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1225 CONNECTICUT AVENUE, N.W., WASHINGTON, 0. C. 20036/AREA CODE: 202-659-9320


M. E. PARKS, Vice Chairman
H. E. GREER, Director of Rescarca J. P. GRIFFIN, Administrative Secretary D. P. LEE, General Counsel

June 1, 1973

The Honorable William D. Hathaway
United States Senate
Room 248, old Senate Office Building
Washington, D. C.

Dear Senator:

At the hearings yesterday on s. 1867 and related bills, you asked for my opinion with respect to a revision of Section 121 under which the allocation of the 7.5% tax would be left open, with authority delegated to the Secretary of Treasury to establish an allocation if no legislation were enacted prior to January 1, 1975. I said that I had never thought of such an approach and asked for an opportunity to reflect on the matter and respond by letter.

After considering this alternative, my view is that · it would not be desirable.

. Although I have not had time to research the case law that would bear upon the problem, I have no doubt that such a delegation of authority would have to be accompanied by standards to guide the Secretary's exercise of discretion. I feel that, once such standards were formulated, it would become evident that the question of allocation of the tax would raise questions that are essentially political in character and therefore should be settled by the policy-making branch of government, the Congress.

As I testified, we would prefer that Section 12l not be included at all. However, as I also said, if the Senate decides to include Section 121 without the allocation feature, in our view such a provision would not impair collective bargaining and would not be inconsistent with our collective bargaining agreements with the various unions.

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I should like once again to thank you, the other members of the subcommittee, and the staff for the thoughtful attention that you have given to the railroad retirement matter.

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Senator HATHAWAY. At this time, I would like to ask Mr. Dennis if he can answer briefly whether or not, in your opinion, if the Congress passed a March 1 deadline, or any other deadline, other than July 1—that the union would consider this an abrogation of the collective-bargaining agreement ?

Mr. DENNIS. Senator, I believe yesterday that I said that March 1, July 1, May 1, we would devote all our time and effort to try to reach an agreement even before any deadline date that was set, as we intend to do prior to July 1, as agreed to.

The committee has so expressed themselves to me, the negotiating committee, that we should try to get together before the deadline of July. 1.

We recognize that it is an election year, and we want to give you ail the time that we possibly can, so I would have no objections to that feature, that specific feature, at all.

Senator HATHAWAY. Fine. Thank you very much, Mr. Dennis. Thank you, we appreciate your testimony. Our next witness is William W. Winpisinger, general vice president, International Association of Machinists & Aerospace Workers.



Senator HATHAWAY. Mr. Winpisinger, we are happy to have you with us. Would you identify the person with you? Mr. WINPISINGER. Thank you, Senator.

It is a pleasure to be here, and may I congratulate you on handling that name so well. It isn't often it is done.

With me is Mr. Plato E. Papps, who is general counsel of the IAM, which I represent.

Senator HATHAWAY. We will at this point, without objection, make your entire statement a part of the record, and it will be inserted at the conclusion of your testimony.

Mr. WINPISINGER. Yes, sir.
I would prefer to do exactly that.

It might fairly be asked, when the statement is read, why it appears to be, at least, in part, tangential to the announced objectives of the committee as stated by the chairman at the beginning of these sessions.

That is done simply because at a time past, when it was my direct responsibility to deal on behalf of our union in this arena, in the entire labor picture, and because I have had substantial experience as a trustee of other pension funds within the purview of the IAM's activities, and this goes back some 4 or 5 years ago, it was apparent to me that the Railroad Retirement System was on a crash course with destiny, in terms of being unable to support the benefit levels based upon existing contribution levels.

When I began to first state what I thought to be that fact in various forums of rail labor, it was laughed at, booed, and a number of other things, predictably, I might say.

Sometime later, the disagreement on 13300, the prior bill that was before this committee in this particular arena, was spawned in part because of this very concern, and the Senate ordained at that point a commission to get into this and really begin to determine the facts.

After the Commission began its work, then I hear other people echo exactly the same fears that I had had for a long time, and they began to take corrective action, or propose corrective action, and it has been alleged in some of the lobbying activities, and I think, in part, in the testimony, that the IAM at one time supports what is now before the committee, and I want to clear the record to say that to the extent that it is the Commission's recommendation, or what is now being done pursuant to that, might be a step away from the past, I do support it, but, to the extent that it gets to the solution of the problem, I do not support it, because I don't believe it gets there. The purpose of the theorizing in my statement goes to that fact, and I attempt to set forth conceptually what we have always felt represents the final solution that is available to the parties and to the American people through the Congress toward this very perplexing and repetitive problem.

Basically, I saw it requires a merger with the Social Security System in terms of the assets, liabilities, and everything else, and that the development by direction of a formula of benefits that will compensate railroaders for the years in which they have done service under the terms of the Railway Retirement Act, in terms of higher pensions for the higher contributions that they have made in the past.

I think, then, structurally, with the available assets, and I am told by people that we have had working on this problem, with vast experience in the field, that there are sufficient moneys to determine certain priorities and put this package together.

We attempted to do so, leading up to these hearings. The exigencies of the problem we will continue to work on and hopefully seek the introduction of a package at some future appropriate time, and hopefully see it thoroughly debated, and in our judgment, enacted.

Along with that, I have always felt that and it is manifest this morning—that the Congress had the really unwanted role in sitting as the silent partner at the railroad bargaining table in the past few years. A few things have been put in the record in the last 20 minutes that I would like to correct.

First, many times in the past, negotiations of all rail labor were concluded as a package with all rail unions participating. Experience in that framework established the tendency of the large to ride roughshod over the small was so great that the bargaining was fragmented into different groups of unions, and it degenerated to something like the nonoperating brotherhoods against the operating brotherhoods.

The seed is being planted to create that very fragmentation again in the future for the same reasons, and the same reason that precludes the IAM today from being a signatory to this arrangement. We don't think it solves the problem. It is really giving cobalt treatment to the same cancer. We know that in the meantime that cancer will substantially grow, and the cobalt may not be sufficient then to arrest or cure it. It certainly develops a more complicated cure by taking additional time.

Second, we feel that because this is the only industry, and these are the only employees, and these are the only unions which deal with a Federal retirement system in negotiations, it tends to detract from realistic settlement of other worker problems which we consider to be just as important.

There is a wage consideration attaching to this present arrangement, which means hourly wage rates are going to be somewhat depressed if it becomes a reality than they would be otherwise.

In no instance in social security employment does that system come to the bargaining table, and I believe that to be as it should be, that the wisdom of the Congress, as the representative of the people, determines what realistic benefit and contribution levels are to preserve national rail soundness.

I think it is wrong, and I always have, to bargain about a federally controlled and administered system. Parties should not come to this forum for redress of collective bargaining problems, and I don't think that the parties in this instance, because they do have parochial interests, should usurp, if you will, from the Congress, to determine that which is, in fact, the will of the American people, to be the representative of the American people.

Yet, that is the very thing in which we find it. I think any union worth its salt, and nearly 1 million strong, with a small number of our people involved in the railroad industry, has to be concerned about the other membership as consumers and as citizens and as pensioners in another system, and I think we have to balance those interests rationally, and I don't really know how rational we can be at a bargaining table when we attempt to balance them as a union representative, as an employee, and bargaining about something we have to come here and have ratified.

I think the answer lies, as I said, in a merger with social security, and then a commitment of these moneys that remain to a private pension system which gets this industry under the same financing as air transport, autos, coal, steel, and all the other basic industries in the country, where you go make the private pension sector a part of the bargaining, and keep it viable as the needs of retirees change in the future by allocating additional moneys to it out of a wage package, and we don't have to go anywhere when it is done. It is ratified and becomes an agreement, and we go out from there with a basic Federal retirement for the whole thing.

I believe that to be workable, viable, and I think in the near future, we would be able to offer something to this committee that is appropriate, and it would achieve these ends.

Aside from that, and I will say so much for the theory, this is why I theorize, why I think this is so terribly important, and I might say that as long as we continue on this course, we are wrong. I think we put in jeopardy the pensions of future retirees in the next half dozen years or so. They are in great jeopardy, and these are the only pensions these people have at this point in time. I think that is tragic.

I think to get a private system augmenting it would certainly eliminate that aspect, and we wouldn't be here all the time arguing about it and jeopardizing the futures of these people.

In addition to that, we have serious problems with the basic H.R. 7200 legislation, and they may or may not spill over into the Senate bill sponsored by yourself.

First of all, I am not confident, I am not sure how morally honest everybody can be. I am not even sure for myself when I sit and bargain for something in which I have a personal stake. Such is the case with railroad retirement.

This tends, I think, to distort the figure because the bargainers sit

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