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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.
American Farm Bureau Federation
June 1, 1973
Senator William D. Hathaway, Chairman
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.
STATEMENT OF THE AMERICAN FARM BUREAU FEDERATION
TO THE RAILROAD RETIREMENT SUBCOMMITTEE
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
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.
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