AP - The House could approve a major pension overhaul bill as early as Friday after abandoning negotiations with the Senate over a larger package that combined pension reform with an extension of popular tax breaks, congressional leadership aides said.
WASHINGTON (AP) - The House could approve a major pension overhaul bill as early as Friday after abandoning negotiations with the Senate over a larger package that included tax breaks, the majority leader's office said.
The vote would come just hours before the House prepares to leave for its five-week August recess and end months of often-acrimonious negotiations with the Senate over the shape of a bill that could influence the retirement benefits of millions of Americans.
The House vote would move the legislation to the Senate, which has one more week of work before members depart Washington. The Senate could amend the bill, but, with the House gone, that would delay passage until after Labor Day.
Major airlines, specifically Northwest Airlines Corp. and Delta Air Lines, have warned that they might have to terminate their pension plans if Congress does not act quickly to pass a pension bill that includes relief for the financially struggling industry.
House Majority Leader John Boehner's spokesman, Kevin Madden, said the pension bill and a separate tax bill would be considered either Friday or Saturday. He said House Republicans would meet Friday afternoon to discuss the strategy. The tax bill would include the renewal of tax breaks, an estate tax cut and a raise in the minimum wage.
The tax breaks have been part of the pension package, and negotiations on that package broke down late Thursday when the Senate balked at the House's effort to strip the tax breaks from the bill so it could be paired with the estate tax cut.
The logic is that the Senate, which has rejected the estate tax cut, would be more sympathetic if it is paired with the tax breaks and the minimum wage hike.
The pension bill, years in the making, is meant to strengthen traditional employer-based pension plans, crucial to the retirements of some 44 million Americans. It would also provide for steps, such as automatic enrollment, to ensure that 401(k) plans and IRAs, increasingly the main savings option of younger workers, are used by more people.
The two sides were in basic agreement on all the main pension aspects of the bill, although senators said early Friday they still needed another look at two main areas of contention: giving airlines special breaks in meeting their pension obligations and allowing financial firms that manage investment plans to give advice to people with 401(k) and IRA plans.
The bill would require all defined-benefit plans to reach full funding within seven years, presumably shrinking the current level of underfunding estimated at $450 billion. Companies that are seriously underfunded would be required to make extra payments to catch up with their contributions.
The legislation also attempts to protect the fiscal integrity of the Pension Benefit Guaranty Corp., the federal agency that insures pension plans and takes over plans abandoned by companies. The PBGC, running a deficit of $22.8 billion, has so far operated on premiums and interest earnings, but there is concern that it could require a taxpayer bailout if more major employers dump their pension plans.
A decision by the airlines to abandon their plans could add billions to the PBGC's deficit.
It also would give legal certainty to future cash balance and other ``hybrid'' defined-benefit plans. Such plans have faced lawsuits over charges they discriminate against older workers.
The original Senate bill passed last year gave financially struggling airlines, specifically Northwest and Delta, up to 20 extra years to reach full funding. The compromise being worked on would give the airlines, struggling to survive since the Sept. 11, 2001 terrorist attacks, and now escalating fuel costs, less generous breaks.
Negotiators on Thursday also said they had settled a dispute over who is permitted to offer investment advice on retirement plans.
House Majority Leader John Boehner, R-Ohio, has pushed a plan that would give financial firms that manage investment plans the authority to provide advice on 401(k) and IRA plans. But he met resistance in the Senate over concern such advise would present potential conflicts of interests.