House Passes Pension Reform, Clinton Threatens Veto

October 27, 2000 ( - Despite threats of a Presidential veto, the House of Representatives Thursday passed HR 2614, a tax bill containing the bipartisan retirement savings package. However, the House version did not include some of the cash balance restrictions in the Senate Finance version.

The bill did not include the ban on cash balance “wear aways” that had been added to the Senate Finance Committee version of the bill. A wear away can occur in a conversion from a traditional pension plan to a cash balance program, effectively freezing older worker benefits for a period of time.

The bill does direct the Treasury to study the impact of cash balance conversions, as well as provisions that would require plan sponsors to disclose more information to participants when a cash balance conversion occurs.

The bill would also increase the minimum wage by $1/hour over the next two years

With respect to Medicare, the House-passed measure would provide for $28 billion in additional Medicare payments to health care providers over the next five years, with about $10 billion of that going to HMOs.  The President has already called that “unjustifiable.”

In a letter to the House Speaker, the President called the final version of the bill “a partisan legislative package” developed “without any consultation with me or congressional Democrats.”  He also said he would “have no choice but to veto it.”

One of the largest single provisions in the bill is an expanded limit that would allow all American companies to deduct from taxable income 70% of the cost of business meals, up from 50% currently.

The bill was passed by a largely partisan vote of 237-174.  The Senate is expected to take up the bill soon.

– Nevin Adams