Last Friday, the House approved a measure that seeks to block the PBGC from taking over United Airlines’ pension plans. The amendment was tacked on to an appropriations bill (H.R. 3010) and reads as follows:
SEC. __. None of the funds appropriated by this Act may be used by the Pension Benefit Guaranty Corporation to enforce or implement the “Settlement Agreement By and Among UAL Corporation and all Direct and Indirect Subsidiaries and Pension Benefit Guaranty Corporation”, dated April 22, 2005.
The Wall Street Journal reports here that the measure indicates “how emotional the issue of troubled pension plans has become.” The article points out that the “provision would have little impact, largely because the insurer’s budget comes from collecting premiums from companies — not from money appropriated by Congress” and that “the Senate isn’t likely to approve such a provision.”
For those of you who might not have been reading BenefitsBlog this time last year, you can read about another very emotional response to pension underfunding here.
If you wish to read the discussion on the House floor regarding the amendment, continue reading . . .
AMENDMENT OFFERED BY MR. GEORGE MILLER OF CALIFORNIA
Mr. GEORGE MILLER of California. Mr. Chairman, I offer an amendment.
The CHAIRMAN. The Clerk will designate the amendment.
The text of the amendment is as follows:
Amendment offered by Mr. George Miller of California:
At the end of the bill, before the short title, insert the following:
SEC. __. None of the funds appropriated by this Act may be used by the Pension Benefit Guaranty Corporation to enforce or implement the “Settlement Agreement By and Among UAL Corporation and all Direct and Indirect Subsidiaries and Pension Benefit Guaranty Corporation,” dated April 22, 2005.
The CHAIRMAN. Pursuant to the order of the House of June 23, 2005, the gentleman from California (Mr. George Miller) and the gentleman from Ohio (Mr. Regula) each will control 5 minutes.
The Chair recognizes the gentleman from California (Mr. George Miller).
Mr. GEORGE MILLER of California. Mr. Chairman, I yield myself 2 minutes.
Mr. Chairman, I join the gentlewoman from Illinois (Ms. Schakowsky) and the gentleman from New York (Mr. Crowley) to offer an amendment which will be the first time that will allow Congress, and perhaps the last time, to save the hard-earned retirement benefits of 120,000 workers and retirees at United Airlines.
Unfortunately, United Airlines has become a poster child for what is wrong with the private pension in this country. United filed for bankruptcy over 2 years ago and forced one wage concession after another from its workers, and then it unilaterally decided
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that it would stop making the legally required pension contributions to its plans. It dragged on the negotiations with its employees and then, in the middle of the night, got up from those negotiations and dumped those retirement plans into the PBGC, causing those employees to lose somewhere from 30 to 60 percent of their retirement nest egg, of their retirement assets, of their future standard of living. That is what these people lost because United decided it would no longer negotiate to try to find a solution to this problem.
We see Delta Airlines that has frozen its pension plan, has asked to stretch out its payments so that it can protect the assets of its employees. United chose another idea: It would simply dump these liabilities onto the taxpayers of the United States of America. What United was not telling anybody was the truth. They were not telling them about their funding of their pension plans, about their liabilities of their pension plans. They simply decided they would terminate these plans in the PBGC.
So this is our chance. This is our chance to try to save the retirement nest eggs of the flight attendants, of the ramp workers, of the pilots, of all of the people that have given so much to have this airline continue to fly. We held an E-hearing. Over 2,000 people participated and told us what the real impact of these cuts would be on their families, on their children, on spouses with illnesses, on their parents. People who had worked 30, 35, 40 years for this company now find out that they have been terminated with no chance to go back.
This amendment says United Airlines has got to go back to the bargaining table and work out a provision to take care of this.
Mr. Chairman, I reserve the balance of my time.
Mr. REGULA. Mr. Chairman, I rise in opposition to the amendment, and I yield 3 minutes to the gentleman from Illinois (Mr. Kirk).
Mr. KIRK. Mr. Chairman, I thank the chairman for yielding me this time.
I rise in opposition to this amendment because it seeks to overturn two court decisions and what Judge Wedoff said was “The least of the bad” alternative “choices here has got to be the one that keeps the airline functioning, that keeps employees being paid.” We have to look out for the interests of all people, especially the 62,000 employees of United Airlines right now, just crawling out of bankruptcy, on whom the future of the entire western Chicagoland region, O’Hare Airport, and many of the related businesses depend. If we push United into bankruptcy, and especially if we push her further into liquidation, we will not only have an employee pension problem, but we will have a massive unemployment problem. We will also jeopardize the crown jewel of the economic development programs for Illinois, which is the modernization of O’Hare airport. O’Hare airport and its modernization depends on a functioning United Airlines. And for us to interfere with the two court decisions and the already declared decisions of four unions with United is a great mistake.
I think we should make sure that this process moves forward, we should make sure that this airline continues to function, and we should make sure that the 62,000 current employees of United are allowed to find their way back into profitability so they can put food on their table, especially in my district and other Illinois districts.
Mr. GEORGE MILLER of California. Mr. Chairman, I yield 1 minute to the gentlewoman from Illinois (Ms. Schakowsky), cosponsor of the amendment.
Ms. SCHAKOWSKY. Mr. Chairman, I rise today, with the gentleman from California (Mr. George Miller) and the gentleman from New York (Mr. Crowley), to offer an amendment that would protect the retirement security of dedicated United Airlines employees and retirees who support, and I want to underscore that, who support our amendment.
Our amendment would stop the Pension Benefit Guaranty Corporation from taking over United’s four pension plans in one fell swoop. Our amendment would give Congress a chance to work out a better solution than pension termination.
I urge my colleagues to support this amendment because the threat to United’s employees is real. This is not a straight hand-off from United to the PBGC. Although United’s pension liability is $9.8 billion, the PBGC is only assuming $6.6 billion of the debt to United workers. The takeover of the plans will result in pension benefit cuts averaging 25 to 50 percent, a loss of $3.2 billion, for men and women who have worked for years with the promise of a secure pension. And it is on top of the $3 billion in concessions United employees already made.
We are on the cusp of a pension crisis in this country. The PBGC, without United, has a $23 billion deficit, and other companies are waiting in line to dump their pension benefits.
I urge my colleagues to support this measure.
Mr. REGULA. Mr. Chairman, I yield 1 minute to the gentleman from California (Mr. Dreier).
Mr. DREIER. Mr. Chairman, I rise in strongest opposition to the Miller amendment. Five unions have been involved in the negotiation process here to ensure that over 60,000 people are able to keep their jobs and a very, very important company continues to remain alive.
There is one union that has chosen not to be supportive of this. The fact that one union is not supportive of this agreement working between United Airlines and the Pension Benefit Guaranty Corporation has now created a scenario where we want to take the entire package down, and I believe that it would undermine a very important part of the commerce of the United States of America. We all know how important the airline is to the very vibrant economy that we have today.
So I urge my colleagues to oppose the Miller amendment and let us proceed to ensure that we do not see 62,000 people lose their jobs.
Mr. GEORGE MILLER of California. Mr. Chairman, I yield 1 minute to the gentleman from New York (Mr. Crowley), a cosponsor of the amendment.
Mr. CROWLEY. Mr. Chairman, I thank my friend and colleague from California for yielding me this time.
Mr. Chairman, I rise in strong support of the Miller-Schakowsky-Crowley amendment and urge all our Members here in the House to support it.
Is this amendment a cure to our Nation’s employee pension problems? No. The problem is PBGC jumped too easily at a deal to put taxpayers on the hook for pensions, while allowing United to walk away from its responsibilities to its employees.
Representing the district that houses LaGuardia Airport and serving many Delta employees, I have real concerns about the bad precedent set by PBGC and worry that other airlines, and soon other industries, will follow United’s lead.
As we know, Delta recently stated that it must pay $2.6 billion over the next 3 years to meet the obligations of its defined benefit pension plan. The carrier has warned in the past that its growing obligation poses a threat to restructure and avoid a bankruptcy filing. At the same time, UAL Chief Executive Gerald Grinstein has said that United would gain a competitive advantage on rivals by dumping its employee pension obligation.
This is bad precedent. Real pension reform is needed, and this amendment is to serve as a wake-up call to that fact.
Mr. REGULA. Mr. Chairman, I yield myself such time as I may consume.
I would just point out to the Members that this is a very delicately balanced arrangement and I think the risk to all of this is that if we were to adopt this amendment, the benefits that now are available to retirees under PBGC could even be lost, plus a lot of jobs could be lost. And we are inserting ourselves or would be inserting ourselves into something that has been worked out among all the parties in a way that is in the best interest of both active employees and retirees, and this is not the appropriate forum to deal with this subject.
We have legislation moving through the Committee on Education and the Workforce dealing with pensions, and this would set a precedent, I think, for our body, the U.S. House, to interject itself in something that should be handled by the parties, and I think what they are trying to do is to work it out in a way that is in the best interest of both the active employees and retirees.