Chuck Grassley: “Mr. President, the replacement of the so-called ``30-year Treasury'' interest rate has reached an emergency. This is the…”

“Mr. President, the replacement of the so-called ``30-year Treasury'' interest rate has reached an emergency. This is the statutory rate used to value pension liabilities. There is an inverse relationship between interest rates and pension liabilities: As interest rates go up, pension liabilities go down. Conversely, as interest rates go down, pension liabilities go up. Small changes in interest rates mean big differences in pension contributions. Current interest rates are at historic lows. Low interest rates have caused pension plan liabilities to skyrocket. To make matters worse, the recession that began in 2000 brought down stock values. The combination of unusually low interest rates and the decline in stock values have combined to worsen the pension plan funding problem. Just when you think things can't get any worse, they do. In October 2001, the U.S. Department of the Treasury discontinued the 30-year Treasury bond. The 30-year bond is the statutory rate used by pension plans to value their liabilities.”