Mr. President, we have been talking about the Durbin- Hutchison amendment during most of the day. I have heard some of the debate going back and forth. I want to address some of the issues raised in the debate, trying to stop our amendment…
Mr. President, we have been talking about the Durbin- Hutchison amendment during most of the day. I have heard some of the debate going back and forth. I want to address some of the issues raised in the debate, trying to stop our amendment from going forward.
First, let me say I so appreciate Senator Durbin joining with me to make sure we have a bipartisan effort that stands for the companies that are trying desperately to keep their defined benefit plans for pensions for their employees.
These airlines that are doing this are doing it at the same time that the price of jet fuel has gone up exponentially. For instance, since January 2007, a little bit more than 1 year ago, the price of jet fuel has increased 107 percent. Continental Airlines' year-over-year increase in fuel costs is approaching $2 billion. This year, American Airlines' fuel bill is going to be $9.3 billion. Everybody who is driving an automobile to their job or to pick up their children from school knows how much it costs to fill up the tank of a car. Just multiply that for an airline whose entire business is flying back and forth across the country and across the globe. You can imagine what that does to the bottom line of a business.
Here we are, looking at actually three airlines that are trying to make their benefits the most generous they can be while they are looking at rising fuel prices that are about to sink them. They are all showing unprofitable months and quarters. Now we have legislation coming forward that would take away a law that was passed last year that attempted to equalize the airlines that have benefit plans that are defined benefits and plans that are defined contributions, which are 401(k)s. We want to keep the playing field as level as we can. If you put on top of that the fact that the timing of this could not be worse because of the rising fuel costs, it is just impossible to imagine that the Senate will do this.
The underlying provision, it has been suggested, would have no effect on the bottom line. Of course it is going to have an effect on the bottom line. It requires full funding of pension obligations, irrespective of past overfunding. In plain English, the carrier must come up with more cash, even if they have overpaid. According to one carrier, the new cash demand would be $1 billion over the next 3 years. Where are we going to find that amount of cash?
Domestic fare increases are not even covering the rising cost of fuel. As compared to January 2007, the price of jet fuel was 65 percent higher and domestic average fares have risen 9 percent. You are beginning to see they are not going to be able to recover this at the fare box. But if we pass this legislation requiring one airline, instead of putting in $80 million, to put in $350 million, how is it going to offset those higher costs? There is only one way, and that is higher ticket prices. Are we going to pass a law that is going to raise ticket prices at a time when the airlines--and every American--are feeling the pinch of this economy? I cannot even imagine we would do that.
I have also heard it argued that the provision in the bill that we are trying to eliminate is fair. The truth is the current law is equitable and fair. Changing the current law in the manner suggested would treat two carriers differently from the other carriers that do not have defined benefit plans. We had the equity debate. The current law is the product of that debate. Ask the carriers if they think the current law is equitable. They will say yes.
The carriers that are not affected by this have told me they are agnostic on this issue. They are not pushing for a competitive advantage because I think all the carriers know that this is not the time that anybody wants to go into bankruptcy and they do not even want their competitors to go into bankruptcy because we can't handle the commerce in this country without the airlines we have operating without a disruption.
We settled this debate. We settled it in 2006. It was undone. We settled it again in 2007. The law we passed must be adhered to because these businesses made decisions based on the law.
The employees of these airlines will be the biggest losers if this bill is allowed to stand with this provision in it. Senator Durbin and I are trying to take this provision out to protect the employees and to, hopefully, keep the airlines from having a hit they cannot take right now.
I have heard the argument on this floor that the amendment we are putting forth would mean less money to employee pensions. It is exactly the opposite. The carriers that are hurt by this provision are trying to do the right thing by maintaining their pensions and providing their employees with strong retirement benefits. In fact, these impacted carriers have been prepaying their pension obligations in good years, showing their employees they are committed to these benefits. The excess contributions helped ensure that, in tough times, if cash becomes tight, the pensions of these hard-working employees are protected and funded. If the pension rules are changed to disallow the flexibility of using past excess contributions, they will actually discourage overfunding of pensions. The carriers will only provide the minimum contributions in order to preserve cash in difficult times.
Some have challenged this claim on the belief that cash contributed to pensions can be pulled out in tough times, so they wouldn't be in any way discouraged from overcontributing to pensions. But this is not true. Once cash is contributed to the pension plans, it cannot be taken out. In fact, that is one of the reasons the current law allows companies to offset ongoing pension costs with previous overfunding. If they couldn't do it, a company would never put extra cash into pension funds. Instead, they would put it in a bank account where they could get it out. In the end, a carrier would never contribute in excess to the plan because they just couldn't do it.
Employees are at risk with the underlying provision we are trying to take out. The cash demands this language places on the carrier trying to secure solid pension benefits for its employees will simply be too high. If we destabilize this environment, we could very well jeopardize the ability of these carriers to weather the current storm, and the outcome would be devastating to employees. Bankruptcy is not kind to employees. Ask any person who has worked for a company that has gone into bankruptcy. Whether it is their present livelihood or their pensions, the employees would lose. That is why they support striking this provision with our amendment.
The current pension laws for air carriers are fair and equitable. They do not need changes. They especially do not need changes retroactively, after they have made decisions to overfund pension plans based on the law as it is today. The change could lead to disastrous consequences for impacted carriers and especially for their employees.
Why would we take such a risk? We should be doing everything to help these companies during difficult operating environments, not destabilizing them, not giving advantages to some in the industry.
No one in the industry is asking for this. This is something that has come up seemingly because there were process arguments about what bill the fix went into. The bill that the fix went into was the only available bill where you could put an amendment, and the amendment had been given to all of the relevant committees, so they knew what we were trying to do. There was nothing hidden. There was nothing sudden. Everybody knew we were going to try to correct the inequities, as we have all negotiated at the table to do. If you ask any of the carriers I have spoken to, no one is asking for this to be retroactively fixed in a different way from the present law, a law that has been relied on.
The bottom line is some airlines have overfunded their pension obligations because they had cash and that is where they wanted to put it, to assure employees of a safe and sound pension system, more than the law required. American Airlines is 115 percent funded. But that was always done because, under the present law, you had the flexibility to just catch up with the current obligations with a credit for the overobligation as these airlines are working out their pension plans according to the law we passed last year and the year before.
I hope we can get a vote on the Durbin-Hutchison amendment. The members of the committee who have worked on this--the Commerce Committee, Senator Rockefeller, the chairman of the Aviation Committee--have been very supportive of us having our bill, which we worked so hard in a bipartisan way to produce, which has such good effects for the aviation industry, not to be hobbled by an extraneous issue that has been put in by another committee that does not have the aviation jurisdiction but is a tax committee.
I hope we will keep the underlying bill, which is very solid. Senator Rockefeller and I, Senator Inouye, and Senator Stevens have worked very hard. We have a great bill. It is a bill that will fund more safety measures. It will put more inspectors in the FAA. It is a bill that has a passengers bill of rights--Senator Boxer has worked on this for a long time. It will assure that passengers who are stranded in a plane that cannot take off will have accommodations for comfort or they will be able to get off the airplane--something we have never had before.
It is a bill that will modernize the traffic control system so we will have more service in our country. This bill has so many good features. I hope we can pass the Durbin-Hutchison amendment that will keep the bill intact that was hammered out by the Commerce Committee and not have it taken down by a tax bill, most of which has nothing to do with aviation at all.
The aviation part of the bill is great. It is a good, solid compromise. But the pension and the extraneous provisions are going to sink this bill, and it will be a sad day for the consumers in the aviation system in this country if that happens.
I yield the floor.
Madam President, parliamentary inquiry: Could I ask what the amendment is?
Just a date change.
Could I ask, on the amendment that was offered by the Senator from West Virginia, is that the bill that has been discussed that has already been on the table without the pension provision? Is that the new substitute that was just put forward?
Madam President, I am greatly disappointed that we have come to the time when we are not going to be able to move this bill because there is not an open amendment process. I have worked with Senator Rockefeller on the aviation bill; this is the FAA reauthorization. We have come to agreement on the basic bill. It is very bipartisan. Senator Inouye and Senator Stevens, the chairman of the Commerce Committee and the ranking member, have come to an agreement on the aviation portions of this bill. The distinguished majority leader said we don't want to take amendments that are not relevant to the bill, but, in fact, the tax package that is in the substitute that was put forward deals with many issues that are not in any way related to aviation, not in one instance. So we would like to be able to pass a bipartisan FAA reauthorization bill.
We have come to agreement in the Commerce Committee on the importance of the bill--the passenger bill of rights, the added safety features. It will modernize the air traffic control system. Yet now we have a bill that has no amendments allowed unless we get permission to offer amendments, when the underlying bill has many extraneous provisions in it that were added by the Finance Committee. They are not relevant to this bill, and they are not agreed to even by the leaders on the Commerce Committee whose bill this is.
So I am disappointed. I think it is going to stop the consideration of the FAA bill. If we could pare it back to FAA reauthorization, modernization, then I think we would have a bipartisan step forward for the consumers and passengers in this country.
I wish to thank my colleague, the Senator from Illinois, for working on the pension part, which has now been taken out. I think that is an excellent step in the right direction. It is very important to me. I was the cosponsor of his amendment. That amendment has now virtually been adopted. But I can't walk away from the rest of the people on my side of the aisle who want to offer legitimate amendments and who have very great concerns about the tax provisions in this bill that have nothing to do with aviation.
So I hope once we get to the point the bill doesn't move forward, which is where I think we will go, we can once again come together in a bipartisan spirit and have the aviation bill we have agreed to, with the tax provisions that relate to aviation that we have agreed to, and get this bill going. There will be legitimate amendments on perimeter rule, on some other safety issues. Those will be relevant. But we can't move forward when half our body virtually is unable to be a participant.
Madam President, parliamentary inquiry: Wasn't the tree filled up so that there are no possibilities of offering amendments?
Madam President, I appreciate what the Senator from Montana and the Senator from Illinois have said. I do hope we can continue to
work on this. I know the situation, as it stands right now, would not be acceptable: having a major piece of legislation that needs to be debated, and we need to have the ability for the minority voice to be heard. I don't think that it is going to happen with this particular procedure, but that doesn't mean the door is closed.
We do want to work on this bill because, as I have said many times, the underlying bill is one I fully support. It may be that one of the options would be to separate the tax part of the bill and the aviation part. I agree with the aviation tax part as well. Most people on our side of the aisle do. It is the taxes that have nothing to do with aviation that have been put into this bill that are the problem. That is what is killing this bill right now. If we can come to an agreement on the aviation taxes and the aviation bill and let the other tax provisions that relate to the subway and the railway and the highway fund, if those can be done in a separate package and then we have the votes up or down, then I think that is one option we ought to consider.
So right now, in this particular procedure, I think we are going nowhere. But we are going to continue to talk, and perhaps one of these other options would be doable. The pension part is so important to me. I have worked with Senator Durbin all day and ever since I learned the pension part had been changed in the tax part of the package.
I hope we can come to a conclusion. I would like to come to a conclusion with the Finance Committee because I think there are some compromises, perhaps, that could be made. But I know what is in the bill now would be very detrimental to some of the airlines in this country. I think, as a matter of fairness and equity and protection of employees, that we could not accept the language that is there. That doesn't mean the door isn't open to talk. But if we can do something in a separate bill and let the aviation bill--taxes and authorization--go forward, I would hope that would be an option to consider.
Mr. President, if I may respond briefly to the Senator from Montana, there is a lot of room for us to work on the highway trust fund issue. Everybody wants to replenish the highway trust fund. I do think there are issues with paying for it, and I think there is the view that we don't have to put a tax on some sectors in order to make this whole, because it is stimulative, and I think we could work on something that would get the highway trust fund replenished but not have to then find the issue of how we pay for it-- particularly, one of the things is the retroactive tax version which is a problem for some people.
With the highway trust fund, I think we are replenishing something we can all agree is necessary. If we can come to terms on paying for it and in what manner it will be paid for, that is an area we would like to discuss.