Congress, Pensions, dis, dat, and other tings

[General Lee]

By BRODY MULLINS
Staff Reporter of THE WALL STREET JOURNAL
September 9, 2005

WASHINGTON -- Bolstered by the shift in political winds from Hurricane
Katrina, U.S. corporations are pressing lawmakers to approve a range of
issues that have languished on Capitol Hill, some of which have little
to do with hurricane relief.

Major U.S. airlines are asking Congress to suspend federal jet-fuel
taxes. Oil and gas companies want drilling rights in new parts of the
Gulf Coast. Insurance companies want the ability to use tax-free funds
to create a multibillion-dollar industry fund to cover future claims
from natural disasters. Shipbuilders such as Northrop Grumman Corp. want
billions of dollars to help rebuild shipyards in Mississippi. Small
chicken farmers are asking Congress for low-interest loans to fix up
dozens of damaged chicken coops in Mississippi.

"Overall, we are going to be a lot more open to things now that would
help keep our traditional industries chugging along," says Rep. Jack
Kingston, a Republican from Georgia.


Delta Airlines stands to be the first big winner of the Republicans'
largess. Lawmakers in the House and Senate say that they expect to
approve legislation by mid-October to give the Atlanta-based carrier
more time to make payments to its employee pension plan. Delta officials
have told Congress that they would be forced to file for bankruptcy
protection if Congress doesn't lend them a hand by the time the new
bankruptcy law takes effect next month. Delta is the incumbent carrier
in the storm-ravaged Gulf Coast.

Yesterday, senators working on a pension-overhaul bill agreed to
language requested by Delta's lobbyists that would give the airline 14
years to catch up on payments to its employees' retirement plans.
Currently, the Delta plans are underfunded by $5.3 billion. Sen. Michael
Enzi of Wyoming, chairman of the Health, Education, Labor and Pensions
Committee, also added a Delta-backed provision that would allow the
airline to increase benefits promised to workers if the airline could
offset the new costs with matching contributions to the plans.

Until Katrina battered the Gulf Coast, House Republicans were adamantly
opposed to helping the airlines. But now, their resistance is softening.
"I'm clearly sensitive to the problem of the legacy carriers," said Rep.
John Boehner, the author of the pension-overhaul legislation in the
House. "We ought to do what is reasonable to keep them from dumping
their pensions" on the federal government, Mr. Boehner now says.
[Michael Enzi]

Delta and other large airlines are also pushing Congress and the Bush
administration to suspend the 4.3-cents-a-gallon tax on jet fuel, a
long-sought goal. Earlier this week, Sen. Ted Stevens, the Alaska
Republican who chairs the Commerce Committee, asked the airline industry
what Congress could do to alleviate some of the hurricane's impact,
according to airline lobbyists. The industry's trade association, the
Air Transport Association, responded that Congress could temporarily
suspend the fuel tax, and is pushing a one-year suspension proposal.

Mr. Stevens has scheduled a hearing on the matter next week. Despite his
interest in providing assistance, the airlines continue to face
resistance in both the House and Senate. Senate Finance Committee
Chairman Charles Grassley of Iowa and House Majority Leader Tom DeLay of
Texas oppose suspending fuel taxes, because the funds are used to build
highways, bridges and runways. Rep. John Mica, the Florida Republican
who chairs the House's aviation subcommittee, said the airlines "can
raise their fares to adjust for fuel costs."

A price increase is one possibility. Airlines have considered imposing a
"fuel surcharge" that would be tacked onto every ticket, and some would
even prefer if Congress mandated it to ensure that all carriers would
boost their prices. Either way, carriers have asked the Department of
Transportation to let them list any surcharge separately from the
regular fare, so that it wouldn't be included in the base fare that
customers are initially quoted. Rather, the surcharge would appear at
the end of a purchase, along with other taxes and fees. The industry
would also like Congress to exempt any fuel surcharge from the existing
7.5% passenger ticket tax.

Beyond the airlines, the energy industry is pushing to permit oil and
gas drilling in Alaska's Arctic National Wildlife Refuge, reduce
regulatory barriers to building new power plants and increase federal
subsidies to help low-income Americans heat their homes in the winter.

Gas companies are pressing Congress to revive legislation that would
expand oil drilling in eastern portions of the Gulf of Mexico. "It's all
stuff that we were talking about before Katrina, but Katrina exposed our
vulnerabilities," says Darrell Henry, a lobbyist with the American Gas
Association.


Interesting stuff! I really like the last couple paragraphs. We need to help those oil and gas companies! Give them more tax breaks.....? What? Would Bush do that? nah...?

Bye Bye--General Lee

 

[twobits]

i thought 14 years was not enough. wasn't JG pushing for 20-25 years?

 

[J32driver]

Interesting stuff! I really like the last couple paragraphs. We need to help those oil and gas companies! Give them more tax breaks.....? What? Would Bush do that? nah...?

Did you and I just read the same article? Where did you come up with the idea this was a tax break for BIG OIL? Only mention of anything that might even be confused is :

"reduce regulatory barriers to building new power plants and increase federal subsidies to help low-income Americans heat their homes in the winter."


You don't hate Republicans or anything do ya?

 

[doh]

Well, I like it! It would be awesome if something good happened to a few pilots around here! General, good luck! I'll save congratulations for after the vote!

 

[bafanguy]

Delta Airlines stands to be the first big winner of the Republicans'
largess. Lawmakers in the House and Senate say that they expect to
approve legislation by mid-October to give the Atlanta-based carrier
more time to make payments to its employee pension plan.




























.
















Bye Bye--General Lee

That statment doesn't quite reflect the entire benefit of this change in legislation. Sure, DL will get to spread out payments to the plan and at least add to the effort to stay out of court, but there's more to it.

People don't realize, perhaps, that doing everything possible to avoid dumping another pension plan of a BK company into the already financially-shaky PBGC is to everyone's benefit, not just DL's.

If the PBGC can't pay its obligations to pensioners because too many companies are ditching their DB plans, guess who gets to pick up the shortfall ? That would be YOU, the taxpayer. Your tax money will go to pay what the PBGC couldn't. At that point, it becomes a "bailout" and something that every effort should've been made to avoid. DL will most likely be in court, but NOT dumping the DB plan will be to eveyone's benefit.

This may be one of those win-win deals if DL can avoid being granted a distress termination of its DB plan. I'm certainly no expert on this, but that's how it was explained to me.

 

[Widow's Son]

DB plans are dinosaurs. They are a millstone around any company's neck that implodes several decades down the road. They are bad for employees as we are seeing now. Why would anyone want to make a 40-50 year bet with any corporation and if the managments are as corrupt and inept as they appear to be why would anyone want their retirement nest egg in management's hands?

In my opinion the best solution for everyone is to freeze all the DB plans and get rid of the whole concept. Defined contribution plans are much safer. The money goes in regularly and immediately and is in full control of the employee. For the company, the obligation is over the day the employee retires. They never have to worry about having more employees on the payroll who aren't working than are.

The sooner all employees get switched over to DC plans the better off they will be. Putting a bandaid on a broken system is just prolonging the inevitable. Just a few years ago, ALPA would have gone ballistic at the idea of any company getting more time to bring their pension contributions current, now they are praying for it.

The legacy airlines will never be able to have a level playing field to compete with the LCC's as long as they are hobbled by the DB millstone.
The current system just encourages companies to let the plans get unsustainable and then file BK to dump them and start over, whereas with a DC system, every pay period the match money goes in and the plans are never not funded. The match money is set to the contribution amount so it doesn't matter whether the market or actuarial data fluctuate.

The DB "tooth" is cracked, decayed, and oozing puss. Putting a filling in it and taking a vicoden may help in the short term, but the only real solution is to pull the tooth and replace it.

 

[bafanguy]

DB plans are dinosaurs. They are a millstone around any company's neck that implodes several decades down the road. They are bad for employees as we are seeing now. Why would anyone want to make a 40-50 year bet with any corporation and if the managments are as corrupt and inept as they appear to be why would anyone want their retirement nest egg in management's hands?

In my opinion the best solution for everyone is to freeze all the DB plans and get rid of the whole concept. Defined contribution plans are much safer. The money goes in regularly and immediately and is in full control of the employee. For the company, the obligation is over the day the employee retires. They never have to worry about having more employees on the payroll who aren't working than are.

The sooner all employees get switched over to DC plans the better off they will be. Putting a bandaid on a broken system is just prolonging the inevitable. Just a few years ago, ALPA would have gone ballistic at the idea of any company getting more time to bring their pension contributions current, now they are praying for it.

The legacy airlines will never be able to have a level playing field to compete with the LCC's as long as they are hobbled by the DB millstone.
The current system just encourages companies to let the plans get unsustainable and then file BK to dump them and start over, whereas with a DC system, every pay period the match money goes in and the plans are never not funded. The match money is set to the contribution amount so it doesn't matter whether the market or actuarial data fluctuate.

The DB "tooth" is cracked, decayed, and oozing puss. Putting a filling in it and taking a vicoden may help in the short term, but the only real solution is to pull the tooth and replace it.

It's most likely headed the way you describe. In the meantime, however, the consequences of the DBs being terminated and dumped on the financially-unstable PBGC is a fact of life. Politicians are unlikely to just deep-6 the PBGC and let people on those DBs just sink. They can change the law to slowdown the problem, or your tax money may being paying someone else's retirement.

If that chaps your butt, I understand completely; it chaps mine too... I also pay taxes and will be seriously irked at bailing out the PBGC should it come to that.