided to recipients, ending coverage for optional beneficiaries, or coming up with additional state funds to absorb 100 percent of the cost of services.''

I do not see why this needs to be an all-or-nothing proposition. Why do we have to throw out the entire Medicaid financing structure, which benefits States, beneficiaries, and providers, in order to grant States additional flexibility to their programs?

In 1997, we rejected the all-or-nothing proposal and worked with the States and gave them a package of added flexibility, including the ability to enroll much of their Medicaid population in managed care without the need for a waiver.

Secretary Thompson talks a great deal about the flexibility the block grant offers and cites the need to allow States the ability to move people out of institutional settings into more appropriate home- and community-based settings and is right. Under the block grant, States are only granted additional flexibility to do so if they accept a block grant. In contrast, the SOS Act provides States an enhanced Federal matching rate to provide home- and community-based services.

However, rather than saying to States that they can only do so through the acceptance of a block grant, why can't we provide them this option without the imposition of a Federal limit on funding? Both states and beneficiary groups are asking for it and we can and should act.

It is on this point that I must add that the Medicaid program was not created for Federal officials or governors. We all clearly need to be reminded that there are other stakeholders in the Medicaid program, including the 43 million people served by the program.

As Alan Weil of the Urban institute and the former Medicaid director of the State of Colorado wrote in a recent article published in Health Affairs: ``If money is at the heart of debates over Medicaid, the millions of indigent people whose varied and complex medical needs are met by the program are its sole. The amount of human suffering the program alleviates is immense.''

As the Administration attempts to proceed on negotiations with the governors on a deal on block grants, let's not forget the children, mothers, seniors, and people with disabilities served by Medicaid. The SOS Act provides a far better alternative.

I ask unanimous consent that the text of the bill be printed in the Record.

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. President, on December 10 I was in Las Vegas when my staff stepped into a meeting and said the Supreme Court had upheld the McCain-Feingold Campaign Reform bill. I couldn't believe it. All of the political prognosticators said this very conservative Supreme Court would not uphold that law. They not only upheld the law but they completely repudiated what the intermediate court of appeals had done. They went past them and upheld the law.

I was so happy that after I got out of my meeting, when the press called me, I said that if Sandra Day O'Connor were available I would give her a big hug because the decision she wrote was tremendous. She broke from the pack to do what no one thought she would do. I have tremendous respect and admiration for her courage in doing that. I wrote her a letter and told her what I said publicly. What she did was tremendous.

Why did she do it? A lot of it is not only based upon her academic prowess but the fact that she served as an elected State legislator in Arizona. I am sure she remembers what fundraising is all about.

The bipartisan campaign finance reform law--I call it bipartisan because John McCain was one of the main sponsors, even though it was passed primarily by Democrats in the House and the Senate--and the December 10 ruling were the culmination of a remarkable 8-year effort by two outstanding public servants.

They first introduced this bill in September of 1995. Both of these men realized that since our campaign laws were revamped many years ago, those who wanted to get around the intent of the law had discovered some gaping holes and exploited them beyond what anybody could have imagined.

In the late 19th century and early part of the 20th century, corporate America basically owned Congress. As a result of that, in the early 20th century, Congress passed a law saying there could be no corporate funds used in Federal elections. That is the way it was during almost all of this past century. Slowly but surely that changed because the courts ruled that even though you could not give corporate or soft money directly to a Federal candidate, that candidate could go out and, in any way they wanted, raise money for the State party.

As we know, during the last 15 years or so, the largest amount of money spent in Federal elections was soft money, corporate money, because corporations would give huge amounts of money to the two State parties and they would run these mostly negative ads. The negative advertising taking place in America in recent years has come generally from soft money--so-called corporate money.

Mr. President, the same was developing in recent years that was in effect before 1900 and shortly after 1900 when corporate America was giving these huge amounts of money to Congress. Maybe Congress, prior to December 10, 2003, was not compromised. Maybe they were not corrupted. I am confident that is true, but what was going on was corrupting. It would only have been a matter of time until this got way out of hand, more so than it should have been.

So I appreciate very much the law having been drafted. I appreciate very much the fact that now we have a campaign practice in America which says if somebody is running for office, they can go ask an individual for money and individuals are the only ones who can give money. An individual Senator or Congressman cannot ask for corporate money in any fashion or form. That is the way it should be. There is nothing wrong with asking for campaign money. There is nothing wrong with giving campaign money, as long as there is full disclosure and it comes from individuals, not corporations.

The law that passed and was upheld by the Supreme Court is not a perfect law. I am sure people will manage to find ways around it. But public confidence had been eroding and now the political parties are not being allowed to accept large contributions, at least directed at individual Senators, who won't have as much money, and there is certainly nothing wrong with that. I am sure we won't see all the negative ads that we have seen in the past.

These unlimited contributions damaged out political system by raising the stakes for those who wrote big checks. I am a strong supporter of business. Businesses create jobs and provide health insurance for many Americans. They generate the products and services we all enjoy. Most businesses play by the rules and play fair. They realize their short- term pursuit of profit is not the only thing that matters. They understand in the long run, America prospers best when we all share in the prosperity.

The influence of big money in politics created an environment in which special interests threatened to overwhelm the common good. Instead of seeking common ground and compromise, business and interest groups began to think in terms of a winner-take-all strategy, with the ability to influence the process going to the highest bidder.

This poisonous climate actually widened the gap between the interests of big business--which could contribute large sums of soft money--and the interests of ordinary Americans. Unfortunately, in most cases, ordinary Americans found themselves on the outside, looking in on a process that was dominated by big money.

I am not pointing fingers at anyone because it was happening on both sides. Senators Feingold and McCain realized that something was wrong, and they set out 8 years ago to make it right. It wasn't easy. It took years to get to a conclusive vote on the bill. I offered an amendment identical to their proposal, but a cloture vote failed and it died.

Finally, in 2002, the Senate passed the Campaign Finance Reform Act. A week later, it was signed by President Bush into law. A little over a month ago, that law was upheld by the highest court in the land. The saga of campaign finance reform is a useful lesson to those who study government. It illustrates the importance of tenacity and conviction.

I have no doubt that the great majority of Americans supported campaign finance reform from the very beginning. As indicated by the vote, the people in this body and in the House knew that people favored this. There may have been some individuals who didn't want to vote for the bill in their hearts, but they did so because they recognized that the overwhelming number of people in America supported it. Despite this support of the American people, the bill would never have become law if Senators McCain and Feingold had not kept pushing it because there were a lot of people who may have been outwardly supportive of this in Congress but simply weren't willing to push very hard to make sure it came to be.

Time and time again, Senators Feingold and McCain encountered all kinds of setbacks. Time and time again, they refused to give up. I don't know how many cloture votes failed in this matter--I would estimate at least 25 over the years. These two men kept fighting because they believed in their hearts that this was an issue of fundamental importance to our democracy.

Senators McCain and Feingold stayed the course because they were fighting not just for a piece of legislation, they were fighting to save our political system. The tenacity might have surprised their opponents, but those of us who followed their careers should not have been surprised. Is McCain-Feingold perfect? Of course not. Will people try to get around it? Of course they will. We will have to look at ways to plug those holes. But it is so much better that we don't have these large amounts of soft money coming into elections.

Just to be illustrative, in the State of Nevada, when I ran 6 years ago, Senator John Ensign and I spent, between us, $20 million. The vast majority of that was soft money that went through political parties. There were negative ads against me and negative ads against Senator Ensign. The system would have been better without that money. You can multiply this all over the country because it was the same. So what has happened here and what happened with the Supreme Court is good for the system. I have great respect and admiration for Senator Russ Feingold.

To show you what a man of conviction he is, 6 years ago when he was involved in his first reelection effort, he was behind in the polls. We knew that and we said to Russ Feingold: Let us give some money to the State party to help you. He said: Do not give money to the State party. In fact, if I recall correctly, money was given and he made us take it back. Even though he was behind at the time, losing the election was more acceptable to him than violating a principle--that is, corporate money being involved in his election. He wound up winning. I think one reason for that is that people know he is a man of conviction and that proved it.

He comes from the State of Wisconsin, which has a rich tradition of progressive reform. There is a statue in this Capitol of ``Fightin''' Bob LaFollette, a leader of the progressive movement in that State. Senator Feingold's father was involved in that movement, and he passed along his strong values to his son.

Russ Feingold graduated from the University of Wisconsin at Madison. He is a Rhodes scholar. Then he went and graduated with honors from Harvard School of Law. He then served 8 years in the Wisconsin State Senate before coming to this body.

His trip to the Senate is a story in itself. Twelve years ago, the Senate race in Wisconsin was a race involving money. There were people there who had raised a lot of money and were spending a lot of money. Russ Feingold had almost no money. He was a State senator, but he had been walking door to door all over the State of Wisconsin.

Maybe a month before the election, a number of newspapers in Wisconsin said: We have had enough of this negative campaigning going on in this race, and we are going to support this young State senator from Wisconsin. We want people to focus on Russ Feingold, which was a name few people had heard of. Russ Feingold came from nowhere within a matter of weeks to win that election.

Here in the Senate he fights to help working people and farmers by improving health care, education, and creating jobs. I know Russ Feingold is a man who stands for good government, not only what he did on campaign finance reform, but also as a watchdog against wasteful spending.

Russ Feingold is a man who practices what he preaches. When he launched his effort to ban unregulated soft money, the naysayers said it couldn't be done. They said the political process had become so expensive that nobody could get elected without corporate money. Russ Feingold proved them wrong. He stuck to his principles, kept his promises to limit spending and reject the use of soft money in his own race, and he was reelected.

He is a man of strong principles, and he shows strong principles and successful politics are not mutually exclusive.

I have gotten to know Russ Feingold very well. I have gotten to know his lovely wife Mary, who is a friend of mine. I try to call her once in a while just to see how she is doing. She is perky and astute--a wonderful woman. I want the record to be spread with my admiration for Russ Feingold and his wife Mary, for the team they are, and I am certain the encouragement she gave him to stay the course.

Mr. President, the other member of this duo that was responsible for this legislation is John McCain. John McCain is an interesting person, to say the least. He is a true American hero. He has lived through things that most of us cannot comprehend.

More than 20 years ago, I went to a congressional prayer breakfast. John McCain and I served together in the House of Representatives. We were elected at the same time. The prayer breakfast in the House, as I recall, was every Thursday morning. I can't remember the exact day, but it was held in the morning. I wanted to go because John McCain--this person with whom I was elected in the same class--was going to make a presentation at the prayer breakfast. It was one of the most memorable 45 minutes I have ever spent.

John McCain recounted to us--there was no press around; it was a private meeting--what he had gone through in the state of being a prisoner of war in Vietnam. He is a graduate of the U.S. Naval Academy. His father was an outstanding military officer, as was his grandfather.

In October of 1967, John McCain was flying a mission over Vietnam when his plane was struck, and he was forced to eject from that jet airplane. He parachuted and landed in a lake, a short ways from the prison where he was going to be placed. He broke both of his arms, broke a leg, and sustained many other injuries. Not only that, but a mob dragged him out of the lake to the shore and then proceeded to beat on him, even though he was badly injured. He was taken a short distance to the famous Hanoi Hilton where he was tortured and held in solitary confinement.

He spent 6 years in prison, much of that in solitary confinement. Because his father was head of the Seventh Fleet--I think that's the proper designation; he took care of the theater of war in Vietnam--the Vietnamese said because your father is a military leader in this area, you can go home. John McCain said: No, I am not going home unless my fellow prisoners go with me. So they proceeded to break his shoulders again and cause him all kinds of physical pain, discomfort, anxiety, and emotional stress. It was brutal what they did to him.

He recounted this in some detail at the prayer breakfast. But a lot of it had to be put together because he is certainly not a boastful man and doesn't talk about his military experience very much and, I repeat, this was in a very private, prayerful meeting. I can remember his explaining the first time all these prisoners were able to get together for Christmas and how they found a way to sing Christmas songs.

It was, as I said, a remarkable experience to listen to John McCain. He is a man of integrity. To show his humility, if you look at his biography on his Web site, it is four very short paragraphs. He doesn't talk about most of the things he has accomplished in life. You have to read on, not on his Web site, because he is a man of some humility.

McCain and Feingold are a lot alike. They both have tenacity, perseverance. They both cause the Senate and myself, someone who is trying to move legislation along, a bit of heartburn on occasion. I have sometimes asked myself about these two guys--oh, why are they doing this? They are doing what they do, even though there is some short-term pain for me and others who are trying to move legislation on the floor, because they feel strongly about different issues.

There are times when I am anxious and concerned about the issue they raise, but I never ever question why they do it. I know why they do it. I work as much as I can to understand that these two watchdogs work together on a number of issues, and they also work separately. They have different interests in life.

I couldn't let any more time go by without talking about how important it is for the body politic to have passed McCain-Feingold and how important it is to the country that the Supreme Court of the United States upheld that law nearly as we had written it. It has changed our lives, but I think for the better. Even though some people are upset it passed, I am very glad, and it would never have happened but for the perseverance of these two men. It will renew the vitality of our political system and restore our faith in Government. It could not have happened but for these two fine Senators about whom the States of Wisconsin and Arizona should feel proud.

Mr. President, I suggest the absence of a quorum.

Reserving the right to object, the Parliamentarians have not had an opportunity to study this in detail. Therefore, they are not at this time ready to rule on whether or not this amendment is in order. A number of people have called our cloakroom, recognizing that as soon as the Parliamentarian makes a decision, that will answer the question itself. Based upon that, on behalf of a number of other Senators, I object to setting this amendment aside.

Mr. President, I ask my colleague to withhold the request until I have had a chance to make a brief statement.

Mr. President, I sought recognition to join my distinguished colleague, Senator Santorum, in the presentation of this matter which is of great importance, not only to Pennsylvania, but great importance to the country.

The US Airways system is the sixth-largest carrier in the United States. It provides service on a national and international basis. As a result of the problems of September 11, US Airways has had considerable financial problems and has moved forward to get a loan guarantee from the Federal Government, $1 billion, and to accomplish that there have been major concessions made by labor and major concessions made by suppliers to enable the airline to chart a course for the future on which they can succeed.

The Pension Benefit Guaranty Corporation has interpreted the law to say

that they are not in a position to accept the termination of a plan and the reinstatement unless there is a legislative change. If the bill, which Senator Santorum, Senator Dole and I are proposing, is not enacted, airline pilots will have a drastic reduction in their pension benefits, and the taxpayers will have all of the obligations thrust upon the Pension Benefit Guaranty Corporation so that the taxpayers will be hurt and the pilots will be hurt and, ultimately, consumers of airline travel will be hurt.

The legislation which we have proposed would authorize the PBGC to have a discontinuance of the plan and then to have a reinstatement of the plan. I think it is preeminently sensible.

I am not unaware of the prerogatives of the Finance Committee and their guardianship of the law generally, and I do not subscribe to rifleshot, buckshot--any shot. This is a proposal that makes sense. If other companies come in and can make a similar presentation, that makes sense, too.

So it is my hope that we will be able to consider this bill on the merits. We are not too busy to take a little time of the Senate having a discussion of the bill. It cannot be considered without a unanimous consent agreement. But, if the unanimous consent agreement were entered into, we could have debate.

If the Senator from Iowa and the Senator from Montana disagree with the substance of the bill, I can understand that. We can debate it, it can be considered, and we can vote on it. But this is one of those situations where I think a little extra consideration is in line.

If the unanimous consent request is granted, then we can have debate on the merits, and I will go into these issues in some greater detail for the edification of my colleagues whom I hope will have a chance to vote on this matter.

I thank my colleague from Pennsylvania for yielding and for withholding the unanimous consent request.

I have sought recognition today to join my colleague Senator Santorum in introducing legislation that would benefit American taxpayers by saving them hundreds of millions of dollars in potential Federal pension liabilities as well as protecting pension benefits of US Airways pilots. Senator Santorum and I believe this legislation is a win-win proposition that benefits all parties involved, and it is good policy that the American consumer will benefit from as well.

Sound transportation infrastructure is the backbone of a healthy and vibrant economy. The airline industry continues to struggle in the wake of the events of September 11. Though passengers are returning, the industry is still operating at well below historic levels, and this is obviously affecting the industry's profitability.

US Airways, the Nation's sixth-largest air carrier, has been particularly hard hit, filing for chapter 11 bankruptcy protection on August 11, 2002, and laying off over 13,000 employees since. One unique challenge faced by this airline is the fact that it has historically had a large and lucrative operation at Washington's Ronald Reagan National Airport, and so long as operations from this airport were constrained due to post-September 11 security considerations, US Airways was losing a significant portion of its revenues.

US Airways is now in the final stage of obtaining approval for a $1 billion loan guarantee from the Air Transportation Stabilization Board, ATSB. I have been assured that this loan guarantee will enable US Airways to emerge successfully from chapter 11 bankruptcy proceedings and again vie successfully for passengers in the international market.

But before this can happen, US Airways needs to restructure its pension obligations, which are backed by the Federal Pension Benefit Guaranty Corporation, PBGC, and, ultimately, the American taxpayer. US Airways's pension liabilities increased significantly in recent months due to poor market performance and a 41-year low in interest rates. Funding obligations for the pilots' pension plan is estimated to be $575 million for 2004 and $333 million for 2005. Given its current cash position, US Airways cannot make these payments, and, additionally, the airline has indications from the ATSB that the ATSB will not approve its loan considering these large obligations.

But US Airways is proposing a simple and cost-saving solution that would essentially terminate and then restore its pilots' pension plan, a change that would allow the airline to amortize the plan's unfunded accrued liability and unfunded current liability in level payments over a 30-year period. Simply put, payments that would have been made over a 5-year period would be spread out over 30 years, a schedule that would allow US Airways to fully meet its pension obligations. This means that the PBGC would not have to step in to cover liabilities US Airways would not otherwise be able to meet, and the pilots are agreeable to this proposal. This also means that US Airways would then likely have its loan guarantee approved and thus be able to emerge from bankruptcy protection.

The only problem is that the PBGC has determined that it does not have the legal authority to approve such a plan. Inaction would leave US Airways with no option but to terminate its pilots' pension plan and regrettably transfer liability to the PBGC.

To avoid this unnecessary situation, we are proposing a legislative clarification that would specify that the PBGC has the legal authority to terminate and then restore US Airways's pilots' pension plan, thereby protecting the pilots' pensions while potentially saving the American taxpayer hundreds of millions of dollars annually. I want to emphasize that this is a simple statutory clarification, a clean bill that provides no additional benefits to US Airways and is of no cost to the Federal Government. In fact, successful and timely passage of this bill may very well save the U.S. Treasury billions of dollars over a period of many years.

US Airways will present its reorganization plan before U.S. Bankruptcy Court on January 16, 2003, prior to which it must resolve this pensions issue. Accordingly, time is of the essence, and this legislative fix must be signed into law prior to January 16, 2003, for it to have any positive effect. It is thus with this sense of urgency that Senator Santorum and I ask for the bill's immediate consideration.

I ask unanimous consent a list of facts in support of this legislation be printed in the Record.

Facts in Support of Legislation

problem/background

US Airways is in the final stage of obtaining approval of

(1) a $1 billion loan guarantee from the Air Transportation

Stabilization Board (``ATSB''), (2) a $240 million equity

investment from the Retirement System of Alabama, and (3) a

plan of reorganization pursuant to which US Airways would

emerge from Chapter 11 bankruptcy proceedings.

On 12/20/02, US Airways filed a Plan of Reorganization and

Disclosure Statement with the bankruptcy court. A hearing is

scheduled for 01/16/03 on the adequacy of the Disclosure

Statement, and if approved, the Plan will be circulated with

voting materials to impaired creditors. It is expected that a

hearing on confirmation of the plan of reorganization will

take place in March 2003.

This progress is a direct result of unprecedented contract

modifications agreed to both during the summer and in the

last few weeks by the Air Line Pilots Association,

International (``ALPA''). These modifications will produce an

average savings of $633 million annually.

One of the remaining issues to be resolved is the

restructuring of US Airways's pension obligation, which has

increased significantly because of the poor market

performance and 41-year low interest rates. US Airways

sponsors defined benefit plans for its pilots, flight

attendants, mechanics and other employees and other

employees.

US Airways is facing estimated pension contributions of $1

billion in 2004 and $800 million in 2005 for its defined

benefit plans. The pilot plan pension funding obligation

alone is estimated to be $575 million for 2004 and $333

million for 2005. The Company can not make these payments,

given its cash position. Additionally, it has indications

from the ATSB and the ATSB will not approve its loan with

these large pension obligations. The ATSB is requiring that

US Airways develop a viable business plan for the 7-year ATSB

loan period.

The traditional funding waiver permitted under the Internal

Revenue Code and the Employee Retirement Income Security Act

is not sufficient relief because a waiver applies only one

year at a time and the waived contribution is amortized over

only a 5-year period. A traditional waiver would actually

result in increased pension contributions, particularly in

years 2005, 2006 and 2007, which the Company cannot afford.

As of 01/01/02, the funded status (on a current liability

and market value of assets basis) of the US Airways pilot

defined benefit plan was 73.7 percent. Due to the proper

market performance and low interest rates, it is

estimated that the funded status of the plan will drop

significantly as of 01/01/03 (based on information as of 10/

31/02) to 50.1 percent.

US Airways and ALPA reached agreement on substantial

changes to the pilots' plan that eliminate and reduce

benefits accruing on and after 01/01/03. However, US Airways

must resolve the pension funding obligations for benefits

that accrued prior to 01/01/03 in order to get final approval

for the loan guarantee and emerge from bankruptcy.

There is tremendous urgency to resolving US Airways's

pension funding liabilities, which can be achieved in a

manner that: Insures the success of US Airways'

reorganization; protects the pension benefits of US Airways'

employees and retirees, who would lose hundreds of millions

of dollars in pension benefits that are not guaranteed by the

Pension Benefit Guaranty Corporation (``PBGC'') in the event

of plan termination, and retirees, who would hundreds of

millions; protect the solvency of dollars in pension benefits

that are not guaranteed by the PBGC) in the event of plan

termination; and protects the PBGC by providing substantial

funding for a continuing plan in place of a plan termination

which leaves PBGC with billions of dollars in liabilities

that will not be recovered in the bankruptcy.

US Airways' bankruptcy filings emphasized the need to

resolve this crisis immediately by legislation, and made

clear the likely alternative was plan termination.

solution

US Airways and ALPA have requested a special funding rule

for liabilities that have accrued under the US Airways pilot

defined benefit plan as of 12/31/02. Under the proposed bill

introduced today, the US Airways pilot defined benefit plan

will be treated as if terminated and restored as of 01/01/03,

with a restoration payment schedule that amortizes the plan's

unfunded liability and unfunded current liability in level

payments of a 30-year period.

With enactment of the proposed bill, US Airways would

continue to maintain and fund the pension plans for its

pilots. US Airways would successfully restructure. US Airways

would meet all funding obligations to the pilots' plan by

making substantial level pension contributions of

approximately $150 million on average per year under the

proposed payment schedule. Additionally, with enactment of

the proposed bill, the PBGC would avoid the liability and

responsibility resulting from the termination of an

underfunded pension plan.

Mr. President, I thank my colleagues from Iowa and Montana for their responses. I appreciate their considerations.

It would be my hope, as I said earlier, that they would recognize the exigencies of this situation and permit us to proceed. But in light of their statements that they intend to object, which I understand will follow, I inquire of my colleague from Montana, who is now chairman, and of my colleague from Iowa, who hopefully by this time tomorrow will have the resolution passed to shift the chairmanship, whether there might be an early hearing set in the Finance Committee.

I am in line to be chairman of the appropriations subcommittee having jurisdiction over the Department of Labor. And Senator Harkin and I have agreed to have a hearing on this next week. But the authorizing committee has the paramount responsibility. There is a U.S. Bankruptcy Court hearing on this matter on Wednesday. I do not think we have a problem about the solvency of US Airways being involved as I thought there might have been several weeks ago. But I think the court might be willing to defer action which touches upon these issues if there was knowledge that there was going to be expedited treatment.

So my question to the chairman and ranking member of the Finance Committee is whether it might be possible to schedule a hearing yet this month which could then be used with the court to defer action with the possibility or prospects of some action by the Senate on this issue, that is, US Airways, or the issue generally.

Mr. President, if I might direct a question through the Chair to the Senator from Montana, he says he may well be able to have a hearing this month. It depends upon his analysis of the legislation or the complexity of it. Would it be a fair statement that the representation could be made to the court that there will be an effort made, if possible, to have a hearing in finance this month?

I think that would be a yes.

Might I ask my colleague from Iowa, who will soon waive the gavel, if he concurs in what the Senator from Montana said?

Mr. President, if I may direct a question through the Chair to the Senator from Iowa, the substance of what I understand he said is that if it is possible to have a hearing this month, considering whether it be on a single company or the complexity of taking up a broader issue, that consideration would be given to having a hearing this month if it can be done in a practical sense.

Mr. President, I take that also to be a yes.

I thank my colleague from Iowa.