mittee concerning railroad retirement legislation. The subcommittee has very kindly granted this request, and Mr. Taylor was scheduled to appear before you today. Mr. Taylor has now advised me that he will be unable to appear, but has asked that I submit to you the report of the legislative committee of his organization, the chairman of which is Mr. W. B. Gunn. Accordingly, I am happy to present to this subcommittee the following statements from the report of their legislative committee, signed by Mr. W. B. Gunn:

I have checked the 6th Actuarial Report of the Railroad Retirement Board and find that it is merely a continuation of the 1953 report, and the methods used are the same. Therefore, the only thing I find is that the actuarial report and the financial report do not jibe.

One thing the hearings before the committee has brought out has been the possible authorization of the investment of a part of retirement funds in Government insured mortgages. I think this a good idea. The fund is now drawing 3 percent, and this could earn up to 41⁄2 percent in Government-insured mortgages. Therefore, it occurs to me Congress could authorize the investment of up to 33% percent of our funds in these mortgages and realize a considerable additional sum. I submit this to the consideration of the membership. If the membership considers it favorably, then Congressman Bennett could be asked to take action in the matter.

Mr. Taylor's letter of transmittal is as follows:

I am forwarding to you a report from our legislative committee, signed by Brother W. B. Gunn, chairman, which is self-explanatory. Referring to paragraph 2, I concur with the findings of the committee that the actuarial report and the financial report of the Railroad Retirement Board does not jibe. The sixth actuarial report shows we are operating in the red, while the Railroad Retirement Board shows our financial position good, and quoting from their financial report, the February 1956 issue of the Monthly Review, volume 17, No. 2, 822 Rush Street, Chicago, Ill. : "Balance at end of period: $3,504,586,532."

The fund as of July 1, 1954, was $3,353,705,209, when the basic payroll tax was increased from $300 to $350 per month, an increase in 19 months of $150,881,323, yet the actuarial report shows we are operating at a deficit. This should be looked into, as railroad employees are now paying a higher rate of payroll tax for pensions than any other group in the world.

Referring to Brother Gunn's letter, relative to investment of 33% percent of retirement funds in Government-insured mortgages. At our regular meeting on March 3, the membership adopted resolutions favoring their recommendation that a part of the retirement fund be invested in Governmental mortgages. This seems to me a more equitable way of increasing the fund, rather than further increasing the employee's payroll tax rate by 1 percent as recommended in the RLEA-sponsored bills now in committee.

We regret that we were unable to arrive at any cost recommendations on H. R. 3087 due to the confusing information in the sixth actuarial report, and the financial report put out by the Railroad Retirement Board.

I would deeply appreciate serious and careful consideration by this subcommittee of these views.

Mr. HARRIS. We thank you, Mr. Bennett, and appreciate your bringing to our attention the views of the Association of Veteran Railway Employees.

The next witness is our colleague from Kentucky, Mr. Perkins.

STATEMENT OF HON. CARL D. PERKINS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF KENTUCKY

Mr. PERKINS. There are a number of proposals, including my own, before this committee, but H. R. 9065, introduced by the Honorable Oren Harris, covers the most pressing needs of this program, and I will confine my remarks to the provisions of that bill.

The railroad retirement program has been highly successful and, after 20 years of operation, we find the railroad retirement account has more than $312 billion in the treasury. This represents an increase of more than a quarter million dollars during the past 12 months; but the total is no more than is required to keep the program on a sound financial basis.

However, conditions have changed and the increased cost of living has been so great that the retired railroad worker often finds himself in dire financial straits. It is incumbent on this committee and on Congress that the provisions of this act be kept in line with the economic developments of our time. The upward trend of the cost of living is at, or near, a stable point, and there is every reason to believe that an amendment to provide for this increased cost of living would keep the railroad workers' retirement payments in balance with the economy for some years to come.

The Harris bill proposes a 15 percent increase in retirement payments and a similar increase in survivorship payments, except for the minimum and maximum. This is not a flat increase of 15 percent but, rather, an increase in the elements of the formula for the computation of retirement payments that will approximate a 15 percent increase in all retirement payments and a similar increase in survivorship payments, except for those at the minimum and maximum. In order to keep the trust fund solvent, the bill further proposes an increase of 2 percent in the overall contributions to this fund, with an additional provision that the employee's portion of this contribution shall not be considered income for income tax purposes. This provision will keep the trust fund solvent and, on the basis of past experience, build it up for future unexpected demands.

I urge this committee to report favorably on H. R. 9065 as a necessary step to bring the railroad workers' retirement payments into line with the current cost of living.

Mr. HARRIS. Thank you Mr. Perkins. The next witness is the Honorable M. G. Burnside of West Virginia.

STATEMENT OF HON. M. G. BURNSIDE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WEST VIRGINIA

Mr. BURNSIDE. Mr. Chairman and members of the committee, I want to thank you for extending to me the opportunity of appearing before you today to bring to your attention the views of a number of my constituents and myself regarding legislation which is now pending before this committee to amend the Railroad Retirement Act. I understand that more than 50 bills have been introduced to amend this act, but many of these bills are quite similar. I am not, of course, familiar with each of these measures, and I do not intend to discuss each of them separately. I have, however, received during this session of Congress a considerable volume of correspondence regarding the Railroad Retirement Act from people associated with and affected by the railroad industry throughout my district.

I want to point out first that I have found a general agreement and satisfaction with the amendments to the act contained in H. R. 4744 which was initiated by this committee and passed by he Congress last year. That bill meant much to widows of railroad brothers and corrected what many people felt was an injustice in the act. I know that

the people in my district are appreciative of the interest of this committee in their welfare and the whole retirement plan.

Many people in my district, however, feel that there is a need for further amendment to the act. In the volume of correspondence which I have received on this subject, there is no unanimity regarding the most essential or most beneficial single amendment. A considerable number of people, however, have brought to my attention their support of legislation which would amned the act so as to permit retirement at age 60 or after 30 or 35 years of service regardless of age. A substantial number have also expressed to me their support of a plan to compute retirement benefits from the average monthly income during the 5 years in which the workers' highest income was earned.

I think there is no doubt but that either of these proposals would meet with great approval among railroad workers. The greatest objection, of course, to these proposals relates to their cost and the consequent risk to the security of the retirement fund should they be adopted. Many of the people who have written me feel that these amendments could be financed without risk to the stability of the fund and without increase in present assessments.

I am sure that the members of this committee are more acquainted with this problem than I. If this legislation cannot be approved without risking the security of the retirement fund and the interest of the millions who have contributed to it, then I am sure that neither the proponents of these bills or any Member of Congress would want to see them enacted. If, however, we can make these changes with safety, I feel that they would represent a real improvement in the act and a real contribution to the welfare of all railroad workers. I, therefore, urge the committee to give consideration to the argument involving the accounting for these suggestions and on the basis of the evidence which you have at hand, make a determination as to whether these proposals are sound and can be adopted or whether they are fiscally improvident. I assure you that I, and I think that the railroad workers in my district will share in my views, will abide by the decision of this committee knowing that you have at heart the welfare of railroad workers and the Nation.

I have received a number of letters and have talked with some workers and their wives who are interested in an amendment to the act which would enable the wives of workers who are governed by both railroad retirement and social security to receive a spouse's annuity from each of thees retirement systems. This provision affects, I believe, a relatively small number of workers, but those who are affected, feel that their contributions to both systems should entitle their wives to receive the benefits of both. Many of the men involved were forced to give up railroad employment for physical or other reasons not within their control. Certainly the logic of this point cannot be easily disputed, and the present limitation in the act in this respect works as a penalty on individuals in many cases and I strongly request this committee to give its most serious consideration to eliminating the provision preventing the receipt of benefits from both railroad retirement and social security.

I think that the most popular subject of the correspondence which I have received regarding railroad retirement is the proposal to increase benefits for retired workers and widows. The amount of the increase varies with individuals, but I think pretty generally a 15

percent increase would be viewed by most as adequate to meet the increased cost of living and to maintain some measure of security for retired people.

I have introduced a bill, H. R. 9541, to provide a 15-percent increase. I am happy to point out that my bill is supported by all of the railroad labor associations, and I would like to take this opportunity to summarize the provisions of this bill. It would, as I stated, provide an across-the-board 15-percent increase to beenficiaries of the act. The cost of this increase would be met by an increase of 2 percent in contributions. One percent would be paid by the employee. The additional 1 percent would be paid by the employer. There is, therefore, no question about the risk to the fund should this increase be approved.

What I think more important is the fact that despite the 1 percent increase in their contributions, these additional benefits would not cost the workers anything because my bill exempts from the income tax law the employee's contribution to the railroad retirement fund. In view of the fact that the employer has always been able to deduct his contributions, I think it eminently fair that railroad workers should receive the same consideration, and I see no reason why this great improvement should not be added to the act. It will enable us to provide a substantial increase to workers and will at the same time correct a real inequity in our present tax structure. I, therefore, earnestly request this committee to approve this bill as soon as possible so that it may be adopted by the Congress at the earliest possible opportunity.

Mr. HARRIS. Thank you for your testimony, Mr. Burnside. The next witness is our colleague from Pennsylvania, Mr. Rhodes.

STATEMENT OF HON. GEORGE M. RHODES, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA

Mr. RHODES. Mr. Chairman, members of the committee, I appreciate the opportunity of appearing in support of H. R. 9065, to provide a 15 percent in all annuities under the Railroad Retirement Act. I have introduced an identical bill, H. R. 9355.

The economic squeeze on our retired senior citizens is one of the most pressing problems. A recent study of the economic status of the aged, conducted by the Twentieth Century Fund, reveals the fact that 36 percent of the people 65 years of age or older have no income of their own; 11 percent have an annual income of from $1,000 to $2,000; only 15 percent have an annual income of over $2,000. Twenty percent of the people over 65 are on public-assistance rolls. I submit that this is a shocking and shameful record of neglect.

Recent figures from the Railroad Retirement Board for the 1954-55 period show that the average monthly employee annuity payment was for $101; the average monthly pension payment was for $79; wives' annuities averaged only $37 a month; aged widows' annuities averaged only $49 a month. Mr. Chairman, these figures represent averages; many are much lower.

A total of 306,600 employee annuities were paid each month during the 1954-55 period; wives' annuities numbered 106,600 monthly; aged widows' annuities totaled 138,000 a month. While a relatively small proportion of total aged population is involved in the proposed

increase under the Railroad Retirement Act, the need is nevertheless acute.

Many thousands of persons covered under this Act are among those unfortunate 38 percent of our aged citizens having less than $1,000 in annual income.

This severe inferiority of income status among the aged has actually worsened in recent years, despite the fact that our standard of living has been moving upward. For example, during the period 1947-52, the share of personal income received by persons 65 years of age and over increased by only 1 percent or only about $500,000 of the total increase of $15 billion in personal incomes going to all age groups of the population. When we consider the inflationary conditions existing during this period, which reduced the purchasing power of the dollar, aged persons actually lost ground.

Our aged population is increasing rapidly at a rate of more than 1,000 persons a day. There are currently about 14 million persons aged 65 or over, about 82 percent of our total population. Of this number about 81⁄2 million are over 70. The number of aged is expected to rise even more sharply in the years ahead as medical science makes still further progress to prolong life expectancy.

Other statistics are also pertinent in the consideration of the legislation before this committee. Older people are not employed as widely as in years gone by. In 1920 about 55 percent of all men over 65 were employed; today only 30 percent are employed. There are 90 men for every 100 women over age 65 today; about half of all women aged 70 are widows, while three out of four men of the same age are married. This factor illustrates the need for sound survivorship provisions, with adequate benefits to meet modern conditions.

Pensions and annuities have always lagged behind the cost of liv-. ing and the problem has been trying to catch up. Those living on fixed income do not regularly share in increases in our gross national product and per capita disposable income.

Enactment of H. R. 4744 in the last session made important and necessary improvements in the law but it was clearly recognized that this legislation was not intended to foreclose action to increase benefits across-the-board as is provided for in H. R. 9065.

The last significant increase in railroad retirement benefits went into effect late in 1951, with the enactment of Public Law 234 of the 82d Congress. It was a modest increase, considering the inflationary spiral caused by the military action in Korea, advances in our economic output, and our rising standard of living.

What has happened to our economy since 1951? Gross national product has risen from $328.2 billion to $387.2 billion in 1955, or an increase of $59 billion. Personal consumption expenditures have increased by $44 billion. Total national income has risen from $277 billion to $322 billion, an increase of $45 billion. Wage earners' income rose from $175.6 billion to $215.5 billion, an increase of about $40 billion. Corporate profits after taxes have increased by $3 billion, or about 14 percent over this same time period. Mr. Chairman, it would seem to me that these comparisons of recognized measurements of our economy over the past 4 years clearly warrant more than the 15 percent increase in railroad retirement benefits. I feel that 15 percent is a modest request and would personally argue that an even greater increase is justified when all the factors are considered.