Chairmen scrap for upper hand with pension reform

Between Senate disputes and uncertainty in the House, K Street has been tossed and turned by the rocky trajectory of pension legislation — and speculation continues over who’s in control of overhauling the nation’s employee benefit system.

Between Senate disputes and uncertainty in the House, K Street has been tossed and turned by the rocky trajectory of pension legislation — and speculation continues over who’s in control of overhauling the nation’s employee benefit system.

The compromise brokered by Sens. Chuck Grassley (R-Iowa) and Mike Enzi (R-Wyo.), chairmen of the committees with jurisdiction over pensions, was imperiled first by pleas from bankrupt airlines for help in paying their unpaid benefit bills, then by a hold placed by Sen. John Cornyn (R-Texas) on behalf of healthy airlines concerned about giving an unfair advantage to foundering competitors.

In the House, Education and the Workforce Committee Chairman John Boehner (R-Ohio) continues to wait on Ways and Means Chairman Bill Thomas (R-Calif.) as Thomas adds savings provisions to Boehner’s pension template. Thomas has long desired to tackle the ambitious “three-legged stool” of retirement security, but the controversial third leg, legislation to overhaul Social Security, will likely be postponed to keep the bill moving.

“The cagey Ways and Means Committee is being the cagey Ways and Means Committee, as it does very well,” said Janice Gregory, senior vice president at the ERISA Industry Committee, which represents employer pension sponsors. “They have in their heads that they’re going to do something after Columbus Day recess, and still talking in terms of this mega-bill thing. What’s in it is anybody’s guess.”

Given Thomas’s penchant for poker faces and surprise moves, especially after recesses, anything can happen. But the equally tenacious Boehner has begun to hint that he expects his pension bill to move to the floor by month’s end.

As for Ways and Means members, Boehner said last week: “They’ll do what they’ll do.”

Adding Social Security to the mix, he added, “is like asking Congress to eat a bowl of cold green peas. They won’t do it. … The American people don’t seem to have any appetite for it.”

Lobbyists still pressing Congress to take up Social Security private accounts went into pushback mode, a sign that Boehner’s statement had roiled the industry. But Boehner had reason to be confident that the Ways and Means Committee would forgo Social Security to produce a pension bill quickly enough to maintain momentum for what is sure to be a hard-fought conference with the Senate.

Thomas is an original co-sponsor of Boehner’s bill, but he has not signed onto the “GROW” bill, House conservatives’ plan for diverting Social Security surpluses to private accounts. The Ways and Means Committee has set a Nov. 4 deadline for consideration of the pension bill, leaving enough time for a conference before the target adjournment date of Nov. 18.

“It’s important that pension reform move forward,” Rep. E. Clay Shaw (R-Fla.), a senior member of Ways and Means, said late last week.

As for retirement-savings add-ons, Shaw said, “It’s nice to have that as a carrot to move other legislation forward, but there’s got to be a limit” to how long the committee can wait on Boehner’s bill.

Rob Leonard, a former Ways and Means chief counsel who now lobbies for Clark Consulting Federal Policy Group, said Boehner and Thomas are prepared to jettison the White House’s top priority of earlier this year to move forward.

“The important thing is, they do appear ready to move fairly soon, meaning this month, rather than putting this off for a broader retirement-security package,” Leonard said.

Leonard said to expect a few savings items in the bill, such as changing 401(k) accounts to opt-out status rather than opt-in, but he all but ruled out Social Security language.

“That’s going to be moved on to another day,” he predicted.

Boehner has been emphasizing the need to overhaul pension premium payments and the use of credit balances by companies in poor financial health since before the Enron defaults of 2002 focused public attention on pension-funding rules. Two major airline bankruptcies in the past month have led Grassley to add industry-specific amortization to his pension bill, but so far Boehner has not followed.

“It’s not just these two airlines that have instilled a sense of urgency,” said a GOP committee aide close to Boehner.

There are going to be lot of hard choices to come in conference, he said, particularly on cash-balance plans, the hybrid pensions that have become increasingly popular among companies exiting the traditional defined-benefit system.

Neither the House nor Senate pension bill addresses benefit retroactivity for workers whose employers have already converted to cash-balance plans. At least one senator, Judd Gregg (R-N.H.), has indicated support for Boehner’s push to include retroactivity language, but unions and other employee-interest lobbyists are certain to resist it.

“We can’t go retroactively blessing plans that have been discriminatory and deny people benefits,” said David Certner, federal-affairs director at AARP. Even though he is gearing up for a fight, he echoed predictions of two October votes: “Once the Senate completes its bill, there will be incredible pressure on the House to act.”

Yet another question mark is what impact budget reconciliation, which the post-hurricane frenzy pushed back for at least a month and remains less than a sure thing, will have on the timing of the pension legislation.

“Can you deal with it in this political climate?” Boehner told reporters last week. “I don’t know.”

If reconciliation continues, sources said, premium increases and other revenue-generating provisions of Boehner’s pension bill could be moved through Ways and Means to meet the committee’s $1 billion savings target. But committee Democrats have yet to caucus on the pension issue, sources said.

Lobbyists with the deepest stake in pension changes continue to watch for clues from the Bush administration, where Labor Secretary Elaine Chao has unabashedly and publicly argued for pension changes so restrictive that critics allege they will force less-than-profitable businesses to end defined-benefit pension payments permanently.

Then there is the looming possibility that Boehner could jump into a House GOP leadership race, which could throw a wrench in the humming cooperation between himself and Thomas. Both Boehner’s and Thomas’s leadership PACs are ranked in the top 6 percent in total gross receipts, according to PoliticalMoneyLine, but neither lawmaker has directed PAC money to the other in the past three election cycles.

“Winning is important” if Boehner hopes to mount a leadership bid, said one lobbyist with ties to Boehner’s inner circle, “because it shows other members, if they have any questions, that he can put deals together.”

Even so, the lobbyist added: “I’d be surprised if this is all going to be wrapped up by mid-October.”