They fear a protracted illness. They fear every bond issue that comes before a community. They fear every trip to the grocery store, every call to a plumber or electrician, every knock in the old car.

And their fears are real, because the new level of living costs is beyond their reach; and they are forced-against their will-to turn to us who are earners for help.

Only the most heartless could turn his back on such a legitimate plea. Most of these people are not asking for luxuries. They're asking for subsistence.

It means an additional load on those actively engaged in earning and producing, but the load is inescapable.

The alternative is poverty for many in the midst of prosperity.

Ours must be a two-pronged effort to bring our retired and disabled more in line with the new level of living costs, while fighting valiantly to keep inflation from forcing them still higher.

Government can and should encourage private companies and individuals to make their own pension programs more realistic.

Government can and must lead the way by direct action on pension programs it controls.

I urge this great committee to take immediate action by putting together the best possible legislation to improve railroad retirement and unemployment benefits.

It is a must, and it is already overdue.

I am not here to tell you how to do it. Many bills have been introduced. Each incorporates some excellent suggestions for improve

ment.

I am sure that a constructive piece of legislation can be formulated out of all these suggestions.

The main point is-let's do it, and do it now.

I live with a lot of railroad families. They are the salt of the earth. The problems of the retired, disabled, and unemployed railroaders

are serious.

There can be no choice but to lend them a helping hand.

The CHAIRMAN. Thank you for your interest and appearance, Mr. Brown.

Mr. BROWN. Thank you, Mr. Chairman.

The CHAIRMAN. We are also glad to have our colleague from Florida, the Honorable Charles Bennett, who has heretofore appeared before this committee and expressed his interest in the railroad retirement legislation. We welcome you again, Mr. Bennett, to this committee and we will be pleased to have your statement at this time. STATEMENT OF HON. CHARLES E. BENNETT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mr. BENNETT. Thank you very much, Mr. Chairman.

I would first like to express my appreciation to you and to the members of this committee for permitting me to appear here today to testify in favor of H.R. 3705, my bill to increase railroad retirement benefits.

Your committee is in a much better position than I to determine what railroad retiree benefit increases can be financed and how they should be financed. In introducing this bill, my principal objective

is to present to this committee and to Congress the liberalizations which in my opinion are chiefly desired by retired rail workers in the district which I represent.

There is one railroad, the Florida East Coast Line, which is now headquartered at Jacksonville and the Seaboard shops are very extensive in my area, so there are many employees in the area which I represent.

That the provisions of this bill are the chief desires of retirees in my district is indicated by the correspondence which I have had with the Grand Association of Veteran Railway Employees, the principal organization of retired rail workers in this district.

The provisions of this bill are in close accord with the legislative program of that very representative group, which includes a substantial number of current employees as well as many retirees. If it is found necessary to raise contributions of employees and employers to enact the desired liberalizations that organization recommends increasing the rate by one percent on employee and employer on $400 per month, $4,800 annually. It has seemed to me for some time that a promising means of financing some increases would be by raising the rate of return on the reserve fund, and this is proposed in section 7 of the bill which I have introduced.

H.R. 3705, my bill, has 10 sections exclusive of sections 1 and 12, which are routine sections concerning the short title of the bill and its effective dates. Section 2 provides for full retirement at age 60 with 30 years service, or after 35 years service regardless of age.

Section 3 provides that wives shall become eligible for annuities at age 60.

Section 4 provides for annuities based on 5 highest years of earnings of total service, whether or not consecutive, up to $400 per month, with repeal of the 1924-31 computation law now used to credit service performed prior to 1937.

Section 5 provides an increase of 10 percent to annuitants over 70. Section 7 increases the interest rate on the reserve fund from 3 percent to 4 percent.

Section 8 increases outside earnings allowed disabled annuitants to $200 per month.

Section 9 repeals all remaining dual benefit restrictions.

Section 10 provides for proration of annuities for the month during which death or disentitlement occurs.

Section 11 eliminates the requirement that annuitants cease certain nonrailroad employment.

Most of the benefit increases proposed in my bill have been proposed before, and I am confident that the committee has received and will receive much testimony on these proposals. I would like to call the committee's attention to one proposal which, as far as I am advised, is unique. This is my bill's section 6, which provides a special increase for annuitants over the age of 70. I believe annuitants in this age group should receive special consideration for future increases. In the first place, better increases at less cost can be given to this group, inasmuch as fewer annuitants reach that age than reach the age of 65. Thus, it is easier to give actuarially sound increases to this age group. In the second place, those who have reached this age are probably in greater financial need than those who are between the ages

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of 65 and 70, since many of them will have exhausted their savings while living on small retirement incomes during the first years of their retirement. In addition, those over 70 are less able to obtain odd jobs to supplement their annuities. Finally, a special increase for annuitants over 70 would give something to which those under that age might look forward.

Thank you again, Mr. Chairman, for permitting me to appear to express these views to you and the committee as you so graciously have this year and in years prior.

The CHAIRMAN. Thank you, Mr. Bennett, for your continued interest in this subject matter of the railroad employees.

We are glad now to welcome to this committee the Honorable Joel T. Broyhill, our colleague from Virginia.

Mr. Broyhill, we are glad to have you this morning and will be glad to have your statement.

STATEMENT OF HON. JOEL T. BROYHILL, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VIRGINIA

Mr. BROYHILL. Mr. Chairman, in deference to the heavy schedule of the committee, like my colleague who preceded me, I would like to submit a prepared statement for the record and make just a couple of brief observations.

The CHAIRMAN. Let your statement be included at this point in the record.

(The statement referred to follows:)

STATEMENT OF REPRESENTATIVE JOEL T. BROYHILL (REPUBLICAN-VIRGINIA) IN SUPPORT OF RAILROAD RETIREMENT LEGISLATION (H.R. 1012) BEFORE THE HOUSE INTERSTATE AND FOREIGN COMMERCE COMMITTEE, FEBRUARY 3, 1959 Mr. Chairman, This distinguished committee has before it today important proposals affecting hundreds of retired workers of the Nation's railroads. Across the Potomac, in the congressional district I have the honor to represent, is located one of the largest railroad yards in the world. I personally know many men and women employed in Potomac yards. I know their problems and I know these problems are shared by their fellow workers in all parts of the United States.

Today they are wagging the cow's tail. Discharging our responsibilities respecting Federal and social security employees we have increased their benefits to bring them more into line with the cost of living. But to date we have neglected the railroad workers, who are also our responsibility. We have assumed this responsibility through the enactment of the Railroad Retirement Act and the Railroad Unemployment Insurance Act. Without action by the Congress, retired and unemployed railroad employees must continue to drag behind those in the Government service and those covered under the social security system.

The railroad workers are not fat cats. They are people who are in an income bracket comparable to many other groups who devote most of the fruits of their labor to current expenses. They are dependent on adequate retirement and unemployment insurance to meet these situations. If there are savings, they are indeed meager. Little opportunity is offered to set aside funds for old age and emergencies.

Now, I am appreciative of the economic difficulties of the eastern railroads. Competition has reduced their earning power. They have been compelled to curtail certain types of services. But such difficulties are inherent in our system of free enterprise. Business has its ups and downs. That is to be expected.

In my own business-the building industry-we are sometimes faced with the necessity of reducing original prices to sell homes. But that is not the fault of our construction workers and we certainly do not make them the victims

of our failure to properly evaluate the housing market. It is my hope that the economic plight of the eastern railroads will improve and that if necessary the Federal Government will lend some sort of helping hand. Rail transportation is essential to our national welfare. We must do what we can to make it economically healthy.

The necessity of liberalization of the congressional acts affecting our railroad workers is further emphasized by the long-range actuarial deficit now existing in these programs. We must restore to a sound actuarial footing.

Mr. Chairman, I am pleased to follow your footsteps in presenting a companion bill to yours in order to accomplish the aforementioned purposes. The same measure was the subject of a number of bills introduced in the 85th Congress. It was passed by the Senate last August, but was not called up for floor action in this House in time to receive proper consideration before adjournment.

The bill contains a number of benefit improvements under both the Railroad Retirement Act and the Railroad Unemployment Insurance Act. But, to my mind, the primary purpose which will be accomplished under the bill will be to put both of these systems on firmer financial bases.

The railroad retirement system has been operating at a deficit for the past several years. This situation must be corrected without delay if we are to maintain a retirement system in which the railroad workers of this Nation can place their confidence. Under the bill, it is proposed to increase the tax rate and raise the maximum wage base sufficiently to finance the benefit increases contained in the bill, as well as to help liquidate the present actuarial deficiency in the railroad retirement fund.

Taxes would be increased from a current rate of 64 percent on railroad employers and employees to 634 percent beginning with the current year and to 74 percent commencing in 1962. Thereafter the tax rate increases would match those taking place under the social security old age and survivor insurance program.

The wage base maximum would be increased from $350 to $400 a month. This would put the railroad retirement system on a par with the social security system, which, under amendments enacted last year, covers earnings up to $4,800 a year.

The financial basis of the railroad unemployment insurance system would be strengthened to provide funds for the additional benefits proposed in the bill and to take care of the current deficiency which exists also in this fund.

This would be accomplished by increasing the tax base from $350 to $400 a month and changing the tax rate to provide for a range from a minimum of 11⁄2 percent to a maximum of 31⁄2 percent, depending upon the current balance in the railroad unemployment insurance account. Minimum annual earnings needed to qualify for unemployment benefits would be raised from $400 to $500 a year.

The benefit increases proposed under the Railroad Retirement Act include a general 10 percent increase in monthly pension and retirement payments. When the 85th Congress came to a close it had granted pay or retirement increases for practically every group whose rates of compensation are established by law, with one major exception-the retired railroad worker. Civil service retirees were granted a 10 percent increase, those under social security 7 percent. It is no more than simple justice that the retired railroad worker, who has borne the brunt of increased living costs to the same degree as his retired neighbors, be given equal treatment.

Other major changes proposed in the Railroad Retirement Act are:

(1) Lowering the retirement age for women employees with 10 to 30 years service and wives of retirees to age 62 with a reduction in annuities. This would allow the same privilege of receiving a reduced annuity now available to women under social security. The same privilege would be offered to male workers at age 62 with 30 years of service.

(2) Raising the maximum compensation used in computing benefits from $350 to $400 a month for services rendered after this year.

(3) Allowing those retired on account of disability to earn up to $1,200 a year in casual or intermittent employment without loss of benefits.

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(4) Allowing survivors living in foreign countries to earn up to $1,200 a year, the same as survivors in this country. Under present law, survivors living outside the United States, principally in Canada, are allowed no benefits for any month in which they work 6 days.

Under the Railroad Unemployment Insurance Act benefits increases would range from 50 cents to $1.70 a day, depending upon rates. The maximum benefit would be $10.20 a day, as compared to the present $8.50.

The bill would also extend the benefit year, or the periods during which unemployment benefits may be paid to an employee. These extensions apply principally to workers with considerable railroad service. Those with over 15 years would be extended another 130 days of benefits, those with 10 to 15 years another 65 days.

I sincerely hope that this measure will receive the thorough consideration of the Committee on Interstate and Foreign Commerce at its earliest convenience. I am sure that after having done so, the committee will issue a favorable report upon it, so that the urgent necessities for srengthening the finances of both of these systems and bringing their benefits in line with present living costs will be met.

Mr. BROYHILL. Mr. Chairman, I am here in support of H.R. 1012; in fact, I have, like many others, introduced a companion bill to H.R. 1012, numbered H.R. 3819.

My congressional district is located right across the Potomac River. In fact, you can look out the window here and see a large portion of it. I would like to state that in Alexandria we have one of the largest railroad yards in the world, the Potomac yards.

We have thousands of railroad employees there, and also retired railroad employees. I know them quite well. They are my friends and neighbors and I can assure you, Mr. Chairman, that they are not fat cats by any means. They have a serious problem making ends meet, particularly those on retirement and particularly due to the fact that this is a high cost-of-living area.

We are all familiar with the evils of inflation. We know it is troublesome for everyone, a problem for our Government itself, but I submit, Mr. Chairman, that no group of our citizens are as seriously affected by inflation as our retired people, our senior citizens.

Certainly, the younger people have the power to negotiate and have collective bargaining to have increases in salaries to meet increased living costs. Many of them have the privilege and opportunity of changing jobs when the employers do not recognize the increase in the cost of living, but the people who are having to live on annuities, retired people, must depend upon the good will and the concern of the former employers or the Government if the Government is responsible for their annuity.

The Congress has met its obligation in that regard in the fields for which they are responsible. We have approved increases in social security, military retirement and here last year we approved an increase of 10 percent for all retired civil service workers.

I submit, Mr. Chairman, that the retired railroad employees are somewhat like one wagging the cow's tail. They are the only ones left out of this round of retirement increases, so I feel that we must meet our obligations there and take care of this group of employees.

I recognize that there is a problem in finding the funds for this. I know that we are all concerned about the actuarial soundness of this railroad retirement system. I understand, however, that this legislation will put the retirement system on an actuarial sound basis, which it is not at this time.

The CHAIRMAN. If you would permit an interruption, I would say that if we were to adopt anything like all the proposals that have been offered, we certainly would not have anything like actuarial soundness.