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Airlines get pension relief from Iraq spending bill

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Kai Ryssdal: It was two weeks ago tomorrow that President Bush signed that $120 billion Iraq spending bill. Getting it to the president's desk was a hard-fought legislative battle. It was vetoed once by the president. It was scrutinized by a bunch of congressional committees.

Now, it turns out two amendments were added at the last minute that give financial breaks to two airlines. And a couple of senators want to know how they got in there. Marketplace's John Dimsdale reports.


John Dimsdale: Sections 6614 and 6615 of the Iraq War Emergency Supplemental Bill allow American and Continental Airlines to use a favorable interest rate in calculating their pension liabilities over the next 10 years.

The two companies say the benefit merely levels the playing field, which Congress tilted when it gave pension breaks to Delta and Northwest last year. Delta and Northwest were in bankruptcy at the time.

Montana Senator Max Baucus, the chairman of the Senate Finance Committee, says he didn't find about the pension change until after the fact.

Max Baucus: Yeah, this is like an earmark stuck in an appropriations bill. By conferees, in nature of the dead of the night, on a subject that has nothing to do with an appropriations bill.

Baucus and the ranking Republican on the Finance Committee, Iowa's Charles Grassley, sent letters to the CEOs of American and Continental asking how much the amendments will benefit the companies. Baucus says the airlines flew around the Finance Committee, which has jurisdiction over pensions.

Baucus: And even the language is inartfully drafted. It's difficult to know what it is. A company just doesn't have its lawyers draft legislation and send it to the Appropriations Committee. That's what happened here.

Both American and Continental turned down our interview requests, and wouldn't say how much the amendments signed by the president mean to them. The companies issued statements saying all they wanted were pension rules that apply to all airlines equally.

They add they intend to live up to their pension obligations, and will reply to Senators Baucus and Grassley soon.

In Washington, I'm John Dimsdale for Marketplace.

About the author

As head of Marketplace’s Washington, D.C. bureau, John Dimsdale provides insightful commentary on the intersection of government and money for the entire Marketplace portfolio.

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