Take one House majority leader, add more than $870,000 in campaign contributions from the securities and investment industry, and what kind of pension reform legislation do you get?
One that, in the words of The New York Times, “rather than strengthening the pension system, would actually weaken it, according to a little-noticed analysis by the government’s pension agency… The agency’s report projects that the House and Senate bills would lower corporate contributions to the already underfinanced pension system by $140 billion to $160 billion in the next three years.”
When companies default on their pension plans for employees, it is the federal Pension Benefit Guaranty Corporation that ensures they get paid. In recent years, numerous financially toubled companies, from United Airlines to Bethleham Steel to Polaroid, have turned over responsibility for their pension programs to the PBGC.
According to the NYT report, House Majority John Boehner (R-OH), who is the lead sponsor of the bill in the House, has championed the desires of the securities and investment industry. The bill weakens restrictions on Wall Street, making it easier for financial service companies to handle more retirement money without meeting certain fiduciary standards. Boehner also included a provision that allows investment firms to hawk 401(k) retirement plans to participants even if the firm’s own mutual funds are among the products they offer. Current law prohibits this practice.
The securities and investment industry has been the top contributor to Boehner’s leadership PAC, Freedom Project, over the years, giving $644,473, according to www.opensecrets.org. The industry has also kicked in $225,636 to his campaign fund.
The House and Senate have both passed pension legislation and now committee members from both chambers are deciding a final version of the bill. The lawmakers are hoping to complete their work from April 15. In addition to easing rules for the securities and investment industry, the bill is chock full of giveaways to other companies and industries.
For example, the airline industry has gotten a big break easing pension rules. Among other things, airlines will be allowed to use “highly optimistic assumptions about their investment returns when calculating how much they need to contribute to their pension funds each year.” The provisions were inserted at the behest of Northwest Airlines, now in bankruptcy proceedings. Despite their poor financial performance, airline companies have been particularly adept at deploying lobbyists to wrangle fixes from Congress—remember the huge bailout after 9-11? But that’s another story, also told here, in "Is That a Politician In Your Pocket?"