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SEC. 603. The provisions of title II of this Act and

2 the amendments made by title III and title IV of this Act

3 shall become effective on January 1, 1975.

4

SEC. 604. The amendments made by the provisions of

5 title V of this Act shall become effective on January 1, 1975, 6 and shall apply only with respect to compensation paid for 7 services rendered on or after that date.

8

SEC. 605. The amendment made by section 601 of this 9 Act shall be effective on the enactment date of this Act and 10 shall apply with respect to any increase in annuities under 11 the Railroad Retirement Act of 1937 which becomes effec12 tive after June 30, 1974.

Passed the House of Representatives September 12, 1974.

Attest:

W. PAT JENNINGS,

Clerk.

93d Congress, 2d Session

House Document No. 93-371

VETOING H.R. 15301, AN ACT TO AMEND THE
RAILROAD RETIREMENT ACT OF 1937 TO
REVISE THE RETIREMENT SYSTEM FOR EM-
PLOYEES OF EMPLOYERS COVERED THERE-
UNDER, AND FOR OTHER PURPOSES

MESSAGE

FROM

THE PRESIDENT OF THE UNITED STATES

VETOING H.R. 15301, AN ACT TO AMEND THE RAILROAD
RETIREMENT ACT OF 1937 TO REVISE THE RETIREMENT
SYSTEM FOR EMPLOYEES OF EMPLOYERS COVERED
THEREUNDER, AND FOR OTHER PURPOSES

38-011

OCTOBER 15, 1974.—Message and accompanying act
ordered to be printed as a House document

U.S. GOVERNMENT PRINTINg office

WASHINGTON: 1974

To the House of Representatives:

I am returning today without my approval, H.R. 15301, a bill which would finance a long-standing deficit in the Railroad Retirement System at the expense of the general taxpayer.

The Railroad Retirement System, under current law, is headed toward bankruptcy by the mid-1980s. This condition arises largely because benefits have been increased 68 percent since 1970 without requiring the beneficiaries of the system, railroad employees and employers, to pay the added costs.

This bill proposes to solve the financial problems of the Railroad Retirement System by placing a seven billion dollar burden on the general taxpayer, requiring him to contribute $285 million to the Railroad Retirement Trust Fund each year for the next twenty-five years. In return for his seven billion dollar contribution, the general taxpayer would earn no entitlement to benefits and would receive no return on his investment.

At a time when the taxpayer is already carrying the double burden of taxes and inflation, legislation such as this is most inappropriate.

Recognizing the financial straits of the Railroad Retirement System, the Executive Branch in 1970 proposed and the Congress authorized an independent study of the System. After eighteen months of careful work, the study group recommended that the benefits be financed "*** on an assured, fully self-supporting basis by contributions from the railroad community through the crisis period of the next 20 to 30 years and then beyond."

Following receipt of the report, the Congress directed representatives of railroad employees and management to submit their combined recommendations for restoring financial soundness to the System, taking into account the report and the specific recommendations of the Commission.

The bill which is now before me is true neither to the recommendation of the Commission nor to the charge placed on the industry by the Congress.

Forcing the general taxpayer to carry an unfair burden is not the only defect in this bill. It would also establish a special investment procedure for the Railroad Retirement Trust Fund.

Under the bill, the interest paid by the Treasury on Railroad Retirement investments and Federal securities would rise when interest rates increase but would not fall when they decrease. This "heads I win; tails you lose" arrangement, with the taxpayer being the loser, has been suggested before, but never adopted. It should not be a part of the solution to the Railroad Retirement System's financial problem. Furthermore, the provisions of the benefit formula are so complex that they would be extremely difficult to administer and virtually impossible to explain to the persons who are supposed to benefit from it.

(1)

H.D. 374

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