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House plans pension, tax bill votes by Saturday

Posted on: Friday, 28 July 2006, 13:06 CDT

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)

Source: REUTERS

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