[Congressional Record Volume 146, Number 103 (Thursday, September 7, 2000)]
[House]
[Pages H7335-H7346]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       RAILROAD RETIREMENT AND SURVIVORS' IMPROVEMENT ACT OF 2000

  Mr. SHUSTER. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 4844) to modernize the financing of the railroad retirement 
system and to provide enhanced benefits to employees and beneficiaries, 
as amended.
  The Clerk read as follows:

                               H.R. 4844

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Railroad 
     Retirement and Survivors' Improvement Act of 2000''.

[[Page H7336]]

       (b) Table of Contents.--

Sec. 1. Short title; table of contents.

         TITLE I--AMENDMENTS TO RAILROAD RETIREMENT ACT OF 1974

Sec. 101. Expansion of widow's and widower's benefits.
Sec. 102. Retirement age restoration.
Sec. 103. Vesting requirement.
Sec. 104. Repeal of railroad retirement maximum.
Sec. 105. Investment of railroad retirement assets.
Sec. 106. Elimination of supplemental annuity account.
Sec. 107. Transfer authority revisions.
Sec. 108. Annual ratio projections and certifications by the Railroad 
              Retirement Board.

       TITLE II--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

Sec. 201. Amendments to the Internal Revenue Code of 1986.
Sec. 202. Exemption from tax for Railroad Retirement Investment Trust.
Sec. 203. Repeal of supplemental annuity tax.
Sec. 204. Employer, employee representative, and employee tier 2 tax 
              rate adjustments.

         TITLE I--AMENDMENTS TO RAILROAD RETIREMENT ACT OF 1974

     SEC. 101. EXPANSION OF WIDOW'S AND WIDOWER'S BENEFITS.

       (a) In General.--Section 4(g) of the Railroad Retirement 
     Act of 1974 is amended by adding at the end the following new 
     subdivision:
       ``(10)(i) If for any month the unreduced annuity provided 
     under this section for a widow or widower is less than the 
     widow's or widower's initial minimum amount computed pursuant 
     to paragraph (ii) of this subdivision, the unreduced annuity 
     shall be increased to that initial minimum amount. For the 
     purposes of this subdivision, the unreduced annuity is the 
     annuity without regard to any deduction on account of work, 
     without regard to any reduction for entitlement to an annuity 
     under section 2(a)(1) of this Act, without regard to any 
     reduction for entitlement to a benefit under title II of the 
     Social Security Act, and without regard to any reduction for 
     entitlement to a public service pension pursuant to sections 
     202(e)(7), 202(f)(2), or section 202(g)(4) of the Social 
     Security Act.
       ``(ii) For the purposes of this subdivision, the widow or 
     widower's initial minimum amount is the amount of the 
     unreduced annuity computed at the time an annuity is awarded 
     to that widow or widower, except that--
       ``(A) in subsection (g)(1)(i) `100 per centum' shall be 
     substituted for `50 per centum'; and
       ``(B) in subsection (g)(2)(ii) `130 per centum' shall be 
     substituted for `80 per centum' both places it appears.
       ``(iii) If a widow or widower who was previously entitled 
     to a widow's or widower's annuity under section 2(d)(1)(ii) 
     of this Act becomes entitled to a widow's or widow's annuity 
     under section 2(d)(1)(i) of this Act, a new initial minimum 
     amount shall be computed at the time of award of the widow's 
     or widower's annuity under section 2(d)(1)(i) of this Act.''.
       (b) Effective Date.--
       (1) Generally.--The amendment made by this section shall 
     take effect January 1, 2001 and shall apply to annuity 
     amounts accruing for months after December 2000 in the case 
     of annuities awarded on or after that date and in the case of 
     annuities awarded before that date if the annuity amount 
     under section 4(g) of the Railroad Retirement Act was 
     computed under section 4(g), as amended by Public Law 97-35.
       (2) Special rule for annuities awarded before january 1, 
     2001.--In applying the amendments made by this section to 
     annuities awarded before January 1, 2001, the calculation of 
     the initial minimum amount under new section 4(g)(10)(ii) of 
     the Act shall be made as of the date of award of the widow's 
     or widower's annuity.

     SEC. 102. RETIREMENT AGE RESTORATION.

       (a) Employee Annuities.--Section 3(a)(2) of the Railroad 
     Retirement Act of 1974 is amended by inserting after ``(2)'' 
     the following: ``For purposes of this subsection, individuals 
     entitled to an annuity under section 2(a)(1)(ii) of this Act 
     shall, except for the purposes of recomputations in 
     accordance with section 215(f) of the Social Security Act, be 
     deemed to have attained retirement age (as defined by section 
     216(l) of the Social Security Act).''.
       (b) Spouse and Survivor Annuities.--Section 4(a)(2) of the 
     Railroad Retirement Act of 1974 is amended by striking ``if 
     an'' and all that follows through ``section 2(c)(1) of this 
     Act'' and inserting ``a spouse entitled to an annuity under 
     section 2(c)(1)(ii)(B) of this Act''.
       (c) Conforming Repeals.--Sections 3(a)(3), 4(a)(3), and 
     4(a)(4) of the Railroad Retirement Act are repealed.
       (d) Effective Dates.--
       (1) Generally.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to annuities that 
     begin to accrue on or after January 1, 2001.
       (2) Exception.--The amount of the annuity provided for a 
     spouse under section 4(a) shall be computed under section 
     4(a)(3), as in effect before the date of the enactment of 
     this section, if the annuity amount provided under section 
     3(a) for the individual on whose employment record the spouse 
     annuity is based was computed under section 3(a)(3), as in 
     effect before the date of the enactment of this section.

     SEC. 103. VESTING REQUIREMENT.

       (a) Certain Annuities for Individuals.--Section 2(a) of the 
     Railroad Retirement Act of 1974 is amended--
       (1) by inserting in subdivision (1) ``or, for purposes of 
     paragraphs (i), (iii), and (v), five years of service, all of 
     which accrues after December 31, 1995,'' after ``ten years of 
     service'', and
       (2) by adding at the end the following:
       ``(4) An individual who is entitled to an annuity under 
     paragraph (v) of subdivision (1), but who does not have at 
     least ten years of service, shall, prior to the month in 
     which the individual attains age 62, be entitled only to an 
     annuity amount computed under section 3(a) of this Act 
     (without regard to section 3(a)(2) of this Act) or section 
     3(f)(3) of this Act. Upon attainment of age 62, such an 
     individual may also be entitled to an annuity amount computed 
     under section 3(b), but such annuity amount shall be reduced 
     for early retirement in the same manner as if the individual 
     were entitled to an annuity under section 2(a)(1)(iii).''.
       (b) Computation Rule for Individuals' Annuities.--Section 
     3(a) of the Railroad Retirement Act of 1974, as amended by 
     section 102 of this Act, is further amended by adding at the 
     end the following new subdivision:
       ``(3) If an individual entitled to an annuity under section 
     2(a)(1)(i) or (iii) of this Act on the basis of less than ten 
     years of service is entitled to a benefit under section 
     202(a), section 202(b), or section 202(c) of the Social 
     Security Act which began to accrue before the annuity under 
     section 2(a)(1)(i) or (iii) of this Act, the annuity amount 
     provided such individual under this subsection, shall be 
     computed as though the annuity under this Act began to accrue 
     on the later of (A) the date on which the benefit under 
     section 202(a), section 202(b), or section 202(c) of the 
     Social Security Act began or (B) the date on which the 
     individual first met the conditions for entitlement to an age 
     reduced annuity under this Act other than the conditions set 
     forth in sections 2(e)(1) and 2(e)(2) of this Act and the 
     requirement that an application be filed.''.
       (c) Survivors' Annuities.--Section 2(d)(1) of the Railroad 
     Retirement Act of 1974 is amended by inserting ``or five 
     years of service, all of which accrues after December 31, 
     1995,'' after ``ten years of service''.
       (d) Limitation on Annuity Amounts.--Section 2 of the 
     Railroad Retirement Act of 1974 is amended by adding at the 
     end the following:
       ``(i) An individual entitled to an annuity under this 
     section who has completed five years of service, all of which 
     accrues after 1995, but who has not completed ten years of 
     service, and the spouse, divorced spouse, and survivors of 
     such individual, shall not be entitled to an annuity amount 
     provided under section 3(a), section 4(a), or section 4(f) of 
     this Act unless the individual, or the individual's spouse, 
     divorced spouse, or survivors, would be entitled to a benefit 
     under the Social Security Act on the basis of the 
     individual's employment record under both the Railroad 
     Retirement Act and the Social Security Act.''.
       (e) Computation Rule for Spouses' Annuities.--Section 4(a) 
     of the Railroad Retirement Act of 1974, as amended by section 
     102 of this Act, is further amended by adding at the end the 
     following new subdivision:
       ``(3) If a spouse entitled to an annuity under section 
     2(c)(1)(ii)(A), section 2(c)(1)(ii)(C), or section 2(c)(2) of 
     this Act or a divorced spouse entitled to an annuity under 
     section 2(c)(4) of this Act on the basis of the employment 
     record of an employee who will have completed less than 10 
     years of service is entitled to a benefit under section 
     202(a), section 202(b), or section 202(c) of the Social 
     Security Act which began to accrue before the annuity under 
     section 2(c)(1)(ii)(A), section 2(c)(1)(ii)(C), section 
     2(c)(2), or section 2(c)(4) of this Act, the annuity amount 
     provided under this subsection shall be computed as though 
     the annuity under this Act began to accrue on the later of 
     (A) the date on which the benefit under section 202(a), 
     section 202(b), or section 202(c) of the Social Security Act 
     began or (B) the first date on which the annuitant met the 
     conditions for entitlement to an age reduced annuity under 
     this Act other than the conditions set forth in sections 
     2(e)(1) and 2(e)(2) of this Act and the requirement that an 
     application be filed.''.
       (f)  Application Deeming Provision.--Section 5(b) of the 
     Railroad Retirement Act of 1974 is amended by striking the 
     second sentence and inserting the following: ``An application 
     filed with the Board for an employee annuity, spouse annuity, 
     or divorced spouse annuity on the basis of the employment 
     record of an employee who will have completed less than ten 
     years of service shall be deemed to be an application for any 
     benefit to which such applicant may be entitled under this 
     Act or section 202(a), section 202(b), or section 202(c) of 
     the Social Security Act. An application filed with the Board 
     for an annuity on the basis of the employment record of an 
     employee who will have completed ten years of service shall, 
     unless the applicant specified otherwise, be deemed to be an 
     application for any benefit to which such applicant may be 
     entitled under this Act or title II of the Social Security 
     Act.''.
       (g) Crediting Service Under the Social Security Act.--
     Section 18(2) of the Railroad Retirement Act of 1974 is 
     amended--
       (1) by inserting ``or less than five years of service, all 
     of which accrues after December

[[Page H7337]]

     31, 1995,'' after ``ten years of service'' every place it 
     occurs; and
       (2) by inserting ``or five or more years of service, all of 
     which accrues after December 31, 1995,'' after ``ten or more 
     years of service''.
       (h) Automatic Benefit Eligibility Adjustments.--Section 19 
     of Railroad Retirement Act of 1974 is amended--
       (1) by inserting ``or five or more years of service, all of 
     which accrues after December 31, 1995,'' after ``ten years of 
     service'' in subsection (c); and
       (2) by inserting ``or five or more years of service, all of 
     which accrues after December 31, 1995,'' after ``ten years of 
     service'' in subsection (d)(2).
       (i) Conforming Amendments.--
       (1) Section 6(e)(1) of the Railroad Retirement Act of 1974 
     is amended by inserting ``or five or more years of service, 
     all of which accrues after December 31, 1995,'' after ``ten 
     years of service''.
       (2) Section 7(b)(2) of the Railroad Retirement Act of 1974 
     is amended by inserting ``or five or more years of service, 
     all of which accrues after December 31, 1995,'' after ``ten 
     years of service''.
       (3) Section 205(i) of the Social Security Act is amended by 
     inserting ``or five or more years of service, all of which 
     accrues after December 31, 1995,'' after ``ten years of 
     service''.
       (j) Effective Date.--The amendments made by this section 
     shall take effect January 1, 2001.

     SEC. 104. REPEAL OF RAILROAD RETIREMENT MAXIMUM.

       (a) Employee Annuities.--Section 3(f) of the Railroad 
     Retirement Act of 1974 is amended by striking paragraph (1).
       (b) Spouse and Survivor Annuities.--Section 4 of the 
     Railroad Retirement Act of 1974 is amended by striking 
     subsection (c).
       (c) Effective Date.--The amendments made by this section 
     shall be effective January 1, 2001, and shall apply to 
     annuity amounts accruing for months after December 2000.

     SEC. 105. INVESTMENT OF RAILROAD RETIREMENT ASSETS.

       (a) Establishment of Railroad Retirement Investment 
     Trust.--Section 15 of the Railroad Retirement Act of 1974 is 
     amended by inserting after subsection (i) the following:
       ``(j) Railroad Retirement Investment Trust.--
       ``(1) Establishment.--The Railroad Retirement Investment 
     Trust (hereinafter in this subsection referred to as the 
     `Trust') is hereby established. The Trust shall manage and 
     invest the assets of the Railroad Retirement Trust Fund 
     (hereinafter in this section referred to as the ``Fund'', 
     which is hereby established as a trust organized in the 
     District of Columbia and shall, to the extent not 
     inconsistent with this Act, be subject to the laws of the 
     District of Columbia applicable to such trusts.
       ``(2) Not a federal agency or instrumentality.--The Trust 
     is not a department, agency, or instrumentality of the 
     Government of the United States and shall not be subject to 
     title 31, United States Code.
       ``(3) Board of trustees.--
       ``(A) Generally.--The Trust shall have a Board of Trustees, 
     consisting of 7 members, each appointed by a unanimous vote 
     of the Railroad Retirement Board. The Railroad Retirement 
     Board may remove any member so appointed by unanimous vote. 
     Of the 7 members, 3 shall represent the interests of labor, 3 
     shall represent the interests of management, and 1 shall 
     represent the interests of the general public. The members of 
     the Board of Trustees shall not be considered officers or 
     employees of the Government of the United States.
       ``(B) Qualifications.--Members of the Board of Trustees 
     shall be appointed only from among persons who have 
     experience and expertise in the management of financial 
     investments and pension plans. No member of the Railroad 
     Retirement Board shall be eligible to be a member of the 
     Board of Trustees.
       ``(C) Terms.--Except as provided in this subparagraph, each 
     member shall be appointed for a 3-year term. The initial 
     members appointed under this paragraph shall be divided into 
     3 equal groups so nearly as may be, of which one group will 
     be appointed for a 1-year term, one for a 2-year term, and 
     one for a 3-year term. A vacancy in the Board of Trustees 
     shall not affect the powers of the Board of Trustees and 
     shall be filled in the same manner as the selection of the 
     member whose departure caused the vacancy. Upon the 
     expiration of a term of a member of the Board of Trustees, 
     that member shall continue to serve until a successor is 
     appointed.
       ``(4) Powers of the board of trustees.--The Board of 
     Trustees shall--
       ``(A) retain independent advisers to assist it in the 
     formulation and adoption of its investment guidelines;
       ``(B) retain independent investment managers to invest the 
     assets of the Fund in a manner consistent with such 
     investment guidelines;
       ``(C) invest assets in the Fund, pursuant to the policies 
     adopted in subparagraph (A);
       ``(D) pay administrative expenses of the Fund and the Trust 
     from the money in the Fund; and
       ``(E) transfer money to the disbursing agent to pay 
     benefits payable under this Act from money in the Fund and 
     administrative expenses related to those benefits.
       ``(5) Reporting requirements and fiduciary standards.--The 
     following reporting requirements and fiduciary standards 
     shall apply with respect to the Railroad Retirement Trust and 
     the Railroad Retirement Trust Fund (and the assets held in 
     such Trust Fund):
       ``(A) Duties of the board of trustees.--The Railroad 
     Retirement Trust and each member of the Board of Trustees 
     shall discharge their duties with respect to the assets of 
     the Fund solely in the interest of the Railroad Retirement 
     Board and through it, the participants and beneficiaries of 
     the programs funded under this Act--
       ``(i) for the exclusive purpose of--

       ``(I) providing benefits to participants and their 
     beneficiaries; and
       ``(II) defraying reasonable expenses of administering the 
     functions of the Trust;

       ``(ii) with the care, skill, prudence, and diligence under 
     the circumstances then prevailing that a prudent person 
     acting in a like capacity and familiar with such matters 
     would use in the conduct of an enterprise of a like character 
     and with like aims;
       ``(iii) by diversifying investments so as to minimize the 
     risk of large losses, unless under the circumstances it is 
     clearly prudent not to do so; and
       ``(iv) in accordance with Trust governing documents and 
     instruments insofar as such documents and instruments are 
     consistent with this Act.
       ``(B) Prohibitions with respect to members of the board of 
     trustees.--No member of the Board of Trustees shall--
       ``(i) deal with the assets of the Fund in the trustee's own 
     interest or for the trustee's own account;
       ``(ii) in an individual or in any other capacity act in any 
     transaction involving the assets of the Fund on behalf of a 
     party (or represent a party) whose interests are adverse to 
     the interests of the Trust, the Fund, the Railroad Retirement 
     Board, or the interests of participants or beneficiaries; or
       ``(iii) receive any consideration for the trustee's own 
     personal account from any party dealing with the assets of 
     the Fund.
       ``(C) Exculpatory provisions and insurance.--Any provision 
     in an agreement or instrument that purports to relieve a 
     trustee from responsibility or liability for any 
     responsibility, obligation or duty under this Act shall be 
     void: Provided, however, That nothing shall preclude--
       ``(i) the Trust from purchasing insurance for its trustees 
     or for itself to cover liability or losses occurring by 
     reason of the act or omission of a trustee, if such insurance 
     permits recourse by the insurer against the trustee in the 
     case of a breach of a fiduciary obligation by such trustee;
       ``(ii) a trustee from purchasing insurance to cover 
     liability under this section from and for his own account; or
       ``(iii) an employer or an employee organization from 
     purchasing insurance to cover potential liability of one or 
     more trustees with respect to their fiduciary 
     responsibilities, obligations, and duties under this section.
       ``(D) Bonding.--Every trustee and every person who handles 
     funds or other property of the Fund (hereafter in this 
     subsection referred to as `Trust official') shall be bonded. 
     Such bond shall provide protection to the Fund against 
     loss by reason of acts of fraud or dishonesty on the part 
     of any Trust official, directly or through the connivance 
     of others, and shall be in accordance with the following:
       ``(i) The amount of such bond shall be fixed at the 
     beginning of each fiscal year of the Trust by the Railroad 
     Retirement Board. Such amount shall not be less than 10 
     percent of the amount of the funds handled. In no case shall 
     such bond be less than $1,000 nor more than $500,000, except 
     that the Railroad Retirement Board, after consideration of 
     the record, may prescribe an amount in excess of $500,000, 
     subject to the 10 per centum limitation of the preceding 
     sentence.
       ``(ii) It shall be unlawful for any Trust official to 
     receive, handle, disburse, or otherwise exercise custody or 
     control of any of the funds or other property of the Fund 
     without being bonded as required by this subsection and it 
     shall be unlawful for any Trust official, or any other person 
     having authority to direct the performance of such functions, 
     to permit such functions, or any of them, to be performed by 
     any Trust official, with respect to whom the requirements 
     this subsection have not been met.
       ``(iii) It shall be unlawful for any person to procure any 
     bond required by this subsection from any surety or other 
     company or through any agent or broker in whose business 
     operations such person has any control or significant 
     financial interest, direct or indirect.
       ``(E) Audit and report.--
       ``(i) The Trust shall annually engage an independent 
     qualified public accountant to audit the financial statements 
     of the Fund.
       ``(ii) The Trust shall submit an annual management report 
     to the Congress not later than 180 days after the end of the 
     Trust's fiscal year. A management report under this 
     subsection shall include--

       ``(I) a statement of financial position;
       ``(II) a statement of operations;
       ``(III) a statement of cash flows;
       ``(IV) a statement on internal accounting and 
     administrative control systems;
       ``(V) the report resulting from an audit of the financial 
     statements of the Trust conducted under subparagraph (E)(i); 
     and
       ``(VI) any other comments and information necessary to 
     inform the Congress about the

[[Page H7338]]

     operations and financial condition of the Trust and the Fund.

       ``(iii) The Trust shall provide the President, the Railroad 
     Retirement Board, and the Director of the Office of 
     Management and Budget a copy of the management report when it 
     is submitted to Congress.
       ``(F) Enforcement.--The Railroad Retirement Board may bring 
     a civil action--
       ``(i) to enjoin any act or practice by the Railroad 
     Retirement Investment Trust, its Board of Trustees or its 
     employees or agents that violates any provision of this Act; 
     or
       ``(ii) to obtain other appropriate relief to redress such 
     violations, or to enforce any provisions of this Act.
       ``(6) Rules and administrative powers.--The Board of 
     Trustees shall have the authority to make rules to govern its 
     operations, employ professional staff, and contract with 
     outside advisers to provide legal, accounting, investment 
     advisory or other services necessary for the proper 
     administration of this subsection. In the case of contracts 
     with investment advisory services, compensation for such 
     services may be on a fixed contract fee basis or on such 
     other terms and conditions as are customary for such 
     services.
       ``(7) Quorum.--Five members of the Board of Trustees 
     constitute a quorum to do business. Investment guidelines 
     must be adopted by a unanimous vote of the entire Board of 
     Trustees. All other decisions of the Board of Trustees shall 
     be decided by a majority vote of the quorum present. All 
     decisions of the Board of Trustees shall be entered upon the 
     records of the Board of Trustees.''.
       (b) Conforming and Technical Amendments Governing 
     Investments.--Subsection 15(e) of the Railroad Retirement Act 
     of 1974 is amended--
       (1) beginning in the first sentence, by striking ``, the 
     Dual Benefits Payments Account'' and all that follows through 
     ``may be made only'' in the second sentence and inserting 
     ``and the Dual Benefits Payments Account as are not 
     transferred to the Railroad Retirement Investment Trust as 
     the Board may determine'';
       (2) by striking ``the Second Liberty Bond Act, as amended'' 
     and inserting ``chapter 31 of title 31''; and
       (3) by striking ``the foregoing requirements'' and 
     inserting ``the requirements of this subsection''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this 
     section.

     SEC. 106. ELIMINATION OF SUPPLEMENTAL ANNUITY ACCOUNT.

       (a) Source of Payments.--Section 7(c)(1) of the Railroad 
     Retirement Act of 1974 is amended by striking ``payments of 
     supplemental annuities under section 2(b) of this Act shall 
     be made from the Railroad Retirement Supplemental Account, 
     and''.
       (b) Elimination of Account.--Section 15(c) of the Railroad 
     Retirement Act of 1974 is repealed.
       (c) In General.--Section 15(a) of the Railroad Retirement 
     Act of 1974 is amended by striking ``, except those portions 
     of the amounts covered into the Treasury under sections 
     3211(b),'' and all that follows through the end of the 
     subsection and inserting a period.
       (d) Effective Date.--The amendments made by this section 
     shall take effect January 1, 2001, except that the Railroad 
     Retirement Supplemental Account shall continue to exist until 
     the transfer authorized by the following sentence occurs. As 
     soon as possible after December 31, 2000, the Board shall 
     determine the balance in the Railroad Retirement Supplemental 
     Account and shall direct the Secretary of the Treasury to 
     transfer such amount to the Railroad Retirement Trust Fund 
     and the Secretary shall make such transfer.

     SEC. 107. TRANSFER AUTHORITY REVISIONS.

       (a) Railroad Retirement Account.--Section 15 of the 
     Railroad Retirement Act of 1974 is amended by adding after 
     subsection (j) the following:
       ``(k) Transfers to the Fund.--The Board shall, upon 
     establishment of the Railroad Retirement Trust Fund and from 
     time to time thereafter, direct the Secretary of the Treasury 
     to transfer, in such manner as will maximize the investment 
     returns to the Railroad Retirement system, that portion of 
     the Railroad Retirement Account that is not needed to pay 
     current administrative expenses of the Board to the Railroad 
     Retirement Trust Fund. The Secretary shall make that 
     transfer.''.
       (b) Railroad Retirement Trust Fund.--Section 15 of the 
     Railroad Retirement Act of 1974, as amended by subsection 
     (a), is further amended by adding after subsection (k) the 
     following:
       ``(l) Railroad Retirement Trust Fund.--The Railroad 
     Retirement Trust shall from time to time transfer to the 
     disbursing agent described in section 7(b)(4) such amounts as 
     may be necessary to pay benefits under this Act (other than 
     benefits paid from the Social Security Equivalent Benefit 
     Account or the Dual Benefit Payments Account).''.
       (c) Social Security Equivalent Benefit Account.--Section 
     15A(d)(2) of the Railroad Retirement Act of 1974 is amended 
     to read as follows:
       ``(2) Upon establishment of the Railroad Retirement Trust 
     Fund and from time to time thereafter, the Board shall direct 
     the Secretary of the Treasury to transfer, in such manner as 
     will maximize the investment returns to the Railroad 
     Retirement system, the balance of the Social Security 
     Equivalent Benefit Account not needed to pay current benefits 
     required to be paid from that Account to the Railroad 
     Retirement Trust Fund, and the Secretary shall make that 
     transfer. Any balance transferred under this paragraph shall 
     be used by the Railroad Retirement Trust only to pay benefits 
     under this Act or to purchase obligations of the United 
     States that are backed by the full faith and credit of the 
     United States pursuant to chapter 31 of title 31, United 
     States Code. The proceeds of sales of, and the interest 
     income from, such obligations shall be used by the Trust only 
     to pay benefits under this Act.''.
       (2) Transfers to disbursing agent.--Section 15A(c)(1) of 
     the Railroad Retirement Act of 1974 is amended by adding at 
     the end the following: ``The Secretary shall from time to 
     time transfer to the disbursing agent under section 7(b)(4) 
     amounts necessary to pay those benefits.''.
       (3) Conforming amendment.--Section 15A(d)(1) of the 
     Railroad Retirement Act of 1974 is amended by striking the 
     second and third sentences.
       (d) Dual Benefits Payments Account.--Section 15(d)(1) of 
     the Railroad Retirement Act of 1974 is amended by adding at 
     the end the following: ``The Secretary of the Treasury shall 
     from time to time transfer from the Dual Benefits Payments 
     Account to the disbursing agent under section 7(b)(4) amounts 
     necessary to pay benefits payable from that Account.''.
       (e) Certification by the Board and Payment.--Paragraph (4) 
     of section 7(b) of the Railroad Retirement Act of 1974 is 
     amended to read as follows:
       ``(4)(A) The Railroad Retirement Board, after consultation 
     with the Board of Trustees of the Railroad Retirement Trust 
     and the Secretary of the Treasury, shall enter into an 
     arrangement with a nongovernmental financial institution to 
     serve as disbursing agent for benefits payable under this Act 
     who shall disburse consolidated benefits under this Act to 
     each recipient.
       ``(B) The Board shall from time to time certify--
       ``(i) to the Secretary of the Treasury the amounts required 
     to be transferred from the Social Security Equivalent Benefit 
     Account and the the Dual Benefits Payments Account to the 
     disbursing agent to make payments of benefits and the 
     Secretary of the Treasury shall transfer those amounts;
       ``(ii) to the Board of Trustees of the Railroad Retirement 
     Investment Trust the amounts required to be transferred from 
     the Railroad Retirement Investment Trust to the disbursing 
     agent to make payments of benefits and the Board of Trustees 
     shall transfer those amounts; and
       ``(iii) to the disbursing agent the name and address of 
     each individual entitled to receive a payment, the amount of 
     such payment, and the time at which the payment should be 
     made.''.
       (f) Benefit Payments.--Section 7(c)(1) of the Railroad 
     Retirement Act of 1974 is amended--
       (1) by striking ``from the Railroad Retirement Account'' 
     and inserting ``by the disbursing agent under subsection 
     (b)(4) from money transferred to it from the Railroad 
     Retirement Trust Fund or the Social Security Equivalent 
     Benefit Account, as the case may be''; and
       (2) by inserting ``by the disbursing agent under subsection 
     (b)(4) from money transferred to it'' after ``Public Law 93-
     445 shall be made''.
       (g) Transitional Rule for Existing Obligation.--In making 
     transfers under subsections (a) and (c), the Board shall 
     consult with the Secretary of the Treasury to design an 
     appropriate method to transfer obligations held as of the 
     date of enactment or to convert such obligations to cash 
     prior to transfer. The Railroad Retirement Trust may hold to 
     maturity any obligations so received or may redeem them prior 
     to maturity, as the Trust deems appropriate.

     SEC. 108. ANNUAL RATIO PROJECTIONS AND CERTIFICATIONS BY THE 
                   RAILROAD RETIREMENT BOARD.

       (a) Projections.--Section 22(a)(1) of the Railroad 
     Retirement Act of 1974 is amended--
       (1) by adding the following sentence after the first 
     sentence: ``On or before May 1 of each year beginning in 
     2002, the Railroad Retirement Board shall compute its 
     projection of the account benefits ratio and the average 
     account benefits ratio (as defined by section 3241(c) of the 
     Internal Revenue Code of 1986) for each of the next 
     succeeding five fiscal years.''; and
       (2) by striking ``the projection prepared pursuant to the 
     preceding sentence'' and inserting ``the projections prepared 
     pursuant to the preceding two sentences''.
       (b) Certifications.--The Railroad Retirement Act of 1974 is 
     amended by adding at the end the following:


       ``computation and certification of account benefit ratios

       ``Sec. 23. (a) On or before November 1, 2002, the Railroad 
     Retirement Board shall--
       ``(1) compute the account benefits ratios for each of the 
     most recent 10 preceding fiscal years, and
       ``(2) certify the account benefits ratios for each such 
     fiscal year to the Secretary.
       ``(b) On or before November 1 of each year after 2002, the 
     Railroad Retirement Board shall--
       ``(1) compute the account benefits ratio for the fiscal 
     year ending in such year, and
       ``(2) certify the account benefits ratio for such fiscal 
     year to the Secretary.
       ``(c) Definition.--As used in this section, the term 
     `account benefit ratio' has the meaning given that term in 
     section 3241(c) of the Internal Revenue Code of 1986.''.

[[Page H7339]]

       TITLE II--AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986

     SEC. 201. AMENDMENTS TO THE INTERNAL REVENUE CODE OF 1986.

       Except as otherwise provided, whenever in this title an 
     amendment or repeal is expressed in terms of an amendment to, 
     or repeal of, a section or other provision, the reference 
     shall be considered to be made to a section or other 
     provision of the Internal Revenue Code of 1986.

     SEC. 202. EXEMPTION FROM TAX FOR RAILROAD RETIREMENT 
                   INVESTMENT TRUST.

       Subsection (c) of section 501 is amended by adding at the 
     end the following new paragraph:
       ``(28) The Railroad Retirement Investment Trust established 
     under section 15(j) of the Railroad Retirement Act of 1974.''

     SEC. 203. REPEAL OF SUPPLEMENTAL ANNUITY TAX.

       (a) Repeal of Tax on Employee Representatives.--Section 
     3211 is amended by striking subsection (b).
       (b) Repeal of Tax on Employers.--Section 3221 is amended by 
     striking subsections (c) and (d).
       (c) Effective Date.--The amendments made by this section 
     shall apply to calendar years beginning after December 31, 
     2000.

     SEC. 204. EMPLOYER, EMPLOYEE REPRESENTATIVE, AND EMPLOYEE 
                   TIER 2 TAX RATE ADJUSTMENTS.

       (a) Rate of Tax on Employers.--Subsection (b) of section 
     3221 is amended to read as follows:
       ``(b) Tier 2 Tax.--
       ``(1) In general.--In addition to other taxes, there is 
     hereby imposed on every employer an excise tax, with respect 
     to having individuals in his employ, equal to the applicable 
     percentage of the compensation paid during any calendar year 
     by such employer for services rendered to such employer.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the term `applicable percentage' means--
       ``(A) 15.6 percent in the case of compensation paid during 
     2001,
       ``(B) 14.2 percent in the case of compensation paid during 
     2002, and
       ``(C) in the case of compensation paid during any calendar 
     year after 2002, the percentage determined under section 3241 
     for such calendar year.''.
       (b) Rate of Tax on Employee Representatives.--Section 3211, 
     as amended by section 203, is amended by striking subsection 
     (a) and inserting the following new subsections:
       ``(a) Tier 1 Tax.--In addition to other taxes, there is 
     hereby imposed on the income of each employee representative 
     a tax equal to the applicable percentage of the compensation 
     received during any calendar year by such employee 
     representative for services rendered by such employee 
     representative. For purposes of the preceding sentence, the 
     term `applicable percentage' means the percentage equal to 
     the sum of the rates of tax in effect under subsections (a) 
     and (b) of section 3101 and subsections (a) and (b) of 
     section 3111 for the calendar year.
       ``(b) Tier 2 Tax.--
       ``(1) In general.--In addition to other taxes, there is 
     hereby imposed on the income of each employee representative 
     a tax equal to the applicable percentage of the compensation 
     received during any calendar year by such employee 
     representatives for services rendered by such employee 
     representative.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the term `applicable percentage' means--
       ``(A) 14.75 percent in the case of compensation received 
     during 2001,
       ``(B) 14.20 percent in the case of compensation received 
     during 2002, and
       ``(C) in the case of compensation received during any 
     calendar year after 2002, the percentage determined under 
     section 3241 for such calendar year.
       ``(c) Cross Reference.--

  ``For application of different contribution bases with respect to the 
taxes imposed by subsections (a) and (b), see section 3231(e)(2).''.

       (c) Rate of Tax on Employees.--Subsection (b) of section 
     3201 is amended to read as follows:
       ``(b) Tier 2 Tax.--
       ``(1) In general.--In addition to other taxes, there is 
     hereby imposed on the income of each employee a tax equal to 
     the applicable percentage of the compensation received during 
     any calendar year by such employee for services rendered by 
     such employee.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the term `applicable percentage' means--
       ``(A) 4.90 percent in the case of compensation received 
     during 2001 or 2002, and
       ``(B) in the case of compensation received during any 
     calendar year after 2002, the percentage determined under 
     section 3241 for such calendar year.''.
       (d) Determination of Rate.--Chapter 22 is amended by adding 
     at the end thereof the following new subchapter:

             ``Subchapter E--Tier 2 Tax Rate Determination

``Sec. 3241. Determination of tier 2 tax rate based on average account 
              benefits ratio.

     ``SEC. 3241. DETERMINATION OF TIER 2 TAX RATE BASED ON 
                   AVERAGE ACCOUNT BENEFITS RATIO.

       ``(a) In General.--For purposes of sections 3201(b), 
     3211(b), and 3221(b), the applicable percentage for any 
     calendar year is the percentage determined in accordance with 
     the table in subsection (b).
       ``(b) Tax Rate Schedule.--


------------------------------------------------------------------------
 Average account benefits ratio       Applicable
---------------------------------   percentage for        Applicable
                                   sections 3211(b)     percentage for
    At least      But less than       and 3221(b)       section 3201(b)
------------------------------------------------------------------------
                          2.5                22.1                 4.9
         2.5              3.0                18.1                 4.9
         3.0              3.5                15.1                 4.9
         3.5              4.0                14.1                 4.9
         4.0              6.1                13.1                 4.9
         6.1              6.5                12.6                 4.4
         6.5              7.0                12.1                 3.9
         7.0              7.5                11.6                 3.4
         7.5              8.0                11.1                 2.9
         8.0              8.5                10.1                 1.9
         8.5              9.0                 9.1                 0.9
         9.0                                  8.2                   0
------------------------------------------------------------------------

       ``(c) Definitions Related to Determination of Rates of 
     Tax.--
       ``(1) Average account benefits ratio.--For purposes of this 
     section, the term `average account benefits ratio' means, 
     with respect to any calendar year, the average determined by 
     the Secretary of the account benefits ratios for the 10 most 
     recent fiscal years ending before such calendar year. If the 
     amount determined under the preceding sentence is not a 
     multiple of 0.1, such amount shall be increased to the next 
     highest multiple of 0.1.
       ``(2) Account benefits ratio.--For purposes of this 
     section, the term `account benefits ratio' means, with 
     respect to any fiscal year, the amount determined by the 
     Railroad Retirement Board by dividing the fair market value 
     of the assets in the Railroad Retirement Account and of the 
     Railroad Retirement Investment Trust (and for years before 
     2001, the Social Security Equivalent Benefits Account) as of 
     the close of such fiscal year by the total benefits and 
     administrative expenses paid from the Railroad Retirement 
     Account and the Railroad Retirement Investment Trust during 
     such fiscal year.
       ``(d) Notice.--No later than December 1 of each calendar 
     year, the Secretary shall publish a notice in the Federal 
     Register of the rates of tax determined under this section 
     which are applicable for the following calendar year.''.
       (e) Conforming Amendments.--
       (1) Section 24(d)(3)(A)(iii) is amended by striking 
     ``section 3211(a)(1)'' and inserting ``section 3211(a)''.
       (2) Section 72(r)(2)(B)(i) is amended by striking ``section 
     3211(a)(2)'' and inserting ``section 3211(b)''.
       (3) Paragraphs (2)(A)(iii)(II) and (4)(A) of section 
     3231(e) is amended by striking ``3211(a)(1)'' and inserting 
     ``3211(a)''.
       (4) Section 3231(e)(2)(B)(ii)(I) is amended by striking 
     ``3211(a)(2)'' and inserting ``3211(b)''.
       (5) The table of subchapters for chapter 22 is amended by 
     adding at the end the following new item:

``Subchapter E. Tier 2 tax rate determination.''.

       (f) Effective Date.--The amendments made by this section 
     shall apply to calendar years beginning after December 31, 
     2000.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Pennsylvania (Mr. Shuster) and the gentleman from Minnesota (Mr. 
Oberstar) each will control 20 minutes.
  The Chair recognizes the gentleman from Pennsylvania (Mr. Shuster).
  Mr. SHUSTER. Mr. Speaker, I ask unanimous consent to yield 5 minutes 
of my time to the gentleman from Michigan (Mr. Smith) and that he be 
allowed to control said time.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Pennsylvania?
  There was no objection.
  Mr. OBERSTAR. Mr. Speaker, I ask unanimous consent to yield 5 minutes 
of my time to the gentleman from Michigan (Mr. Smith) for the purposes 
of yielding time to others, as well for the purposes of managing 5 
minutes.
  Mr. SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Minnesota?
  There was no objection.
  The SPEAKER pro tempore. The gentleman from Michigan will control 10 
minutes.
  Mr. SHUSTER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise today in strong support of this bipartisan 
measure which represents the most comprehensive modernization of the 
railroad retirement system in nearly two decades.
  The bill is also the fruit of an arduous 2-year labor-management 
negotiating process, followed by consideration in two different 
committees of the House. I particularly want to commend on the 
Committee of Transportation and Infrastructure our ranking member, the 
gentleman from Minnesota (Mr. Oberstar); the gentleman from Wisconsin 
(Mr. Petri), chairman of the Subcommittee on Ground Transportation; and 
the gentleman from West Virginia (Mr. Rahall), the ranking member, who 
have all provided

[[Page H7340]]

very able and diligent assistance in putting this package together.
  I also want to acknowledge and commend the bipartisan efforts of the 
Committee on Ways and Means leadership. Specifically, we could not be 
poised to pass such important legislation today without the work of the 
gentleman from Texas (Chairman Archer); the gentleman from New York 
(Mr. Rangel), the ranking member; the gentleman from Florida (Mr. 
Shaw), the subcommittee chairman; and the gentleman from California 
(Mr. Matsui), the subcommittee ranking member. Both committees have 
shown that they can pull together to produce a major reform package 
such as this one.
  I will not attempt to detail the very complex bill here today, only 
to touch on some of the highlights. Reducing the pension retirement age 
to 60 with 30 years of service; providing for full inheritance of 
pension annunities by surviving spouses and cutting the vesting 
requirement in half to put it on the same 5-year basis with most other 
pension plans. While increasing benefits, this bill allows for payroll 
tax reductions, based on the performance of the underlying trust fund. 
Having a professionally managed investment portfolio will allow 
railroad retirees to benefit from returns comparable to those available 
in other pension plans.
  I want to stress, Mr. Speaker, that this legislation in no way 
prejudges whatever decision this Congress might make with regard to 
Social Security reform. This bill is addressed only to the pension or 
the Tier II part of railroad retirement. Tier I, the railroad 
counterpart of Social Security, is not touched in any way.
  From a fiscal standpoint, when we apply common sense to this bill, it 
is assuring a sound and prosperous future for railroad retirement. 
First, it creates an automatic tax adjustment mechanism so that the 
payroll tax rates can float up or down reflecting the performance of 
the pension assets.
  Secondly, this automatic adjustment mechanism is structured to assure 
a minimum of 4 years of benefit reserves.
  Third, by diversifying the investment of the Tier II pension assets, 
it helps both rail workers and employers grow their retirement fund 
more rapidly than is permitted under current law.
  Mr. Speaker, this bill is a win for all, for railroad workers, for 
railroad retirees, for the railroads that provide a key part of our 
transport network and for the taxpayer, through enhanced fiscal 
soundness of the railroad retirement system. I strongly urge its 
approval.
  Mr. Speaker, I reserve the balance of my time.
  Mr. OBERSTAR. Mr. Speaker, I yield myself 6 minutes.
  The legislation before us, Mr. Speaker, will bring substantial 
benefits to the more than 1 quarter million men and women who work on 
America's railroads and the more than 700,000 retirees and survivors of 
retired railroad workers. At the same time, this legislation allows for 
a significant reduction in the payroll taxes paid by the Nation's 
railroads.
  It is a win for railroads. It is a win for railroad labor. It is a 
win for retirees.
  I want to compliment our chairman, the gentleman from Pennsylvania 
(Mr. Shuster), for the splendid work that he has done and the 
cooperation extended across the aisle, as we have done so often on so 
many issues in our committee.
  Once again, we have brought a very contentious issue to fruition, 
through the committee process, through collaboration and cooperation 
and working out something that is in the best public interest.
  I want to thank our ranking member on our side, the gentleman from 
West Virginia (Mr. Rahall), for his leadership and working together 
with railroad labor railroads and the gentleman from Illinois (Mr. 
Lipinski) for the work that he did in previous years as the ranking 
member on the Subcommittee on Railroads and for his continued interest 
in and support of this issue and many other Members on our side and on 
the Republican side who have worked so hard to bring us to this point.
  This point is an historic agreement reached by railroad labor and 
management after 2 years of very tough negotiations. The benefit 
improvements and tax cuts are made possible by changing current law 
that limits the investment of railroad retirement trust fund assets to 
only government securities.
  The proposed changes govern how railroad retirement trust fund assets 
can be invested. The changes will not affect the solvency of the 
railroad retirement system. The Tier I portion, which is Social 
Security benefits, will continue to be invested only in government 
securities.
  Tier II, the part of the system that offers pension plan type 
benefits above the Social Security benefit levels, will be eligible for 
investment in assets other than government securities. The projected 
increase in trust fund income from these changes are based on fairly 
conservative forecasts of the rates of return that can be earned from 
such a diversified portfolio, about 2 percentage points above the 
return on government securities.
  Most importantly, if those investments fail to perform as well as 
expected, workers' pensions are further protected as this legislation 
and in the agreement that underlies the legislation which requires that 
the railroads absorb any future tax increase that might be necessary to 
keep this system solvent. Ultimately, the Federal Government continues 
to be responsible for the security of the railroad retirement system.
  This legislation offers the first major benefit improvements in the 
railroad retirement program in more than 25 years.
  Just a few of the improvements, and I will cite the primary benefits.
  First, the age at which employees can retire with full benefits is 
reduced from 62 to 60 years with 30 years of service.
  Second, the number of years required for vesting in the railroad 
retirement system is reduced from 10 years to 5 years.
  Third, the benefit of widows and widowers will be expanded.
  Fourth, the limits on certain Tier II annuities are repealed.
  Fifth, the bill calls for automatic future improvements if the 
retirement plan becomes overfunded.
  The bill allows for railroads' payroll taxes for Tier II benefits to 
decline from the current level of 16.1 percent to 13.1 percent. By the 
third year following passage of the bill, the railroads stand to gain 
nearly $400 million a year from lower payroll taxes. These savings go 
directly to the railroads' bottom lines, can be used to make the 
investments they need in improving railroad infrastructure and to 
improve the wages and working conditions of railway workers.
  It is important for us to point out that nothing in the legislation 
alters the fundamental nature of the railroad retirement program. 
Benefits will continue to be guaranteed in the final analysis by the 
Federal Government. This is a good bill. It is good for workers. It is 
good for retirees. It is good for their survivors. It is good for the 
railroads and for the national economy. I urge all Members to give it 
their support.
  Mr. Speaker, I reserve the balance of my time.

                              {time}  1615

  Mr. SMITH of Michigan. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I think the question before us is should we delve into 
using taxpayer money to, if you will, bail out a private pension 
retirement plan for railroad workers.
  Let me just quote some of the facts developed by our Committee on the 
Budget, four reasons that Members should oppose this bill.
  Number one may be the most important as far as the American taxpayers 
are concerned. The Committee on the Budget says it will cost $33 
billion of taxpayer money over the next 10 years. This bill increases 
benefits and reduces contributions to the Railroad Retirement System by 
$7 billion over the next 10 years.
  In addition, it allows the Railroad Retirement System to cash in $15 
billion in government bonds now held by the railroad industry pension 
fund. These actions will reduce the budget surplus, thereby increasing 
the Government's interest costs by $13 billion over that time period. 
The net cost to U.S. taxpayers, including the offset, therefore, is $33 
billion.
  Again, with all of the pension plans in this country, many of them 
facing

[[Page H7341]]

difficulty and insolvency as life spans continue to increase, it 
reminds me of some of the problems with Social Security. Social 
Security has some of the exact same problems as the railroad retirement 
pension plan.
  Let me give the second reason suggested by the Committee on the 
Budget staff. This bill maintains a special subsidy available to no 
other industry. Under current law, income taxes paid by railroad 
retirees on their retirement benefits are transferred to the Railroad 
Retirement System. Therefore, they do not pay the taxes. This subsidy, 
which is available to no other industry, will cost taxpayers more than 
$5 billion.
  Number three, it allows the Railroad Retirement System to really raid 
Social Security. I ask my colleagues to consider the fact that Social 
Security is becoming insolvent, it is insolvent, and this bill in 
effect takes some of that Social Security solvency additionally away.
  This bill allows the transfer of funds from the railroad retirement 
Social Security equivalent benefit account to the Social Security 
retirement trust fund. This transfer will result in Social Security 
funds being used to pay railroad retirement benefits.
  Number four, I think it sets a bad precedent for Social Security 
reform. Instead of creating personal accounts with individual ownership 
and control over these accounts, this bill creates a government-
appointed board to invest in the stock market on a collective basis. 
Under collective investments, there is no way to guarantee younger 
workers that they would receive any of the higher returns earned by the 
Government with their investment.
  So, number one, we are bailing out to the tune of $33 billion, 
according to the staff of the Committee on the Budget; number two, we 
are having government go into the business of investing those funds, 
and I think both precedents are dangerous as we look at Social 
Security.
  Let me quote some information from the Congressional Research 
Service: ``This Railroad Retirement and Survivors Improvement Act,'' as 
it is called, ``proposes a number of substantive changes.''
  Number one, the bill would increase benefits for widows and widowers 
of railroad employees. It would lower the minimum age at which workers 
with 30 years of employment are eligible for those benefits. So we 
reduce the requirement for benefits while we ask the American taxpayer 
to bail them out, using some Social Security money. Something is wrong 
with this legislation as a precedent, as a way to solve a problem that 
the railroad retirees have. How many private pension funds do we really 
want to go into? Government got mixed up in it. It is quasi-
governmental.
  Mr. Speaker, at this time, so I will have some time to react to other 
statements, 10 minutes out of the 40 minutes is given against the bill, 
which I think reflects some of the positive votes as it moved through 
two separate committees, I will reserve the balance of my time.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SHUSTER. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, before I yield to my good friend from the Committee on 
Ways and Means, I want to emphasize that of the $33 billion that my 
good friend from Michigan talks about, the overwhelming majority of 
that money is paid for by the employers and the employees.
  This is a self-financing trust fund. The only part which is not is $6 
billion over 10 years, which is transferred simply from government 
securities to private investment funds, and indeed I should think 
anybody who believes in the market and in free enterprise and 
entrepreneurialism would be in support of doing that, because it is 
going to generate more money.
  So to say that this is going to cost the taxpayers this money is 
simply not accurate, in my judgment.
  Mr. Speaker, I am pleased to yield 5 minutes to the distinguished 
gentleman from Florida (Mr. Shaw).
  Mr. SHAW. Mr. Speaker, I thank the chairman for yielding me this 
time.
  The Railroad Retirement and Survivors Improvement Act makes important 
changes to the Railroad Retirement System that will enhance benefits, 
increase the industry's responsibility over its pension system, and set 
the stage for more substantial reforms in the future that would make 
the program a free-standing pension plan.
  The Railroad Retirement System is divided into two tiers: The first 
tier resembles Social Security, and the second tier resembles a defined 
benefit employer pension plan. The second tier is very unique. It 
resembles a private pension plan, but it is administered by the Federal 
Government. Benefits are entitled under Federal law. The legislation 
before us today deals primarily with the second tier, the industry's 
pension plan.
  H.R. 4844 makes many improvements to the industry's pension. First, 
it allows the industry to diversify its assets portfolio by investing 
in private securities. There is not one single private or state pension 
system out there today that invests 100 percent of its assets in 
Treasury bills.
  Secondly, it allows the industry to invest its pension contributions 
outside of the Federal Government and outside the Government's control.
  Third, the proposal increases the industry's responsibility over the 
financial soundness of its pension plan. In the past, when the system 
ran into financial trouble, the Government had to bail the program out. 
Under this bill, there is a mechanism which automatically adjusts the 
industry's taxes if the program gets into trouble. The responsibility 
and the investment risk falls on the industry. It does not fall upon 
the taxpayer.
  Finally, this legislation takes important steps towards converting 
the system into a freestanding industry pension plan outside of Federal 
jurisdiction. Under this bill, the second tier of the Railroad 
Retirement System becomes more like any other defined benefit employer 
plan or State pension plan. Its assets are invested in private 
securities outside of the Treasury, it is governed by a board of 
trustees who are bound by fiduciary principles similar to ERISA, and 
also benefit checks are no longer paid by the Treasury.
  In closing, I would like to emphasize that the benefit changes and 
the tax changes made by this bill are paid for within the Railroad 
Retirement System. The Railroad Retirement System is a self-financing 
program. Like Social Security, it is entirely financed with dedicated 
payroll taxes on workers and employers and the taxes that retirees pay 
on the benefits. The costs of this plan are borne by the Railroad 
Retirement System, not by the taxpayer.
  Mr. Speaker, I would like to add here in answer to comments by the 
gentleman from Michigan (Mr. Smith) that the budgetary impact is 
primarily due to the fact that these Treasury bills are being cashed in 
in order to make these investments. That does have a budgetary impact. 
But the budgetary impact really is minimal, because we will be saving 
in future years the interest that the Treasury has paid. And it is 
doing something else; it is retiring much of the public debt that the 
Federal Government owes, which is something that I think both parties 
at least say that they support, and I certainly do.
  Mr. Speaker, I would urge my colleagues to support this piece of 
bipartisan legislation. I would like to say this was a rare situation 
where we found ourselves in the enviable position of reaching out and 
crossing the aisle to our friends in the Democrat Party. It was also 
quite an experience seeing the industry and the unions coming together 
to ask for these changes. Moreover this bill is a good thing for the 
United States taxpayers.
  Let me also add that during the debate today, certain questions have 
been raised about the budgetary effects of this bill. With this 
statement, I am submitting a response to these concerns. Again, I urge 
my colleagues to join me in support of this legislation.


                          Response to Concerns

  1. The bill increases railroad retirement benefits, reduces railroad 
payroll taxes, and allows the industry to cash in the government bonds 
in their Trust Fund. These changes will cost taxpayers $20.8 bill over 
10 years ($33 billion when interest is included).
  The Railroad Retirement system is a self-financing system--just like 
Social Security. It is paid for with dedicated payroll taxes and taxes 
that retirees pay on their benefits. The cost of the tax cuts and 
benefit increases contained in this bill does not fall on the general 
taxpayer. The cost is wholly paid for with taxes levied on railroad 
workers, railroad employers, and railroad retirees.
  The proposal allows the Railroad Retirement system to invest in 
private-sector securities.

[[Page H7342]]

This means that most of the Treasury securities currently held in the 
Railroad Retirement Account must be redeemed so they can be transferred 
to an independent account outside of Treasury. This one-time cost of 
redeeming the Treasury securities will be borne by taxpayers. However, 
this is money that the General Fund owes the Railroad Retirement 
system. It reflects past surpluses that the government has borrowed 
from the system and must now repay.
  2. The proposal will reduce the budget surplus by $20.8 billion and 
increase the government's interest costs.
  The bill reduces the on-budget surplus because the Railroad 
Retirement system is an on-budget program. As a result, any changes to 
the system will affect the on-budget surplus--just like changes to 
Social Security affect the off-budget surplus.
  The bill would not increase the government's interest costs. In fact, 
the Treasury securities in the Railroad Retirement Account are part of 
the total government debt. Once they are redeemed, the total government 
debt will fall, and so will the associated interest payments.
  3. The bill maintains a special subsidy available to no other 
industry. Under current law, the income taxes paid by railroad retirees 
on their retirement benefits are transferred to the Railroad Retirement 
system instead of the U.S. Treasury. This subsidy costs taxpayers 
nearly $6 billion.
  This is not a subsidy, and it doesn't cost taxpayers anything. The 
tax is not paid by the general taxpayer--it is paid by railroad 
retirees. Appropriately, the revenues from the tax go back to the 
Railroad Retirement system instead of the General Fund of the Treasury. 
In the same vein, the taxes that seniors pay on their Social Security 
benefits go back to the Social Security Trust Fund instead of the 
General Fund.
  4. ERISA standards were designed to ensure that companies properly 
funded their pension plans. However, the railroad industry has a $39.7 
billion unfunded liability. Instead of moving toward a funded system, 
this bill allows the Railroad Industry to enjoy lower taxes and higher 
benefits now in exchange for higher taxes or lower benefits in the 
future.
  The Railroad Retirement system is not subject to ERISA, and it is not 
a funded system. Instead, it is a pay-as-you-go system where annual tax 
revenues are used to pay annual benefits. The trust fund balances in 
the Railroad Retirement Account are currently large enough to pay more 
than 5 years worth of benefits. This is considered quite high for a 
pay-as-you-go system. That's why the system can afford to cut taxes and 
pay higher benefits.
  Although the system can afford these changes in the short run, it may 
not be able to afford them over time. As a result, the proposal 
includes a provision that allows the tax rate to adjust each year based 
on the system's funding situation. For the first time ever, the burden 
of maintaining the system's solvency will fall on the railroad 
industry--not the general taxpayer.
  Many experts and commissions have recommended that the Railroad 
Retirement system should be converted into a fully-funded system 
covered by ERISA. However, it would be very difficult to take this step 
without the industry's support. This bill is a step in the right 
direction because it puts the mechanisms in place to move toward a 
free-standing pension plan outside of federal jurisdiction. If this 
bill is enacted, the system would resemble a private pension plan, 
making it much easier to make the transition in the future.
  5. The bill will reduce the solvency of the Railroad Retirement 
system.
  Under current law, the Railroad Retirement system is solvent over 75 
years under optimistic and intermediate assumptions. The actuaries of 
the Railroad Retirement Board have certified that the system remains 
solvent for 75 years under the provisions of this bill.
  6. The bill sets a bad precedent for Social Security reform--instead 
of creating personal accounts with individual ownership and control, 
this bill creates a government-appointed board to invest in the stock 
market on a collective basis.
  This proposal primarily affects the second tier of the Railroad 
Retirement system--the part that resembles a private employer pension 
plan. Because this bill mostly deals with the industry pension, not the 
Social Security equivalent, the changes made by this bill cannot (and 
should not) translate to the Social Security program. After all, Social 
Security is a social insurance program--it is not a pension plan.
  Mr. OBERSTAR. Mr. Speaker, I yield 3 minutes to the gentleman from 
California (Mr. Matsui), the ranking member on the Subcommittee on 
Social Security of the Committee on Ways and Means.
  Mr. MATSUI. Mr. Speaker, I would like to thank the gentleman from 
Minnesota, the ranking Democrat on the Committee on Transportation and 
Infrastructure, for yielding this time.
  I would like to commend both the gentleman from Pennsylvania (Mr. 
Shuster), the gentleman from Minnesota (Mr. Oberstar), obviously my 
colleague and chairman of the Subcommittee on Social Security (Mr. 
Shaw), and other Members who have been working on this legislation.
  This legislation is supported and sponsored by the Association of 
American Railroads, which are all the railroads in the United States, 
along with 60 percent of the membership of the railroad labor unions. 
In my opinion, it took years and years to put together, and for Members 
to vote this down now would be tragic, because this would have an 
impact on 254,000 current employees of the industry, and over 700,000 
families and individuals that are currently retired. This helps widows 
and widowers, who will have a $300 increase in benefits, and it will 
reduce the age of retirement from 62 to 60, the change we made in 1983, 
and we now need to go back to age 60. So in terms of benefits to the 
employees and to the industry, this is tremendous.
  The reason that there is a cost, as the gentleman from Michigan (Mr. 
Smith) has raised, as I think the gentleman from Florida (Mr. Shaw) has 
indicated, there is a one-time cost, because what we are doing is we 
are bringing in government bonds to allow the Tier II part of the 
system to be invested in the private equity market.
  That is not a violation of Social Security or anything like that. All 
that is for, that is like a private defined benefit pension. Tier I 
programs are like Social Security. Tier II is like a private pension 
system. Frankly, it is the only pension system that the Federal 
Government operates, because of a historic relationship with the 
railroad industry and obviously with the employees. So the $15 billion 
will be paid down over time. It will not be a continuing obligation to 
the Federal Government.
  Secondly, we received a letter dated the 18th of July, 2000, from 
Steven Goss, the deputy chief actuary of the Social Security system, to 
Harry Ballentine, the chief actuary; and in this letter it indicates 
that there is no impact at all on the Social Security trust fund. So 
the gentleman from Michigan may want to read this letter, who made the 
allegation that this would diminish the Social Security trust fund. It 
will have no impact at all, according to the actuaries.
  We must pass this legislation. This is legislation that will help the 
railroads, and also it will help the employees and current 
beneficiaries and retirees.
  Mr. SMITH of Michigan. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, may I ask of the chairman and yield for the answer, when 
it came out of the Committee on Ways and Means, my understanding was 
that there was a 4.3 cent tax on diesel fuel for railroads. Is that 
reduction still in the bill?
  Mr. SHUSTER. Mr. Speaker, will the gentleman yield?
  Mr. SMITH of Michigan. I yield to the gentleman from Pennsylvania.
  Mr. SHUSTER. Mr. Speaker, that is not included in this bill. This is 
a clean railroad retirement reform bill. There is no tax treatment in 
there.
  Mr. SMITH of Michigan. Mr. Speaker, reclaiming my time, to help pay 
for it, it was my understanding when this bill went through the 
Committee on Ways and Means, they put a 4.3 cent tax on the diesel fuel 
used by railroads, and somehow in this clean bill it is no longer 
there.

                              {time}  1630

  If the gentleman will continue to yield, oh, no, that has nothing to 
do with it, I would say to my good friend. It was several years ago as 
part of the deficit reduction package of 1993 that that tax was placed.
  Mr. SMITH of Michigan. Is the gentleman saying, Mr. Speaker, that the 
4.3 cents was not in the bill in the Committee on Ways and Means?
  Mr. SHUSTER. The original Committee on Ways and Means bill did have 
the 4.3 cent reduction in it.
  Mr. SMITH of Michigan. Reclaiming my time, Mr. Speaker, since I am 
short on time, let me just emphasize again that a bill of this 
magnitude should not be going through on suspension. It should have a 
full debate, because the

[[Page H7343]]

consequences, if it is not $33 billion if we do not include the 
interest, then at least look at the CBO scoring that says $20 billion.
  This legislation has been sort of promoted as a bipartisan agreement 
with overwhelming support by both rail management and rail labor. Why 
have they agreed so easily? I think the answer is because American 
taxpayers are footing the bill. Again, CBO has scored the cost at $20 
billion.
  Let me go through some of the facts. The Railroad Retirement System 
already has an unfunded liability of $39.7 billion. It is a pension 
fund in trouble. So with three retirees in the railroad industry, with 
three retirees for every worker, why would we go to the extent of not 
only reducing the taxes and contributions they pay in, but increasing 
the benefits they get out?
  So we increase the benefits, we reduce the age for eligibility. Here 
again it seems to me that it only can be this kind of solution if we 
reach into the pockets of the American taxpayers. The industry would 
need to increase contributions from 21 percent of wages to 31 percent 
of wages for the next 30 years to cover this shortfall.
  Accurate accounting shows that the industry has received at least $85 
billion more in benefits than it has paid in contributions. The rail 
industry has for many years, of course, received special government 
subsidies that are available to no other industry. Just to mention one, 
under current law, income taxes paid by rail retirees do not go to the 
U.S. Treasury. They are instead transferred to the Railroad Retirement 
System, costing taxpayers over $5 billion. The government also 
currently pays the cost of Amtrak's social security contributions, 
costing taxpayers another $150 million a year.
  This kind of cost, this kind of implication, of precedent, should be 
going through this Chamber with a full debate and not through a special 
suspension calendar.
  Let me just briefly comment in my closing minutes on specifically 
what the bill does. It repeals a 26.5 cent per hour employee 
contribution to supplemental annuities, it reduces employer 
contributions from the current 16.1 percent to 14.2 percent, and it 
expands benefits for widows and widowers. It reduces the vesting 
requirement from 10 to 5 years. It repeals the current gap on payment 
of earned benefits. Six, it reduces the minimum retirement age to 60 
years old.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SHUSTER. Mr. Speaker, I am pleased to yield 2 minutes to the 
distinguished gentleman from Wisconsin (Mr. Petri), chairman of the 
Subcommittee on Ground Transportation.
  Mr. PETRI. Mr. Speaker, I thank the chairman for yielding time to me.
  Mr. Speaker, I rise in support of the bill before us, the Railroad 
Retirement and Survivors' Improvement Act of 2000. H.R. 4844 will 
increase benefits for widows and widowers of railroad retirees, and 
lower the vesting period from 10 years to 5 years, which is more 
consistent with private industry plans. It will also restore the 
retirement age from age 62 with 30 years of service to age 60 with 30 
years of service.
  Mr. Speaker, this is an excellent bill with advantages for both labor 
and management as well as for the general taxpayer. I urge my 
colleagues to support H.R. 4844.
  Mr. OBERSTAR. Mr. Speaker, I reserve the balance of my time.
  Mr. SMITH of Michigan. Mr. Speaker, I reserve the balance of my time.
  Mr. SHUSTER. Mr. Speaker, I am pleased to yield 2 minutes to the 
distinguished gentleman from New York (Mr. Quinn).
  Mr. QUINN. Mr. Speaker, I want to take a minute to thank everybody 
who has been involved in this process: the gentleman from Pennsylvania 
(Mr. Shuster), the gentleman from Minnesota (Mr. Oberstar), the 
gentleman from Florida (Mr. Shaw), the gentleman from California (Mr. 
Matsui), the gentleman from Wisconsin (Mr. Petri), and many others not 
on the floor today, the gentleman from Illinois (Speaker Hastert) being 
one.
  I can remember back in July where many of us went to the Speaker to 
talk to him about the importance of this bill to try to get it on the 
calendar. While he is not on the floor discussing it today, I think he 
and others on both sides of the aisle played a huge role in getting us 
here today.
  I did not rise to talk about the specifics of today's bill because 
whenever we talk about pension and pension plans we can get a little 
bit complicated. We have people on both sides of the aisle who have 
worked this issue. We have people like the gentleman from Florida (Mr. 
Shaw), who has worked with rail labor and others who understood the 
problems.
  I rose today, this afternoon, just to talk a little bit about the 
fact that we have been at it now for almost 2 years, Mr. Chairman, 
talking about discussion, talking about compromise, talking about 
meeting each other halfway. We are about doing something that is good 
for a lot of people this afternoon, retirees, and some who will retire. 
Coming from a railroad family, my father put on 35 years on the South 
Buffalo Railroad back home.
  There is a section here that talks about widows and widowers. This 
has been a patently and basically unfair rule for too many years, that 
just because a railroad worker dies, that pension for the widow or 
widower remains sometimes cut by two-thirds. In the meantime, that same 
family has the same mortgage bills and heating bills and taxes and 
prescriptions and all those other bills that come and go day-to-day, 
week-to-week, year-to-year.
  I think more than anything else, Mr. Speaker, we are here to talk 
about righting some wrongs, doing the fair thing for railroad workers 
all across the country. I enthusiastically support H.R. 4844, and ask 
all of our colleagues on both sides of the aisle to do the same thing 
this afternoon.
  Mr. OBERSTAR. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, not to oversimplify this issue, but to put it in very 
plain terms, there is more money being collected in taxes from workers 
in railroads than is necessary to pay out benefits under the current 
system.
  The agreement reached does equity for both the railroads and the 
workers. The railroads, on the one hand, get money they can invest in 
improving their infrastructure, rolling stock, and trackage, and the 
workers--specifically retirees, widows and widowers, get benefits that 
they would not otherwise receive. That is what this is all about.
  I want to point out that there was not 100 percent agreement between 
rail management and rail labor. Just after the agreement was reached, 
representatives of those labor unions, the majority, that supported the 
agreement and those labor unions, the minority, that opposed it, asked 
for my support, each on their terms, to support their viewpoint.
  I felt it would be in everyone's best interests if rail labor were 
united in support of the agreement. So in attempting to reach a 
consensus with all of rail labor, the gentleman from West Virginia (Mr. 
Rahall) and I made a proposal to rail labor which we then made to rail 
management to improve the benefit package.
  We recognized we could not radically alter the agreement, but hoped 
to make the proposal more palatable to those who opposed it. 
Specifically, we suggested that the railroad companies allow workers to 
retire at age 58 with actuarially reduced benefits, but with full 
medical coverage until the employees become eligible for Medicare at 
age 65.
  Today, rail employees can retire at age 60 with reduced benefits. 
They are not eligible for medical coverage until age 61. We thought we 
had made a reasonable, modest proposal. It was considered deliberately 
by railroad management, but unfortunately, we could not get the parties 
on both sides to agree to coalesce around this change.
  In the end, having made that effort, I concluded that this was the 
best package that could be negotiated under the circumstances.
  Most of rail labor is in support of this legislative package. It is 
good for both sides. It is a great improvement for retirees. The 
legislation ought to go forward. We ought to approve it in this body 
today. I, of course, give it my full and strong support.
  Mr. Speaker, enacting H.R. 4844 will bring substantial benefits to 
the more than one quarter million men and women who work on America's 
railroads and the 700,000 retirees and survivors of retired railroad 
workers. At the same time the bill allows for a significant reduction 
in the payroll taxes paid by U.S. railroads. This is clearly a win-win 
proposition for

[[Page H7344]]

railroads, railroad labor, retired railroad workers and their 
survivors.
  This bill is the product of an historic agreement reached by railroad 
labor and management following two years of often-difficult 
negotiations. The benefit improvements that the two sides agreed upon 
are made possible by changing the current law that limits the 
investment of Railroad Retirement Trust Fund assets to government 
securities. Railroad retirement is a two-tiered system: Tier I largely 
mimics the Social Security system in terms of taxes and benefits, while 
Tier II provides additional benefits and might be considered the 
equivalent of a defined benefit employee pension plan. Tier II benefits 
are financed by a combination of a 4.9 percent payroll tax on employees 
and a 16.1 percent payroll tax on employers.
  Analysis provided by the Railroad Retirement Board's actuary 
demonstrates that the proposed changes should not affect the solvency 
of the Railroad Retirement system. The Tier I portion of the program 
will continue to be invested only in government securities as has long 
been the case and is appropriate for the social safety net. Only Tier 
II funds will be eligible for investment in assets other than 
government securities. The expected improvement in income to the trust 
fund is based on a fairly conservative projection of the rates of 
return on such a diversified portfolio--about two percentage points 
above the return on government securities. In addition, if the 
investments fail to perform as well as expected, workers' pensions are 
further protected as the legislation requires that the railroads absorb 
any future tax increases that might be necessary to keep the system 
solvent.
  This legislation provides the first major benefit improvements to 
retired railroad workers and their dependents in more than 25 years. 
The primary improvements are:
  (1) Lower retirement age. The age at which employees can retire with 
full benefits is reduced from 62 years to 60 years with 30 years of 
service. Today, employees who retire at age 60 or 61 have their annuity 
permanently reduced by taking 20 percent or more off the Tier I 
benefit. The annuities of their spouses are also reduced. Lowering the 
age to 60 actually restores railroad workers to the retirement age that 
existed before adjustments made back in 1983 to shore up the program's 
solvency.
  (2) Fewer years for vesting. the number of years required for vesting 
in the Railroad Retirement System is reduced from ten to five years. 
This change puts the Railroad Retirement System in line with the 
pension plans of most other industries.
  (3) Expanded benefits for widows and widowers. Under current Social 
Security Law, a widow or widower of a deceased worker receives the full 
amount of the retirement benefit previously paid to the retiree. In 
contrast, a widow or widower of a deceased railroad worker is eligible 
for 100 percent of the Tier I benefit, but only 50 percent of the late 
retiree's Tier II benefit. The surviving spouse often experiences a 
dramatic reduction in income at a time when life has already been made 
more difficult. Under the proposed change, the surviving spouse's 
annuity would be guaranteed to be no less than the amount the retiree 
was receiving in the month before death.
  (4) Cap on benefits eliminated. Currently, there is a statutory limit 
on the initial benefit amount that can be paid to an employee. This 
limit is computed under a complex formula based on the employee's 
highest two years of Railroad Retirement and Social Security earnings 
during the 10-year period immediately before retirement.

  This limitation has proved to be unintentionally harsh in two 
situations. The first involves employees whose lifetime pattern of 
earnings deteriorated in their last 10 years before retirement due, for 
example, to job loss or part-time employment.
  The second situation involves employees with long railroad careers at 
modest compensation levels. The Tier II benefit amount is computer 
under a formula that takes into consideration not only an employee's 
compensation level, but also length of service. Thus, employees with 
modest earnings can build up their Tier II benefits through may years 
of rail service. Because the cap takes into consideration only their 
modest pre-retirement earnings and completely ignores their long years 
of service, these employees may have their benefit reduced upon 
retirement.
  Under this legislation, the cap would be repealed for both new and 
preciously awarded annuities.
  (5) Automatic future improvements should the retirement plan become 
overfunded. Should the plan's assets become greater than an amount 
deemed necessary by the Railroad Retirement Board to pay benefits, 
employees and the railroads will be able to use the surplus on a 50-50 
basis to improve benefits and lower taxes. H.R. 4844 also reduces 
significantly the payroll taxes paid by the railroads. This bill allows 
the railroads' payroll tax for Tier II benefits to decline from the 
current level of 16.1 percent to 13.1 percent. By the third year 
following passage of this bill, the railroads stand to gain nearly $400 
million annually from lower payroll taxes. All of these savings go 
directly to the railroads' bottom lines and can be used to make 
investments needed in the railroad infrastructure and to improve the 
wages and working conditions of railway workers. Higher net returns 
also should make railroad stocks look better to potential investors and 
improve the railroads' ability to engage in equity financing. Clearly, 
this is a win-win proposition for both the railroads and its workers.
  While I believe this bill provides significant benefits to railroad 
workers and retirees, I recognize that railroad labor is not united in 
support for this bill. Two unions, the Brotherhood of Locomotive 
Engineers and the Brotherhood of Maintenance of Way Employees, do not 
support this legislation. They believe that the distribution of 
benefits should be weighted more favorably toward railroad workers and 
retirees as the monies involved are, after all, part of their overall 
compensation package. They were especially interested in securing a 
further reduction in the retirement age as the agreement only returned 
them to the retirement age that prevailed in 1983.
  Just after the agreement was reached, representatives of both those 
labor unions that supported the agreement and those labor unions that 
opposed it solicited my support. I felt that it would be in everyone's 
best interest if railroad labor were united in support of the bill. To 
work toward achieving consensus within all of rail labor, the Gentleman 
from West Virginia (Mr. Rahall) and I made a proposal to railroad 
management to improve somewhat the benefit package. We recognized that 
we could not radically alter the agreement, but we sought to make the 
proposal more palatable to those who opposed it. Specifically, we 
suggested that the railroads allow workers to retire at age 58 with 
actuarially reduced benefits, but with full medical coverage until the 
employees become eligible for Medicare at age 65. Today, employees can 
retire at age 60 with reduced benefits; they aren't eligible for 
medical coverage until age 61. Mr. Rahall and I believed this was a 
modest proposal, but unfortunately we were unsuccessful in getting the 
parties to coalesce around this change.
  Although, I would prefer to see unified labor support for this 
legislation, I believe that this bill is the best that can be obtained 
under current conditions and therefore I have given it my full support.
  At the request of the Ways and Means Committee, we have made some 
modifications of the mechanics of how these reforms would be 
implemented.
  Those relatively minor modifications deal with how the monies would 
be administered, with the composition of the group responsible for the 
investments, and with the way the benefits will be disbursed, but we 
have not, in any way, altered the fundamental nature of the program. 
Railroad retirement benefits will continue to be guaranteed, in the 
final analysis, by the United States Government. This continues to be a 
federal program and the Congress continues to have authority over it 
and responsibility for it. The proposed changes do not in any way 
represent a step toward privatization.
  This is a good bill. It is good for workers; it is good for retirees 
and their survivors; it is good for the railroads, and it is good for 
the country. I urge all Members to vote for it.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SMITH of Michigan. Mr. Speaker, I yield myself the balance of my 
time.
  Mr. Speaker, again I thank both the chairman and the ranking member 
for the time to protest some of my concerns.
  Again, nobody else in the Nation, or very few, can have a pension 
system that is going broke and then reduce the contribution, reduce the 
taxes that are going in by the employee and the employer, and increase 
benefits, increase benefits for widows, widowers, and also reduce the 
age to 60 that these individual workers are eligible for that 
retirement.
  Railroad workers work very hard, they put in a lot of time and a lot 
of hours, but we cannot afford this $33 billion cost bill.
  Mr. SHUSTER. Mr. Speaker, I am pleased to yield 1 minute to the 
distinguished gentleman from Omaha, Nebraska (Mr. Terry).
  Mr. TERRY. Mr. Speaker, I rise in support of the 8,000 retirees in my 
district and the nearly equal number of future retirees from the 
railroad industry.
  One point that I want to make before I talk more is that this body 
just a few weeks ago rolled back or voted to roll back the tax on 
social security. The income tax on social security does not go

[[Page H7345]]

into the Treasury, either. That is how we treat retirement plans. What 
this is about is fundamental fairness.
  Two weeks ago, Mr. Chairman, in my hometown a gentleman with an 
oxygen tank, very frail, very young, 55 to 60, comes up to me. He is 
himself a railroad retiree, and says, here is my wife. We need to pass 
or the Congress needs to pass railroad retirement reform so she will 
have her benefits when I am no longer here to support her.
  That is what this legislation is about in protecting those widows, 
those families. There are plenty of letters from widows in my area. 
Mrs. Lohouse, help is on the way. You should get your full benefits.
  (Mr. OBERSTAR asked and was given permission to revise and extend his 
remarks.)
  Mr. OBERSTAR. Mr. Chairman, I yield back the balance of my time.
  Mr. SHUSTER. Mr. Speaker, I yield myself the balance of my time.
  The SPEAKER pro tempore. The gentleman from Pennsylvania (Mr. 
Shuster) has 2 minutes remaining.
  Mr. SHUSTER. Mr. Speaker, I rise in strong support for this 
bipartisan bill which has been carefully scrubbed by both the Committee 
on Transportation and Infrastructure and the Committee on Ways and 
Means on a totally bipartisan basis.
  Let me emphasize, contrary to some of the assertions or one of the 
assertions that we have heard here today, the Railroad Retirement 
System is not only solvent, the Railroad Retirement Board actuary has 
certified that it is overfunded. Indeed, that is the reason why or one 
of the reasons why we are able to move with this legislation today.
  Indeed, this legislation also requires a 4-year minimum reserve in 
the trust fund. The money that is paid out is money which is paid into 
the system by the railroad workers and by the railroad employers, the 
railroad companies.
  This legislation corrects a grievous wrong, particularly as it 
applies to the widows of this system. I want to say, Mr. Speaker, that 
it was over 2 years ago when the gentleman from New York (Mr. Quinn) 
initiated the first hearing on this issue. Thanks to his diligence and 
then the follow-up of so many on both sides of the aisle, we find 
ourselves here today.
  I also want to emphasize that at filing time of this report we had 
306 cosponsors, and we have had many, many more calls since that time 
to try to cosponsor, but of course once the report is filed, one 
cannot.
  We have a large majority of Republicans, a large majority of 
Democrats. This is a totally bipartisan bill. It is good for railroad 
families, it is good for America, and I urge strong support of this 
legislation.
  Ms. BROWN of Florida. Mr. Speaker, H.R. 4844 is long overdue. 
Railroad labor, widows and widowers will gain enhanced benefits as a 
result of this self-financing legislation. I am particularly thrilled 
that the 4.3 cents/gallon tax repeal is not a part of this legislation.
  This provision would have essentially eroded support for the measure 
and would have thrown the numbers into disarray. H.R. 4844 allows 
railroad retirement assets to be invested in private securities, 
reduces the payroll tax on railroads, and reduces vesting from ten to 
five years for both Tier I and Tier II benefits.
  The bill also increases survivor benefits to widows and widowers of 
rail workers and Mr. Speaker, this is what legislation on behalf of the 
people is about. I urge strong support for H.R. 4844.
  Mr. WELLER. Mr. Speaker, I rise today to enthusiastically support 
H.R. 4844, the Railroad Retirement and Survivors Improvement Act of 
2000.
  The Railroad Retirement and Survivors Improvement Act of 2000 is 
historic legislation that will improve the lives of railroad workers 
and their spouses. I am proud to be a cosponsor of this important 
bipartisan bill and am pleased to cast my vote in favor of this 
legislation today. This bill will guarantee a better standard of 
retirement for the nearly 3,500 retirees in my district and for all 
future retirees and their families.
  Under H.R. 4844, the quality of life for widows and widowers are 
significantly improved. Under current law, spouses are limited to one-
half of the deceased employee's Tier 2 benefits. However, under this 
legislation, this bill increases Tier 2 benefits for widows and 
widowers to 100 percent of the deceased employee's benefits on the date 
of death. Thus, widowers and widows will continue to receive the same 
benefits as their spouse received prior to death. Widows should not 
have to face a loss of income in addition to the death of a spouse. 
This bill ensures that is no longer a reality--widows will receive full 
benefits under this legislation.
  Additionally, H.R. 4844 reduces the years of covered service to be 
vested in the railroad retirement system from the present 10 years to 5 
years. Ten years is too long to wait to be vested in the railroad 
retirement system, and this legislation corrects this problem. Further, 
the retirement age is reduced from 62 to 60. By reducing this age, 
workers are given the opportunity to retire earlier without a 
corresponding loss of benefits.
  H.R. 4844 also fixes the cap on the ``maximum benefit.'' Present law 
limits the total amount of monthly railroad retirement benefits payable 
to an employee and an employee's spouse at the time the employee's 
annuity payout begins. The Railroad Retirement and Survivors' 
Improvement Act of 200 removes this cap so that there is not a maximum 
benefit limit.
  Mr. Speaker, this is good legislation that will give working families 
more retirement security. I commend Chairmen Shaw and Archer for their 
leadership on this bill and ask for all of my colleagues to support 
this important legislation.
  Mr. SHUSTER. Mr. Speaker, I yield back the balance of my time.

                              {time}  1645

  The SPEAKER pro tempore (Mr. Walden of Oregon). The question is on 
the motion offered by the gentleman from Pennsylvania (Mr. Shuster) 
that the House suspend the rules and pass the bill, H.R. 4844, as 
amended.
  The question was taken.
  Mr. SHUSTER. Mr. Speaker, on that I demand the yeas and nays.
  The yeas and nays were ordered.
  The vote was taken by electronic device, and there were--yeas 391, 
nays 25, not voting 18, as follows:

                             [Roll No. 459]

                               YEAS--391

     Abercrombie
     Aderholt
     Allen
     Andrews
     Armey
     Baca
     Bachus
     Baird
     Baker
     Baldacci
     Baldwin
     Ballenger
     Barcia
     Barr
     Barrett (NE)
     Barrett (WI)
     Bartlett
     Barton
     Bass
     Bateman
     Becerra
     Bentsen
     Bereuter
     Berkley
     Berman
     Berry
     Biggert
     Bilbray
     Bilirakis
     Bishop
     Blagojevich
     Bliley
     Blumenauer
     Blunt
     Boehlert
     Boehner
     Bonilla
     Bonior
     Bono
     Borski
     Boswell
     Boucher
     Boyd
     Brady (PA)
     Brady (TX)
     Brown (FL)
     Brown (OH)
     Bryant
     Burr
     Burton
     Buyer
     Calvert
     Camp
     Canady
     Capps
     Capuano
     Cardin
     Carson
     Castle
     Chambliss
     Chenoweth-Hage
     Clay
     Clayton
     Clement
     Clyburn
     Coble
     Collins
     Combest
     Condit
     Conyers
     Cook
     Cooksey
     Costello
     Coyne
     Cramer
     Crowley
     Cubin
     Cummings
     Cunningham
     Danner
     Davis (IL)
     Davis (VA)
     Deal
     DeFazio
     DeGette
     DeLauro
     DeMint
     Deutsch
     Diaz-Balart
     Dickey
     Dicks
     Dingell
     Dixon
     Doggett
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[[Page H7346]]


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                                NAYS--25

     Archer
     Cannon
     Chabot
     Coburn
     Cox
     Crane
     DeLay
     Hefley
     Hostettler
     Hunter
     Johnson, Sam
     Kasich
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                             NOT VOTING--18

     Ackerman
     Callahan
     Campbell
     Davis (FL)
     Delahunt
     Holden
     Jefferson
     Klink
     Lazio
     McCollum
     McDermott
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     Meeks (NY)
     Owens
     Roukema
     Vento
     Vitter
     Young (AK)

                              {time}  1708

  Mr. SHAYS changed his vote from ``yea'' to ``nay.''
  Mr. EVERETT and Mr. SHADEGG changed their vote from ``nay'' to 
``yea.''
  So (two-thirds having voted in favor thereof) the rules were 
suspended and the bill, as amended, was passed.
  The result of the vote was announced as above recorded.
  A motion to reconsider was laid on the table.
  Stated for:
  Mr. McDERMOTT. Mr. Speaker, I was absent and unable to vote on 
rollcall No. 459.
  I would have voted in favor of the motion to suspend the rules and 
pass H.R. 4844.

                          ____________________