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the opportunity in free collective bargaining to reach agreement for an

appropriate quid pro quo in return for the assumption of these additional


Section 108 (b) accomplishes the intent of the National Agreement

• and avoids an inequitable double barreling of the railroads whom I repre

sent. It also authorizes such railroads to agree through collective

bargaining to assume the additional Railroad Retirement taxes for their

employees at a date earlier than the expiration of the applicable moratorium.

Pursuant to this latter proviso, certain of the railroads on the attached

Appendix have made such an agreement with the United Steelworkers of

America in return for an appropriate quid pro quo contingent on H. R. 7200 becoming law containing Section 108 (b) in the form in which it was reported

out of Committee. These same railroads have offered to enter into

similar agreements with other involved organizations in accordance with

this same proviso.

For the reasons outlined above, the railroads for whom I speak

urge the adoption of Section 108 (b) as both necessary and vital to the

equitable application of H.R. 7200 and support the bill provided such

provision is embodied therein.

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American Farm Bureau Federation

June 1, 1973

423 1 9TH STREET, NW
AREA CODE 202 - 638 - 6315

Senator William D. Hathaway, Chairman
Railroad Retirement Subcommittee
Senate Committee on Labor and Public Welfare
New Senate Office Building
Washington, D.C. 20510

Dear Senator Hathaway:

Please find enclosed a statement relating to H. R. 7200 and similiar proposals to revise existing statutes relating to the railroad retirement system.

It will be appreciated if you will include this statement in the hearing record on this matter.

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Presented by:
Matt Triggs, Assistant Legislative Director

May 31, 1973

We welcome the opportunity to present Farm Bureau's views to the Committee.

Farm Bureau is a voluntary organization of 2,175,780 families in forty

nine states and Puerto Rico.

The interests of our members would be adversely affected by the enactment

of H. R. 7200.

H. R. 7200 would (1) reduce the tax that railroad workers pay for Railroad

Retirement programs from 10.6% to 5.85% of taxable' pay (2) increase the tax

railroads pay from 10.6% to 15.35% of taxable earnings, and (3) authorize railroads to recoup the increased tax by automatic non-suspendable increases in

freight rates.

The effect would be that railroad workers would successfully transfer to

farmers and other shippers and to consumers, on a continuing basis, about one

half of the contribution they now make for retirement.

This transfer of payment obligations does nothing to reduce the actuarial

deficiency of the Railroad Retirement Fund. In fact if H. R. 7200 is enacted

the actuarial deficit would be substantially increased by (1) extending the

temporary benefit increases authorized in recent years despite the fact that no

provision has been made to finance these benefits, and (2) providing a new

benefit, retirement at full pension rates for male employees at age sixty with

thirty years service.

Farmers pay large freight bills not only to ship their products to market

but also for the farm machinery and supplies they purchase for production purposes and for the consumer products they buy. The burden of the new cost resulting from H. R. 7200 would be particularly heavy for farmers who, because

of distance to market or source of supply, are dependent on rail service.

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We recognize that railroad employees make larger payments for retirement

than employees covered by Social Security, but they are also entitled to

receive larger benefits--benefits which railroad unions have advocated in the

past with full recognition of the costs to the retirement fund.

We recognize the argument that what is involved is a transfer to consumers

of the pension costs of an existing program--a transfer which can and does pro

ceed in other cases without Congressional action. But the Railroad Retirement

Act is a statute. The lengthy considerations given by the Congress to the statute over the years should not now be brushed aside. Congress should not necessarily endorse whatever method of sharing pension costs the unions and the

industry may propose.

In this respect much attention has been given to the argument that what

Congress is being asked to do is merely to affirm a labor-management agreement

that the parties have worked out. The persuasiveness of this argument is

diminished by the fact that both parties have agreed that the consumer and

shipper should pay the costs of the shifted obligation.

We recognize the need of carriers for more expeditious action on wage

cost increases. We have supported more flexible and expeditious rate making

policy. But, as members of this Committee know, rate-making policy is a complex

question involving consideration of innumerable factors.

Legislation to amend

rate-making principles and procedures, based on comprehensive hearings, is to be

considered by the Commerce Committee in the near future.

We recognize the need to improve the precarious financial status of the

Railroad Retirement Fund. But H. R. 7200 does not deal with this problem.

Although railroads and railroad unions were committed to submitting a

solution to the problem of the financial status of the Fund they have not done


They now ask for more time. But the enactment of H. R. 7200 would make it

more difficult to resolve the financial problem, would add to the actuarial

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