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paid under the Social Security Act and they receive credit for the railroad service. Now, when we restore this lump-sum benefit, that is, this lump-sum guarantee there are conditions on which a widow who is potentially eligible for monthly benefits, upon attaining age 65, may wish to elect to take the lump sum at that time rather than to get her benefits at age 65. The bill provides that she may elect to do so and if she elects to do so she, of course, waives the privilege of having survivor benefits ultimately determined on the basis of railroad service and social-security service combined; but the bill specifically provides that she need not waive such benefits as she might be entitled to . the Social Security Act on the basis of nonrailroad service One. The CHAIRMAN. Well, that was a point that I wanted to bring out. I think it is a very worth-while provision that we have in this bill and I am pleased to see that it is in there, because it goes to the point of helping survivors. Mr. SchoeNE. Well, we felt, Mr. Chairman, that it was only fair to do that, in view of the fact that the lump sum guarantee is a guarantee only of return of contributions made to the railroad retirement system. We do not attempt here to make any return on contributions made to the social security system and consequently if one elects to take this lump sum while potentially eligible for age 65 benefits, it is not fair that they should have to waive the benefits under the social security system. . The CHAIRMAN. From your statement it would indicate then that it provides an improvement from the standpoint of the survivors with respect to the matters you have just mentioned. Mr. ScHoFNE. Yes; it does, Mr. Chairman. The CHAIRMAN. The committee will recess until 11:45. Mr. CRossER. I would like to ask a question, Mr. Chairman. The CHAIRMAN. You have some questions? Mr. CRossER. One or two. The CHAIRMAN. Mr. Crosser. Mr. CRossER. Did you examine the bill that was introduced, I think, on May 26? Mr. SchoeNE. Which bill do you have reference to, Mr. Crosser. I do not identify it. Mr. CRossER. I think Mr. Wolverton introduced a bill on the 26th. We had something delivered on our desks, which I understand was a copy of the bill. r. SchoßNE. That is H. R. 6704. The CHAIRMAN. H. R. 6704. Mr. SchoENE. Yes; I examined that, Mr. Crosser. Mr. CRossER. Will you tell us how you regard that bill from the standpoint of the employees? In the first place, do you think it was actuarially sound? Mr. SchoeNE. Well, Mr. Crosser, on that question I, of course, have to rely on information furnished by the Railroad Retirement Board. I asked the Railroad Retirement Board at the time that bill was introduced to indicate their best judgment to me of what its cost would be. The information I got indicated that the cost of the bill would be approximately 3.15 percent of pay roll, which, as you can see from the testimony I have given, would be about 0.73 percent of pay roll in excess of the cost of H. R. 5993.
In my judgment that would be too far in excess of the tax rate to be acio sound. That bill, so far as the distribution of benefits was concerned, had a range of increases running from 10 percent to 92.5 percent. Naturally on behalf of the employees we would like to see as large an increase as can safely be made and had we considered it actuarially supportable would have liked to have seen some of the larger increases that were provided in that bill. We did, feel however, that the distribution with that wide a range was not equitable among all of the employees and that it ho discriminated against employees who will be retired some year in the future in favor of employees who have already retired and o: who will be retiring in the very near future. That discrimination we felt was rather acute in view of the fact that the employees who have already retired have paid relatively less in contributions to the system than—and some of them paid nothing, of course—than those who would be retiring in the future would be paying in taxes all through their railroad career. hat, in summary was the judgment that I had. Mr. CRossER. It was a fact, was it not, that the general tendency of the bill was to make those who paid most in a smaller percentage of increase? Mr. ScHoFNE. That is right. That was a general tendency of the bill and that was one of our objections to it. The CHAfEMAN. Have you finished, Mr. Crosser? Mr. CRossER. Yes, Mr. Chairman. The CHAIRMAN. Of course I did not intend to get into any discussion as to the merits of H. R. 6704. I made that clear when I opened the hearings. I still think it a splendid bill, and from an actuarial standpoint, I may say this, that actuaries, I have found in my experience on this committee, differ sometimes very widely. The study that we made of that bill was to bring it within a range that would not be greater in cost than that of the original Crosser bill. I have been satisfied from the studies that our staff made and the actuarial advice that we had, that notwithstanding others might have a different opinion, we are still of the opinion that it could have been done within that cost. We did seek in that bill to take care of the immediate emergency that is so heavy upon those with small pensions, and annuities, and we had the feeling that the bill would take care of that immediate situation and in a very admirable way and that it would take care of the situation for the next 15 or 20 years. In the meantime there would be time for such revision as might be necessary to take care of those who would be retired after that time and that is all I wanted to say about it. We will not go into a discussion of it. I am in favor of this bill that represents the agreement between the management and the men. Mr. ScHoFNE. I understand that, Mr. Chairman, I have avoided any specific discussion of the other bills, because we want to get through as rapidly as possible and I think that since management and the men have agreed upon a particular course or program, that the obvious statesmanlike course for the Congress to take is to enact that program into law. The CHAIRMAN. Regardless of what the provisions of the several bills may be, I take it that there was a very sincere desire upon the part of all who have introduced bills to meet a situation that we all recognize and which we take care of to the best of our ability in the bill that has now been presented as agreed bill. We will take a recess until a quarter of twelve. (After a recess for the purpose of answering the roll call, the following proceedings were had.) The CHAIRMAN. The committee will please be in order. The first 3. will be our colleague from the State of Massachusetts, Mr. aSOrl. Mr. Clason, we will hear you at this time.
STATEMENT OF HON. CHARLES R. CLASON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MASSACHUSETTS
Mr. CLAsoN. Mr. Chairman and gentlemen of the committee, I am delighted that the committee is taking up this legislation at this hearing today. During the 2 years of the present Congress I have introduced three separate measures looking for benefits, retirement pay and benefit provisions for retirement for veteran railroad men. I believe that the provisions of my separate bills have merit. Some of them have been worked out at very considerable expense to the railroad men interested in them and they have been assured that they were sound from an actuarial standpoint. I have also felt that railroad men should be allowed the right of retirement pay below the age of 65 and so in my bills I have provided in various provisions for the right to retire after 30 years service regardless of age. However, I realize that in the closing days of a Congress it is both well and wise to take such legislation which is fair and just as it is possible to get and while, of course, I retain the interest in the provisions of my own bill and certainly will be back, I hope, to argue in favor of them at some other time, before some other Congress, nevertheless I do feel that the bill which is before you today and which has been filed by your chairman (Mr. Wolverton) contains provisions which will be very helpful and will improve the present retirement law. I know that your distinguished chairman (Mr. Wolverton) has put a lot of effort into the bill which he has presented, and I certainly will vote in favor of it if I have that opportunity. My remarks are brief, because I feel certain that all of the members of the committee are fully cognizant of the provisions of the chairman's bill and I hope that all will be in support of it. I will support it. I wish to thank you for this opportunity to be heard. The CHAIRMAN. Mr. Clason, we are glad to have your appearance before the committee. We are all aware of the interest you have had in the workers on our rail system and this appearance before the com; this morning is an additional evidence of your interest in their ehalf. Mr. CLAson. Thank you, Mr. Chairman. The CHAIRMAN. We will hear Congressman Ellis of West Virginia.
STATEMENT OF HON. HUBERT S. ELLIS, A REPRESENTATIVE IN
pear here today in support of H. R. 6766. It appears to me that the committee has come to a very satisfactory and happy solution of a very complicated problem. Most of us have felt for a long time that these retirement payments should be increased and I note that this has come about through a reduction of the unemployment insurance taxes, which is unusual, within itself. These advantages for all concerned have been accomplished without an increased cost to the public. I think that the committee should be congratulated upon its work. I am glad to lend my assistance to support of the measure in the House. Thank you. The CHAIRMAN. Thank you for your appearance, Congressman Ellis. As I have stated with reference to Mr. Clason, we are all aware of your interest in the legislation and we are glad to have you here and especially your assurance of support. The CHAIRMAN. *. next witness will be Mr. William J. Kennedy, Chairman of the Railroad Retirement Board.
STATEMENT OF WILLIAM J. KENNEDY, CHAIRMAN, RAILROAD RETIREMENT BOARD, CHICAGO, ILL.
Mr. KENNEDY. Mr. Chairman and members of the committee, my name is William J. Kennedy. I am Chairman of the Railroad Retirement Board located at 844 Rush Street, Chicago, Ill. The Board, as you know, has lent its approval to the original bill, H. R. 5993, and the Board is now wholeheartedly approving H. R. 6766 and H. R. 6768. The CHAIRMAN. Are there any questions? Mr. HARRIs. Mr. Chairman. The CHAIRMAN. Mr. Harris. Mr. HARRIs. I would like to ask the Chairman one question. Did I understand from information we received that there was a division on H. R. 5993 in the Board? Mr. KENNEDY. I did not get your question, Congressman. Mr. HARRIs. Did I understand from previous information there was a division in the position of the Board on H. R. 5993? Mr. KENNEDY. That is correct. But now, the Board is unanimous. Mr. HARRIs. You are in entire accord with H. R. 6766 and H. R. 6768. The Board is unanimous? Mr. KENNEDY. That is correct. The CHAIRMAN. Before I call any further witnesses, may I be advised as to whether the Railroad Brotherhoods or the Association of American Railroads have any other witnesses they wish to hear at this time? Mr. SchoENE. We have no further witnesses, Mr. Chairman.
STATEMENT OF BENJAMIN B. KENDRICK, SOCIAL SECURITY ANALYST, FOR THE CHAMBER OF COMMERCE OF THE UNITED STATES, WASHINGTON, D. C.
The CHAIRMAN. The next witness will be Mr. Benjamin B. Kendrick, social-security analyst of the Economic Research Department of the Chamber of Commerce of the United States. Do you have a prepared statement, Mr. Kendrick? Mr. KENDRICK. Yes, I do.
Mr. HARRIs. Mr. Chairman, it is 12 o'clock and I wonder if we can get some idea of how much time the witness will require. The CHAIRMAN. I have a notice here to the effect that it will be 15 minutes. I hope it will not be longer than that and if shorter I will be better pleased. Mr. KENDRICK. I think I can hold it down to less than 15 minutes, Mr. Chairman. The CHAIRMAN. Thank you. That will be very, very helpful to the committee. Mr. KENDRICK. Mr. Chairman and members of the committee, my name is Benjamin B. Kendrick. I am a social-security analyst with the United States Chamber of Commerce and I am appearing on behalf of the chamber. In general, the chamber urges that the committee take an over-all view of the social security matters in general legislation, other than railroad retirement and unemployment system. We are opposed to discriminatory social security provisions. We favor coverage under social security of the 20,000,000 workers not now having any protection. We favor adequate benefits for all employees covered under the social security. We oppose discriminatory treatment in favor of any special group. The CHAIRMAN. A statement to that effect finds a sympathetic accord in me, but as I pointed out, the fact is that this committee only has jurisdiction over the subject so far as it relates to railroad workers. Mr. KENDRICK. That is right; and so my point is that while it may not be practical for the committee at this time or for this committee to bring within the general social security system, railroad employees, .# present action should be shaped with that in mind as an ultimate goal, and in particular railroad retirement benefits should not be increased at this time because an increase in the discrimination which already exists would obviously not be a step in the direction of eliminating discrimination. The Chamber of Commerce of the United States has long supported social security legislation as well as proposals for extending and improving the Nation's existing social security structure. Under the guidance of its distinguished Committee on Social Security, the chamber has ever sought to maintain a constructive attitude, to seek the development of sound, comprehensive, adequate programs providing basic security not only for the 50,000,000 workers not having any social security protection. In addition, the chamber is of course anxious that the two or three million railroad employees—now protected by the special railroad social security programs—should also have suitable coverage. Incidentally, the special railroad legislation is definitely within the }. of the chamber's social security committee. Thus, although ederal legislation treats railroad employees as though completely apart from other private employees, the chamber attempts to keep the entire social security picture in focus.
In social security matters it is especially important to keep a firm grasp on basic principles. Decisions based on expediency—when piled on top of one another—can have consequences, not immediately