DEPARTMENT OF HEALTH AND HUMAN SERVICES COMMENTS ON LABOR DEPARTMENT VIEWS LETTER ON H.R. 2672, FEDERAL RETIREMENT REFORM ACT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP87B00858R000400560024-5
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 14
• Document Creation Date: December 22, 2016
• Document Release Date: February 17, 2011
• Sequence Number: 24
• Publication Date: February 21, 1986
• Content Type: MEMO

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MEMORANDUM FOR: Director of Congressional Affairs
FROM: Robert W. Magee
Director of Personnel
SUBJECT: Department of Health and Human Services comments
on Labor Department views letter on H.R. 2672,
"Federal Retirement Reform Act"
REFERENCE: Memo to Multiple Addressees frm OMB,
dtd 21 Feb 86, Same Subject
We have reviewed the comments from the Department of Health
and Human Services forwarded with reference and have no
objections to the statements and recommendations contained
therein.
Robert . Magee
STAT
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M.v I Ins vrr-nwr. yr I lC rnC,IL W
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503 ': I
February 21, 1986
LEGISLATIVE REFERRAL XEMORANDUM
TO: Legislative Liaison Officer -
Labor Department - Pete Galvin - 523-7713
OPM Frances Bolden - 632-4682
State Department - Torrey Whitman - 647-5158
Central Intelligence Agency i/
SUBJECT: Department of Health and Human Services comments on
Labor Department views letter on H.R. 2672, "Federal
Retirement Reform Act"
The Office of Management and Budget requests the views of your
agency on the above subject before advising on its relationship
to the program of the President, in accordance with OMB Circuler.
A-19.
A response to this request for your views is needed no later than
February 28, 1986, by telephone.
Questions should be referred to Hilda Schreiber (395-7362),
the legislative analyst in this office.
Naomi R. Sweeney for
Assistant Director for
Legislative Reference
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THE SECRETARY OF HEALTH AND HUMAN SERVICES
WASMINGYON. 0 C 20201
The Honorable James C. Miller, III
Director
Office of Management & Budget
Washington, D.C. 20503
Dear Mr. Miller:
FE B 19 1986
This is in response to your request for a report on
Secretary of Labor William E. Brock's comments on proposals now
before Congress to establish a supplemental retirement plan for
new Federal employees hired after December 31, 1983.
At this time, Congress is considering two proposals for a
supplemental retirement plan for new Federal employees: a
Senate version, H.R. 2672 (formerly S. 1527), and a House
version, H.R. 3660. These two versions are now headed for
Conference Committee negotiations.
Secretary Brock's letter of January 14, 1986, deals
principally with the relationship between employee claims under
the Federal Employees Compensation Act (FECA), administered by
the Department of Labor, and disability and retirement benefits
to be provided under a new supplemental retirement system.
These supplemental benefits, administered by the Office of
Personnel Management, will augment primary benefits under
Social Security, administered by the Department of Health and
Human Services.
Secretary Brock's letter requests that any Administration
position expressed during Conference Committee negotiations
reflect a view that the relationship between FECA and the
disability and retirement benefits of a final supplemental
retirement plan be parallel to the relationship under other
private and public sector plans.
We have several specific comments concerning Secretary
Brock's comments on the proper relationship between FECA and
Social Security benefits, These are explained in detail in the
enclosure. In general, we defer to the Secretary of Labor on
the issues he raised, except for the specific items discussed
in the enclosure.
Sincerely,
Secretary
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Comments on Department of Labor Letter to OMB
Concerning H.R. 2672
The letter from the Department of Labor (DOL) recommends several
changes concerning the treatment of Federal Employees'
Compensation Act (FECA) benefits under H.R. 2672--the
Senate-passed bill establishing a new Federal civil service
retirement system:
(1) DOL recommends that the bill specifically provide that
survivors receiving civil service benefits should elect either
FECA benefits or basic civil service benefits. (The bill
already requires employees to elect FECA benefits or basic
civil service retirement or disability benefits.)
Comment: Defer to DOL. It should be noted, however, that
U.S.C. 8116 (attached) already requires such an election for
survivors. Presumably, section 8116 would still apply since
it has not been repealed by the Senate bill. A clarification
would, however, be helpful since the bill specifically
addresses treatment of dual entitlement to FECA benefits and
civil service disability/retirement benefits, but not survivor
benefits.
(2) DOL recommends that section 306 (DOL incorrectly refers to
section 307 rather than 306) be revised so that FECA benefits
would not be offset by the amount of Social Security
disability benefits attributable to Federal covered
employment. They also recommend that a new section be added
to the bill providing instead for reducing Social-Security
disability benefits based on receipt of FECA benefits.
Comment: While we recognize the intent of the bill is to
pro de consistent treatment of persons receiving FECA
benefits and any type of Social Security benefits, we agree
that FECA benefits should not be reduced by Social Security
disability benefits. Rather, as already provided under
section 224 of the Social Security Act, the proper approach
would be an offset in the Social Security disability benefit
for receipt of FECA benefits. Reducing the Social Security
disability benefit (rather than the FECA benefit) would be
consistent with the principle that workers' compensation
payments are intended to be the primary source of wage
replacement in cases of work-related disability and that the
financial responsibility for work-related injuries should not
be shifted from employers to Social Security taxpayers.
Given that the disability offset provision is already included
in section 224 of the Social Security Act, it is not clear why
a new section needs to be added to the bill to assure that
Social Security disability benefits are offset by FECA
benefits.
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(3) DOL recommends that section 306 of the bill be modified so
that FECA benefits would be offset by Social Security survivor
benefits based on the employee's Federal covered employment--
in the same manner that Social Security retirement benefits
would result in a FECA benefit offset under section 306. DOL
notes (a) that pursuant to 5 U.S.C. 8116, survivors might have
to make an election between their FECA benefits and any Social
Security survivor benefits payable based on the employee's
Federal employment covered by Social Security and (b) that an
offset would be preferable to an election.
Comment: We defer to DOL on whether FECA benefits should be
offset for Social Security survivor benefits based on Federal
covered employment in the same manner that the bill proposes
to offset Social Security retirement benefits. However, it
appears to us that the present law provisions in S U.S.C. 8116
need to be repealed or modified to accomplish this result
since the FECA benefit offset in section 306 does not seem
consistent with the election requirement in 5 U.S.C. 8116.
The provision in 5 U.S.C. 8116 presumably would still apply to
the FECA benefit provisions as modified by the Senate bill.
Under S U.S.C. 8116(b) an employee or survivor eligible for
FECA benefits and any other Federal benefit based on the
employee's injury or death must elect within 1 year after the
injury or death to get either the FECA benefit or the other
Federal benefit(s). Contacts with DOL staff indicate that
while this provision is now being administered to only mean
that the person must choose between FECA and Federal civil
service benefits, the language in the statute could be
interpreted to require an election between FECA benefits and
Social Security disability or survivor benefits based on
Federal covered employment. (The current interpretation
appears to be based on the fact that most Federal civilian
employment is not covered by Social Security.)
Since the Senate bill does not amend S U.S.C. 8116, and since
5 U.S.C. 8116 and section 306 presumably cannot both apply at
the same time to the same case, DOL's letter should
acknowledge this and explain their recommendation concerning
modification of the provisions in 5 U.S.C. 8116.
(4) DOL recommends that the offset in section 306 of the bill be
triggered by receipt of Social Security benefits rather than
potential entitlement to those benefits.
Comment: Do not oppose.
We have no comments on the DOL recommendations concerning ERISA-
related aspects of the House and Senate civil service bills.
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Pipe 000 TITLE S--OOVId N)dENT ORGANIZATION AND ZMPIAYl3B f 011$
(6) his usual employment;
(4) his ape. .
CO) his qualifications for other employment;
(4) the availability of suitable employment;
and
(7) other factors or circumstances which
may affect his wage-samins capacity in his
disabled condition.
(b) Section 6114(d) of this title Is applicable
to determining the wage-earning capacity of an
employee after the beginning of partial disabil.
icy.
(Pub. I.. 56-354. Sept. 0, IM. 80 Slat. 649.)
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definitions applicable and the style of this title as out,
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SOCTZOP Raman To to D.C. Coss
This section to referred to In sections 61-1403. 31-
1619 of the District of Columbia Code.
f 5111. Limitations eft right to receive saapenestion
(a) While an smploy.e is receiving tompensa.
Lion under this subchapter, or It he has been
paid a lump sum in commutation of installment
paymennta until the expiration of the period
during which the installment paymenta would
have continued, he may not receive salary, pay,
or remuneration of any type from the United
states. except-
(1) in return for service actually performed;
(2) pension for service In the Army, Navy,
or Al: Force;
(i) other benefits administered by the Vet-
inns' Administration unless such benefits
are payable for the same Injury or the same
death; and
(4) retired pay, retirement pay. retainer
pay, or equivalent pay for service In the
Armed Forces or other uniformed services,
subject to the reduction of such pay In aooor-
dutoe with section 5639(b) of title 6. United
states Code.
However. eligibility for or receipt of benefits
under subchapter Ill of chapter 63 of this title,
or another retirement system for employees of
the Oovernntent. does not Impair the right of
the employee to compensation for scheduled
dlaahtllues specified by section $107(c) of this
title.
(b) An Individual entitled to benefits under
this subchapter bemuse of his Injury, or be-
cause of the death of an employee, who also Is
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under a provision of statute other than this
subchapter payments or benefits for that
injury or death (exoept proceeds of an tnsur-
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the taste of death. by the deceased) as an em-
ployee or In the armed forces. shall elect which
benefits he will receive. The Individual shall
mate the sleet ton within I year after the Injury
or death or within a further time allowed for
good cause by the Secretary of labor. The sloc-
tion when made Is irrevocable, except as other-
wise provided by statute.
(c) The liability of the United States or an in-
strumentaltty thereof under this subchapter or
any extension thereof with respect to the
injury or death of an employee is exclusive and
Instead of all other liability of the United
States or the Instrumentality to the employee,
his legal representative, spouse, dependents,
next of kin, and any other person otherwise en-
titled to recover damages from the United
Sates or the instrumentality because of the'
Injury or death in a direct judicial proceedIng,
in a civil action. or In admiralty, or by an ad-
ministrative or judicial proceeding under a
workman's compensation statute or under a
Federal tort liability statute. )!However, this sub-
section does not apply to a truster or a member
of a crew of a vessel.
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707. 1 101. 74 Stat. 501.
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sal, 14(b). 76 Stat. $15.
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Guard whose pension Is based in whole or In part on
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In subsection W. the reference to the definition of
"employee" In former section 750 Is omitted as
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the entire subchapter.
Administration of this subchapter was transferred to
the Secretary of labor by section 1 of 1910 Rears.
Plan No. It. 04 Silt. 1171 cast section 6143).
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definitions applicable and the style 01 this title as out
lined In the preface to the report.
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U.S. DEPA TMENT Of LABOR
96C0WVWV OF LAMP
WASfelvY 4. D.C
January 14, 1986
The Honorable Jases C. Miller III
Director
Office of Management and Budget
Washington, D.C. 20503
Dear Jim:
I am writing to advise you of our views on H.R. 2672, pertaining
to disability and retirement benefits for Federal employees
hired after January 1, 1984. This bill is now in conference.
We would appreciate inclusion of our views in any Administra-
tion oomcunication to the conferees.
Both the Senate version of H.R. 2672 and the bill that will
be the basis of the House position in conference (B.R. 3660)
build a retirement and disability system for new Federal workers,
based on a combination of Social Security benefits and supple-
mental benefits. They also provide for the establishment of
-a thrift savings plan by which employees may, if they choose,
contribute a certain percentage of their income to 'an invest-
ment fund. For such employees the Goverhx?nt would also
deposit to the fund a sus based on a percentage of the employees'
contribution.
The Labor Department's primary interest in these bills per-
tains to their treatment of matters arising under the Federal
zapioyees' Compensation Act (PICA) and the Employee Retirement
Income Security Act (LRIBA). With regard to PICA, we prefer
the Renate bill. With regard to LRISA, we favor the policies
currently reflected in both the House and Senate bills.
Regarding the PICA-related provisions of this legislation, we
believe that an effective Federal disability and retirement
system must have equitable provisions for handling situations
where a Federal employee would be eligible for both workers'
compensation benefits under PICA and retirement or disability
benefits under the Federal retirement system or under other
law. Under current law, these situations are addressed in
a simple, straightforward manner; individuals must elect to
receive either PICA benefits or benefits under the Federal
disability or retirement system. They cannot receive both.
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The disability and retirement systems conteaplated by the
Senate and Rouse bills, however, are more cosplicated and
require specificity regarding the manner in which each of
their individual elements relate to FIG benefits. The ele-
ments of the proposed system are: (1) the basic Federal dis-
ability or retirement benefits= (2) the thrift plans and
(3) Social Security benefits. B.A. 3660 does not address
the relationship between the elements of the new program and
PECA at all. It is, therefore, unacceptable to on. The Senate
bill does address these issues and establishes a framework
which we believe is essentially equitable and proper. Within
this framework, however, the Senate bill leaves some questions
open and raises some concerns.
First, while the Senate bill properly continues the current
requirement that a person eligible for PECA must elect between
receiving FECA benefits and receiving basic Federal disability
or retirement benefits, it does not address the election issue
with regard to death cases. We assume that in cases of death,
the Senate intended an election by survivors between PECA
benefits and the basic retirement benefits, but we believe
the language of the bill should clearly reflect that intention.
Second, the Senate bill provides that an individual eligible
for both Social Security benefits (either retirement or dis-
ability) and PEG benefits would receive full Social Security
benefits, but would have FICA benefits reduced on a dollar-
for-dollar basis for those Social Security benefits which
were based on Federal employment. We believe that this is
a proper approach for Social Security retirement (OAST) bene-
fits, but is not a proper approach for Social Security disability
(SSDI) benefits. Our concern with having FICA benefits reduced
when an Individual is also receiving SSDI benefits is based on
our view of the proper role of a workers' compensation system,
which we believe is appropriately reflected in current law
and should be retained in the new Federal retirement system.
Current law generally provides that if insurance benefits
and workers' compensation benefits total more than 80 percent
of pre-disability earnings, SSDI will be reduced. Thus, workers'
compensation pays the 'first dollar.' We favor this approach
because, by not reducing FICA benefits, it regsires employers
to pay for work-related injuries, improves safety incentives,
sod helps preserve the integrity of the Socibl Security Trust
fund. The Senate bill, however, would reverse this offset
for Federal workers, reducing PECA benefits by the amount of
Social Security disability benefits. Thus, the Social Security
Trust Fund would in effect subsidise Federal employers whose
workers have serious employment-related injuries.
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We would therefore recommend that the offset in favor of workers'
compensation established by section 307 of the Senate bill
be limited to Social Security retirement benefit., and that
a new section be added providing for application of the SSDI
offset to FBCA benefits in disability eases.
Another matter of concern with section 307 of the Senate bill
is that it refers only to benefits
or former employee. Accordingly, the proposed to an employee
not apply to survivors' benefits. proposed offset would
however, survivors might have to make ranaelectionIIbetween116,
their FECA benefits and any Social Security death benefits.
We believe the offset approach taken by the Senate bill with
respect to employees is preferable to an election, and therefore
recommend that section 307 be extended to inclode survivors'
benefits.
We are also troubled by section 307's offset trigger. The
language provides for an offset when Social Security benefits
are payable or, upon proper application, would be This language could be interpreted to mean that an employee?
or former employee receiving benefits under FEG
would automatically have those benefits reduced by ald at age
amount of Social Security benefits even if theemployeemhas
elected to delay receipt of such benefits to age 45. We
believe the off et should be limited to Social Security
benefits actually received.
On the whole, we believe the Senate bill represents a respon-
sible approach to the proper apportioning of coets between
the F!CA system and the specific elements of the new retire-
ment system contemplated by the bill.
We will now comment on the sRISA-telated asp
bills. Both the Senate and the House billsinclude abthrif t
savings plan. This plan is similar to a
contribution plan. It is contemplated thatitheefundsoaccuau-ed
lated in the Federal plan will be managed in
p
brivate
art investment fund managers who will be plan fiduciaries.
Both bills also include a role for the Department of Labor
in enforcing the fiduciary provisions
plan's investment management system. governing the thrift
The Department believes that the standards
responsibility under the Federal plan should ~parallelfthoseary
applicable to the private sector under the Employee Retirement
Income Security Act ( sA). The Federal Thrift Savings Plan
will be the largest and most visible thrift plan in the country.
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its beneficiaries should be afforded the same protections as
participants in privete secto~an~atds of oon4uct asssisil Ca i!s
should be bound by the same 8
private Sector plans.
Fiduciary standards similar to those in ERIKA are also important
for practical reasons. Adopting standards similar to private
sector standards will tclitgtandardaeare well'devtlopediand
and enforcement activities. ERISA-type standards
the regulatory structure is in place.
will also facilitate compliance with the standards for the
in-
Federal plan because the
vestment managers are already familiar
sector fiduciary standards.
Finally, the Department favors ERISA-type standards because
it feels their value and enforceability have already been
well demonstrated. Indeed, great care should be taken in
developing standards for the public sector plan because any s could
major conceptual deviation
ther vell satablishadaand proven
encourage the erosion of
private sector standards.
The Souse and Senate bills both require the Depa tmentstoof
establish programs of compliance audits. Given the thrift plan and the nu~ of ispappropriateepseo+~ever,
believes that such a-program
we feel the administrative burden ben Provided be
Qiniaised and that sufficient reeo responsibilities.
to carry out these additional respo
The Department's final concern regarding athe nd thrift plenum--be
that economic oonsideratln
the basis for making investment decisions. Loe-economic invest-
ment criteria are appropriate for selecting among
only if the investment opportunities are of equal economic
to use no -ec arctic criteria
merit. if a pension plan is allowed
as a guide to investment decisions, fiduciary
unenforceable. Even more importantly, the use of non-economic
criteria for selecting will
investment
participants by lowering
affecting participants' retirement income seurity. oh to
the Rouse and Senate bills currently appear drafted
toa td.
protect plan participants' interest in this important 9
very tr' yours
Wpg:gdd
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Office of the Press Secretary
For Immediate Release February 27, 1986
STATEMENT BY THE PRESIDENT
Today I am signing H.R. 4061, the Federal Employees
Benefits Improvement Act of 1986. H.R. 4061 changes the
Federal Employees Health Benefits law, as recommended by my
Administration, to allow rebates of health insurance premiums
to be paid by insurance carriers to Federal annuitants, as is
already permitted for current employees.
It is gratifying for me to be able to sign this legis-
lation so that Federal annuitants can receive their health
insurance rebates without further delay.
I congratulate. the Congress on enacting acceptable legis-
lation to accomplish this change so quickly after my veto of
H.R. 3384 last month. Like H.R. 4061, H.R. 3384 would have
authorized premium rebates for Federal annuitants. However, I
could not approve that bill, particularly because it contained
a seriously objectionable provision that would have eliminated
the current 75 percent limit on the Government contribution
to any health insurance plan for Federal employees and annu-
itants. That provision would have been too costly over the
next few years, contrary to our efforts to achieve a balanced
budget by 1991.
I am very pleased that the Congress has dropped this
expensive provision, and I urge the Congress now to turn its
attention to the structural reforms in the Federal Employees
Health Benefits program proposed by the Administration.
These changes would encourage greater competition and choice
of health plans for employees, restructure the formula for
determining the Government's share of enrollee premiums, and
decrease Government intrusion in the program.
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February 27, 1986 CONGRESSIONAL RECORD - SENATE
cine Foundation is a small organiza-
tion whose dedication and commit-
ment to the people of El Salvador is
much admired by all who have had
the opportunity to study its work. To
better acquaint my colleagues with
this provider of basic health services, I
wish to insert into the RECORD a brief
summary of its programs and organi-
zations.
There being no objection, the sum-
mary was ordered to be printed in the
RECORD, as follows:
EL SALVADOR MEDICAL PROJECT
The civil war in El Salvador has produced
over half a million displaced persons and led
to the collapse of the national health infra-
structure, resulting in a profound public
health crisis. Aesculapius International
Medicine has responded by providing a
health team from the United States now en-
gaged in primary health care, preventative
medicine, and health education to a Salva-
doran population whose needs fall outside
the scope of existing programs.
The project was established in August,
1984 in a rural village 50 kilometers north of
San Salvador. Working directly and through
health promoters, the project provides for
the health needs of more than 60,000
people. In conjunction with the CAPS pro-
gram of the Archdiocese of San Salvador,
the Aesculapius team has participated in
the training of over one hundred rural
health promoters from all parts of the coun-
try. Fifty-three are from Chalatenango-the
department in which our clinic is situated-
and work under the medical supervision of
the Aesculapius team. A second site, serving
a population of over 60,000 will be estab-
lished in the department of Usulatan in
early 1986.
The Aesculapius team in 1985 consisted of
one physician, two nurses and a health edu-
cator/administrator. Both nurses are public
health specialists, and have worked for Aes-
culapius in El Salvador since August 1984.
All four are unpaid volunteers, speak fluent
Spanish, and have made a minimum twelve
months commitment to the project. A nurse
practitioner, a third public health nurse and
a nutritionist will join the team in early
1986.
As a joint project with the Archdiocese of
San Salvador in Chalatenango and the Dio-
cese of Santiago de Maria in Usulatan, the
project has been recognized in El Salvador
as being strictly nonpolitical and humani-
tarian. This has permitted the project to
continue, despite increasing political and
military tensions in the area. The health
work is nonsectarian in nature and available
to all in need.
TRIBUTE TO JUDGE CHARLES
FORD
Mr. HEFLIN. Mr. President, Judge
Charles Ford, the probate judge of
Choctaw County, AL, is one of a van-
ishing breed. He is an old-style probate
judge, who is considered by the people
of his county to be all things to them.
They call upon him in almost every ca-
pacity. He is a friend, a helper, a
county official, a caring politician, and
generally all-around good fellow.
Judge Ford has served as probate
judge of Choctaw County for 10 years.
The people have become accustomed
to relying upon, him. for advice on all
sorts of problems. In addition to his
probate judge duties, he is also the
chairman of the Choctaw County
Commission, which has charge of the
highways and roads in that county, as
well as all of the county services and
departments. He puts in long hours
and is never really away from the job,
for at home he is constantly being vis-
ited by his constituents either in
person or on the telephone. Judge
Ford is genuinely loved by the people
of Choctaw County for his kindly
down-to-earth manner, as well as for
his energetic efforts in helping each
and every citizen who seeks his advice,
counsel or assistance.
Recently, there appeared an article
in the Mobile Press entitled "Judge
Ford: 'I'm people all the time.' " This
article is highly complimentary of the
fine work that he does, and I ask
unanimous consent that a copy of this
article appear in the CONGRESSIONAL
RECORD.
There being no objection, the article
was ordered to be printed in the
RECORD, as follows:
[From the Mobile (AL) Press, Jan. 27, 1986)
JUDGE FORD: "I'M Two PEOPLE ALL THE
TIME"
(By Darla Graves)
BuTLEa, AL-Living in a Choctaw County
and serving the county's residents is a pleas-
ure, according to Probate Judge Charles
Ford.
Originally from the town of Pushmataha,
Ala., Ford and his wife now reside in the
city of Butler, Ala., the county seat.
Ford has.served as probate judge in Choc-
taw County for 10 years. He said that when
he first ran for the office in 1976, he had to
defeat six worthy opponents. which was not
as easy task. However, he did win and he/
said that he plans to run for re-election in
When asked how he felt about being a
judge, Ford replied, "I really love it because
I can get involved in helping the needy of
the county. My office is the highest elected
office in the county, and it's a powerful
office. But, I use it to help people; I never
play politics."
Ford's duties as probate judge include pro-
bating wills, handling adoptions, issuing dif-
ferent types of licenses, performing mar-
riages and things of that nature. He is also
the chairman of the Choctaw County Com-
mission.
"I have two jobs, actually. I serve in the
capacity of probate judge and also as chair-
man of the county commission."
"There are, I believe. 34 counties in the
state of Alabama in which the probate
judge serves as the chairman. I'm two
people all the time. I have to answer all the
complaints of all four of the county commis-
sioners," he said. "But we all, basically, get
along very well."
Ford said the hardest type of cases for
him are those in which he has to determine
whether or not a person is mentally stable.
"When I study petitions, all the allega-
tions are filled out in the petitions. Luckily,
I know all the people in the county. I know
the families, and I know their backgrounds.
After all. I'm part of the people. Bo; I usual-
ly have to rely on my knowledge of the
people in. order to make a judgment on
whether or not someone Is mentally unsta-
ble. These cases are very hard to deal with,"
he said.
Ford said that he has one daughter who
works for the Washington County Court-
house and two granddaughters. His wife is a
S 1725
secretary fora bank president in Butler and
assists hiln in campaign efforts when she
can. However, he said that he never stops
campaigning.
Since his job is a "constant 24-hour job,"
he seldom has time for hobbies. But when
he does he said he enjoys hunting and fish-
ing. According to Ford. Choctaw County is
an excellent area for hunting.
Ford said although he did not attend law
school, which was not a prerequisite for the
position of probate judge, he nonetheless
feels that he is doing a good job for the
people.
"I have always wanted to serve the people.
If I am not working in the office, I will go
out and visit in the county. I stay In contact:
with the people, and I know what they'
want. Therefore, I know what kind of job
I'm doing, and the people will tell you, espe-
cially on election day."
One particular way that he serves the
people to the best of his ability is through
his marriage ceremonies. He said that a lot
of people will come in from Mississippi to be
married by him because there is a 3-day
waiting period in Mississippi and a no wait-
ing period in Alabama. Therefore, he said,
he performs a lot of marriages after hours
and on Sundays.
He recalled one incident where a couple
wanted to be married in the courthouse
square and both the bride and groom wore
overalls to the ceremony.
"They also wanted me to wear overalls,
and, of course, I didn't mind because it was
fun. Instead of throwing rice they threw
corn. No invitations were sent out, but
people saw what was going on and came to
the square. We ended up having a huge
crowd there," he said-jokingly.
When asked if there was anything about
his job that he would change if he could,
Ford replied, "I don't have anything in par-
ht people and hope to continue to do so in
he future."
EFITS IMPROVEMENT ACT OF
1986
Mr. STEVENS._ Mr. President, sec-
tion 101 of H.R. 4061 will enable re-
tired Federal employees in the Federal
Employees Health Benefits Program
[FEHBPI to receive rebates which
have been offered by 11 plans in the
program.
Those rebates result from excessive
reserves that accumulated in the pro-
gram. In order to reduce these re-
serves, the Office of Personnel Man-
agement [OPM] authorized carriers in
1985 to pay rebates to currently en-
rolled subscribers. Rebates were au-
thorized as a method for reducing the
1985 contributions of subscribers.
Eleven carriers announced plans to
make rebates to their 1985 subscribers
and set aside reserves from which the
rebates would be made.
OPM determined, however, that an-
nuitants cannot receive the rebates be-
cause the present law does not author-
ize OPM to reduce the contributions
of annuitants. Rebates to employees
and-annuitants were delayed pending
consideration of this corrective legisla-
tion.
Employees, annuitantsand the- Gov-
ernment contribute to the health ben-
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CONGRESSIONAL RECORD - SENATE February 27, 1986
efits plans and should share propor-
tionately in any rebates. This act
amends 5 U.S.C. 8909(b) to give OPM
specific authority to use excess contin-
gency reserve balances to reduce the
contributions of annuitants as well as
the contributions of employees and
the Government.
Section 101 of H.R. 4061 will be ef-
fective upon enactment, but rebates to
annuitants will be authorized even if
made to annuitants enrolled in a plan
as of a specific date in 1985 in order to
permit annuitants to share with em-
ployees in the 1985 reductions.
PENSION WELFARE
Mr. QUAYLE. Mr. President, on
February 3, 1986, the Will Street
Journal published an editorial titled
"Pension Welfare," which clearly dem-
onstrated the need for true reform of
our Nation's pension system. Given
the importance of private pensions in
our Nation, and the current crisis of
the Pension Benefit Guaranty Corpo-
ration. (PBGCI, I urge my colleagues
to read this editorial and take to heart
its warning.
There being no objection, the edito-
rial was ordered to be printed in the
REcoxn, as follows:
PENSION WELrexa
Back in 1974, the Watergate affair in
Washington was what amounted to a politi-
cal urban riot. The city was manic from a
daily feeding of rumors, leaks and published
bombshells. As sometimes happens during a
riot, Washington's political authorities
weren't able to keep track of what everyone
in Congress was doing. Amidst all U?.
tumult, Title IV slipped into the 1974 pen;
sion-reform act known as ERISA. Title IV is
ERISA's federal pension-insurance system..
Dress up Refrigerator Perry as Little Lord`
Fauntleroy, and you have a pretty good idea
of how closely the current system resembles
real insurance.
"We are in effect running a corporate wel-
fare program that subsidizes declining In-
dustries," says Kathleen Utgoff, administra-
tor of the Pension Benefit Guaranty Corpo-
ration (PBGC), which administers the in-
surance program. Rep. John Erlenborn, a
principal architect of ERISA, says the sys-
tem's premium (slated to rise from $2.60 per
worker to $8.50) isn't a real premium; he
calls it "a head tax." Others call the federal
pension insurance a "transfer program" and
"backdoor industrial policy." What is more,
say some congressional pension specialists,
the political players for Team Smokestack
knew they were creating a corporate bailout
program years before "Japan Inc." became a
household word.
Last year, Wheeling Pittsburgh Steel, on
the brink of being pulled under by its credi-
tors, unloaded an estimated $475 million in
unfunded pension obligations on the federal
pension corporation. Months earlier, Allis
Chalmers shipped $165 million of unfunded
obligations. Continental Steel, in Chapter
11 proceedings. has filed to reject two pen-
sion plans, with the prospect likely of send-
ing the PBGC a $27.5 million air-ball. Con-
sequently, the PBGC suddenly has an on-
paper deficit of $1.3 billion (it plans to liti-
gate the Wheeling-Pitt action).
Successfully off-loading its $425 million
pension liability was part of the bankruptcy
workout demanded by Wheeling-Pitt banks.
The strategy allows these companies to get
back in the race, their cost structure signifi-
cantly lightened by ERISA. That means
that healthier companies, such as U.S.
Steel, and Cyclops, end up running well-
funded pension plans, competing with the
Koreans and Europeans, and paying premi-
ums that are used to prop up their reeling
competitors. Besides the many steel-indus-
try claims on the program, about 20% of
recent plan dumpings have been from com-
panies that aren't in bankruptcy.
Two changes have been proposed to fix
this.
Currently, the PBGC has little choice but
to pay out the guaranteed level of benefits
of a terminated plan. The budget-reconcilia-
tion bill Congress failed to pass in the last
session contains amendments tightening the
procedures under which companies may ter-
minate their unfunded plans. The new rules
would give the system powers to significant-
ly challenge terminations. The other pro-
posed change-only an idea now-would
Induce or require pension plans to use the
private insurance system and pay risk-relat-
ed premiums. This would make the Agency
something more than a passive mail drop
for a sick company's cost burdens. (An at-
tempt to subject Wheeling-Pitt to the new
rules failed.)
Another potentially significant change
discussed in those congressional amend-
ments is a requirement that the pension cor-
poration study the feasibility of risk-related
premiums and private insurance. The
Reagan administration has just announced
its intention to seek that change.
Private insurers have little experience
with which to set such rates and would
resist covering pension plans whose unfund-
ed liabilities make them virtually uninsur-
able. But the current system deserves reor-
ganization. "Insurance" traditionally de-
notes coverage for unforseen events. Howev-
er, the process by which some companies
are dumping their problems on the PBGC is
not an insurable event. Putting well-funded
pension plans (as are most plans) under pri-
vate insurance would allow us to face hon-
estly the question of protecting workers in
declining industries.
Those workers often have employers in in-
dustries that have little prospect of meeting
their unfunded pension liabilities for rea-
sons that include a fundamental loss of
competitive position, relatively high wage
structures and poor management. These are
factors in the natural process of corporate
extinction, and securing a realistic level of
workers' benefits in these circumstances is a
legitimate concern. But it is a misuse of
public policy to force well-run companies
and their workers to support a federal "in-
surance" system that penalizes them for the
purpose of propping up their less successful
and often less efficient competitors.
CANADIAN LUMBER IMPORTS
Mr. EAST. Mr. President, the Cana-
dian softwood lumber trade problem
affects virtually the entire United
States. We recognize that, so does the
administration. That's why the admin-
istration has entered into trade talks
with Canada centering on the lumber
problem. Two meetings have been held
to date between the two teams of ne-
gotiations, and I understand a third
meeting will occur soon.
The administration and the Canadi-
an Government should be congratulat-
ed for recognizing that the importa-
tion of Canadian softwood lumber is a
major trade problem. I cone d our
country and Canada for seeking a rea-
sonable, responsible, negotiated solu-
tion to the problem. It is my firm hope
that negotiations between the two gov-
ernments will succeed at the earliest
possible date. In my view, a negotiated
solution is far preferable to any legis-
lative solution.
I am convinced that the current
slump in the United States timber in-
dustry is a direct result of a sharp in-
crease in the Canadian softwood
lumber share of the United States
market. Canada's share of the market
has grown dramatically from less than
20 percent in 1975 to 33.5 percent in
1985, resulting in tens of thousands of
lost United States Jobs.
There is only one reason for this sit-
uation to exist: Canadian Provincial
governments are virtually giving away
their stumpage at rock-bottom prices.
To promote Canadian lumber activity,
the Canadian Government sells
lumber stumpage rights to producers
at prices well below market levels. Cer-
tainly, these Canadian Provinces are
free to pursue any domestic subsidy
they like. But the Congress of the
United States ought not sit idly by and
watch subsidized Canadian lumber
.rose the border into the United
States, , robbing Independent small
business of their markets, closing
mills, and displacing American work-
ers.
Since 1975, Canadian softwood
lumber production has increased 103
percent while United States produc-
tion grew by only 20 percent. Canada
has now captured over one-third of
the United States market and in my
State of North Carolina, Canada has
captured 40 percent of the market.
Simply stated, Mr. President, our
American lumber industry is being
overwhelmed by a Canadian industry
subsidized, aided, and encouraged by
its Government. The result of that sit-
uation Is an injury to the American
worker that ought not be overlooked
by this Senate.
Given the clear reason behind the
Canadians success in our market, in
good conscience, we ought not allow
this trend to continue. Either Canada
agrees to a meaningful resolution to
the problem or we ask the United
States Government for an aggressive
hard-line correction to assure that our
domestic industry can compete with
Canadian mills on a level playing field.
APPOINTMENT OF SENATOR
MATTINGLY TO CANADA-
UNITED STATES INTERPARLIA-
MENTARY GROUP
The PRESIDING OFFICER (Mr.
Evs>srs), the Chair, on behalf of the
Vice President, pursuant to 22 U.&C.
2764-276g, as amended, appoints the
Senator from Georgia tMr.Marrrna-
LYl as a member of the Senate delega-
tion to the Canada-United States In-
terparlimsentary Group during the
second session of the 99th Congress to
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