We will discuss this within the committee, taking into account the testimony offered today.

The record will remain open for any additional views or ideas from anybody in this room until 1 week from today because of the Fourth of July intervening. If these ideas can be passed and management and labor get together and come up with a better idea, we can then proceed to adopt it.

But it would seem to me that to link railroad retirement to social security as we would be doing, and bringing the spouses in under it are both in order. By this, I do not necessarily mean that a better system that can be evolved from labor and management would not be accepted.

I would be interested in any ideas Mr. Finney has as to how we could do what we are proposing now.

Mr. FINNEY. I will be glad to, Senator.

Senator PELL. If there is nothing further, this concludes the hearings on these bills.

At this point I will insert in the record additional statements and communications received.

STATEMENT OF HON. VANCE HARTKE, A U.S. SENATOR FROM THE STATE OF INDIANA

Mr. Chairman and members of the committee, the bill before you is one which will correct an obvious inequity in the present law. I am in support of its passage and urge upon this committee the desirability of recommending H.R. 3157 to the Senate for its favorable

action.

I received a letter from a woman who is a victim of the inequities of the present law, a law under which it is not only possible for an individual to pay into the social security old-age and survivors insurance system for years only to be denied its benefits, but which even makes such an injustice mandatory.

You are of course familiar with the situation. Under present law, the wife of a worker under the Railroad Retirement Act of 1937 upon attaining age 65 is entitled to a spouse's benefit equal to onehalf of the retired husband's benefit.

But the law also forbids her to receive whatever portion of that spouse's benefit equals benefits she may receive under social security— benefits to which she is entitled otherwise by virtue of her own payments during her own working life in any employment subject to social security.

In other words, if her own social security credits have entitled her to old-age benefits of $40 per month and if her spouse's benefits under railroad retirement entitle her to $60 per month, the latter is reduced to $20 so that she in effect receives no benefit whatsoever from her social security premiums over the years. Yet her husband's entitlement to her spouse's benefits has also been earned without regard to her additional sources of retirement income.

This, I am convinced, is injustice. It is payment to the retirement fund of money for which there is no retirement benefit allowed. The bill for correction of this unjust state of affairs, which in effect deprives a woman of the retirement payments she has personally earned

and paid for, deserves passage, and I urge your recommendation to that effect in the Senate.

I also think, Mr. Chairman, that your amendment to H.R. 3157 which would peg the taxable wage base of railway workers at the same level as that of social security, is a prudent and necessary proposal. We must preserve the actuarial soundness of the railroad retirement fund, to insure that retirees will not be in any danger of losing their hard-earned benefits. I am confident that the committee will consider your amendment very seriously, and I am hopeful that my remarks will aid you in this effort.

STATEMENT OF HON. WAYNE MORSE, A U.S. SENATOR FROM THE STATE OF OREGON

The bill before us provides us with the opportunity to correct one of the anomalies in the Railroad Retirement Act which has plagued us for a long period of time. For years efforts have been made to rationalize the discriminatory treatment given to the annuity which the act provides for the wife of the pensioned railroad employee. Unlike any of the other annuitants and beneficiaries under the act, the wife alone is subject to restrictions which, in effect, deprive her of benefits which she may have earned in her own right as an employee under the Social Security Act. Only in her case does the law direct a reduction in benefit on account of any sums which may be due to her as an earned social security pension. If, during her earlier years, she worked in order to contribute to the family breadwinning, the social security pension paid to her in her senior years, small as it may be, is deducted from her spouse's annuity under the Railroad Retirement Act. Her sister who may have refused to work receives the full spouse's annuity without deduction of any kind.

Of what use, then, is an earned social security pension to the wife of a retired railroad employee? Attempts to explain to her why she may not receive both her social security check and her spouse's annuity; why one must be absorbed by the other have never been successful. She simply cannot understand why she should be denied in her 65th year, her full share of the retirement benefits which she herself had earned.

Most of us have had experience with this problem. These women, their husbands and their families write to us constantly in an effort to find out why they are exposed to this treatment and why nothing has ever been done to correct it. As the former chairman of this subcommittee, I can speak with firsthand knowledge of this continuing complaint since a large part of these unending inquiries inevitably are called to the attention of this subcommittee. Frankly, I have never been satisfied with the statutory provisions in this respect, and in my judgment, the committee has a real opportunity to provide long overdue relief for these people since the bill before it has already cleared one of the Houses of the Congress.

The problem which we face in our approach to the bill is one which has always presented itself as the real obstacle to this or to any proposal to improve or adjust the railroad retirement system. I refer, of course, to the ever-present actuarial deficit. To my knowledge, the railroad retirement system has always had an actuarial deficit of one kind or another, at least during the period of my service on this

subcommittee.

The valuation of the system is, of course, based upon actuarial assumptions, long-range in point of view. Since they are long-range, only the passage of time can tell us to what extent these assumptions may be in error.

The crucial element in developing the actuarial basis for the valuation is the future level of railroad employment. Thus, we are told in the current actuarial valuation that reasonable variations in these payroll assumptions would reduce the actuarial deficiency to a 0.19 percent of the taxable payroll on the long side or to 0.78 percent on the short side. The actuarial deficit of 0.41 percent of taxable payroll which they adopted is based on a payroll assumption of $4.3 billion per year, representing a 10-percent drop from the payroll assumption in the eighth valuation.

We are also advised that an actuarial deficit of 0.5 percent of taxable payroll or less is well within the limits of actuarial tolerance. Thus, the fact that the actuaries have agreed upon a set of assumptions, particularly payroll assumptions, which would result in a deficit of 0.41 percent is no cause for alarm. According to the ninth actuarial valuation, the system is eminently sound as of this time.

I do not quarrel with any of the actuarial procedures employed in this valuation. Far from it, I think that the system is well administered and well run and that its actuaries are among the most eminent in the profession. I cite the above only to pinpoint the kind of problem with which we are dealing with in attempting to weight the equities inherent in this bill against the cost of the reform which the bill seeks to make.

This cost, we are told, will be $13 million on a level basis or, in other words, will amount to 0.30 percent of the taxable payroll. Since the bill does not provide for its own funding, this cost must necessarily be added to the existing actuarial deficit and will increase it from its existing level of 0.41 percent of taxable payroll to 0.71 percent. This is enough to cause any of us to hesitate. I think it is fair to say that this is the reason why the inequity of the restriction in the spouse's annuity has been permitted to continue.

However, we should point up the fact that the situation with which we are confronted is due primarily to the structural changes in railroad employment caused by the technological advances of the past decade. The impact of these changes upon the level of employment has been felt even more keenly in this industry than in most. This is what the work rules dispute of the first half of this decade is all about. Indeed, this is what most of the disputes in railroading are all about.

We have before us another aspect of this problem, no matter how small it may appear to be in the light of these other great employment issues which the industry knows only too well. It has been said time and again that the impact of technological advance should not fall on the employee alone. The costs of automation and technological advance cannot be imposed upon those who are dislocated by the changes

It is in the light of factors such as these that I must agree with the judgment of the House of Representatives that, on balance, the equities

of the bill must overweigh the small added cost to the system. I think we have reached that point and that we should no longer defer taking the necessary action to remove these discriminatory restrictions upon the wives of retired railroad employees. We must remember that, by and large, the railroad system comprises the entire pension system for the railroad employees and that the pensions are small enough.

STATEMENT BY HON. STROM THURMOND, A U.S. SENATOR FROM THE STATE OF SOUTH CAROLINA

Mr. Chairman, I appreciate the opportunity to express my views in connection with H.R. 3157 which is now under consideration by this subcommittee.

I strongly support the purpose of this bill, which is to permit the spouse of a railroad employee to receive her full spouse's annuity under the Railroad Retirement Act concurrently with the receipt of social security benefits or railroad retirement benefits earned in her own right with no reduction in her spouse's annuity. Under existing law, social security benefits received by the spouse in her own right are deducted from her railroad retirement spouse's benefits. In short, this bill seeks merely to eliminate an inequity in the Railroad Retirement Act and allow a beneficiary under that Act to receive the full measure of other benefits to which she is entitled in her own right. The justice in this proposal is self-evident.

On January 15 of this year, I introduced similar legislation, S. 545. There is one significant difference in the bill which I had the pleasure of introducing and in the House-passed measure now pending before this subcommittee. The difference is that S. 545 makes a modest adjustment in the tax rates of the Railroad Retirement Act so as to compensate for the increased annuities which will flow as a result of the enactment of this bill, and H.R. 3157 does not change the rates presently in force. I want to point out briefly one caveat which I know this subcommittee will carefully consider in connection with the pending measure. As you know, the railroad retirement fund is presently experiencing a deficit of some $19%1⁄2 million a year. The enactment of the pending measure without any adjustment in the tax rates would add approximately $14 million to this yearly deficit. The total yearly deficit would then be approximately $33%1⁄2 million or 0.76 percent of taxable payroll.

Mr. Chairman, I know that we all recognize the necessity for keeping the railroad retirement fund on a sound acturial basis. This is imperative. It was pointed out during the debate on this measure on the floor of the House of Representatives that there is some difference of opinion among the actuaries as to what tolerance can be accepted and a sound fund still be maintained. It is generally conceded that if the tolerance goes over one-half of 1 percent of the taxable payroll, a danger point is reached. It is for this reason that I point out that the House-passed measure would create a yearly acturial deficit of some 0.76 percent of taxable payroll a figure which borders closely on the unacceptable. I know that this com

mittee will carefully consider this problem in its further study of the pending measure.

Once again, I thank the committee for the opportunity of presenting my views on this worthwhile proposal.

STATEMENT OF HON. JOSEPH M. MONTOYA, A U.S. SENATOR FROM THE STATE OF NEW MEXICO

Mr. Chairman and members of the subcommittee, thank you for the opportunity to testify in behalf of legislation to remove discriminatory restrictions upon the wives of retired railroad employees. H.R. 3157 amends section 2(e) of the Railroad Retirement Act of 1937 to permit the spouse of a retired railroad employee to receive a spouse's annuity under that section concurrently with the receipt of social security benefits earned in her own right without reduction in the spouse's annuity. Under existing law, social security benefits received by the spouse in her own right are deducted from her railroad retirement spouse's benefits.

The bill before us provides us with the opportunity to correct one of the anomalies in the Railroad Retirement Act which has plagued us for a long period of time. For years efforts have been made to rationalize the discriminatory treatment given to the annuity which the act provides for the wife of the pensioned railroad employee. Unlike any of the other annuitants and beneficiaries under the act, the wife alone is subject to restrictions which, in effect, deprive her of benefits which she may have earned in her own right as an employee under the Social Security Act. Only in her case does the law direct a reduction in benefits on account of any sums which may be due to her as an earned social security pension. If, during her earlier years, she worked in order to help support her family, the social security pension paid to her in her senior years, small as it may be, is deducted from her spouse's annuity under the Railroad Retirement Act. Another woman who has not worked, receives the full spouse's annuity without deduction of any kind.

Under the present law, a woman who has never worked may receive a spouse's benefit under both railroad retirement and social security if her husband is entitled to dual benefits. However, her neighbor who earned a social security benefit in a lifetime of work and whose husband is covered by railroad retirement alone may not receive the full spouse's benefit under the Railroad Retirement Act because of the requirement that in her case her spouse's benefit must be reduced by her earned social security benefit.

Many similar bills have been introduced in recent years which did not become law because, although Congress seemed to be in sympathy with the objective of the bills, the railroad retirement system has always had an actuarial deficit of one kind or another which was said to alone be enough to make such legislation impractical. This problem of the ever-present actuarial deficit is still with us. Nevertheless, the alleged deficit is only a forecast based upon variable factors and is slight in any event. It has become my opinion that the need to correct the obvious injustice of the present system outweighs the cost of the reform which the bill seeks to make.

It is my understanding that approximately 41,000 spouses will benefit from this bill; 40,000 of whom are social security beneficiaries