Retiree care fight to continue

Industry, backers note Bush silence

March 07, 2002|By Kristine Henry | Kristine Henry,SUN STAFF

Steel industry leaders and supporters said yesterday that they will forge ahead with the fight for relief from retiree health care costs despite President Bush's silence on the issue.

Bush on Tuesday imposed tariffs of up to 30 percent on a wide range of steel imports. His action came after the U.S. International Trade Commission determined that imports had harmed the domestic industry and recommended various remedies, including tariffs.

Many in the steel industry had been pushing for tariffs of 40 percent - along with a commitment that the money from the levy would go toward a bailout on the approximately $12 billion tab for the health care costs of retirees. The benefits were promised to workers years ago and are overwhelming many steel producers.

The weight of those obligations - commonly called legacy costs - were in part responsible for the spate of recent bankruptcies in the domestic industry - including that of National Steel Corp. yesterday. Bethlehem Steel Corp. filed for Chapter 11 protection in October.

Bethlehem, which employs about 3,500 in Baltimore County, pays the health care costs of 130,000 current and retired employees and their dependents.

"I would have felt more comfortable if the president had said in his statement [Tuesday] relative to legacy costs that he would provide leadership," said Rep. Benjamin L. Cardin, whose 3rd District includes many steel workers. "Without leadership from the White House it will be tough, and I don't know if the president is with us or not."

In the coming weeks, steel executives and steel workers will be meeting again with members of Congress and their staffs to hammer out legacy cost legislation that can be introduced in the House and Senate. One staff member on Capitol Hill, who spoke on condition of anonymity and who has been involved in the talks and is helping draft a bill, said a dominant issue will be how much of the current benefit the federal government should try to replicate.

Some in Congress argue that the steel workers should get everything they were promised under labor contracts, while others say that would be too expensive, and doctor visit co-pays and pharmaceutical deductibles might have to be increased.

But there are some who say any bailout would be unfair.

"It raises serious questions of equity," said Robert D. Reisch- auer, president of the Urban Institute and former director of the Congressional Budget Office. "We are talking about a group of people who have Medicare coverage."

Tom Miller, director of health policy studies for the Cato Institute, said legacy cost relief would set a bad precedent.

"There would be an endless range of folks petitioning for relief," he said. "We can't keep paying off again and again the mistakes of others."

Although Bush did not publicly voice support for legacy cost relief, the staff member and others said the White House and the Commerce Department have assured lawmakers that he is not necessarily opposed to the idea.

"The president made it clear to us that Congress needs to move," said Rep. Robert L. Ehrlich Jr., whose 2nd District includes Bethlehem's Sparrows Point plant. He said Bush told members of steel-producing states that they need to "think outside the box."

"This is going to make the [tariff issue] look easy," Ehrlich said.

Ehrlich indicated that before handing out money, lawmakers want to see how industry consolidation plays out.

Robert S. "Steve" Miller Jr., Bethlehem's chairman and chief executive, said Tuesday that a tentative deal that would have had United States Steel Corp. acquire Bethlehem has collapsed because of the lack of momentum on the legacy cost issue. Bethlehem is in talks, however, with the Brazilian steel maker Companhia Siderurgica Nacionale (CSN) over a possible joint venture.

National Steel Corp. of Indiana filed for Chapter 11 bankruptcy protection yesterday but said its planned acquisition by U.S. Steel is moving ahead. Unlike the tentative deal with Bethlehem, the plan to buy National Steel, which is owned by Japan's NKK Corp., was not contingent on health care relief.

U.S. Sen. Barbara A. Mikulski said it is too soon to say specifically how the legacy cost issue would be addressed.

"What the president did [Tuesday] was take up the threshold issue," she said. "If he had not done that, legacy costs would be a moot point and we might as well have declared surrender to those who want to bring the United States steel industry to its knees."

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