FAA Reauthorization Act of 2007 - Motion to Proceed

Floor Speech

FAA REAUTHORIZATION ACT OF 2007--MOTION TO PROCEED -- (Senate - April 29, 2008)

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Mr. DURBIN. Madam President, when the Senate considers the Federal Aviation Administration Authorization Act, I will offer a bipartisan amendment to strike section 808 of the substitute to this bill. The section I wish to strike would impose a significant competitive disadvantage on airlines that have done the most to protect their employees and provide for the secure retirement of those employees and current retirees. It would increase the pension obligations of these airlines above what is required of the airlines they compete with. It is fundamentally unfair. Such a move would undermine the ability of these airlines to maintain their commitments to their workers, particularly in today's struggling economy.

In 2006, with several airlines facing the prospect of bankruptcy, the Pension Protection Act adjusted how struggling airlines that had frozen their defined benefit pension plans could calculate their pension obligations. Those airlines were allowed to devote significantly less funding than their competitors toward payments to their pension plans. Understand, airlines facing bankruptcy that were on the cusp of losing defined benefit retirement plans were given better treatment under the Tax Code than those that didn't file bankruptcy and tried to keep their word to their employees under their defined benefit plans. Airlines that maintained their pension plans weren't given this benefit. As a result, American, Continental, Hawaiian, Alaskan, and US Airways were placed at a significant competitive disadvantage, only because they continued to offer their workers defined benefits for retirement. Those are the benefit plans, incidentally, that workers like the most. They are the ones that guarantee what you will receive when you retire, as opposed to a defined contribution plan, for example, that says a certain amount of money will be set aside, and maybe it will earn a lot before you retire, maybe it will not. The defined benefit plans--which, incidentally, Federal employees and Members of Congress have--are the best. These airlines that had similar plans for their employees and retirees and avoided bankruptcy were put at a disadvantage. The airlines facing bankruptcy, throwing away their pension plans, and changing them, were given a better break under the Tax Code than those that continued in business, avoiding bankruptcy and keeping their word to their employees and retirees.

In 2007, I joined with Senator Harry Reid, adding language to the Iraq supplemental that tried to address this unfairness and inequity. Under the 2006 law, airlines that had prohibited new workers from participating in their defined benefit plan were allowed to assume a rate of return of 8.85 percent on their pension investments. The 2007 law allowed the other airlines, those that had maintained the previous defined benefit commitment, to assume an 8.25-percent return. I know these numbers probably in the course of the speech don't impress you, but they should. It makes a significant difference of how much money an airline has to put in the pension plan, and the Tax Code, the law of our land, requires it. Airlines that had frozen their plans were allowed to amortize their plan shortfalls over 17 years; in other words, those that were facing bankruptcy and walking away from many aspects of their pension plans were able to take a longer period of time to pay out what was necessary to bring their plans up to solvency. The 2007 law gave airlines with defined benefit plans only 10 years, not 17. Therefore, airlines that are offering their workers defined benefits retirement face a competitive disadvantage.

The 2007 law I mentioned earlier partially closed the gap. Section 808 of this FAA reauthorization bill would tilt the playing field away from the airlines that already face this competitive disadvantage because they offer the very best pension benefits to their employees.

What it comes down to is this: Airlines are declaring bankruptcy in every direction. Some are reporting record losses. Last week, American Airlines reported a loss of $328 million in the first quarter, virtually all of it attributable to increases in jet fuel. A few days later, United Airlines, another major airline based in my home State of Illinois, announced first quarter losses, if I am not mistaken, of nearly $500 million and the need to lay off some 1,000 employees. Now comes this FAA reauthorization bill, and it includes a provision that will create an economic burden and hardship on some of these airlines that are struggling to survive. Could this Senate pick a worse time to hammer away at these airlines, when they are struggling to deal with jet fuel costs that are going through the roof and an uncertain economy facing a recession? If there was ever a bad idea, this is it.

Mr. ROCKEFELLER. Will the Senator yield for 15 seconds?

Mr. DURBIN. I am happy to yield.

Mr. ROCKEFELLER. I thank the Senator.

Madam President, I ask unanimous consent that all postcloture time be yielded back and that the motion to proceed be agreed to and the motion to reconsider laid upon the table; that once the bill is reported, the Senator who is now speaking be recognized to offer a substitute amendment; that upon reporting of that amendment, no further amendments be in order during today's session and that there be debate only today.

The PRESIDING OFFICER. Without objection, it is so ordered.

Mrs. HUTCHISON. Madam President, will the Senator from Illinois further yield?

The PRESIDING OFFICER. The Senator from Texas.

Mrs. HUTCHISON. I want to say I am in complete agreement with what the Senator from Illinois has said. I know he is going to finish his statement, but he is making exactly the point I think needs to be made in this debate.

We will have an amendment tomorrow. Senator Durbin and I are going to cosponsor an amendment that would fix the issue about which he is speaking. The idea that we would pass an FAA reauthorization that would modernize our facilities, that would put more safety precautions in place, that would give passengers more rights and, oh, by the way, would also bankrupt some of our airlines in the meantime is ridiculous.

The bill will be so good. Senator Rockefeller has done a great job. We have compromised. We have worked on a bipartisan basis. Then, all of a sudden, we see this pension issue rise up that would put one, maybe two airlines into bankruptcy, and then we have taken away all the advantages of this very good bill.

I commend the Senator from Illinois. I look forward to working with him tomorrow on an amendment--or whenever we are designated to put our amendment in place--and hope the balance we had is restored in the pension issues so that airlines that are offering defined benefit plans--which are so rare these days--will still be able to offer employees that, even at a greater cost.

I look forward to working with my colleague from West Virginia to make sure this very good bill goes forward without the bad tax provisions and the pension provision that was added, not by our committee, but by the Finance Committee.

I thank the Senator for yielding. I look forward to working with the Senator to fix this pension issue.

Thank you, Madam President.

The PRESIDING OFFICER. The Senator from Illinois.

Mr. DURBIN. Madam President, I thank the Senator from Texas for joining me in offering this amendment. This is a bipartisan amendment. We urge our colleagues: Take a close look at this. At the end of the day, if we pass this FAA modernization bill and force more airlines into bankruptcy because of this provision, is that our goal?

We have lost so many airlines already, and now a major airline, such as American Airlines, which avoided bankruptcy and managed to keep its promise to its employees and retirees, and has provided significant funding for its pension, is going to be penalized by this bill.

Ask the people whose pensions are affected, those members of unions who are supporting our efforts to stop this change in the law. I cannot understand the motivation behind this change.

When this was originally considered a few years back, there was another group in charge in Congress and a chairman of the House Ways and Means Committee who singled out several airlines that were not facing bankruptcy and created a disadvantage for them. We tried to remedy it last year, and we got a temporary fix in there. And here they come again: this group that wants to keep changing this law, penalizing these airlines--at absolutely the worst possible moment. Wouldn't it be ironic if this were passed and the airlines that worked the hardest to avoid bankruptcy, the airlines that worked the hardest to keep the defined benefit plans--absolutely the gold standard when it comes to retirement--wouldn't it be ironic if the language of this bill ended up capsizing these airlines at this precarious moment in our economic history.

I am going to urge my colleagues: Take a close look at this. Ask yourselves: If the beneficiaries of these retirement plans oppose this change, if the airlines oppose this change, if there is no argument to be made as to why you would treat these airlines differently than those that have faced massive changes in their pension plans, why in the world would we want to pass this amendment?

At the end of the day, I want to make sure we have FAA modernization. But I also want to make sure there are airlines still serving America in every corner of America so our people have a chance to travel for business, for leisure, whatever it might be.

I urge my colleagues: Please take a close look at this. I hope they will consider supporting the Durbin-Hutchison amendment when it is offered tomorrow morning. It will be the first item of business. I hope we can entertain a debate and move to its consideration at an early time.

There is no reason to delay this. The sooner we remove this cloud from these airlines that have worked so hard to stay in business and avoid bankruptcy the better.

I yield the floor.

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