Representative Miller Statement on Pension Premium Increases

Representative Miller Statement on Pension Premium Increases

Wednesday, October 26, 2005

WASHINGTON, DC -- Representative George Miller (D-CA), the senior Democrat on the House Education and the Workforce Committee, issued the following statement today at a committee meeting to consider changes to the premiums paid by companies to the Pension Benefit Guaranty Corporation.

***

Mr. Chairman, last spring this committee considered a pension bill that we were told accomplished real pension reform. Prior to the markup, Democrats made a simple request: show us the information that supports that claim.

We asked the PBGC, the CBO, the Joint Tax committee, private parties and your staff to provide us the information, but no one had been given the time to analyze the bill. Because Democrats didn't have the information, we simply could not make an informed judgment. Because we had no other good choice, we voted "present" on the bill.

Since then, the PBGC and CBO have carefully studied the bill, and a few weeks ago they gave us their findings. Their reports about the committee bill aren't pretty. The PBGC tells us that the committee bill not only fails to reform the pension system, but it actually makes the pension crisis worse and increases PBGC deficit by billions of dollars.

Now we know the PBGC is a part of the Bush Administration, so this is information is from an agency friendly to you, Mr. Chairman. And of course, it is the PBGC that actually maintains the financial models on which our pension system relies, and it is the PBGC that actually runs the pension insurance program.

The Congressional Budget Office also released its analysis of the committee bill. Same story. The committee bill, according to the CBO, actually hastens PBGC's deficits. Here is a quote from the CBO study: "H.R. 2830 would increase PBGC's 10-year net costs by $9 billion, or by about 14 percent compared with what it would be under current policy."

The bottom line of these two studies is this: this committee voted last spring to actually worsen - not improve - pension underfunding and the PBGC's staggering deficits.

Mr. Chairman, given these facts, I think that it would be the responsible thing to reconsider the pension bill, taking into account the facts provided by the PBGC and CBO. Let's get pension reform right. We've already lost precious time since our side issued warnings over three years ago that reform was urgent.
Now, as we predicted, more airlines are considering dumping their pensions because we didn't lift a finger to stop United. Pension terminations by Northwest and Delta - and perhaps Delphi - would further devastate the PBGC's finances.

Today we're being asked to vote on a significant increase in PBGC premiums, with a new surcharge on bankrupt companies. The proposal is troubling because it is being driven not by a determination of how much of a premium hike is acceptable without driving companies out of the defined benefit system, but rather by your search for budget offsets to pay for tax cuts for the rich.

Last spring - in H.R. 2830 - less than $2 billion in premium increases were recommended. Now we're up to $6 billion because we have tax cuts to pay for. It is wrong to make these decisions based on budget schemes instead of sound pension policy.

I plan to reluctantly support this portion of reconciliation, but these premium increases will serve no purpose if we fail to pass real pension reform.

I hope we have an opportunity to fix H.R. 2830 before we ever see it on the floor. It doesn't reform the private pension system; it makes the crisis worse. It doesn't provide the disclosure to workers and the public that even the PBGC and the President support. It doesn't stop companies from dumping their pension plans onto taxpayers. And it doesn't protect older workers in cash balance conversions. We've offered proposals to do this the right way, but you've rejected them.

Mr. Chairman, let's get pension reform right. Millions of Americans are feeling jittery about their nest egg, with good reason. They're looking for us to take decisive action on their behalf to shore up private pensions. So far this committee hasn't done the job.

http://www.house.gov/apps/list/press/ed31_democrats/rel102605c.html