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Senator HATHAWAY. The committee will stand in recess until tomorrow morning at 9:30.

[Whereupon, at 11:55 a.m., the committee was adjourned until 9:30 a.m., May 31, 1973.]

RAILROAD RETIREMENT AMENDMENTS, 1973

THURSDAY, MAY 31, 1973

U.S. SENATE,
SUBCOMMITTEE ON RAILROAD RETIREMENT OF THE
COMMITTEE ON LABOR AND PUBLIC WELFARE,

Washington, D.C. The subcommittee met at 9:30 a.m., pursuant to call, in room 4232, New Dirksen Building, Senator William D. Hathaway, presiding.

Present: Senators Hathaway and Schweiker. Committee staff members present: Angus S. King, Jr., majority counsel; and Eugene Mittelman, minority counsel.

Senator HATHAWAY. The Railroad Retirement Subcommittee will come to order. This is a continuation of the hearings which began yesterday on S. 1867 and H.R. 7200.

Our first witness today is Mr. William H. Dempsey, chairman of the National Railway Labor Conference.

Mr. Dempsey, we are glad to have you with us. We are glad to. see that you are still employed after what Senator Schweiker said yesterday. STATEMENT OF WILLIAM H. DEMPSEY, CHAIRMAN, NATIONAL

RAILWAY CONFERENCE, ACCOMPANIED BY HUGH E. GREER, DIRECTOR OF RESEARCH, NATIONAL RAILWAY LABOR CONFERENCE

Mr. DEMPSEY. I think the time for reaction has been too short, so I still have my position.

The gentleman with me is Mr. Hugh E. Greer, who is the director of research of the National Railway Labor Conference, and I, for the record, am chairman, and lest the record yesterday left it obscure, this is a management organization. I am here on behalf of management.

I have a written statement which we have filed.

Senator HATHAWAY. Without objection your entire statement will be made a part of the record and inserted at the end of your testimony.

Mr. DEMPSEY. Thank you, Mr. Chairman.

I don't propose to read any part of that statement. I am sure the subcommittee can read it a lot faster than I can recite it.

With the chairman's permission, what I would like to do is simply to, in the first place, of course, make myself available for questions and begin simply by making a few brief comments on the matters that seem to be of principal interest to the subcommittee judging by yesterday's hearings.

Preeminent among those issues, so far as I could tell, is the matter of section 121, S. 1867, the section under which an additional tax of 3.75

percent would be applied to both employees and employers on January 1, 1975, unless something else happens in the interim.

Now, let me begin simply by saying that the carriers associate themselves with the basic position taken by Mr. Dennis yesterday, that is to say, we urge that this provision not be incorporated in the legislation.

Let me indicate now very briefly why we take that position.

As I understand the purposes of section 121, they are dual. In the first place, it is designed to put pressure on the parties, or provide an inducement to the parties to arrive at a negotiated solution to the remaining problems that we have in the retirement system by in effect saying that if you don't arrive at an agreement, here is something that will happen to you which probably neither one of you would like to have happen.

Second, as I understand it, it is designed as a fail-safe mechanism in the event that the Congress got bogged down and could not pass legislation by January 1, of 1975.

Those are certainly understandable and desirable aims, and we take no exception to them at all.

But, we do take exception to this particular means of achieving those ends.

Let me address myself to both of those concerns.

First, the matter of an inducement to the parties : It is a matter of judgment, of course, but so far as my judgment is concerned, I don't believe that the parties in the first place need any additional inducement. I think I can feel perfectly secure in saying that there is no one on either side of the bargaining table that feels that either party could come to the Congress next year and propose or suggest or support in any way an additional deferment of the solution to the deficiency problem, which we recognize to be a grave one, or of a permanent solution to the other remaining issues of restructuring the railroad retirement system. I think that is simply out of the question.

In short, we fully understand that if we do not arrive at a collectively bargained resolution of these issues, within this 18-month period, that we will have a solution imposed upon us by the Congress, and we, of course, believe, based on past experience, that any resolution of any issue of this sort that is imposed upon the parties is bound to be less satisfactory than oneto both sides—than one they can work out themselves.

Now, I think it is a fair question, and I think in a way it was put yesterday by Senator Schweiker, as to why we feel that way now, when we were not able to work out a complete resolution of these problems in the time that has been available to us in the past year. In other words, why should the Senate put any greater confidence on the inducement of the congressionally mandated solution during this forthcoming period of time, than it did in the past?

I would like to address myself to that problem quickly. I think what is instructive here is the chronology of events that took place over the last several months.

As the subcommittee is aware, the parties were under an obligation imposed by the Congress to report to the Congress by March 1 of this year their recommendations with respect to retirement system problems based upon and taking into account the recommendations of the Railroad Retirement Commission.

The Commission, as the subcommittee is aware, did not file its report until the last day of June of this past year, I believe it was, or perhaps it was July 1. So it was only at that point that the parties were able to begin to try to work out solutions to these difficult problems.

We started by beginning to analyze the data and the recommendations of the Commission, and as the subcommittee is aware, the data is very extensive, the discussion by the Commission, the analysis by the Commission is very complex.

We began our meetings in October of last year, as Mr. Dennis testified yesterday, and then we thought on our part that the best chance of a negotiated resolution of these issues would be had if we conducted our negotiations not only on these issues, but also on the wage and work rules and fringe benefit problems that were scheduled to arise in January of this last year.

So at our suggestion, further negotiations were deferred until January. That may have been a wise or an unwise judgment, but it was one that we made, and may I say that I think the facts bore out the wisdom of taking that course.

So that we then began in January, and we held extensive discussions on an intensive schedule in January and February.

We did not meet the March 1 deadline, but came within a week of it by signing a memorandum of understanding on March 8. So that effectively we had only a period of a couple of months of discussions of these problems.

That was the natural consequence of the schedule for expiration of the temporary increases on July 1.

Now, the fact is that we knew that unless we made substantial strides toward solution of the railroad retirement issues, this time the Congress would act. So that incentive was there and it did contribute to the fact that we have been able to come up with a partial solution to the retirement issues.

That leaves us with complex problems, and difficult ones to be sure, but I do feel that in these circumstances the Congress can take comfort in the fact that we have accomplished this much, and the remaining issues are in such a posture that the parties realize full well that unless they come up with something, the Congress will act by January of 1975.

As far as inducement for the Congress to act, I think that would mainly be a function of time. We do appreciate the considerations that lead, in S. 1867, to a March 1 reporting date instead of a July 1 reporting date. We frankly prefer, for reasons that I think would be fairly obvious, the July 1 date.

One can't prove that an agreement that could not be reached by March 1 could be reached by July 1, but I think one can safely say in this kind of a situation that the more time, the better, in terms of the interests of promoting a collectively bargained agreement.

On the other hand, there is the colliding interest of the Congress having sufficient time to take action. As I say, we are hopeful that the Senate would agree with the judgment of the House in that respect and remain with the July 1 reporting date, but if that is not possible, if it is not possible to harmonize these matters in that fashion, then I would hope a date between March 1 and July 1 would be possible.

Of course, we will meet whatever date it is that the Congress gives us, and do our best within the allotted time. Now, also, if one is look

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