House plans pension, tax bill votes by Saturday

By Susan Cornwell

WASHINGTON (Reuters) – The U.S. House of Representatives
should vote by Saturday on a bill to overhaul the U.S. pension
system and a tax cut bill that includes a long-term rollback in
estate taxes and a minimum wage increase, Senate and House
Republican aides said on Friday.

Republican leaders are trying to finish a crucial pension
overhaul while pushing through a contentious estate tax cut
ahead of the November congressional elections, when Democrats
hope to make their biggest gains in over a decade.

A Senate aide told reporters that House and Senate
negotiators had agreed on the pension bill details but had not
been able to agree on whether to keep some $35 billion of tax
breaks in the bill. Republican leaders now plan to strip those
provisions from the pension bill and combine them with a
permanent rollback in estate taxes in hopes of getting the
repeal of what they call the “death tax” through the Senate.

House and Senate Republican aides said leaders might try to
improve chances of Senate passage by throwing in an increase in
the minimum wage to $7.25 an hour, from the current $5.15.

The House could vote on the bills Friday or Saturday before
leaving for a five-week break and the Senate would take the
measures up next week.

Republican leaders developed the latest strategy to move
the crucial pension bill and the estate tax cut separately
through Congress after negotiations between the House and
Senate ended in acrimony. Senators battled to keep extension of
popular tax breaks with the pension bill and House members
fought to strip them out in order to use them to help move a
contentious estate tax cut through Congress.

There was no immediate comment on the strategy from the
lawmakers who negotiated the pension bill. They said on
Thursday they were virtually finished with it but were still
haggling over provisions to help financially-pressed airlines.

The haggling has delayed action on the pension bill, which
some airlines said they must get soon to avoid defaulting on
their pension plans.

Most of the pension bill aims to close loopholes that led
to underfunding of employer-sponsored pensions that cover 44
million Americans.

Most companies would have seven years to make up funding
gaps in their pension plans. But airlines which have frozen
their plans would be allowed 17 years. They would have to
calculate liabilities using an 8.85 percent interest rate, a
Senate aide said. This was targeted at bankrupt Delta Air Lines
Inc. and Northwest Airlines Corp..

Airlines which have not frozen their plans would get 10
years. This provision was aimed at American Airlines, a unit of
AMR Corp., and Continental Airlines Inc..

There would also be a provision making it easier for hedge
funds to handle pension money without being subject to legal
safeguards that cover most financial institutions, aides said.

(Additional reporting by Donna Smith)