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WASHINGTON, April 9 — When many employees lost their retirement savings after Enron filed for bankruptcy protection, lawmakers in Washington promised legislation that would mend the holes in the pension safety net exposed by the company's collapse.

But some legal experts and pension rights advocates say the first of the post-Enron pension measures to reach the House floor actually opens up fresh loopholes. Some of the bill's provisions would lead companies to seek to reduce the number of employees covered by pensions and give proportionately larger pension benefits to the most highly paid executives, they say.

The measure was passed by the Ways and Means Committee by a vote of 36 to 2 last month and is expected to be combined into another bill on the House floor on Thursday. The legislation would be the first inspired by Enron's collapse to make it to a full vote of either chamber of Congress. Critics acknowledge it would fix some problems exposed by the Enron debacle, and proponents note that the criticized provision passed the House last year with bipartisan support, only to be dropped for procedural reasons in the Senate.

But the legislation's fine print highlights how Congressional efforts at "reform" — as the battle over campaign finance also demonstrated — can sow new concerns.

Current rules, dating to a 1986 pension law, require that to qualify for favorable tax status, pension plans must meet very specific tests for the balance between benefits for lower paid and higher paid workers.

But a provision tucked into the House bill during a Ways and Means Committee hearing last month would scale back those requirements, allowing companies to test their plans against more subjective standards and giving the Treasury Department authority to approve plans that do not meet today's tests.

The provision, which some pension law experts said would significantly weaken employee protections, was championed by business interests and supported by Representative Bill Thomas, the California Republican who is chairman of the committee. The provision was also supported by the bill's chief sponsors, Representative Rob Portman, Republican of Ohio, and Representative Benjamin L. Cardin, Democrat of Maryland. Mr. Portman said the provision is expected to be inserted into the other House bill on the floor Thursday.

"This provision is an outrage," said Daniel Halperin, a pension law expert at Harvard Law School and a Treasury official during the Carter administration. The language in the bill, he said, is an attempt to "basically gut" current rules intended to ensure that companies offer roughly proportional retirement plans to highly paid and more moderately compensated workers.

Another critic is J. Mark Iwry, who oversaw employee-benefits policy and regulation at the Treasury Department from 1995 to 2001.

"This controversial proposal would weaken existing legal protections for workers in both the statute and regulations," Mr. Iwry said. "It would allow corporations in some cases to exclude more employees from pension coverage and reduce the level of benefits for average- and lower-paid workers who remain covered."

Mr. Portman said that such criticism "way overstates" the effect that the provisions would have, and he predicted that the language would actually encourage small-business owners to offer retirement plans. The provisions, he added, "will be used only in rare instances, but it's considered important by companies which have a fair plan, but when you go through the very specific and very technical mechanical tests, they still don't meet the so-called nondiscrimination rules," Mr. Portman said.

"Frankly, it's not what the business community wanted," he added. "They wanted much more substantial reforms."

Yet business groups say the provision would go a long way toward eliminating inflexible tests for pension plans that make it difficult for some good plans to qualify for tax-favored treatment. They also note that the bill gives discretion to the Treasury Department to approve plans that otherwise do not pass muster.

"I'd certainly be surprised to see the Treasury Department start to bless plans that anyone believes are unfair," said James Delaplane, vice president for retirement policy at the American Benefits Council, which represents large employers. Many retirement plans that clearly treat all employees fairly have faced regulatory concerns over such matters as provisions governing early retirement, Mr. Delaplane said. Other provisions have also drawn the ire of some experts, who say they would reduce scrutiny of some pension plans.

The legislation directs regulators to simplify reporting requirements for pension plans with fewer than 25 participants. Backers of the measure say it will encourage more small businesses to offer pension plans to their employees.

"Those are the ones most likely to not offer plans right now," said Jim Morrell, a spokesman for Mr. Portman.

But critics fear that less disclosure will make it harder to detect problems in these plans. "Small plans already have substantial relief when it comes to pension plan reporting," Mr. Iwry said. "Relaxing the reporting requirements still further would make it harder for regulators to monitor compliance with the rules."

Corporate lobbyists have sought changes in the 1986 pension rules for years. Their differences with pension rights advocates reflect a continuing tension built into the nation's private pension system.

On the one hand, because tax benefits are conferred on pension plans, government rules seek to ensure that highly paid executives do not get an unfair share of the benefits. On the other hand, lawmakers worry that excessively stringent rules will reduce the number of employers offering retirement plans, or prompt employers to curtail plan benefits.

The Portman-Cardin bill contains a number of provisions supported by pension rights advocates. They favor the bill's requirement that companies warn employees 30 days before freezing trading in their 401(k) retirement plan accounts — a proposal made in response to the inability of Enron workers to sell shares during several weeks last fall when the company's stock was in free fall.

Pension rights groups also embrace the bill's proposal forcing companies that use their own stock to match employees' 401(k) contributions to allow workers to sell those shares after three years.

Republican lawmakers said tonight that the Portman-Cardin bill would be combined with another bill, sponsored by Representative John A. Boehner, Republican of Ohio, on the House floor on Thursday, with the Boehner bill serving as the platform for the measure's final version. In the Senate, Democrats are working on a separate bill substantially different from the House proposals.

One of the most significant differences, for example, would force companies that do not offer a traditional pension plan to either use company stock as the matching contribution in employee 401(k) plans or offer the stock as a 401(k) investment option — but not both. The provision is an attempt to reduce the number of employees whose retirement plans are too heavily concentrated in shares of their own company.

McCain-Feingold Reinstates An Old But Necessary Principle: Restraint Of Corporate Power

(4/2/02) - Since President Bush signed the campaign finance bill into law, we’ve heard a lot from Sen. Mitch McConnell, R-Ky., and special-interest groups about how the new law will affect them. No one seems to be talking, though, about how the new law will affect the public.

It’s a critical question, because average citizens – the millions of Americans who go to the polls every other November – are the intended beneficiaries of this new campaign law. By protecting our elections from the distorting and corrupting influence of almost bottomless aggregations of wealth held by corporations, the new law makes our democracy more representative of the people.

If there is one lesson the last century has taught us about politics, it is that corporations, relentlessly driven to increase profits, will inevitably find a way to corrupt politics – unless we remain vigilant. Teddy Roosevelt knew it firsthand, which is why he railed against corporate influence in 1905, declaring, “There is no enemy of free government more dangerous and none so insidious as the corruption of the electorate.”

The nation’s very first campaign finance law, the Tillman Act of 1907, was a response to the public outcry over huge oil companies, steel manufacturers, banks, and railroads that pumped eye-popping sums of money into the political parties in return for political favors. So, too, was the Federal Corrupt Practices Act of 1925, which Congress passed in the wake of Teapot Dome, another campaign finance scandal in which the oil industry secretly paid huge sums of money to federal officials who doled out oil leases. And then, of course, there was the Federal Election Campaign Act of 1974, which was a direct response to the Watergate scandal, in which millions of dollars of illegal corporate contributions flowed into at least three secret slush funds.

We may be excused for forgetting the robber barons, Teapot Dome, and Watergate. But as we consider the cries of special-interest groups, let’s not forget this generation’s equivalent abuses that motivated the new round of reform: The sale of the Lincoln Bedroom and the Clinton coffee klatches. The Republican Team 100 and Regents, whose $100,000 and $250,000 gifts were rewarded with special access to party leaders and committee chairs and special legislative favors. Roger Tamraz, who, though widely condemned for paying $300,000 for special access to President Clinton, unabashedly quipped in his congressional testimony, “I think next time I’ll give $600,000.” The energy industry tycoons who wrote Dick Cheney’s energy policy behind closed doors. And so on.

Congress responded this generation, as it has in the past, for one simple reason: In our democracy, we elect people, not corporations, and, likewise, we choose to have people, not corporations, do the electing. This government of the people and by the people is a government more likely than any other to address the needs of the people. Left unchecked, money’s distorting influence on politics makes our government less democratic.

So, how will the new law affect ordinary citizens? People will know who is spending money to elect or defeat a candidate. They'll be able to rest assured that people, not big companies, are doing that spending. To be sure, with the ban on soft money, you will have to stop sending checks in excess of $25,000 to your favorite political party – if you were in the habit of doing so. And beyond that, you can look forward to a continuation of the values that have guided our democracy since 1907, when Teddy Roosevelt pushed through the Tillman Act.

E. Joshua Rosenkranz, president of Brennan Center for Justice at NYU School of Law, is part of the legal team defending the campaign finance law in the courts.

WASHINGTON, March 20 - The Senate gave final approval today to an overhaul of the nation's campaign finance law, and President Bush said he would sign it, putting the political system at the cusp of the broadest change in a generation.

The 60-to-40 Senate vote showed that the effort to limit money in politics had gained support since last year, and the large margin came despite years of bitter combat over the issue.

Opponents vowed to shift their battle to the courts. ``Today is not the end,'' said Senator Mitch McConnell, the Kentucky Republican who has led the fight against the legislation, saying it infringes on free speech rights. ``There is litigation ahead.''

He added that ``I am consoled by the obvious fact that the courts do not defer to Congress on matters of the Constitution,'' and pledged that he would soon name an ``exciting legal team'' stretching across the political spectrum to help him mount his challenge.

Shortly after the Senate voted, Mr. Bush ended any last ambiguity about where he stood on the bill that had been the signature issue of his main Republican primary opponent, Senator John McCain of Arizona.

``The reforms passed today, while flawed in some areas, still improve the current system over all, and I will sign them into law,'' Mr. Bush said in a statement tonight. He added that the law presented some ``legitimate Constitutional questions'' but did not comment on the legal challenge threatened by opponents.

The bill will take effect after the November Congressional elections. It would ban the large unlimited contributions to national political parties that are known as soft money and rein in campaign advertisements by outside groups advocating the election or defeat of specific candidates.

The day's action capped a long effort to change the campaign finance system. Senator McCain and Senator Russell D. Feingold, Democrat of Wisconsin, first introduced their legislation to limit money in politics in 1995. But time and again the bid to ban soft money died in Senate filibusters or else stalled in the House, facing fierce resistance from Republican leaders.

The political dynamics began to change after Mr. McCain put the battle against special interests at the center of his surprisingly strong presidential run and as more Democrats were elected to the Senate in 2000, bringing more votes for the bill.

But the measure gained critical support in recent months, when the collapse of the Enron Corporation put a spotlight on political giving by corporate interests and helped propel it through the House last month, 240 to 189.

The end of the legislative saga was assured today when the Senate voted 68 to 32 to stop debate on the bill, showing that Mr. McCain and Mr. Feingold had more than the requisite 60 votes to cut off a filibuster.

Even some opponents of the bill believed it was time to move on and voted to shut off debate.

And when the final vote came, it showed that two new senators were backing the bill: Ernest F. Hollings, Democrat of South Carolina, and John W. Warner, Republican of Virginia. Senator Ted Stevens, Republican of Alaska, who had supported it last year, voted against it.

In all, 11 Republicans and one independent joined 48 Democrats to support the bill. Two Democrats and 38 Republicans voted against it.

For a few final hours, the two sides fenced over whether the large soft money donations that reached a record of nearly $500 million in the 2000 election tarnished the political system or were a protected right of participation.

``This great center of democracy is truly tainted by money,'' Senator Feingold said. ``Particularly after Sept. 11, all of us in this chamber hope the public will look to the Capitol and to the Senate with reverence and pride, not with derision. Our task here today is to restore some of that pride.''

Senator Phil Gramm, Republican of Texas, countered by waving a small, red-bound volume of the Constitution and declaring the bill an abridgment of free speech rights and the right to petition the government.

``We are not taking away political influence at all,'' Mr. Gramm said. ``We are redistributing political influence. Who are we taking it away from? We are taking it away from people who are willing and able to use their money to enhance their free speech guaranteed by the Constitution.''

The bill is the most ambitious campaign finance measure to pass Congress since Mr. Bush's father vetoed a broader measure in 1992 that included spending limits and would have subsidized campaigns with public financing.

If upheld by the courts, the new legislation will make the most far-ranging changes since 1974 in how the political parties and outside groups participate in campaigns.

That was when Congress enacted a comprehensive set of contribution and spending limits in response to the Watergate scandal that drove President Richard M. Nixon from office. Two years later the Supreme Court struck down most of the limits on spending as an infringement on free speech but upheld limits on contributions.

At the heart of the bill is the ban on soft money. Such contributions, first allowed by a ruling of the Federal Election Commission in 1978, escalated steadily in the 1990's.

The legislation also places new restrictions on campaign advertisements by groups advocating the election or defeat of specific candidates within 60 days of a general election and 30 days of a primary.

In exchange for the soft money ban, the bill loosens for the first time since 1974 the caps on more strictly regulated contributions known as hard money. The limits on how much an individual can give to a federal candidate would rise to $2,000 an election, from $1,000 now, with subsequent increases for inflation.

The aggregate limit on how much an individual could give to all federal candidates and political parties would rise to $95,000 per two-year election cycle, from $25,000 per year. And state and local parties would be allowed to accept limited soft money donations of up to $10,000 per year per individual for get-out-the-vote drives and voter registration.

Changes in the campaign law affect lawmakers personally, and emotions ran high today. At a victory news conference with an array of supporters, Mr. McCain, usually either ebullient or combative, seemed uncharacteristically subdued.

``It's not often that I'm rendered speechless,'' he said, ``and I'm sure that the affliction will not remain with me very long.''

In the Senate chamber, Mr. Gramm momentarily choked up as he thanked Mr. McConnell for being willing to fight so steadfastly against the measure and be ``constantly vilified every day in the media because of a position you take.''

To the end, senators disagreed sharply about how the measure would change the political system. Mr. McConnell said large donors would simply shift from giving soft money contributions to political parties and give to less accountable outside interest groups who face less stringent disclosure requirements. ``We are all now complicit in a dramatic transfer of power,'' he said.

Senator Tom Daschle, the majority leader from South Dakota, said that those who argued that change would make the system worse beg the question, ``Is what we have good enough?'''

In a reference to Enron, he said, ``Is it good enough that half the government has to recuse itself from an investigation of a failed company because it spread so much money to so many people? Is it good enough that in every election the amount of money spent goes up and the number of people voting goes down?''

Supporters and opponents of the bill said there were many reasons why it finally made it to the president after years of gridlock, beginning with the fact that the soft money ban was less controversial than earlier more sweeping calls for public financing and spending limits. ``The reformers kept stripping it back,'' said Mr. McConnell.

The election of 2000 also had its effect, with Mr. McCain's presidential run giving the issue new resonance and the Democrats' pick up of five Senate seats adding to the ranks of the bill's supporters. After years of killing the bill in Republican filibusters, the Senate approved it last year 59 to 41.

The effort to pass it in the House initially collapsed in a bitter procedural dispute, and its supporters had to mount a petition drive to resuscitate the legislation.

When the Enron scandal put a focus on campaign contributions, the supporters got their last needed signatures to force the measure to a vote. And Mr. Bush's refusal to fight the bill made it easier for several dozen Republicans to defy their leaders and vote for the bill. It passed the House last month 240 to 189.

Then the fact that the Democrats controlled the Senate became pivotal. Mr. Daschle insisted on bringing the House version of the bill directly to the Senate floor so it could bypass a House-Senate conference committee and be sent directly to Mr. Bush.

Following is a statement that I gave on the floor of the House on February 13, 2002. The current campaign finance situation is a disaster. It needs fundamental reform.

Mr. Speaker:

The issue today is very simple. Do we take a major step forward in getting hundreds of millions of dollars from the most powerful special interests in the country out of the political process, or do we continue the obscene status quo?

Tragically, our country has the lowest voter turnout of any major nation on earth. One of the reasons for that is that many ordinary citizens understand is that if you're in the middle class all you get is one vote to influence the political process. But if you're rich and the head of a large corporation, you get one vote plus the access and influence that millions of dollars in campaign contributions buy for you.

Do you want to know how our current system works?

Enron and other large corporations, year after year, paid nothing in taxes - despite huge profits. Why? Because of a tax code that was written for the rich and large corporations as a result of their campaign contributions.

Our elderly and sick citizens pay, by far, the highest prices in the world for prescription drugs. Why? Because the pharmaceutical industry contribute tens of millions of dollars into the political process. The result is that Congress and the White House regard drug company profits as being more important than the health needs of seniors.

And on and on it goes.

Whether the issue is taxes, prescription drugs, health care, energy policy, the environment, trade, the minimum wage or a dozen other issues - the implications are very clear. The hundreds of millions of dollars in campaign contributions made by the wealthy and powerful profoundly shape public policy. The end result of that process is that Congress pays far more attention to the needs of the rich, than to ordinary citizens - and the integrity of our entire political system suffers terribly.

Mr. Speaker: Shays-Meehan should not be considered the end of the process. In my view, we must move toward public funding of elections - as some of our states are now doing. But this legislation is an important step in the right direction, and should be passed.

Does life imitate art, or what? Last weekend's box office was dominated by a movie in which Denzel Washington takes an emergency room hostage to secure treatment for his dying son. Last week's major political event, though it went largely unnoticed by the general public, was also a hostage drama: House Republicans blocked vital aid to the nation's most vulnerable workers, and have refused to release it unless they secure passage of a dying stimulus plan. The plan, you won't be surprised to learn, consists almost entirely of tax cuts for corporations and the wealthy.

Here's how the blackmail scheme works. U.S. unemployment insurance, unlike benefits in many other advanced countries, has a sharp cutoff: 26 weeks and you're out. This cutoff can be rationalized as tough love; arguably the American system, by giving workers no choice other than to find new jobs, has helped prevent the emergence of a European-style class of permanent unemployed. But it's a very harsh rule to impose during recessions, when new jobs are simply not available.

And that's the current situation. Last week 80,000 workers reached the end of their benefits; the Center on Budget and Policy Priorities estimates that two million workers will have exhausted their insurance by June.

Fortunately, in practice the rule is relaxed in hard times. When recession strikes, Congress invariably acts to extend unemployment benefits. During last fall's stimulus debate, everyone favored a 13-week extension. True, both sides tried to tie that extension to other measures. But everyone expected that in the end Congress would extend benefits whatever the status of other stimulus proposals. Indeed, the Senate passed an extension by unanimous voice vote.

But the hard men of the House leadership refuse to allow a clean vote on unemployment benefits. Instead they continue to insist that it's their way or no way: they won't allow a vote on benefits extension except as part of a bill that mainly consists of tax cuts for corporations and families in upper tax brackets, pretty much identical to the failed stimulus bills of the fall. And they rammed that bill through last Thursday. Let's leave aside, for a moment, the economic merits of those tax cuts. What's really striking about this tactic is its sheer bloody-mindedness: the House leadership is willing to impose pain on some of the most vulnerable people in the country, desperate families whose breadwinners have been unable to find jobs, in order to push a divisive, partisan agenda.

And for what it's worth, that agenda is also bad economics. Last month the nonpartisan Congressional Budget Office reviewed a range of potential stimulus measures, including all the elements in the latest House bill. Sure enough, the bill consists largely of the very measures — accelerated tax cuts for upper brackets, reductions in the alternative minimum tax on corporations — that the C.B.O. concluded would be least effective.

What these proposed tax cuts have in common, of course, is that they deliver not a penny of relief to the great majority of American families.

But isn't the House leadership's behavior just politics as usual? No, it isn't. Politics as usual is trying to attach goodies for yourself to bills that provide goodies to other people. Everyone does that. But extending unemployment insurance in a recession is so standard — and refusing to do so is so cruel — that the House action takes the tax-cut crusade to a whole new level of fanaticism.

Put it this way: At first, ordinary workers were told that they would benefit directly from lower taxes — remember those "tax families"? Great effort was devoted to obscuring the simple truth that last year's tax cut offered crumbs for ordinary families, but huge breaks for the wealthy.

Then ordinary workers were told that they should support bills like the two House stimulus plans from the fall — bills that offered retroactive tax cuts to corporations, big tax breaks to families with high incomes, and nothing at all to two-thirds of the population — because those bills would create jobs. After all, tax cuts are part of the war on terrorism, or something.

But now tax-cut advocates have moved from promises to threats. Support tax cuts for the elite, the House leadership says, or we'll cut off your unemployment benefits.

So what's next? Support tax cuts or we'll break your legs?

When Studebaker Corp., best known for its aerodynamic cars, shut its U. S. plant in 1963, more than 4,000 employees lost their company pensions, leading a few to commit suicide.

Their plight eventually led to passage of the Employee Retirement Income Security Act, which established pension safeguards such as vesting requirements and an insurance fund that guarantees traditional defined-benefit plans.

Now, the burning question is whether the collapse of Enron will lead to reforms of 401(k) plans, which didn't exist when ERISA was passed but are now far more prevalent than traditional pensions.

"It better" lead to some changes, says Michael Gordon, a Washington, D.C., lawyer who helped write the ERISA legislation.

"We are giving extremely lavish tax preferences to these plans on the premise they will deliver retirement income to people when they are in their old age. If they don't, and these people have to fall entirely back on Social Security and/or welfare, then the entire premise of the tax privilege is being wrecked," Gordon says.

But others say the 401(k) system isn't broke and that thousands of Enron employees lost more than $1 billion on Enron stock in their 401(k) plans because of corporate mismanagement and possibly fraud.

"The Enron situation is likely to spawn changes in disclosure and accounting practices," but not necessarily pension policy, says James Klein, president of the American Benefits Council. "Once Congress steps back and examines (Enron) more carefully, it'll realize that failures were generally corporate failures and not problems with pensions."

Klein, who represents large employers, says Studebaker "uncovered some real failings in the pension system as it existed in the 1960s. I don't think Enron will expose serious problems with the 401(k) system. Thanks to Studebaker, we now have laws on the books" that protect employees.

Studebaker started out in the mid-1800s making covered wagons, then horseless carriages and finally cars, including stylish models like the Avanti and Starliner.

A company handbook promised employees that upon retirement, "you'll be able to settle down on a farm . . . visit around the country or just take it easy . . . and know that you'll still be getting a regular monthly pension paid for entirely by the company," according to "The Pension Book," by Karen Ferguson and Kate Blackwell.

In 1963, when Studebaker suddenly shut down its South Bend, Ind., plant, 7, 000 workers lost their jobs. People who were already retired or had at least 15 years of service kept their pensions, but the rest -- about 4,000 to 4,500 - - got little or nothing.

There were no charges of pension fraud or mismanagement. The plan was simply underfunded. Had Studebaker continued in business, it might have been able to pay its obligations. But at the time, "there were no legal requirements that the company stand behind the commitments made in the plan," says Gordon.

The plight of Studebaker employees made headlines and encouraged workers from other companies who had lost pensions to write their legislators demanding protection. It also uncovered other pension problems, such as older employees being fired and denied benefits, and theft of pension money, according to Ferguson.

Through the next decade, many employers and some unions and financial service companies fought attempts to regulate pensions. Some claimed that companies would stop providing pension plans if they became too restrictive. ERISA earned the nickname "every ridiculous idea since Adam."

It wasn't until Labor Day 1974 that ERISA was signed into law. During the next two decades, there would be many amendments, mostly favoring employees.

The original act gave workers the right to a pension after 10 years of service, instead of 20 or more, as had been the case. Vesting was later reduced to five years.

It also established strict funding requirements so that companies could pay what they promised.

In addition, ERISA set up the Pension Guaranty Benefit Corp., which protects workers in defined-benefit plans. These plans promise employees a certain monthly retirement income. Companies that offer defined-benefit plans pay into the guaranty fund, which pays workers some or all of their pension if their plan can't. The guaranty fund does not cover defined-contribution plans, which do not provide a fixed retirement income. These include 401(k), profit sharing and employee stock ownership plans.

ERISA also required that the fiduciaries of defined-benefit plans diversify their investments and put no more than 10 percent of plan assets in the employer's stock.

That 10 percent limit didn't apply to defined-contribution plans, largely to protect the popular Sears, Roebuck profit-sharing plan, which was invested almost exclusively in Sears stock and had been creating rich retirees.

When ERISA passed, 401(k) plans didn't exist, but soon they would, and they, too, would be exempted from the 10 percent limit.

Tax-deferred 401(k) plans were authorized by a 1978 law and began operating in 1981. They quickly overtook defined-benefit plans.

In 1979, 28 percent of U.S. workers were covered by a defined-benefit plan only, 7 percent had a defined-contribution plan only and 10 percent had both, according to the U.S. Department of Labor.

Twenty years later, 7 percent had only a defined-benefit plan, 27 percent had only a defined-contribution plan and 15 percent had both.

Was ERISA responsible for the decline in defined-benefit plans? That's an important question now that Congress is debating new restrictions on 401(k) plans that critics say would discourage companies from offering them.

"ERISA itself helped preserve defined-benefit plans, but the regulations in the aftermath contributed to their decline," says Klein, the industry spokesman.

David Wray, president of the Profit Sharing/401(k) Council of America, agrees. "ERISA and its 20 years of offspring are largely responsible for making defined-benefit plans economically unfeasible," he says.

But there are other reasons employers preferred defined-contribution plans - - largely 401(k)s -- over traditional pensions. They are cheaper to administer and shift investment risk from the company to the employee.

Also, the 1980s and 1990s saw tremendous growth in small companies, which have never been big sponsors of defined-benefit plans.

Other trends, such as outsourcing and just-in-time manufacturing, reduced the need for long-term workers and hence the need to offer defined-benefit plans, which reward tenure.

Gordon says ERISA was "a factor, but mostly a pretext" for the decline in traditional pensions.

With that as a backdrop, what are the chances for 401(k) reform?

Karen Friedman, director of policy strategies at the Pension Rights Center, says Enron "is going to be the Studebaker of this new century. It's exposing huge flaws in the system."

Like many companies, Enron matched employees' 401(k) contributions in company stock and prohibited them from selling that stock until age 55. Employees put a lot of their own money in Enron stock, too. About 65 percent of the plan's assets were in Enron shares. Many plans have even higher concentrations in company stock.

During about two weeks last fall when Enron's stock was falling, Enron employees were not allowed to make any changes at all while the plan was changing administrators.

The 401(k) reform proposal meeting the least resistance is one that would require companies to give advance notice of such blackout periods.

Other popular proposals -- one backed by President Bush -- would let employees diversify out of company stock acquired through a match after three years or less. Only 13 percent of companies now impose no restrictions on the sale of company stock acquired through a match, according to the Employee Benefits Research Institute.

Other proposals are expected to meet stiffer opposition.

One bill, co-sponsored by Sen. Barbara Boxer, D-Calif., would prohibit employees from having more than 20 percent of their plan in any one stock.

Another, co-sponsored by Rep. Peter Deutsch, D-Fla., would prohibit employees from putting more than 10 percent of their own contributions in company stock.

AARP has proposed giving employers a choice: They could provide company stock as their matching contribution or let employees put their own contributions in company stock -- but not both. David Certner of AARP says Sens. Joseph Lieberman, D-Conn., and Edward Kennedy, D-Mass., have shown interest in this idea.

Other proposals would give employees who lost money in a 401(k) plan greater legal rights and require plan fiduciaries to carry insurance.

Gordon rejects these proposals as piecemeal. "We need a comprehensive solution that will make these plans safer and more reliable but won't cause the employer to throw up his hands and say, 'Forget it, I won't do anything.' "

What are the odds that we'll see changes anytime soon?

Certner points out that because of elections, Congress will go home early this year.

"It's a fairly short timetable," he says. "I assume employers' strategy will be to run out the clock. On the other hand, (pension reform) is on the front page and Bush had it in his State of the Union speech."

The real question, he says, is not whether something will pass, but "whether it will be something that prevents another Enron from happening."

WASHINGTON, Feb. 15 - The House majority leader, Representative Dick Armey of Texas, urged his fellow Republicans today not to shrink from a fight with Democrats this year over how to shore up Social Security.

In a memorandum to all House Republicans as they went home for a one-week recess, Mr. Armey said he would soon bring legislation to the floor that would give the party the political cover it needed to protect itself from Democratic attacks.

With that protection, Mr. Armey said, the party can more vigorously push its proposal to allow workers to invest part of their Social Security money in the stock market, a change that Democrats say would mean deep cuts in guaranteed benefits and create big financial risks for retirees.

Mr. Armey said one bill he planned to bring up would, for the first time, guarantee all current Social Security recipients that their benefits would not be cut. He said another bill would call for increases in benefits for women.

Depending on the details, which Congressional aides said had not been worked out, the bills could be difficult for Democrats to oppose. More to the point, Republican strategists said, they would help neutralize Democrats' arguments that the Bush administration and Republicans in Congress had put Social Security in deeper financial trouble by squandering the budget surplus and missing an opportunity to pay down the national debt.

``Both of these initiatives are important to current and future Social Security recipients,'' Mr. Armey said in the memorandum. ``But just as important, these measures will provide House Republicans with an opportunity to begin a candid national discussion about the future of this important program.''

Mr. Armey said the party should ``begin making the case - forcefully and without fear or apology - for wide-ranging reform of the system.''

Mr. Armey has announced he will not run for re-election. But many Republicans who are up for re-election are wary of making Social Security a focus of their campaigns this year, fearful that Democrats will turn the issue to their advantage as they reliably have for decades.

One Republican strategist said there was no appetite for a vote this year in the House on a full-fledged plan to add personal investment accounts to Social Security. But he said Republican candidates would welcome the chance to vote on measures that would allow them to fend off what they regard as demagoguery by Democrats.

``Republican candidates are going to have to deal with this issue,'' the strategist said. ``They can't run and hide in a corner under attacks from the Democrats.''

Democrats welcomed any move to put Social Security on the front burner, saying they think they can prevail both on politics and on substance. They said the Republican push for private investment accounts looked particularly risky after the collapse of the Enron Corporation and the losses suffered by workers and investors as its stock became almost worthless.

Democrats also said a focus on Social Security made it easier for them to hammer home their message that Republicans have been fiscally irresponsible, leaving no money to deal with the retirement system's long-term problems.

``The president's budget has broken the Social Security lockbox,'' said Representative Robert T. Matsui of California, the senior Democrat on the House subcommittee on Social Security, ``and now workers' payroll taxes, which they believe are being saved for retirement, are being used to finance tax cuts for wealthy individuals and big corporations.''

The White House made clear today that it planned a vigorous defense of last year's tax cut and of its call for new and accelerated tax reductions. Vice President Dick Cheney said in a speech to the Council on Foreign Relations that last year's tax cut had helped keep the recession relatively shallow and would help create 800,000 jobs this year.

Democrats said Mr. Cheney's figures, from a new report by the White House's Council of Economic Advisers, were self-serving and ignored the fact that the provisions in the tax cut that helped the economy last year were there at the insistence of Democrats, primarily the checks of up to $300 per person sent to most taxpayers.

Senator Tom Daschle of South Dakota, the Democratic leader in the Senate, said that having the White House credit the tax cut with helping the economy was ``a little like a figure skating judge awarding his own team a gold medal.''

WASHINGTON, Feb. 15 — A bill before the House to deregulate the electrical-power industry would create a loophole exempting hundreds of investment companies from federal regulation, just as legislation proliferates to tighten accounting and regulatory rules that were abused by collapsed energy trader Enron Corp.

The sweeping utility-deregulation legislation would repeal a utility holding-company law administered by the Securities and Exchange Commission. Critics question the wisdom of repealing not only the law but also specifically a provision in the House bill that would put any subsidiary or affiliate of registered and exempt utility holding companies outside another securities law that covers investment companies.

The bill’s provision specifically would exempt holding-company affiliates from the Investment Company Act of 1940, which was passed to avoid corporate abuses of the 1920s. Holding companies then had complicated “pyramiding” structures, with subsidiaries owning other holding companies engaged in risky businesses unrelated to power generation. The activities led to utility bankruptcies and massive losses for shareholders, who believed they were buying conservative investments.

The provision has been pushed by Western Resources Inc., a power transmission-and-distribution company based in Topeka, Kan., according to a committee staffer. David Wittig, a company spokesman, wasn’t available for comment.

Utility-industry supporters of repealing the 1935 Public Utility Holding Company Act, or Pucha, say it has created anticompetitive regulatory barriers to new investment in electricity generation and transmission facilities. Repeal is expected to greatly accelerate mergers to consolidate the $315 billion electricity and natural-gas sectors.

At a hearing this week, Rep. Joe Barton, the Texas Republican who heads the House Energy and Commerce subcommittee on energy and air quality, said he would be willing to rework the legislation to deal with complaints about the investment-company exemption.

Meanwhile, arguments against the provision were outlined in a SEC response to questions from House legislation opponents John Dingell (D., Mich.) and Ed Markey (D., Mass.) of the House Energy and Commerce

WASHINGTON, Feb. 14 — Just hours after the House approved an overhaul of the way campaigns are financed, putting the nation's political system at the brink of its most sweeping change in a generation, the Senate majority leader Tom Daschle promised today that his chamber would take quick action on the measure.

"This is going to be an historic week in the country and in Congress in particular," Senator Daschle, Democrat of South Dakota, said at a news briefing. "Just as soon as the bill comes back to the Senate, I will ask unanimous consent to bring it up here and, under a time agreement, to pass it and put it on the president's desk."

The 240-to-189 House vote came just after 2:30 a.m. Eastern time, after a debate of nearly 17 hours. It capped a seven-year effort to ban the large, unlimited donations to political parties known as soft money that have grown exponentially in recent years.

The Senate passed almost identical legislation last March. Since there are no major differences that need to be worked out between the two chambers, and since Mr. Daschle intends to bring the bill straight to the Senate floor rather than to a conference committee, the prospects for final passage seemed to be very good, although the measure's supporters in the Senate expect they will have to muster the necessary 60 votes to defeat a filibuster.

Well into the night, across hours of sometimes testy debate on the overhaul of the campaign finance law, the House measure's chief sponsors, Representatives Christopher Shays, Republican of Connecticut, and Martin T. Meehan, Democrat of Massachusetts, held together a comfortable bloc of supporters.

Battling the Republican leadership and energized by the Enron scandal, they defeated two rival bills and fended off amendment after amendment.

In a significant 240-to-191 vote, 39 Republicans opposed their party leaders and joined 200 Democrats and an independent to put the Shays-Meehan legislation banning large unlimited donations to political parties at the center of the day's debate.

"There's a certain momentum that develops," Mr. Meehan said.

Republican strategists acknowledged on Wednesday night that they could not stop the measure from passage. They scaled back their hopes after the House, by a thin 219-to-209 vote, defeated an amendment favored by the National Rifle Association that Republican leaders had intended to use to peel away pro-gun Democrats from the campaign finance coalition.

Still, the debate stretched into the night, with the advocates of change working to defeat an array of Republican amendments intended to undercut the bill.

As Mr. Shays and Mr. Meehan were winning, the White House weighed in unexpectedly after months of public neutrality. Ari Fleischer, the White House press secretary, criticized a late change in the bill as "unfair, unwise and unwarranted."

Senior Republicans said, however, that Mr. Fleischer was not opening the door to a veto; President Bush has long told lawmakers not to count on him to keep the measure from becoming law. Mr. Fleischer dodged the question, saying only, "The president has indicated he will sign something that improves the system."

But his comments complicated a day of maneuvering and hardball politics on an issue that affects lawmakers most personally. By late evening, Mr. Shays and Mr. Meehan promised a change to answer the Republican criticism.

The Shays-Meehan bill is nearly identical to one that passed the Senate, 59 to 41, last March, pushed forward by Senator John McCain, the Arizona Republican who battled Mr. Bush in the 2000 Republican presidential primaries.

The bill's passage would cap a seven-year legislative effort and put the country on the brink of the most comprehensive change in campaign law in more than a generation.

The bill would ban the large unlimited donations to the political parties known as soft money, which grew to nearly $500 million in the last presidential election, and require the parties to rely on smaller, more closely regulated hard money.

It would also impose new regulations on thinly disguised campaign advertisements by outside groups, 30 days before a primary and 60 days before a general election.

In exchange for the soft money ban, the measure allows some new fund-raising. It would give donors the right to contribute as much as $10,000 to state political parties for get-out-the-vote drives. It would also raise from $1,000 to $2,000 each election the longstanding limit on how much an individual can give to Senate and presidential candidates. Those sections were added in the Senate. The House voted tonight to extend the $2,000 individual donor limit to House races as well.

The legislation to ban soft money has been fiercely opposed by Republican leaders who say their party needs the large donations to counterbalance organized labor's get-out-the-vote drives on behalf of Democrats. And throughout Wednesday, House members fought over whether six-figure contributions corrupted the political system or were a form of legitimate political participation.

"I did not march across the bridge in Selma," thundered Representative John Lewis, Democrat of Georgia, recalling his days in the civil rights movement, "to become a part of a political system so corrupt." Republican leaders and many of the party's rank and file countered that ending such fund-raising by the parties would simply strengthen single-issue interest groups.

"This drives a lot of money away from political parties to interest groups, right and left," Representative Thomas M. Davis III, a Virginia Republican, said. "For moderation this legislation is the death knell."

Supporters of the legislation invoked the Enron scandal to drive their issue forward. Representative James C. Greenwood, a Pennsylvania Republican who is running a House investigation into the collapse of the company, told how it was a large donor to both parties. "This is not about philosophy," he said. "It is about access and influence and it corrupts our process."

For much of Wednesday, the debate took on a surreal quality because the longtime Republican opponents of the soft-money ban tried to scuttle it by offering even more stringent limits on money in politics and criticizing Mr. Shays and Mr. Meehan for not going far enough.

"Those that constantly say they want to ban soft money bring a bill to this floor that is seriously flawed," said Representative Tom DeLay, the majority whip from Texas who had his powerful whip organization trying to find the votes to scuttle the bill.

Many of the two competing measures and 10 amendments drawn up by Republicans were intended to give cover to Republican moderates who once campaigned against big money so that they could say they were honoring their pledge even as they voted to kill the overhaul effort.

But one after another, the rival campaign bills fell. By a vote of 249 to 179 the House defeated a competing bill by Representative Dick Armey, the House majority leader from Texas, that would have even imposed fund-raising limits on political parties and an array of outside groups.