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up its own toll gate so my government got revenue, too, and we are going to end up with double tolls.
Don't you expect Canada to react to this? Certainly the Province of Quebec will. They are very aggressive.
Mr. SCHAFFER. We have had meetings with representatives of the Canadian Government. They know what we are doing and we have heard nothing from them, but I suspect you may be right.
Mr. GREGG. We may end up with a $2 toll instead of $1 for the people living on the border who commute across the border on numerous occasions.
Mr. SCHAFFER. Other people don't live there and others are paying for the services of having a Customs officer present at those border locations. We are saying in the proposal we believe that people causing that service should pay for the service.
Mr. GREGG. I think there is some justification to that, too, but I would note as a specific example that in Pittsburg, NH, there is a Customs house, but no Customs officer. If you want to get a Customs officer, you have to drive to Vermont.
There is a Customs office that has a solar greenhouse on it which costs $80,000 in tax money which froze up because the average temperature is below zero, but that is a side issue. It is going to create, I think, a lot of bad feeling.
Mr. ĠIBBONS. I want to commend you for the line of questioning you are following.
Here we have the world's largest, freest, most open border. Historic achievement. These nickle and dimers are out there trying to ruin something that has taken 200 years to create, the kind of good feeling and good will we got for nickles and dimes. It is preposterous. I don't know who thought this one up.
Mr. GREGG. I think, Mr. Chairman--
Mr. GREGG. I would think we might as a committee want to look at the issue of a Canadian-American open border as something that might be treated differently.
Mr. GIBBONS. I see those wind surfers every time they come in.
I would like to address a couple of questions to-I guess, to Mr. Schaffer on user fees at airports. Are you planning to continue to change overtime when planes come in after working hours?
Mr. SCHAFFER. No. With the proposal the overtime would be included. It is part of the fees that we have established or at least that we are proposing to establish.
Mr. STARK. So if a plane comes in at 2 o'clock in the morning you charge the same fees as if they come in at 5 o'clock in the afternoon?
Mr. SCHAFFER. Yes. Mr. STARK. Why? It is higher cost isn't it to service somebody in odd hours?
Mr. SCHAFFER. Not if the proposal is adopted, because the resources would be made available at any hour and everyone who was using the service would be paying for it so it would not cost any more, and the service would be provided.
Mr. STARK. You pay customs inspectors time-and-a-half or double time?
Mr. SCHAFFER. That is correct; but we are averaging out the costs over every one.
Mr. STARK. Why should the airline that flies during regular hours, and lands and takes off during what we would call regular business hours, subsidize the airline that decides to come in at 2 o'clock in the morning?
Mr. SCHAFFER. First, Mr. Stark, generally the airlines themselves don't decide to come in at a given time. They are slotted sometimes through their own impossible circumstances, they can't land at a given time.
So that sometimes it is unavoidable. But almost all the airlines-
Mr. STARK. The airlines are not now regulated, and give or take certain airplanes, they set their own schedules.
It just seems to me that if you have to bring somebody out at double time to service a plane coming in, you are just subsidizing those people who can operate in normal business hours.
Mr. LANE. Congressman, it is not always the customer-
Mr. STARK. That is the customer now. You charge higher rates now, do you not?
Mr. LANE. Yes, sir.
Mr. STARK. Why is it fair now? What is the change in philosophy that makes you decide that you are going to eliminte that?
Mr. LANE. You give an extreme example of 2 o'clock in the morning. Our problem isn't so much the flight that comes in at 2 o'clock in the morning but the four or five wide bodies that come in between 2 and 3 o'clock in the afternoon which neither the airport nor the inspection agencies have the capacity to handle it.
Mr. STARK. But you have got enough people at straight time then to cover that.
Mr. LANE. It is frequently those same people that will be used to handle the last plane coming in.
Mr. STARK. I am saying why not charge more if the airline forces you into an overtime situation, why not let them pay for it?
Mr. LANE. Well, the passenger is paying for it.
Mr. STARK. Come on, let's look-the airline through competition is not going to charge the passenger more. No airline charges more for night flights. The reverse is true.
It has been the regulation and the law for years that we charge the user more-I mean this is like the $500 for the shrimp boat.
What rationale is there if somebody causes your people to be there overtime, that is the decision the airline makes, why should those who are looking to fly within normal flight times pay extra money? That doesn't make any sense.
Mr. LANE. Under this proposal we are merely saying that it is $2 for each arriving passenger, no matter what time they come in. We are not trying to force the airlines to come in at a particular time earlier in the day or late in the day.
If we had our choice we would rather see the flights spread out over a greater time period. It is not really our choice.
Mr. STARK. Let's talk about another great money saving thing that you are doing. You are instead of putting some part-time people at the Oakland Airport, you are saving, which I commend you for, $100,000 a year roughly by taking these part-time inspectors out of the Oakland International Airport. Good move.
You are thereby costing the airplane $400,000 a year extra to land at San Francisco International Airport because the landing fees and the service facilities there are more expensive.
Do you have any more really good money saving approaches up your sleeve that you would like to defend before the committee today?
Mr. SCHAFFER. Not as good as that one, sir.
Mr. STARK. Well, I would like to commend you guys in a sense that I hope you will remember one thing, that one. You are pushing business, and that is a parochical issue, I am sure, but into an already overcrowded facility.
Mr. SCHAFFER. As you know, we have tried to work very closely with you and other representatives in that area, on the situation. We will take another look at it and if there is a problem we will obviously address it.
Mr. STARK. I appreciate that. Thank you.
Mr. FRENZEL. Mr. Chairman, like the gentleman from Florida and the gentleman from New Hampshire, I am pretty nervous about these fees. There are a large variety of them, and it is hard to discuss them in gross. They apply to one thing and another.
But in general they are fees which we charge the public for our privilege of extracting taxation from the public, and does this mean-I might ask Mr. Owens—that eventually we are going to ask people to pay to file our 1040's?
That is exactly the same kind of policy, and in my judgment outrageous.
Mr. OWENS. There is no such proposal and no such discussion, to my knowledge, or even consideration of that type of proposal.
Mr. FRENZEL. Well, then why should an importer, who is paying customs duties, be obligated to pay a fee for that privilege?
Mr. SCHAFFER. Mr. Congressman, those individuals are causing the service to be performed. Why should every taxpayer pay for the service if every taxpayer isn't deriving the benefit from it. The logic
Mr. FRENZEL. You mean that is a service for him to pay you a tax?
Mr. SCHAFFER. We don't believe this is a tax. He is paying a fee for generating or causing a service by the Customs Service to be performed.
Mr. FRENZEL. What do you mean, to help you to get your work right, he has got to pay a fee?
Mr. SCHAFFER. Congressman, we hope we get it right regardless of whether he pays the fee, but we will be able to provide—he will be paying for the services that he is causing to be performed.
Mr. FRENZEL. Sure he is asking you some questions. He is asking you to rate some products, and that is exactly what I do when call my friendly IŘS agent on his 800 number, and say, what did you mean on this schedule, on that line. You are asking the taxpayer to pay you some more for asking you how the system works, asking you to move it along.
Mr. SCHAFFER. There are no fees for asking for advice. There are fees proposed for the services that are provided across the land borders
Mr. FRENZEL. You have got here entry fees of drawback, entry fees for warehouse, entry for mail entries, for mail entries, forwhat are those for if not so that they can pay their tax to you?
Isn't that what we have to do to satisfy your requirements?
Mr. SCHAFFER. That is correct, but they are the ones who are causing the need for the services-
Mr. FRENZEL. By being so outrageous as to import some things into this country?
Are you going to get them on the export side too? That certainly is a high crime against the republic.
Mr. Chairman, I am going to ask some questions later of the service and its employees, and I don't want to take any more of the committee's time except to say that I consider most of these suggestions doubtful and the rest of them outrageous.
Mr. GIBBONS. Mr. Chairman, could we get these people in our subcommittee?
We would like to have a chance to work this matter out with them. I have a lot of questions from these folks, and their proposal is so vague and nebulous right now that I can't vote for it in any form.
Could we have a hearing in my subcommittee on this thing? This is a serious matter.
Chairman ROSTENKOWSKI. I do not know what the schedule is. I am sure the witnesses will be glad to expose themselves to interrogation.
Mr. GIBBONS. We will work them out at night. We are very cooperative.
Chairman ROSTENKOWSKI. The Chair will look at the schedule and see whether or not we can send the issue to your subcommittee.
Mr. GIBBONS. Let me ask you all, how are you getting along with your squabble with OMB over the revolving fund. Are we going to throw this money into the general fund to get by, and they will send us a budget in which they cut 800 people out of the budget-
Mr. SCHAFFER. We like to think that the issue of the revolving fund can be addressed. The problem is the user fee issue itself-we could, we believe, tie the fee collections to the actual allocations of resources.
Mr. GIBBONS. Is OMB going to let you have a revolving fund?
Mr. SCHAFFER. To the best of my understanding, OMB does oppose the notion of a revolving fund. Mr. GIBBONS. Tell them I oppose the notion of a tax increase, too. Mr. FRENZEL. Would the gentleman yield? Mr. GIBBONS. Certainly.
Mr. FRENZEL. If we have a hearing on this, which I hope we do, I hope you will include the OMB among our witnesses.
Mr. GIBBONS. We will see if we can get them here to talk to us. That is all the questions you have now. I have a heck of a lot more for Customs. We will have hearings some evening that wouldn't interfere with the tax reform simplification.
Chairman ROSTENKOWSKI. If the subcommittee would like to have night hearings, that is perfectly all right with me. I am sure the witnessses will be glad to attend.
Thank you very much.
Chairman ROSTENKOWSKI. The Chair calls Mr. David Walker, and Mr. Delfico. We welcome you to the committee.
Mr. Walker, you may proceed.
STATEMENT OF DAVID M. WALKER, ACTING EXECUTIVE DIREC
TOR, PENSION BENEFIT GUARANTY CORPORATION, ACCOMPA-
ave on my right with me today Mr. Kevin W. Putt, Acting Associate Director for the Corporation, whose departments were responsible for preparing much of the premium request and related statistical information.
It is a pleasure to appear before you and the committee today to testify on behalf of the administration in support of an increase in the premium for the single-employer plan termination insurance to $7.50 per participant, per year, effective January 1, 1985, and related program reforms.
In 1974, as a part of the Employee Retirement Income Security Act (ERISA), the Congress created a much needed insurance program to guarantee payment of vested benefits in terminating defined benefits plans that do not have sufficient assets to provide the promised benefits. Two insurance funds were created for this basic benefits guarantee program, one for single-employer plans, and one for multiemployer plans. My testimony today addresses only the single-employer program. The Congress legislated changes in the multiemployer program, including premiums, in September, 1980, and no further premium adjustment is needed in that program at this time.
In the single-employer program, as of the end of fiscal year 1984, the PBGC was responsible for payment of benefits to about 149,000 current and future retirees and beneficiaries, in approximately 1,100 terminated plans. As of September 30, 1984, the program had liabilities of $1.525 billion and assets of $1.063 billion, leaving an accumulated deficit for our 10 years operations of $462 million. Thus only about 70 percent of the liabilities were funded as of September 3, 1984.
To correct this situation, the administration's budget proposal contains a premium increase and program reforms that would help avoidable claims against the program and ensure the financial integrity of the program.
Let me address our premium needs and then discuss any proposed legislative reforms.
First, the primary reason for the current and past premium increase requests has been increasing net claims from terminated plans, that is, the amount of unfunded guaranteed liabilities minus