RAILROAD RETIREMENT AND RAILROAD UNEMPLOY

MENT INSURANCE LEGISLATION

TUESDAY, FEBRUARY 3, 1959

HOUSE OF REPRESENTATIVES,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D.C.

The committee met, pursuant to notice, at 10 a.m. in room 1334, New House Office Building, Washington, D.C., Hon. Oren Harris (chairman) presiding.

The CHAIRMAN. The committee will come to order.

The House Committee on Interstate and Foreign Commerce is meeting this morning to begin hearings on bills referred to the committee providing for amendments to the Railroad Retirement Act, Railroad Retirement Tax Act, and Railroad Unemployment Insurance Act.

I think it is appropriate for this committee to begin its first hearing of the 86th Congress with this legislation, because it is really unfinished business from the last Congress, and in fact the Congress preceding the last Congress.

The members who were here will recall that during the closing days of the 2d session of the 84th Congress, legislation was adopted granting generally a 10-percent increase in retirement and survivor benefits, with some exceptions. That was contained in Public Law 1013 of the 84th Congress.

No provision was made for the financing of the cost of these benefits, which amounted to $83 million a year on a net level cost basis. There already was an existing deficiency of $86,390,000 a year on a level cost basis. Hence, enactment of this law increased the deficiency to $169,390,000 a year, or 3.2 percent of taxable payroll.

The Congress was told that enactment of this legislation was an emergency measure and was necessary to help thousands of retired railroad employees, their wives, and the widows of such employees to meet the day-to-day living expenses. The Congress was assured by myself and other members of the Committee and by others who were interested in this program that legislation would be considered promptly during the 85th Congress to finance the cost of these benefits. Representatives of railroad labor organizations gave firm assurances that they would propose, at the opening of the 85th Congress, a legislative program to assure adequate financing. The President, in a statement accompanying the signing of Public Law 1013 at that time, stated in part:

It is imperative that satisfactory legislation for this purpose—to assure ade quate financing of the railroad retirement system-be proposed and enacted. In the 85th Congress, this committee held hearings on railroad retirement legislation early in the first session. The principal interest

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during these hearings centered around H.R. 4353 and other identical and related bills. These bills were sponsored by all the standard railway labor organizations and were comprehensive measures designed to grant additional benefits and to eliminate the deficit in the railroad retirement account. At these hearings the railroads agreed to a tax increase to make up the cost of the increased benefits provided by the previous law referred to, Public Law 1013 in the 84th Congress.

The committee was prepared to take action on the pending bills but was requested to defer such action, pending the outcome of a separate bill, pending before the Committee on Ways and Means, which provided for the exclusion of employee retirement taxes from gross income for purposes of the employee's income tax and from withholding at the source.

Therefore, no bill was reported during the 1st session of the 85th Congress.

Recognizing the condition of the railroad retirement account, and the commitments made 2 years previously, the committee reported a bill late in the 2d session of the 85th Congress which provided for an increase in benefits and an increase in taxes sufficient to eliminate the actuarial deficit. A rule was not granted on this bill and so it could not be brought up for consideration in the House under the regular procedure.

The members who were here will also recall that on the last day of the 85th Congress a bill providing for amendments to the Railroad Retirement Act, Railroad Retirement Tax Act, and Railroad Unemployment Insurance Act was referred to the House by the Senate which had passed it only the previous day. These amendments were added to a bill providing for amendments to the Longshoremen's and Harbor Workers' Compensation Act, which I believe was H.R. 12728 of the 85th Congress. That was a bill not within the jurisdiction of this committee, however, and the parliamentary procedure was rather unusual.

As a matter of fact, the only way this bill could have been brought up in the House was by unanimous consent, and, as the record shows, there was objection to the unanimous-consent request. And so the legislation died with the adjournment of the 85th Congress.

This committee considered a great deal of legislation affecting the transportation industry in the 84th and the 85th Congresses. I think there were some very outstanding accomplishments in the field of transportation which had for its purpose the strengthening of the great transportation system of this country. This committee now, as it always has been, is open and ready for business and the doors are always open to any of these matters affecting our transportation system that would help to strengthen it and provide for better service to the American people. Today the committee is giving priority to the railroad retirement and unemployment insurance legislation making it the first order of business in this Congress.

Already there are over 40 bills pending before the committee providing for amendments to the retirement and unemployment insurance program. These bills are:

H.R. 217, H.R. 218, H.R. 219, and H.R. 220, by Mr. Poff, of Virginia; H.R. 223 and H.R. 225, by Mr. Powell, of New York; H.R. 735, by Mrs. Church, of Illinois; H.R. 765 and H.R. 3166, by our

colleague on this committee, Mr. Friedel, of Maryland; H.R. 941, by Mrs. St. George, of New York; H.R. 970, H.R. 971, H.R. 972, H.R. 1370, H.R. 1373, and H.R. 1374, by Mr. Van Zandt, of Pennsylvania; H.R. 977, by our colleague on this committee, Mr. Williams, of Mississippi; H.R. 1012, by myself; H.R. 1013, by our colleague on this committee and distinguished ranking minority member, Mr. Bennett of Michigan; H.R. 1055, by our colleague on this committee, Mr. Roberts, of Alabama; H.R. 1273 and H.R. 3478, by Mr. Lane, of Massachusetts; H.R. 1384 and H.R. 1385, by Mr. Winstead, of Mississippi; H.R. 2214, and H.R. 3052, by Mr. O'Neill, of Massachusetts; H.R. 2233, by Mr. Siler, of Kentucky; H.R. 2500, by Mr. Rains, of Alabama; H.R. 2541, by Mr. Heckler, of West Virginia; H.R. 2556, by Mr. Porter, of Oregon; H.R. 2814, by Mr. Zelenko, of New York; H.R. 2916, by Mr. George P. Miller, of California; H.R. 2925, by our colleague on this committee, Mr. Rhodes of Pennsylvania; H.R. 3027, by a former colleague on this committee, Mr. Loser, of Tennessee; H.R. 3219, by our colleague on this committee, Mr. Staggers, of West Virginia; H.R. 3289, by Mr. Dorn of South Carolina; H.R. 3440, by Mr. Bailey, of West Virginia; H.R. 3469, by Mr. Foley, of Maryland; H.R. 3483, by Mr. McDowell, of Delaware; H.R. 3511, by Mr. Van Pelt, of Wisconsin, H.R. 3705, by Mr. Bennett of Florida; H.R. 3736, by our colleague on this committee, Mr. Mack of Illinois; H.R. 3761, by Mrs. Simpson, of Illinois; H.R. 3857, by Mr. Flynn, of Wisconsin; H.R. 3891, by Mr. Broyhill, of Virginia; and H.R. 3928, by Mr. Tollefson, of Washington.

Approximately half of these bills are identical or substantially similar to H.R. 1012. I should, therefore, like to summarize the principal provisions of H.R. 1012. This bill is substantially the same as the Senate amendments to the longshoremen's bill, to which I have previously referred.

The principal provisions of H.R. 1012 are:

I. AMENDMENTS TO RAILROAD RETIREMENT ACT

1. Retirement and survivor annuities and pensions would be increased by 10 percent, accruing for months after December 1958. 2. Spouses, and women employees with less than 30 years of service, may elect to retire at age 62 at reduced annuity. The reduction would equal one one-hundred-and-eightieth for each month the woman is under age 65.

3. Disability annuitants may earn up to $1,200 a year (instead of $100 a month under present law) without forfeiting their annuity. 4. Maximum creditable compensation would be increased from $350 to $400 a month beginning January 1, 1959.

II. AMENDMENTS TO RAILROAD RETIREMENT TAX ACT

Effective on January 1, 1959, the maximum taxable base would be increased from $350 to $400 a month per employee. Beginning with January 1, 1959, and continuing through December 31, 1961, the employer and employee tax rate would be increased from the present 614 percent to 634 percent each. Beginning with January 1, 1962, the employer and employee tax rate would be increased again to 714 percent each. In addition, the employer and employee tax rate is sched

uled to increase again after 1964 by a number of percentage points equal at any given time to the number of percentage points by which the rate of tax under the Federal Insurance Contributions Act (for social security purposes) at that time exceeds the rate provided by paragraph (2) of section 3101 of the Federal Insurance Contributions Act as amended by the Social Security Amendments of 1956 (such rate being 234 percent).

The increase in the tax base and contribution rates proposed by the amendments to the Railroad Retirement Tax Act, I am happy to state, will produce sufficient revenue for the retirement system to pay for the 10-percent increase in benefits proposed by this bill, and to virtually remove the actuarial deficiency which now exists, thereby placing the railroad retirement system in a sound financial condition.

III. AMENDMENTS TO RAILROAD UNEMPLOYMENT INSURANCE ACT

1. Unemployment insurance benefits would be paid for days of unemployment in excess of 4 days during any registration period. Under present law, benefits are not payable during the first registration period within a benefit year except for days of unemployment in excess of 7 days.

2. A new schedule of increased daily benefit rates would apply, ranging from a minimum daily benefit rate of $4.50 for annual compensation of $500 to $699.99 to a maximum daily benefit rate of $10.20 for annual compensation of $4,000 or more, effective in the general benefit year beginning July 1, 1958. The minimum daily rate payable would be not less than 60 percent of the daily rate of compensation (with a maximum of $10.20 per day) for the employee's last employment in which he was engaged for an employer during the base (calendar) year.

3. Extended unemployment benefit periods beyond the 130 days allowed by present law would be provided as follows:

(a) An employee with less than 10 years of service who has after June 30, 1957, exhausted his rights to unemployment benefits under present law would receive additional unemployment benefits for days of unemployment not exceeding 65 days which occur in registration periods beginning on or after June 19, 1958, and before April 1,

1959.

(b) An employee with 10 but less than 15 years of service, upon exhaustion of his rights to unemployment benefits under present law in a given benefit year, would be entitled to an additional 65 days of unemployment benefits in such benefit year.

(c) An employee with 15 or more years of service, upon exhaustion of his rights to unemployment benefits under present law in a given benefit year, would be entitled to an additional 130 days of unemployment benefits in such benefit year.

4. Sundays and holidays could be compensable days of unemployment, just as any other day, whether or not such Sundays and holidays are preceded and succeeded by a day of unemployment.

5. The maximum taxable base would be increased from $350 to $400 a month per employee effective January 1, 1959, and the tax rate would be changed from a minimum of 12 percent to a maximum of 312 percent depending upon the balance in the railroad unemployment insurance account.