negotiations, and that is the problem with the allocation of 121. What it threatens is the possibility that we will never get to negotiations, because we will be in the courthouse or on strike, or something else will happen. Senator SCHWEIKER. You answered my question in a larger sense. If you ever get back together again to talk, right? OK. One thing as I read through your statement here, as I understand it, this is really the first time, as I read this-you made a statement awhile back, and I am sorry I didn't ask Mr. Dennis this question, because he is the one to ask, that this larger group of unions sat dawn with management to resolve these issues. Is that correct? Mr. DEMPSEY. That is correct, Senator. Senator SCHWEIKER. I also believe it is the first time you have wrapped the whole ball of wax in one package and made the whole thing one way. In other words, under the present law, you would negotiate certain issues in other ways, but not retirement. Is that right? Mr. DEMPSEY. That is right, Senator. Senator SCHWEIKER. I think that is a very important point, having worked in labor negotiations myself. This is the first time we have had a real mechanism where there can be give-and-take, because before the negotiations we were viewing these issues all as fragments, dealing with it here and dealing with it there, and as I understand, the very fact that you could have a quid pro quo by reducing the employee's railroad retirement tax in exchange for the employees giving up a substantial wage increase, you could not have done that before because there was no wage increase that you could offset it against. Is that right? Mr. DEMPSEY. That is exactly right, and that is why I indicated in our testimony that in my judgment the best way to arrive at an agreement would be to consider the issues all together. Senator SCHWEIKER. Was it you, or the union, who asked to include these other issues in with the retirement issues and take the whole ball of wax together? Mr. DEMPSEY. We proposed that to the union. Senator SCHWEIKER. So this is really a new feature, too. I think this is an important point. This is probably the reason we have been hung up on this problem, that we haven't viewed it as a whole. We have viewed it in fragments, and that has made it a lot more difficult. What we are really saying is that we build a complete bargaining situation here that really never existed before in terms of labor, management, and putting all the issues in one package, which is the way a normal bargaining unit would work between labor and management, but has not worked its way, because the railroad retirement law and the railroads laws on the Nation's books somewhat mitigated against that kind of a structure. Mr. DEMPSEY. That is correct, Senator. Also it has been our opinion that there has been a great deal of piecemealing in negotiations in our industry. As Mr. Dennis indicated yesterday, we had always bargained health and welfare apart from wages. It was on a different timetable. This time, the unions agreed to dispose of it in this round of negotiations even though the time is not up and would not have been up until next February. We have now put it on the same timetable as wages. Everything now expires on December 31, 1974. So that it will now be possible, as in any sensible organization it should be possible, to negotiate all important cost-andbenefit factors at one time. Senator SCHWEIKER. Looking back on it, it is not surprising that you could never get together on the retirement issue because of the segregation of it from all the other issues. I think it would have been extremely difficult, if not impossible, to get together if you didn't put it in some kind of whole, complete package, where you could offset one thing against another, which you obviously did in the first round and couldn't have done under the other setup. Mr. DEMPSEY. In this respect, as in others, integration is preferable to segregation. Senator SCHWEIKER. That is all I have. Senator HATHAWAY. It seems to me it is to your advantage to have the earlier deadline in view of the fact that the Congress may disagree with the agreement you reach with respect to financing, and that you would then need more time to renegotiate and come back to Congress a second time. I hope that we will be able to comply with whatever you come up with, but there is that possibility that we may not, especially if your agreement encompasses some social security funding. Mr. DEMPSEY. Yes. That is a pertinent point. As I say, I still would prefer the July or May date. Senator HATHAWAY. I understand. Thank you very much, Mr. Dempsey. [The prepared statement of Mr. Dempsey and other information subsequently supplied follows:] STATEMENT OF WILLIAM H. DEMPSEY, CHAIRMAN, My name is William H. Dempsey. I am Chairman of the National Railway Labor Conference and the National Carriers' Conference Committee, a post I have held since January 1, 1972. The Committee is the bargaining arm of the railroads in national negotiations. I appear here on behalf of the railroads that are parties to the recent labor agreement that has led to the consideration by this Committee of H.R. 7200 as well as S. 1867 and S. 1805. These carriers number about 150. They include virtually all of the nation's Class I railroads except for five northeastern roads now in reorganization. On the union side, organizations representing about 95% of railroad employees have already endorsed the national agreement. As the Committee is aware, H.R. 7200 is composed of two Titles. I will deal with the first Title, which relates to the railroad retirement system. I understand that Title II, which has to do with amendments to the Interstate Commerce Act, will be the subject of hearings before the Senate Commerce Committee. The carriers I represent strongly support Title I of H.R. 7200, which was approved by the House on May 22nd, for reasons that I will outline in my testimony. While S. 1805, introduced by Senator Ribicoff, is */ Those roads are the Boston and Maine, The Central Railroad of New Jersey, the Lehigh Valley, the Penn Central and the Reading. They are conducting their negotiations separately. The proposed bill would, however, apply to these roads in the same way as to other roads. Another carrier in reorganization, the Erie-Lackawanna, is party to the national agreement. identical to H.R. 7200 as it was originally introduced, Title I of H.R. 7200 as finally enacted contains a provision designed to rectify an inequity with respect to certain railroads that are in a situation different from the vast majority of railroads, as I will explain later. If S. 1805 were modified to conform with H.R. 7200 as finally enacted, then of course it would be entirely acceptable to us. S. 1867, introduced by Senator Hathaway, while containing the same substantive Title I provisions as H.R. 7200, does add several features that we believe should not be included. I will address myself to these features of S. 1867 later in my statement. A. Provisions of H.R. 7200 Respecting Railroad Retirement. I begin by summarizing briefly the various features of Title I of H.R. 7200. That Title provides as follows: 1. The temporary increases in railroad retirement benefits of 15, 10, and 20%, enacted by the Congress in 1970, 1971, and 1972, and now scheduled to expire on June 30, 1973, would be extended through December 31, 1974. 2. As of October 1, 1973, the employers subject to the Railroad Retirement Act would assume the employee tax prescribed by existing law that is in excess of the employee tax prescribed by the Social Security Act. This would shift to the employers a maximum employee tax of $42.75 per month on October 1, 1973, which is to be increased to $47.50 per month on January 1, 1974. A deferral in this tax shift is provided for certain steel railroads who are in a somewhat different position than the carriers I represent, due to the fact that the moratorium provisions of their collective bargaining agreements do not coincide with the national railroad pattern but continue until August 1, 1974, the date the basic steel agreement expires. In view of this distinction, the steel railroads sought and obtained an exception which provides that the assumption by the steel railroads of the employee tax in excess of social security taxes shall not occur until the earlier of (1) the expiration date of their current labor contracts or (2) the date as of which the parties reach an agreement providing for the tax takeover. I understand that representatives of the steel railroads will submit a statement explaining in greater detail the reasons for this deferral. 3. As of July 1, 1974, all employees with 30 years of service who are also 60 years of age could retire without any actuarial reduction in their annuities. 4. The parties would continue their negotiations respecting the deficiencies, dealing with "dual" railroad retirement and social security benefits, adoption of a "two tier" railroad retirement system, restructuring the railroad retirement formulae and would report to the Congress no later than July 1, 1974. The Congress then, having considered this report, could enact legislation dealing with these subjects in permanent fashion. 5. If there is any increase in social security benefits during the period beginning July 1, 1973 through December 31, 1974, the dollar amount of such an increase as opposed to the percentage of the increase - would be added to railroad retirement benefits. B. Negotiations Leading to Labor Settlement. The railroad retirement features of the labor-management agreement, which are reflected in H.R. 7200, are interwoven with the other wage and |