Congress must find a way to protect employees and retirees - and taxpayers, too, who would be on the hook for a debilitating bailout should defaults overwhelm the federal pension insurance agency. Doing so requires a legislative balancing act because reform invariably means imposing new costs and regulations that - if perceived to be too burdensome - could dissuade employers from offering traditional pensions. Still, better rules would help to ensure that employers make only the promises they can keep, and in that way preserve the insurance fund for extraordinary circumstances.

There's a lot of good in the pension reform bills cleared by two Senate committees last week and, earlier, by an important House committee. The bills require companies to build their pension investments up to a level that would fully cover their future obligations, rather than tolerating the practice of keeping much smaller amounts in the funds and using the difference for other purposes. That has led to disastrous shortfalls. The bills also raise the premiums that companies must pay for federal pension insurance and close loopholes that have allowed companies to routinely avoid the additional premium that is supposed to apply when companies fail to make adequate contributions to their pension funds.

But the bills also contain some disgracefully bad provisions.

The Senate bill would allow ailing carriers, like Northwest, to assume that by and large, their pension funds will earn strong stock market returns in the future, which could make them look stronger than they are. That could ward off default, but betting on consistently strong stock market returns to meet future obligations is precisely the gamble that got so many pensions into trouble in the first place. Moreover, solutions that favor one industry inevitably lead to demands from other industries for the same misguided treatment. And allowing sick airlines to pump up their projected returns gives them an unfair advantage over healthy carriers that must calculate their obligations more conservatively. A better solution is to give bankrupt companies some leeway in making pension contributions, but to make sure that all companies compute their obligations in the same - prudent - way.

Another clunker in the bills is a tax giveaway disguised as pension reform. Pension contributions are tax deductible and money in a pension grows untaxed. The House version would allow companies to stash 150 percent of the required funds in their pensions; the Senate would allow up to 180 percent. Limited overfunding, say up to 20 percent, is acceptable in order to build a cushion. But excessive overfunding simply allows companies with a lot of cash to inflate their tax deductions and amass tax-favored treasure chests. (Even the Bush administration - no wimp when it comes to grabbing for tax cuts - recommended a funding limit of "only" 130 percent.)

Congress is halfway to enacting some much-needed reforms. If legislators can remember that it's not only about the airline lobby and most certainly not about tax cuts, they can back away from pitfalls that will undermine their efforts.