WASHINGTON – Senate leaders have broken a two-week impasse on a major pension overhaul bill, allowing the House and Senate to begin talks on how to secure the future benefits of millions with defined benefit pension plans.
Under the agreement worked out by Senate Majority Leader Bill Frist and Minority Leader Harry Reid, Republicans will send nine senators to the House-Senate conference on the pension bill, and Democrats will send seven.
"We're advancing a very, very important issue, one that is time-sensitive," Frist said on the Senate floor. "The issue is so important to the 44 million out there who right now are working in an uncertain environment as we address this defined-benefit pension system."
The goal is to send a bill to the president by April 15. Without new legislation by then, companies will have to use an old interest rate formula in calculating their funding obligations that could drive up what they owe to their funds.
Reid and Frist have both stressed the need to move quickly on pension reform, but each has refused to give ground on the normally routine matter of the ratio of conference committee members, astonishing some and angering others.
"I would plead with our leaders to come up with an agreement here," Sen. Trent Lott, R-Miss., who preceded Frist as majority leader, said earlier Friday. "I've never seen this happen before."
On Thursday, Finance Committee Chairman Charles Grassley, R-Iowa, threatened to hold up the bill, allowing only pension relief for the airline industry and a few other urgent matters to move forward. "The rest of the pension bill will end up dying because of the Democratic leader," he said.
The pension bill, passed by the Senate last November on a 97-2 vote and by the House in December on a 294-132 vote, would force companies with defined benefit pension plans to abide by stricter rules for meeting their contribution obligations and improve the financial status of the Pension Benefit Guaranty Corporation, the agency that insures defined benefit plans.
Frist, R-Tenn., originally proposed 12 negotiators — seven Republicans and five Democrats. Reid, D-Nevada, countered by asking for an 8-6 ratio. Frist came back with a 9-6 offer, which Reid said gave unacceptable weight to the GOP side.
Limiting the number to five would have forced Reid to choose between two Health, Education, Labor and Pensions Committee Democrats — Sen. Tom Harkin of Iowa, a major player on the pensions bill, and Sen. Barbara Mikulski of Maryland, who has stood up for the pension rights of autoworkers.
The dispute led to a series of prickly exchanges on the Senate floor:
"This is fitting into a pattern of more postponement, more delay, more obstruction," Frist said Wednesday.
Reid countered: "Obstruction is in the eye of the beholder."
"I am baffled by the minority leader's inability to decide which five Senators from his caucus will join with our seven senators," Frist said Thursday.
Reid said earlier Friday, "I'm puzzled why the Majority Leader refuses to take yes for an answer."
The House is expected to name its conference committee members next week, initiating what could be difficult talks on resolving differences in each version of the lengthy and complex legislation.
Both bills crack down on employers that are underfunding their pension plans while raising the premiums they must pay to the PBGC, which has seen its financial viability threatened as it takes over responsibility for more failing plans, particularly from bankrupt steel and airlines companies.
The bills differ on the methods used to determine employer obligations and their handling of cash-balance plans, under which employers set aside money each year for an employee with a guarantee that it will grow at a specific rate. The Senate bill offers specific relief for the airline industry, which the House version does not.