American Workers Pension System
AMERICAN WORKERS PENSION SYSTEM -- (House of Representatives - November 08, 2005)
The SPEAKER pro tempore. Under the Speaker's announced policy of January 4, 2005, the gentleman from California (Mr. George Miller) is recognized for 60 minutes.
Mr. GEORGE MILLER of California. Mr. Speaker, millions of Americans are worried sick about their retirement nest eggs, and they are demanding decisive action by Congress. In just the last 2 weeks, two national publications have featured cover stories on the peril America's workers and retirees are facing.
On October 31 of this year, the issue of Time magazine has a stinging anthology of missteps and foibles of the Congress in the regulation of private pension plans. The cover story that is pictured here on this cover of Time magazine, called, ``The Great Retirement Rip-off--Millions of Americans who think they will retire with benefits are in for a nasty surprise--how corporations are picking people's pockets--with the help of Congress.''
That is the status of the American workers' pension system today. It is a system that is in peril, and it continues to be in peril because of the lack of action by this Congress.
For 3 years, we have been warning the President and this Congress that we must take decisive action to strengthen unfunded pension plans. Back in July of 2002, I wrote Secretary O'Neill and Secretary Chao, urging them to take action after private pension underfunding quadrupled $25 billion to $111 billion.
I wrote to them that ``The implications of such massive shortfall in pension funds are staggering, for pensioners, taxpayers and for private companies themselves. As part of your agency's statutory duties, as overseers of the Pension Benefit Guaranty Corporation, it is incumbent upon you,'' Mr. and Mrs. Secretary, ``to ensure that private pension plans continue to be properly and adequately funded, and that the economic security of employees and taxpayers is no further endangered.''
What do you think happened since I wrote that letter back in July of 2002? Private pension plans' underfunding has quadrupled again to nearly $450 billion. The pension plans of hard-working men and women in this country, the pension plans that they are basing their retirement plans on, the pension plans that they are relying on for the future care of their spouses and other members of their family are underfunded by $450 billion.
The deficit at the PBGC, the agency that is supposed to guarantee these pensions should these companies go out of business, should these pensions be put into default, they are, in fact, now at greater risk of having to pay out billions of dollars to make up the shortfall. In fact, they are at risk of whether or not the PBGC can continue, given the amount of shortfall that exists in America's pension plans.
Since we wrote the Secretaries back then and since the quadrupling of the underfunding, hundreds of thousands of employees at U.S. Airways and United have lost billions of dollars in promised benefits. What has this Congress done about this? Absolutely nothing.
It took years for the Bush administration to get a reform plan up to the Congress, and it has not lifted a finger to push for the passage of that plan. Where is the leadership on behalf of America's working families? Where is the sense of urgency to protect billions of dollars in promised retirement benefits that are now threatened?
After years of costly delay, finally the House and Senate committees have passed legislation out of committee, but there is an ugly truth about the bills that many of you do not know about. When the Members of Congress voted on these bills, they were not given the facts about what these bills really do: What is the impact of these bills on the Pension Benefit Guaranty Corporation; what is the impact on the companies who we were raising the premiums for; what is the impact on the taxpayers; and what is the impact on America's workers and their retirement plans.
When we voted on one of these so-called pension bills last spring, the committee Democrats voted ``present'' because we had no information on the legislation's impact. A few weeks ago, several weeks after the committee voted, we asked the PBGC and CBO what, in fact, are the real impacts? What they have told us is that it has made the situation worse, that the bill that was passed in the committee actually hastens the pension crisis.
Here is what the Congressional Budget Office wrote us in October of this year: ``H.R. 2830,'' the pension bill, ``would increase PBGC's 10-year net costs by $9 billion, or about 14 percent, compared with what it would be under current policy.'' So we made the problem for the guaranty corporation worse with this bill.
The PBGC, that guaranty corporation, also analyzed itself, and it said that using a model that contains the hundreds of plans found in the guaranty corporation, the committee-passed bill would add billions more to the PBGC's deficit than under current law.
Not only does this bill make the problems worse with respect to underfunding, it also fails in many other respects. Most significantly, the bill does not stop companies like United Airlines from dumping billions of unwanted pension debt onto the guaranty corporation.
Delta and Northwest now have watched this Congress, they have watched United; and I believe that we can expect that they will follow suit, and we will end up with those pensions. They watched United dump $10 billion onto the public taxpayers, and the Congress did not lift a finger. Now Delta and Northwest are in bankruptcy and very well could dump their pensions into the guaranty corporation and onto the backs of the taxpayers.
According to the guaranty corporation, Delta Airlines is underfunded by $10.6 billion. The PBGC loss would be about $8.4 billion and the employees and retirees would lose $2.2 billion in promised benefits.
Northwest Airlines is $5.7 billion underfunded, and the employee loss would even be greater there. Those employees would lose about $2.9 billion in pension benefits that they have planned on, that they are expecting, and that they have built their retirement on. And now, more dominoes may be falling. Delphi Auto Parts has filed for bankruptcy, the largest such filing in the history of the automobile industry. According to the PBGC, the Delphi claim on the taxpayer-funded corporation would be about $4.1 billion. The hit on employees, over $10 billion in uninsured losses would be the largest ever. That tops the $6 billion in worker losses that the PBGC estimated occurred over its four previous largest pension plan terminations.
What does this all add up to? This all adds up to the fact that there is bad news for American workers who are relying on their employer to help them provide for their pension plans, for their retirements. We see this story in Time magazine, the cover story telling us how Americans are in for a very nasty surprise when it comes time to retire in the next few years for many of the baby boomers. Then we see a week later in The New York Times magazine: ``We Regret to Inform You That You No Longer Have a Pension.''
That is the message that is being sent to millions of Americans, millions of Americans who in many instances have no way to recover those resources for their retirement because of their age. They are 50, they are 55, they are 60 years old. They have no way to recover this. They could not work enough overtime. They could not work enough Saturdays and Sundays. They could not work enough holidays to get that pension back.
What is the Congress doing? The Congress is doing nothing. In fact, the tragedy of the Time magazine story is that it shows that Congress has been a handmaiden in allowing corporations to game the system, allowing corporations to use the pension plan for the convenience, the profit, and the personal rewards of board members, shareholders, and the CEOs of the company. They all use the pension plan and manipulate the pension plan for their benefit. But the workers are left out of that equation.
Even this morning, in The New York Times, we are told that the Accounting Standards Board is now looking at taking action because of this manipulation of workers' pensions. They talk about how, I believe it was the Lucent Corporation, where the CEO was given a $4 million bonus for doing such a great job, on top of a $1.5 million salary, and then was given another bonus because the profits of the corporation were up and the revenues were up. The only problem was that the CEO had been in the process of manipulating the pension plan to make it look like the profits of Lucent were up.
Of course, the story of Lucent is well-known. The profits were phantom. They were not there, and they have tumbled. That same CEO has now been fired, probably given a severance package, but nobody said a word while they were manipulating the pension plan.
So this goes on every day and the Congress stands by and does nothing. They do nothing to ensure that Americans will have a say in their pension plans. Imagine this, this company had $10 billion, $12 billion of workers' money, their retirement; yet those workers had no say in how that company would use that pension plan. That is not just Lucent; that is true of almost every other pension plan in this country. That is what we saw with Enron. That is what we see with Lucent. That is what we see with company after company that uses the plan for the convenience of the company to mislead shareholders, to mislead investors, and to mislead Wall Street.
Hopefully, hopefully in the next few weeks, the Accounting Standards Board will step up to the plate here and hit one out for the American public and give the American public some say in the money that they have earned, people who have earned these pensions over 15 years, over 20 years; these people who gave up salary so they would have a better retirement plan. They gave up health care so they would have a better retirement plan. They produced this pension plan, and now it is treated as if it is only the personal property of the executive board of the company, the corporation, and the personal property of the CEO. And if things go bad, they run to the taxpayers to bail them out, but the workers lose over half of all of their pensions. That is what happened to the people at United Airlines. That is what is going to happen to the people at Delphi, and that is what is going to happen to so many pensioners.
Now, we could not get the Republican Congress to hold a hearing on this problem to take a look at United Airlines, so we had to resort to an e-hearing. We had to go out on the Internet and ask the employees of United to tell us what this meant to them, and we got thousands of responses from people, thousands of responses from people about what this pension meant to their life.
Among those thousands of responses, and among millions of so many people in this country, were people telling us about their pensions and the importance of their pensions to take care of a spouse who had serious illnesses, who had disabilities; to take care of a child who was disabled; to take care of a child who had a serious illness, and now they were going to lose that ability because United was cutting their pensions in half, and the PBGC Board would not be able to take care of them. So very often these people talked about their plans for their retirement that simply evaporated the day United callously threw their plans into bankruptcy.
One of the letters we see was from a spouse of a captain at United. She wrote: ``Dear Congressman Miller, my name is Ellen Saracini. My husband, Captain Victor J. Saracini, was the captain of United Flight 175 that struck the south tower of the World Trade Center on September 11, 2001, at 9:03 a.m. While no one could have imagined the events of that infamous day, neither could Victor have imagined what would be happening to his wife and two daughters.
``I am writing this letter to voice to you what has been taken away from Victor and his family. If you only knew my husband, you would know he was a true family man, who made sure his family's future was provided for. I am currently receiving the spousal portion of Victor's pension, which is 50 percent of what he thought would be there for his family. After United took away our employee stock ownership plan, this pension is how I am supporting my two daughters and myself.
``I was given a choice to sue the airlines, the port authority, and others, or join in with the victims compensation fund set up by the government. I pledged I would not sue and proceeded with the fund. After all, this is the company Victor was so proud to work for and the same company of his United brothers and sisters. Every bit of preparation that Victor and I worked for was used against the claim. Life insurance was deducted. My full pension was deducted from the award. Now I will have a double jeopardy, as I will again lose my pension with no recourse on either side.
``I can't help but ask myself, at what point are companies allowed to take away so much from the lives of dedicated employees and their families? At what point does our government step in and stop the atrocities such as this before they are allowed to irrevocably change the lives of so many? I refuse to believe that this is the only solution that can be reached.
``The Pension Benefit Guaranty Corporation's decision to allow United Airlines to end their pension is just wrong. If this monumental verdict moves forward, I will be faced with many hardships. Victor was a proud United pilot, husband, father, and friend, who fought a war with terrorists. Never would he have imagined that he would have to fight for his family's well-being with the very company he so proudly spread his wings for. Sincerely, Ellen Saracini.''
That letter echoes what we heard from so many across the country about their plans being shattered, about their ability to care for members of their family being shattered. And, of course, we understand that so many others would like to tell their stories, but there is no vehicle in the Congress of the United States for doing that.
One of my colleagues on the Education and Workforce Committee, Congressman Tierney, I see has joined us from Boston; and I would like at this point to yield to him. He has been a stalwart in this effort to try to hold the Congress accountable, to try to hold the Pension Benefit Guaranty Corporation accountable, and most importantly to try and hold corporations to be accountable and stop this criminal activity of the manipulation of the pension plans of their employees, the same manipulation, the same activities that are outlined in the cover story of Time magazine of October 31 of this year and then again in The New York Times magazine of October 30 of this year. And today, if you want to be current on it, you can read The New York Times business page about the continued manipulation of the pension plans for the benefit of everybody except the retirees.
Mr. Speaker, I yield to the gentleman from Massachusetts.
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