Madam Speaker, I yield myself such time as I may consume. Madam Speaker, the objective of this legislation should be to encourage the retention and expansion of traditional defined benefit plans. Traditional defined benefit plans generally…
Madam Speaker, I yield myself such time as I may consume.
Madam Speaker, the objective of this legislation should be to encourage the retention and expansion of traditional defined benefit plans. Traditional defined benefit plans generally offer a guaranteed benefit to the worker and, they are generally well managed and diversified. The passage of this bill, in my view, will set up a conference report that will come back to us that will accelerate the termination of well-funded and managed traditional defined benefit plans. And I say that for three reasons.
Three parts of this legislation will adversely affect well-funded and managed plans. First, the funding roles are more costly and more restrictive. That in and of itself will act as a disincentive for continuation of these plans.
Second, there is a failure to include relief for the airline industry, clearly putting pressure on well-funded and managed plans to pick up the costs for other industries, questioning whether they should stay and provide these plans.
Third, we continue to allow companies to go into bankruptcy in order to dump their costs onto the PBGC, once again affecting those well- funded plans that are going to be asked to pick up the tab.
For all these reasons this legislation is likely to accelerate the termination of plans that we would want to see continued. The termination of these plans will just adversely affect the funding of the PBGC, the guaranteed fund, complicating the situation and making it worse.
Madam Speaker, I want to point out that there are provisions in this legislation that are very good. The provisions dealing with the defined contribution provisions are needed and, as it was pointed out in the Ways and Means Committee, contain many of the provisions that were worked on through the Portman-Cardin process as
well as legislation presented by Mr. Emanuel and Mr. Pomeroy. It includes automatic enrollment, the split refunds where tax refunds can go partially into retirement savings, the extension of the savers credit, the ability for individuals to roll over funds and keep them in retirement funds longer.
All of those are positive aspects. However, when you look at this bill in balance, we do need to pass legislation; but on balance this legislation will cause more harm than good, and I urge my colleagues to reject the bill.
Madam Speaker, I reserve the balance of my time.
Madam Speaker, I am pleased to yield 3 minutes to the gentleman from Washington (Mr. McDermott).
(Mr. McDERMOTT asked and was given permission to revise and extend his remarks.)
Mr. Speaker, I am curious: Is the majority on the Ways and Means side going to be using their time or not? Does the gentleman know?
Can I inquire as to the amount of time that remains on all sides?
The time for the gentleman from Michigan?
Mr. Speaker, I reserve the balance of my time.
Mr. Speaker, I yield 3 minutes to the gentleman from Michigan (Mr. Levin), the senior Democrat on the Subcommittee for Social Security and who understands retirement security.
(Mr. LEVIN asked and was given permission to revise and extend his remarks.)
Mr. Speaker, first let me yield myself 30 seconds to point out that I wish we did have provisions in this bill to deal with the airline industry, because I think we should. The problem is that we do not, and we go to conference with a situation where those who have well-funded plans are now likely to be asked to pay because of the costs of the airline industry. And let me also point out from Mr. Boehner's comment about making the PBGC better funded, if we have a lot of terminated plans, it is not going to be better funded. And the gentleman brags about a permanent yield curve which is unpredictable to business. It would be better to have a corporate bond rate, and I am sorry that is not in the legislation.
Mr. Speaker, I yield 2 minutes to the gentleman from Massachusetts (Mr. Neal), a senior members of the Ways and Means Committee and one of the leading experts on retirement issues.
Mr. Speaker, I yield 3 minutes to the gentleman from North Dakota (Mr. Pomeroy), one of the leaders in the Ways and Means Committee on pension issues, the former insurance commissioner from North Dakota.
Mr. Speaker, I reserve the balance of my time.
Mr. Speaker, I yield 1 minute to the gentleman from Texas (Mr. Doggett), a distinguished member of the Ways and Means Committee.
Mr. Speaker, I yield 2 minutes to the gentlewoman from Ohio (Mrs. Jones), distinguished member of the Ways and Means Committee.
Mr. Speaker, I yield 2 minutes to the gentleman from Illinois (Mr. Emanuel), whose provisions are in this bill concerning split refunds and automatic enrollment and other issues that he has brought to the table.
Mr. Speaker, I yield myself the balance of my time.
Mr. Speaker, I am sure that people who are watching this debate are somewhat confused about some of the technical provisions that we have talked about on the funding of a guaranteed fund. But let me try to simplify it.
The bottom line is that the total changes that are being suggested make it more rigid and less predictable for those companies that have traditional pension plans as to how much money they have to put into the guaranteed fund. Understand that the guaranteed fund is funded by the companies making contributions to the guaranteed fund. It is not funded by the government.
So if you have a plan that is well-funded and you are now being told it is going to cost you more to stay in that plan, there is an incentive for you to freeze your plan or to leave. That is what is going to happen, and that is why we are very concerned about many people losing their traditional pension plans as a result of this legislation.
The second point, let me point out, is that many Members have been talking about the airline industry and to try to help the airline industry. I pointed out that I think we should do that. We should do that because, A, it will allow the guaranteed fund to concentrate on other plans, and companies will not arbitrarily cancel their plans because they are afraid they are going to be stuck with the costs of bailing out the airline industry. That makes sense. But we are told: We are going to do that in conference, trust us.
We are the legislative body. We should do it. How do we know what is going to come out of conference? It is our responsibility to make sure it is done. We made some changes for the auto industry. Why have we not brought in those provisions? It is our responsibility to do it.
And I haven't heard anyone talk about how we are going to correct the problem of an industry going into bankruptcy in order to save their costs. Is there any hope that that will come out of conference? I doubt it.
We can do better. I urge my colleagues to reject this bill.
Let me thank Mr. Miller for offering this substitute. I am pleased to join him.
I listened to a lot of my colleagues talk in favor of this bill, telling me things they do not particularly like about it, things that will be, they hope, corrected in conference, and now we have a motion to recommit that does exactly that.
So if we are sincere in wanting to move the process forward so that we can get to conference, let us speak to what we want to get from the conference report. Let me make it clear that the rule did not permit us to offer this directly as a substitute, so the only way we can do it is by the motion to recommit.
But it does contain the issues that many have talked about. It has the good without the bad. It has the provisions for the defined contributions, so that we can deal with the 401(k)s and the IRAs and the savers credits and automatic enrollments and those provisions that are important. But it also deals with the issue of the airline industry directly, not on a promise that we will deal with it in conference, and it deals with the revolving door of bankruptcy, which, if we do not correct, we are going to have other problems in addition to the airline industry. So it deals with those problems.
But it does one more thing, Mr. Speaker, that is critically important: It takes away the additional deficit that this bill would create. This bill will add an additional $14 billion to the deficit of this country. The substitute pays for the cost of the legislation so that we do not add to the growing problem of the deficit of this Nation.
This is a responsible motion, and I urge my colleagues to support it.