House and Senate Negotiators Work on Pension Deal

WASHINGTON – Congressional negotiators, rushing to complete a major pension bill before the August recess, said Monday a deal on the long-awaited bill to shore up defined-benefit pension plans still eluded them.

House Majority Leader John Boehner, R-Ohio, a chief negotiator, said there were still "half a dozen issues" left to resolve on the bill, important to the retirement benefits of some 44 million Americans.

Those included the extent of special breaks for financially struggling airlines and a provision to allow more financial institutions to give investment advice on 401(k) and IRA plans that critics say could present conflict of interest problems.

But Sen. Max Baucus, D-Mont., top Democrat on the Senate Finance Committee, said after a Monday night meeting that he was still confident a deal could be closed Tuesday.

Boehner said earlier he hopes an agreement can be reached in time for the House to pass it by week's end so that the Senate can act on it next week and send it to President Bush.

The House is scheduled to recess Friday for a five-week break. The Senate will be in one more week. Both return after Labor Day to handle a flurry of bills before again taking a month off for the November elections.

Another issue complicating completion was a move by GOP leaders to attach an estate tax cut, opposed by most Democrats, to the pension bill.

Baucus said inclusion of the estate tax cut "will jeopardize the bill." The chairman of the Finance Committee, Sen. Charles Grassley, R-Iowa, said it makes getting the votes for the bill "more difficult and more questionable."

Negotiators were still apart on how much more time to give struggling airlines to put their pension plans on a sound footing. Northwest Airlines Corp. and Delta Air Lines Inc. warned lawmakers last week that without a bill they might terminate their pension plans and dump them on the Pension Benefit Guarantee Corp., the government agency that insures the plans.

The bill would compel employers with defined-benefit plans to meet their financial obligations. It also would give new legal status to cash balance or "hybrid" plans.

Employer-based pension plans are underfunded by an estimated $450 billion, and the Pension Benefit Guaranty Corp., which insures these plans, has seen its deficit climb in recent years to $22.8 billion because of having to take over the plans of bankrupt airline and steel companies.

The PBGC, which so far has operated on premiums and interest earnings without turning to the taxpayer for help, has questioned the long-run benefits of the legislation, concluding in a recent analysis that U.S. companies, expected to pay $1.24 trillion into their pensions over the next decade under current law, would contribute slightly less under the proposed bill.

Boehner and other lawmakers have disputed the PBGC analysis and insisted the bill will strengthen the pension system.

The agency also predicted that its deficit, now estimated to rise by $12.8 billion over the next decade, would increase by around $15 billion under the bill.

"By driving up the PBGC's deficit, it will increase the risk of an eventual taxpayer bailout of that agency," said Rep. George Miller, D-Calif., top Democrat on the House Education and the Workforce Committee.