New Coalition of Citizen Groups Cautions Congress: America Needs Reform, Not Bailout, of Pension System

2/27/2004

From: Pete Sepp or Paul Gessing, 703-683-5700 or pressguy@ntu.org, both of National Taxpayers Union

WASHINGTON, Feb. 27 -- As Congress continues to debate remedies for the mounting deficits in corporate pension plans, a joint letter from six citizen groups provided words of caution to lawmakers: beware of deceptive legislation in the Senate that "shifts the burden from underfunded corporate pension programs onto the backs of taxpayers." The 350,000-member National Taxpayers Union (NTU) organized the coalition effort.

"Pension reform is necessary, but our millions of members would rather see passage of no bill at all than the passage of misnamed 'reform' legislation that would further burden taxpayers with more bad debt," the open letter to Members of the House and Senate stated. "We urge both Houses to strongly consider the common-sense pension reform that was originally advocated by President Bush or passage of the narrowly-targeted legislation previously adopted by the House of Representatives."

Joining with NTU as signatories were American Conservative Union, Citizens for a Sound Economy, Council for Citizens Against Government Waste, Small Business Survival Committee, and Taxpayers for Common Sense Action.

NTU Director of Government Affairs Paul Gessing formed the coalition in response to what he called "the steady slide toward financial disaster as pension reform proposals moved from the White House and through Congress." He explained that last year, President Bush proposed several worthy initiatives to more fully disclose pension plan liabilities and assets to workers and taxpayers. The House of Representatives narrowed the scope of this package to modest but still-beneficial reforms of how plans can calculate their funding requirements. The Senate package, however, is packed with $16 billion of pension plan contribution relief Gessing calls "a giveaway to irresponsible companies." This could actually encourage other firms to ignore their own plans' funding problems, further weakening the position of the Pension Benefit Guaranty Corporation (or PBGC, a federally- chartered agency that backs retirement plans).

"(T)he PBGC is already in bad financial shape, having had a net loss of $7.6 billion in 2003 and currently carrying a deficit of $11.2 billion," the letter noted. "Since American taxpayers are ultimately responsible for the debts of the PBGC, it is unconscionable that Congress would add more to that burden."

NTU is a non-partisan citizen organization founded in 1969 to work for lower taxes, less wasteful spending, and accountable government at all levels. In August 2003 NTU's research affiliate produced a Policy Paper predicting a fiscal meltdown unless reforms such as better risk-pricing and private insurance are enacted. Note: The text of the open letter to Congress and NTU Foundation Policy Paper 142, The Next Big Bailout? How Underfunded Pensions Put Taxpayers at Risk, are available online at http://www.ntu.org.