Congressional Record, Volume 147 Issue 166 (Tuesday, December 4, 2001)

[Congressional Record Volume 147, Number 166 (Tuesday, December 4, 2001)]
[Senate]
[Pages S12352-S12363]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

COMPREHENSIVE RETIREMENT SECURITY AND PENSION REFORM ACT OF 2001--
Continued

Amendment No. 2196

(Purpose: To ensure that returns on investment are earned prior to any
reduction in taxes or increase in benefits.)

Mr. GRAMM. Mr. President, I call up amendment 2196. It is a short
amendment, and I would like it read.
The PRESIDING OFFICER. The clerk will report.
The bill clerk read as follows:

The Senator from Texas [Mr. Gramm] proposes an amendment
numbered 2196:
On page 2 of the amendment, insert before line 1 the
following:
``Sec. 2. Notwithstanding any other provision of this Act,
any reduction in tax or increase in benefits shall take
effect only to the degree that the Secretary of the Treasury
finds that the actual earnings of the Railroad Retirement
Investment Trust Fund are sufficient to fund them.''.

Mr. GRAMM. Mr. President, we have before us a bill that 74 Members
have cosponsored. It is clear from the previous vote where the votes
are on this bill. I remind my colleagues that Senator Domenici offered
an amendment to strike a provision of the bill that was not in any bill
that anybody cosponsored, and it was literally a provision that was
written into the bill that orders the Office of Management and Budget,
which is the budget scoring arm of the executive branch, and the
Congressional Budget Office, which is the budget scoring arm of the
legislative branch of Government, to falsify the budget by not counting
$15 billion that is being taken out of the Treasury.
This is an extraordinary provision. It basically ordered both
budgeting arms--the budgeting arm of the executive branch of Government
and the budgeting arm of the legislative branch of Government--to
simply look the other way and not count $15 billion being taken out of
the Treasury.
Senator Domenici, with the support of the chairman of the Budget
Committee, offered an amendment to strike that language so at least we
could have honest bookkeeping. Only 40 Members of the Senate voted for
honest bookkeeping. It is clear this railroad retirement bill is wired.
What I wanted to do was to offer an amendment to achieve everything
proponents of the bill claim they want to do but to do it in a
responsible manner. I don't know where this amendment is going. I
expect it is going to get relatively few votes. However, I feel
obligated to offer the amendment and people can do what they want to do
with it.
Let me try to define the problem. If you read what people are saying
in the paper and you talk to all these very nice people in the hallways
who are lobbying for this bill, they say: Look, we have over $15
billion in our trust fund. It is our money. It is invested in
Government bonds. We don't think it is a good investment--I sure agree
with them there. They claim they want to take the money and invest it.
Then with the higher interest rates that they can earn, they want to
lower taxes and increase benefits.
Now, there is a big problem here. If you look at the actual estimates
done by the railroad retirement board, you find under any of the three
economic scenarios that the railroad retirement trust fund actuaries
look at, this proposal does a lot more than simply invest the money. In
fact, as I pointed out on many occasions, what this bill does, in
essence, is, over a 17-year period, it literally takes $15 billion of
capital out of the trust fund. This chart shows--and this is based on
the Railroad Retirement Board's data; this is not my data--under
current law the trust fund would build up along the black line entitled
``Trust Fund Under Current Law.''

Let me remind my colleagues that railroad retirement is not fully
funded. If we had ERISA laws applied to railroad retirement where you
had to have a trust fund sufficient to pay benefits, ERISA would shut
railroad retirement down today. This is a program that has no actuarial
solvency whatever and it is currently receiving huge Federal taxpayer
subsidies today and has always received Federal subsidies.
Basically what is going on, this is what the trust fund balance looks
like under current law. Proponents of this bill say it doesn't make
sense to invest this in Government bonds; let us invest it in stocks
and bonds. We will have more money; we can have a better, more secure
retirement program. I agree with that. I am supportive of letting them
invest the money. The problem is, that is a smokescreen.
What they are really doing, if you look at what happens to the trust
fund

[[Page S12353]]

before any money is invested, before one single penny is invested, they
cut the amount of money the railroads are putting into retirement from
16.1 percent of payroll to 14.75 percent, and it falls to 14.2 percent
and then to 13.1 percent. They also lower the retirement age from 62 to
60. At the same time we are raising the retirement age for Social
Security, they lower the number of years to be vested from 10 to 5 and
they raise benefits. The net result is, even though they assume they
will earn 8 percent in real terms, whereas they are only getting 1
percent in real terms from Government bonds the way they are
calculating it, even with as high a rate of return, what happens to the
trust fund under this bill? What happens to the trust fund is, it goes
down because not only are we paying out every penny of earnings from
the higher rate of return but we are also paying out principal.
Why doesn't it go broke? The reason it doesn't go broke is, in 2021,
the trust fund is now down to about a third of what it would be under
current law because you have added all the new benefits. You reduce the
amount of money going into the fund so even though you hope to earn a
much higher rate of return, you expect all the return and two-thirds of
the trust fund.
What happens in 2021 that keeps the system from going bankrupt? The
way the bill is written, at that point, the payroll tax, which is down
to 13.1 percent of payroll, skyrockets. It goes from 13.1 percent up to
22.1 percent and it does that all in a span of some 5 years.
I ask my colleagues the following question: If railroads are saying
they cannot operate profitably while we are putting 16.1 percent of
payroll into this retirement program--and remember, they have three
retirees for every worker; Social Security has three workers for every
retiree; this program is nine times as financially vulnerable as Social
Security--if they can't afford to pay 16.1 percent today and they are
urging us to let them cut that to 13.1 percent, how can they come in
2025 and afford to pay 22.1 percent of payroll, which is what their
numbers require?
Does any Member here not believe that come 2019 the railroads are
going to come to Congress and say, we would be required simply to
maintain the trust fund at roughly one-fourth of what it would have
been without this law, already four-fifths of the trust fund would be
good? They are going to run to Congress in 18 years and say, we can't
possibly pay a 22.1-percent payroll tax and remain in business. So you
are going to either have to have the taxpayer come in and bail out this
fund or you are going to have every railroad in America going broke.

One question that is never answered is, if they can't afford to pay
16.1 percent today, how are they going to afford paying 22.1 percent in
25 years? The point is, they don't ever intend to pay that amount. They
are, in essence, asking us, despite all the rhetoric to the contrary,
to let them take four-fifths of the trust fund over the next 25 years
and divide it up with retirees and then have the Federal Government
guarantee the fund so 25 years from now we have one-fourth of the trust
fund to pay benefits we have today, and the railroads, which cannot pay
16.1 percent, would be paying 22.1 percent then.
Now, they are going to argue the system would be solvent, they can
pay the benefits. But they can only do that with a 22.1-percent payroll
tax. Nobody that I know believes that is a tax they can pay. Anyone who
looks at this realizes if we adopt this bill, 20 years from now we
won't be here, other people will be here, but the railroads will be
saying, you are going to have to come and do something because we can't
pay these taxes.
Under the best of economic circumstances--and this is data from the
railroad retirement board--under the best of circumstances, the bill
before the Congress will deplete 53 percent of the trust fund by 2026.
Under a more restricted and a more normal economic circumstance, it
will deplete 75 percent of the trust fund. And under a pessimistic
economic scenario it will bankrupt the trust fund in 20 years. These
are not my numbers. These are the numbers of the actuaries of the
railroad retirement trust fund.
Now, I understand people want to pass this bill, so I put together an
amendment which lets the railroads and the unions do what they want to
do, which is take $15 billion out of the trust fund right now and
invest it. That will become a private trust fund and they will have it
in stocks and bonds and then they will earn on those stocks and bonds.
The amendment I have offered says, look, do everything you are claiming
to do here but don't reduce the amount of money going into the trust
fund from the railroads and don't increase benefits until you have
invested the $15 billion, and until you have earned a rate of return on
it. And then when you are dealing with the interest and not the
principal, you can do whatever you want to do.
What this bill does is take the money out of Government bonds and
allow it to be invested, $15 billion of it; then as that money earns
interest, you could lower the amount the railroads are paying in, you
could lower the retirement age, you could increase benefits, but only
to the degree you were doing it with the interest you are earning. You
could not spend off the trust fund, thereby putting the taxpayer at
greater risk.
I know if anyone defends the proposal, they will say, look, the trust
fund does not go broke under the bill. In fact, I guess they would
concede it goes down in value under the expected economic scenario by
three-fourths. But there is still enough money to pay the benefits.
That is only part of the story. The rest of the story is, the only
reason there is enough money to pay benefits at this point under the
bill is that it is assumed by them that the tax on the railroads to pay
for the retirement benefits has risen from 13.1 percent to 22.1
percent.
Does anybody believe the railroads are capable of paying 22.1 percent
of the wages of all the railroad retirees into the railroad retirement
trust fund? Are we not here today because the railroads say they cannot
pay 16.1 percent? The whole logic, when you strip away the window
dressing, is they want to lower the amount they are putting into the
trust fund from 16.1 to 13.1 percent, to try to help the railroads.
They have worked out an agreement to get the unions to support it by
saying, in essence, $7.5 billion goes to the railroads and giving $7.5
billion to the union members. But the net result is the trust fund is
$15 billion poorer 17 years from today than it is now. Even though you
are earning a higher rate of return, because you are taking out huge
amounts, you are depleting the trust fund.

All I am trying to do with this amendment is say invest the money and
every penny you earn belongs to the railroads and the unions. Forget
about the taxpayer. But don't take the principal out, just take the
earnings.
Frankly, if this were some kind of reasonable debate, you might say
let's take these higher earnings; part should go to the taxpayer
because the taxpayer is paying a substantial amount of these benefits,
part should go to the railroads, and part should go to the retirees.
But I am saying forget that; take the interest, but don't take the
principal. That is the essence of the amendment.
I would like to submit the amendment. I hope my colleagues will
accept it. I do not understand how it can be prudent public policy to
set out a policy which, while claiming to get a higher rate of return,
actually reduces the size of the trust fund available to pay benefits,
between now and the year 2026, by 75 percent. How can that make sense?
How can it be prudent public policy to set out a program which is
salvaged only by the willingness of the railroads to pay to 22.1
percent of all wages into a trust fund, when today they claim they
cannot afford to pay 16.1 percent? How can that possibly make any
sense?
What I am saying is don't deplete the trust fund. But every penny you
earn, by investing it, you can give to the railroads and you can give
to the retirees. But maintain the assets to protect the taxpayers. That
is the proposal. I think it is simple and easy to understand. For those
who want investment, it gives you investment. For those who want a
better rate of return potentially, it gives you a better rate of
return. But what it does not let you do is pillage 75 percent of the
trust fund over the next 25 years. That it does not let you do.
That is the essence of the amendment.

[[Page S12354]]

I yield the floor.
The PRESIDING OFFICER (Mr. Edwards). The Senator from Montana.
Mr. BAUCUS. Mr. President, I have been listening carefully to my good
friend from Texas, and a lot of what he says is accurate. But he does
not, as they say, tell you the whole story. Ultimately, the question
comes down to: Are there enough funds in tier 2, in the railroad
retirement fund, to pay additional benefits to retirees and spouses and
also to decrease the amount of taxes the railroads are now paying?
Admittedly, it is a very high rate. That is the question. And can that
be done in a fiscally sound manner?
Today the railroad retirement trust fund balance is growing very
dramatically. Under current law, the trust fund will have balances this
year of about six times the cost of benefits. Through about the year
2020, the ratio never sinks below six. At that point, the year 2020, it
continues to decline forever. By the end of 75 years, the balances in
the trust fund will equal an unbelievable 53 times the cost of 1 year's
benefits.
So the question is, Why all this increase in balances? Isn't there
something prudent that can be done about this very large increase in
balances? Because under the actuarial estimates it just continues to
grow and grow.
And how much of the balance is really necessary? In Social Security,
the actuary considers the system to be in actuarial balance in any year
the balances of the Social Security trust fund are equal to at least
one time the amount of benefits that are paid out in a year. That is
Social Security's standards. The actuaries have determined there is at
least a 1-to-1 ratio of balances in the Social Security trust fund
compared to the costs in that year that have to be paid out. Clearly,
today it is much more than one, but the standard, the actuaries say, is
1 to 1. It is not six times or three times, but one.

Today, on the railroad retirement trust fund tier 2, there is a real
need, frankly, to do something about the balances in a way that seems
reasonable and prudent. There are some changes that should be made. One
is the retirement age. Some industries are a lot more hazardous and
dangerous than some others. Railroading is certainly more hazardous and
more dangerous than some other industries. The retirement age today in
the railroad industry under current law is 62 years. It is only fair
that it be reduced to 60 years. In many industries across the Nation,
the retirement age is lower than that. It can be 55, and for a
hazardous industry such as railroads it makes sense that the retirement
age be 60.
In addition, vesting does not have to be a full 10 years as it is
today. In many industries, vesting is less than that. It is 5 years.
For survivor benefits, today when a railroader retires, he and his
wife will receive 145 percent of wages. If he dies, the widow gets 50
percent. If he were single, it would be 100 percent. So the thought is
to at least raise the widow's. If she survives her husband, raise her
benefits to 100 percent. It seems to me that the railroader himself
would get 100 percent if he retired and is single. It just makes sense.
The current taxes that the company pays are too high. They are much
higher than taxes paid in the private arena, and they are higher than
what a company would pay in its pension program for its employees.
The idea is to lower the taxes and increase the benefits in a way
that is reasonable and prudent so we don't have that huge balance
accumulating in the railroad trust fund. I think it is done in a very
sound and fair way.
The ultimate question really is, Is the balance of money in the trust
fund large enough to accommodate these changes? In the legislation
before us, which includes the changes I have indicated, the balances in
the trust fund in any year are at least one and two-thirds times
greater than the amount needed to pay benefits in that year. That is a
higher standard by two-thirds than the standard currently for Social
Security. By the end of the 75-year period under this bill, the
balances are about 12 times the cost of paying benefits in any 1 year.
Look at the chart of the Senator from Texas. He has that red portion.
It continually falls off until about the year 2023. In 2026, his chart
stops. It doesn't keep going. If his chart were to keep going, it would
have the effect of this chart behind me to my right. It falls down to
the levels indicated on the chart of the Senator from Texas, but then
it starts right up again at a very high rate.
The low level which is of concern to the Senator from Texas
rightfully should be addressed. It is a level which is one and two-
thirds times higher than the actuarial balance that the chief actuary
at Social Security says must be maintained.
There are provisions in the bill--the Senator from Texas is correct,
and the railroad industry agrees and thinks this is just fine--which
say if the funds are not what we assume them to be, then the
railroader's and employer's taxes begin to rise. But the Senator from
Texas says when that happens, and if it happens, Congress is going to
just come right in and bail out the railroad industry.
We have not done that, historically. The last five times this
Congress generally addressed the question of the financial viability of
the railroads and/or the retirement system, in 1974, in 1981, in 1983,
and in 1987, Congress did not bail out the railroads. Congress either
decreased benefits or raised employer taxes. We encourage the railroad
to solve these problems themselves. We have never ``bailed out'' the
railroad industry.

Further, this legislation before us has lots of built-in sort of
requirements of independent audits, of reports, and looking far ahead
as possible to try to anticipate if there is going to be a problem of
some kind or another.
Specifically, the legislation before us requires the trust fund to
have an independent, qualified public accountant to audit the trust.
The trust fund then must submit a report to Congress which includes a
report based on the audit. The report supplied to Congress must contain
financial statements of operations and cashflow.
Moreover, two financial reports required in current law would
continue. The chief actuary for the Railroad Retirement Board must also
do a major update of actuarial evaluations every 4 years but with
annual updates every year by the chief actuary of the Railroad
Retirement Board. The Railroad Retirement Board will report annually to
the Congress and to the President as to the state of the system. Every
year we will get updates.
The lines on the chart of the Senator from Texas as well as these are
the intermediate assumptions; that is, there is a pessimistic
assumption, there is an intermediate assumption, and there is an
optimistic assumption. These are the intermediate assumptions on both
of these charts.
What basically drives these assumptions? What is the biggest unknown
that we have to look at?
It is essentially the level of employment in the railroad industry.
When the level of employment in the railroad industry declines
significantly, obviously, as is in the case of Social Security, there
are fewer people paying into the trust fund compared with the number of
people drawing benefits from the trust fund.
This is an industry which is almost the opposite of Social Security.
For Social Security, there are about three workers for every one person
paying in. In this industry, it is about one to three. It is a mature
industry. It is not a young industry. It is an industry with fewer
employees and more retirees.
The question is, How many more fewer employees will there be to
accommodate the number of retirees?
I would like you to look at this chart behind me. It indicates that
we need not worry about a cut in the number of employees. That is
because of increased productivity and increased efficiencies in the
railroad industry. It really can't get much lower per ton mile or per
railroad mile traveled.
This chart shows the railroad crew size and productivity. As you can
see, in about the years 1950 to 1964, the average crew size was five.
In the years roughly 1960 to 1978, the crew size was four, and on down
to about 1998, the average crew size is two.
You can't get much lower than two for a crew on a train. There is
always going to be at least two. We are not going to have fewer
employees. We will probably have more trains, which means more
employees, but we are not going to have fewer employees per train.

[[Page S12355]]

Meanwhile, the revenue per ton mile and per employee, as you can tell
by the chart, is increasing at a very high rate. We have more revenue
for ton miles per employee. That is going to help the solvency of the
trust fund. At the same time there are not going to be any fewer
employees than there are today.

The basic point is, Is this the responsible way to solve the problem
of explosive trust fund balances? I submit yes. One, the actuaries will
maintain a balance that is proper. There will be annual reports galore.
I urge Senators to resist this amendment. It is unnecessary. It is
wrong. It means the balances will stay forever. The benefits will not
be greater. The burden on taxes will not be lower in due time.
If this amendment is agreed to, despite being wrong on its merits, it
is going to probably mean no railroad bill this session, and maybe next
year, because we will have to go to conference on this matter.
I yield the floor.
The PRESIDING OFFICER. The Senator from Texas.
Mr. GRAMM. Mr. President, let me be brief. When all the people came
to see me about 6 months ago--actually, almost a year ago, in relation
to this bill--I sat down to listen to them, having spent about 3 years
working on Social Security.
Let me give you my response, based on something I think everybody can
understand. Today we are really worried about Social Security because
we have 3.3 workers per retiree. We are going to two workers per
retiree. We are very concerned about our ability to pay Social Security
benefits.
I have done a great deal of work and written a fair amount of
material and articles explaining how investing Social Security
surpluses in interest-earning real assets will cause the trust fund in
Social Security to grow and will enhance our ability to pay benefits.
But I have never suggested that investing the Social Security surplus
could allow us to lower the retirement age in Social Security from 65
to 60. In fact, under current law, it is rising from 65 to 67 even at
this moment. I have never suggested that before any money is invested
that we could cut Social Security taxes. Someone would laugh in your
face if you suggested that.
Now, into my office walk representatives of the railroads and unions,
and they say: Look, we have a program which has one worker for every
three retirees, not the other way around, which it is with Social
Security. This retirement program is in much worse shape than Social
Security. We want to invest our trust fund, and we are going to cut the
retirement age, reduce the amount of time you have to work to get
benefits, increase benefits, and reduce the amount that the railroads
are putting into the program through two different payments they are
making.
First of all, if, in your retirement, somebody told you they could
spend 75 percent of your trust fund, give you more benefits, and you
could pay less in, I do not think you would believe it. Well, you
should not believe it because it is not true.

My colleague points out my chart ends in 2026. Why? Because in 2026
the payroll tax, which the railroads are saying have to be reduced for
them to be able to operate--they have to be reduced from 16.1 percent
down to 13.1 percent--by the time we get to 2026, the payroll tax is up
not to 16.1 percent but 22.1 percent. Does anybody believe that the
railroads can or will pay 22.1 percent of payroll into this retirement
program? Nobody believes they can or will.
Everybody understands that 20 years from now we are going to hear
this knock on our door. We are not going to be here, but somebody is
going to be here, and the railroads are going to say: My God, this
retirement program is in terrible trouble, and under law our payroll
tax is getting ready to jump from 13.1 percent to 22.1 percent. We
cannot pay these taxes. At that point whatever these charts show is not
relevant because everybody knows the railroads cannot pay that amount
into this program and operate viably in the American economy.
So what is going to happen? You have spent four-fifths of the trust
fund or let the railroads spend four-fifths of the trust fund. You have
a payroll tax of 22.1 percent. What is going to happen? They are going
to say they can't pay it and they are going to ask the Federal
Government to intervene.
When you are talking about what good shape this trust fund is in,
what is being called solvency here is having enough money to pay
benefits for 4 years. There is no private retirement program under
ERISA that would not be shut down if it had assets that would only pay
for 4 years.
My amendment is not what I would call a stingy amendment. My
amendment says, OK, take this trust fund, and we are going to give you
$15 billion right out of the Treasury. You can invest it on behalf of
the retirees. And then you can spend every penny that you earn on that
$15 billion. You can lower the amount railroads are putting into the
system. You can give new benefits, but you cannot spend the principal.
That is all my amendment does.
If we do not adopt an amendment similar to this, I want to predict,
even though I do not think any of us will be here 20 years from now--I
certainly will not--that 20 years from now this retirement program is
going to be on its back, the railroads are going to be being pulled
down economically by having a 22.1-percent payroll tax, and we are
going to have a transportation crisis in America.
I do not know if anybody will ever look back at what we are doing
here, but they should. Because what we have done, underneath all else,
is that while we are doing some things that make sense--letting them
invest the trust fund makes sense--we are literally letting them take
$15 billion, we are letting the railroads pocket $7.5 billion, we are
letting them give $7.5 billion in gifts to their retirees and workers,
and we are setting up a situation where there is going to be a train
wreck, and the taxpayers are going to be forced to pick up the pieces.
Senator Nickles and I have no constituency. That is obvious. This
thing has been sold. All the railroads have come to Republicans and
said: This is great; it will be great for railroads. The unions have
come to the Democrats and said: This will be great for the workers. And
the bottom line is, nobody cares, apparently, about the taxpayer or
about the future of this retirement program.
So we are on the verge of cutting this, taking 75 percent of the
money out of this trust fund and giving it away, committing ourselves
to the railroads, having to pay a tax that we know they are not capable
of paying, that we know cannot be paid. How are railroads going to put
22.1 percent of every dollar they pay to every worker into this trust
fund 20 years from now when they cannot put 16.1 percent in today? They
are not going to be able to do it.
So all my amendment says is, let them invest it and do whatever they
want to do with the interest, but do not let them spend the principal.
What that will mean is, the trust fund will basically stay at its
current level. They can reduce the amount railroads are paying in. They
can increase benefits. Neither of those actions, in my opinion, is
fiscally responsible, but they cannot simply pillage the trust fund for
$15 billion over 17 years, which is exactly what happens under this
proposal--and every set of figures used by every person in this debate
all come from the railroad retirement board. All of them show that the
trust fund, over the next 20 years, is depleted, under the expected
economic projections, by 75 percent. That cannot be good public policy.
I understand that Senator Nickles has an amendment. What I would like
to do is yield the floor. If there is any more debate on this
amendment, there can be, and I would be happy to have the amendment set
aside. Senator Nickles can offer his amendment, and then it can be
debated. And then we could have the vote on the two amendments and sort
of see where we are.
I yield the floor.
The PRESIDING OFFICER. The Senator from Oklahoma.

Amendment No. 2175 To Amendment No. 2170

(Purpose: To use a 5-year average rather than a 10-year average on
capturing the average account benefits ratio)

Mr. NICKLES. Mr. President, I ask unanimous consent the pending
amendment be laid aside and I call up amendment No. 2175.
The PRESIDING OFFICER. Is there objection?

[[Page S12356]]

Without objection, it is so ordered.
The clerk will report.
The senior assistant bill clerk read as follows:

The Senator from Oklahoma [Mr. Nickles] proposes an
amendment numbered 2175 to amendment No. 2170:
On page 40, line 1, strike ``10 most'' and insert ``5
most''.

Mr. NICKLES. Mr. President, I compliment Senator Gramm for reading
the bill and trying to do something to protect the integrity of the
trust fund.
He has said, No. 1, if we are going to give them $15 billion, let's
make sure we don't spend down the principal. And, No. 2, let's only
spend the interest or the dividends from that trust fund to provide new
benefits. I support him in that. I compliment him for that.
I also have an amendment that wants to protect the integrity of the
trust fund. The trust fund, by any of the scenarios--I will show the
charts in just a minute--the trust funds goes way too low. The bill's
stated objective is to keep the trust fund equal to but somewhere
between four and six times the annual payment to beneficiaries. That is
their goal. That is their objective. Unfortunately, the bill before us,
under the middle assumption, doesn't even come close to that.
As a matter of fact, the trust fund goes all the way down to about
1.3 annual payments. In other words, it almost goes bankrupt. It barely
has enough to make 1 year's payments of benefits. That is not a good
deal for taxpayers, and it is certainly not a good deal for railroad
retirees. I don't think it is a good deal for the railroad companies
because they are going to be socked with a very large tax increase.
I will use the chart Senator Baucus has. I think it illustrates it.
We start out with about 6 years of benefits under today's standard, but
when we pass this bill, in a period of about 20 years, we go down to
just a little over 1 year's balance. In other words, we take a fund--
and I will insert this in the Record. Actually, I will insert for all
three assumptions.
Under the assumption I will talk about, the employment assumption No.
2, the one in the middle, we start with a balance this year of $19.3
billion. And under current law, that goes to $34 billion.
Under the bill we are getting ready to pass--and I can count votes;
frankly, I could count votes before this week started--that trust fund
balance goes from $19 to $8.4 billion. Instead of being $34 billion, it
goes to $8.4 billion. That is the bill we are getting ready to pass.
I wish I could wake up all my colleagues, most of whom have not read
this bill, most of whom had nothing to do with drafting the bill. This
is the first time I can recall in my 21 years in the Senate that we
have had a bill that was totally written by special interest groups. In
this case, railroad unions and management got together and said: Here
is our bill, don't touch it. Don't have a hearing on it.
They didn't have a hearing in the House. We didn't have a hearing in
the Senate. I asked for a hearing in the Senate Finance Committee. We
did not get it. We had a markup but it was already railroaded. There
were not going to be any amendments. There was one amendment adopted in
the House or the Senate. That was the amendment dealing with scoring.
We are not going to count it. It didn't say we will waive the Budget
Act. It said will not count it, which I think is even worse than just
waiving the Budget Act. Why have a Budget Act if you are going to have
$15.3 billion in budget outlays and it doesn't count?
We just had a vote on that by Chairman Domenici and ranking member
Conrad, and we lost. We lost that vote. So the special interest groups
are together. And they said: Let's leave it in. They didn't request
that amendment. It is interesting; that was put in by the House. So
that was the only amendment they put in.

It was a bad amendment in my opinion. We are going to accept that,
and we are going to keep the bill. We will not touch it. I think we are
making a mistake.
You ask: Why are you still fighting this? You know this bill is going
to pass? Sure, I do. But I want to make a statement. I want to show
that we can do a better job. We are not beholden to the special
interest groups. We are beholden to taxpayers. This is a Federal
statute. We are changing Federal law. How many CEOs of the railroad
companies or how many union members were elected to the Senate? I don't
know, but they wrote the law. They wrote the bill that is going to
become law.
I don't think they did a very good job. If I thought they did a good
job, maybe I would cosponsor the bill. I don't think they did a good
job. History will tell.
I will make a prediction. I am not going to be here in 20 years. I
guess if I was as studious and healthy as Senator Thurmond, maybe I
could be. If I was fortunate enough to be reelected by the people of
Oklahoma, maybe I could be. Agewise it is possible, but it is not
possible after consulting with my spouse. But 20 years from now, if not
well before that, Congress is going to have to readdress this issue
because we are going to have a big problem.
As this chart shows--I am borrowing Senator Baucus's chart, and I
thank him--we are going from 6 years of benefits down to a little over
1, we think. That is in 20-some years.
Then Senator Baucus said: Wait a minute. Way out in the outyears, it
goes way up. Who knows? I know they are going to have problems when we
get into the year 2021, 2022, 2023, 2024, 2025 and 2026. It goes way
down. The trust fund actually falls by 65 percent. When you have that
trigger, payroll taxes have to go way up. Payroll taxes have to go up
by 69 percent.
That is because in the bill we say if it triggers at a certain point,
we are going to have a tax increase, a tax increase that is paid by the
railroad companies. And it goes from 13.1 percent to 22.1 percent.
Senator Gramm said they are having problems. They have shrunk their
labor force significantly. They are not going to be able to handle that
kind of increase. They will come back to Congress and say: Here, it is
yours. The trust fund is broke. It didn't work out very well, so pay
our employees. And because the Railroad Retirement Act is a Federal
statute, it becomes an entitlement.
Many people here say it is not that. No, they won't be coming back to
us.
I predict that within 20 years they will be coming back to Congress
and saying: We need a fix. We need a little bump. We need a little
transfusion. Maybe the transfusion will be from Social Security. They
are already getting it. I wonder how many of our colleagues know that
they get billions of dollars from Social Security, basically from tier
1 going into tier 2, to pay their benefits. It is in the bill. I have
an amendment that will address that. Possibly we will consider that
soon.
Right now I offer an amendment that I urge my colleagues to look at,
consider, and hopefully pass. The triggering mechanism to have a tax
increase is if the trust fund goes so low that there will be a tax
increase. If you actually get low enough to pay benefits for 4 years,
you have a tax increase. It is automatic. It is in the bill. It would
become law soon. OK. That makes sense. But you ought to have some kind
of triggering mechanism so if we keep the trust fund balanced, we won't
be coming to the taxpayers for general revenues.

What is wrong is the calculation. You look back over 10 years to
figure that average. By looking over 10 years, if you just see the
revenue estimates, they estimate that the trust fund balance goes from
a high, somewhere in the neighborhood, under present law, of about $27
billion. Under the Daschle bill or the railroad bill we are getting
ready to pass, the railroad trust fund runs about $23 billion. Then the
next several years it falls to 19, 18, 17, 16, 13, 12, 10, 8. You are
looking at a 10-year average. If you look at a 10-year average and you
are averaging 8 and averaging 20, maybe it won't trigger the tax
increase until about the year 2021, 2022, 2023. In other words, it
allows the fund to fall from about 6 years' payments down to a little
over 1 before the tax increase is triggered.
That is too late. That doesn't allow the trust fund to have enough
time to recharge, to build, to have a cushion to earn interest or to
earn dividends. In other words, we allow this dip to go too low.
The effect of my amendment would be to smooth that out. Possibly it
would smooth out the payroll tax increase. In other words, instead of
looking back over 10, we would look over 5. So your average, once you
got on the

[[Page S12357]]

decline, it would say, if we get much lower, we will have to have a tax
increase sooner to keep that fund from going so low. That is too big of
a dip. That is too dangerous for railroad employees or retirees to have
the fund balance dip down as low as 1.3 annual payments.
This is under the middle scenario. If you look under the pessimistic
scenario, it goes in the red. Under the pessimistic scenario, the whole
trust fund goes totally in the red by the year 2022. It will not be
able to make payments. It will need either general revenue funds or it
will have to cancel increases or suspend payments or whatever.
In other words, there is a scenario here where the fund is totally
broke in 20 years. That is not acceptable. I don't think it is
acceptable. I think we should protect railroad retirees. We have too
much of a variable by using a 10-year average before you have a trigger
for a tax increase. So my suggestion is, let's make it over a 5-year
average. If you get on a down slope, the trust fund starts falling in
value, we won't have to wait another 8 years before you trigger a tax
increase.
That is the essence of my amendment. It is a friendly amendment. It
is not an amendment to gut the bill. It is not an amendment to say we
don't want railroad retirement and we are not going to have railroad
retirement. It is an amendment that says they put together a deal that
was negotiated between labor and the employees or the unions. They may
have cut a good deal for the employers, basically saying let the fund
go almost bankrupt before you trigger a tax increase.
We will do that in 20 years. Guess what. Everybody running those
companies will all be retired by then, and Members of Congress will all
be gone by then. Let somebody else worry about that. So these big tax
increases are not triggered--it is interesting, they are not triggered
until 15 years from now, but then they are pretty big. It is not a 10-
percent increase in payroll taxes, not a 20-percent increase; they keep
the tax rate basically at 13.1 percent for about the next 15 years and,
bingo, you go from 13.1 percent to 22.1. That is a 69-percent increase
in payroll taxes.
I just can imagine--as a matter of fact, I will make this prediction:
When this happens 15, 20 years from now, somebody is going to come
back--the railroad companies will say: We can't afford that. That will
bankrupt us. They will basically say: Taxpayers, you handle it or
liquidate the railroad so they can pay these benefits.
You are in that kind of scenario. That will happen. That is too
Draconian of an increase because we allowed the trust fund to get too
low before we triggered the changes. I say, let's trigger the tax
increase. Instead of over a 10-year average, do it over a 5-year
average. That makes a lot more sense. We are not holding these funds to
fiduciary standards. I have an amendment to do that. We don't hold them
to fiduciary standards that we do all other multiemployer plans. Maybe
we should.
I have told some of my colleagues who have been voting and saying
they want to take up the bill, all right, we are on the bill. I want to
consider the bill. They say let's consider amendments. Well, this is an
amendment. This is an amendment that would help the security of the
trust fund, make sure it doesn't get down too low. We would have the
automatic trigger moved up a little bit. That is the essence of the
amendment. Instead of letting the fund dip down quite so low--before it
goes down too low, below the threshold of four times annual payments,
we would trigger the tax increase a little earlier so it doesn't go
down quite so low. That is the essence of the amendment.
We want to save the trust funds so the funds will be there to make
the payments and not bankrupt the railroads at the same time. Now,
maybe if, in the interest in this bill, the railroad companies and the
unions would have come before Congress and said, yes, let's have a
hearing on this bill, I could have asked them questions. My guess is
the railroad unions would say, yes, I like that idea. They would
probably say I like that idea because we don't want to jeopardize our
payments. If somebody is retired at age 60, and they happen to be age
80 and they are reading the reports, they would say, the trust fund
went down to almost bankrupt. They can barely make payments this year.
They are not going to get a lot of comfort over that. So the idea is,
let's try to make greater protection of the trust fund.
Mr. President, I want to have printed in the Record a table that I
have compiled, my staff, of the three various employment assumptions,
1, 2, and 3.
I ask unanimous consent that this table be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

RAIDING THE RAILROAD RETIREMENT TRUST FUND
[Daschle amendment `versus' current law (in millions of dollars)]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Railroad Retirement Trust Fund balance employment Railroad Retirement Trust Fund balance employment Railroad Retirement Trust Fund balance employment
assumption 1 assumption 2 assumption 3
Year -----------------------------------------------------------------------------------------------------------------------------------------------------------
Percent Percent Percent
Current law Daschle Change change Current law Daschle Difference change Current law Daschle Difference change
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2001................................ 19,383 19,383 ........... ........... 19,363 19,363 ........... ........... 19,341 19,341 ........... ...........
2002................................ 20,412 20,504 92 ........... 20,339 20,431 92 ........... 20,254 20,347 93 ...........
2003................................ 21,484 21,351 (133) -1 21,332 21,194 (138) -1 21,135 21,014 (121) -1
2004................................ 22,594 22,027 (567) -3 22,304 21,756 (548) -2 21,973 21,446 (527) -2
2005................................ 23,745 22,698 (1,047) -4 23,285 22,273 (1,012) -4 22,763 21,790 (973) -4
2006................................ 24,750 23,170 (1,580) -6 24,075 22,549 (1,526) -6 23,312 21,846 (1,466) -6
2007................................ 25,951 23,753 (2,198) -8 25,011 22,887 (2,124) -8 23,954 21,913 (2,041) -9
2008................................ 27,176 24,263 (2,913) -11 25,915 23,100 (2,815) -11 24,506 21,799 (2,707) -11
2009................................ 28,417 24,710 (3,707) -13 26,777 23,191 (3,586) -13 24,954 21,501 (3,453) -14
2010................................ 29,657 25,096 (4,561) -15 27,574 23,158 (4,416) -16 25,271 21,011 (4,260) -17
2011................................ 30,724 25,213 (5,511) -18 28,129 22,784 (5,345) -19 25,273 20,107 (5,166) -20
2012................................ 31,983 25,430 (6,553) -20 28,800 22,432 (6,368) -22 25,314 19,145 (6,169) -24
2013................................ 33,257 25,567 (7,690) -23 29,404 21,916 (7,488) -25 25,205 17,930 (7,275) -29
2014................................ 34,550 25,626 (8,924) -26 29,939 21,228 (8,711) -29 24,940 16,448 (8,492) -34
2015................................ 35,868 25,613 (10,255) -29 30,406 20,366 (10,040) -33 24,509 14,688 (9,821) -40
2016................................ 37,016 25,337 (11,679) -32 30,601 19,130 (11,471) -37 23,707 12,441 (11,266) -48
2017................................ 38,423 25,224 (13,199) -34 30,945 17,935 (13,010) -42 22,943 10,237 (12,706) -55
2018................................ 39,916 25,103 (14,813) -37 31,259 16,600 (14,659) -47 22,034 7,769 (14,265) -65
2019................................ 41,524 24,998 (16,526) -40 31,562 15,136 (16,426) -52 20,990 5,166 (15,824) -75
2020................................ 43,278 24,933 (18,345) -42 31,876 13,723 (18,153) -57 19,823 2,691 (17,132) -86
2021................................ 45,014 24,734 (20,280) -45 32,027 12,023 (20,004) -62 18,353 309 (18,044) -98
2022................................ 47,142 24,808 (22,334) -47 32,420 10,604 (21,816) -67 16,977 (2,060) (19,037) -112
2023................................ 49,512 24,983 (24,529) -50 32,890 9,660 (23,230) -71 15,529 (4,599) (20,128) -130
2024................................ 52,149 25,268 (26,881) -52 33,455 8,704 (24,751) -74 14,021 (7,316) (21,337) -152
2025................................ 55,079 25,687 (29,392) -53 34,132 8,495 (25,637) -75 12,461 (10,206) (22,667) -182
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Railroad Retirement Trust Fund actuaries. Provided by Senator Don Nickles, 12/4/01.

Mr. NICKLES. This compares present law to this bill, under those
assumptions. Present law under the employment assumption, the middle
assumption, shows in current law a trust fund balance of $19.3 billion
today and $34 billion in the year 2025. Under the Daschle amendment, or
the bill we have before us, we start at $19.3 billion, and in 25 years
we end at $8.5 billion. In other words, the trust fund is only about--
well, it is 75 percent below where it is today, or where it would be
under current law. That is assuming a 21-percent payroll tax in the
last few years. So even with enormous payroll tax increases, the fund
is still in serious jeopardy of being able to pay benefits, being able
to provide security and assurances that there is going to be money
there for retirees who maybe

[[Page S12358]]

worked most of their lives and depend on it.
I have put this in the Record because I want people to see it. I want
railroad management companies to look at these scenarios and realize,
OK, we are trading current law for this. This may be a great deal for
them for the intermediate time. People may say: Why are you doing this?
Railroad companies will save a few hundred million dollars a year--over
10 years, $4 billion; over 15, 17 years, $17.5 billion. Their taxes are
going to be cut. I will put that into the Record. Their taxes are going
to be cut over $400 million and that gets larger every year. That is
what the companies get by reducing the payroll tax from present law,
$16.1 billion, to 13.1 percent, and then it eliminates another
supplemental benefit tax that boils down to, I think, 26 cents an hour.
They eliminate both of those taxes and save about $400 million a year--
``they'' being maybe a dozen railroad companies. They save $400 million
a year.
What do the employees get? The employees get a pretty good deal. They
get a deal because they have tier 1 benefits that are supposed to be
equal to Social Security; they pay the same tax. The Social Security
tax is equal to 6.2 percent for employees, 6.2 percent for the
employer. They pay the identical tax, same tax as everybody else in
America. But they don't get the same benefit. Under Social Security
benefits, people receive their full retirement benefits at age 65,
which is going to age 67. Under railroad retirement, they get to
receive 100 percent benefit now at 62. This bill makes that 60. They
pay the same tax with more benefit. You get zero if you retire at age
60 under Social Security. If you retire at 62 under Social Security,
you get 80 percent of the benefit you were expected to receive at age
65. That 80 percent is being reduced under current law to 70 percent
over the next several years. So under Social Security, a person who
retires at 62, many years from now, gets 70 percent; and under railroad
retirement, they get 100 percent benefit at age 60--and they pay the
same taxes. There is a big difference there.
What about the survivor benefit? That is a great big benefit increase
for railroad retirees. It costs money. How much does it cost? Guess
what. It costs about $4 billion a year over the next 10 years. They
also have another little benefit: tier 2 benefits, non-Social Security
benefits, the other railroad retirement benefits, a survivor benefit
equal to 100 percent of what the employee was receiving. That is pretty
nice because in most private pension systems the survivor receives 50
percent. I wish they could pay that much and more. Who is going to have
to pay the bill? What are those benefits? They add up to $4 billion
over the next 10 years. That is about $400 million per year in a couple
of years. So it totals about $4 billion over the next 10 years. It just
happens to come out even that the railroad companies and employees
come out with the same amount of benefit. That is what they mutually
agreed upon. Well, what they didn't do, in my opinion, they didn't
protect the fund. The fund goes almost bankrupt before this triggering
mechanism to make sure the fund stays solvent is kicked in. That is not
to get too technical, but they have a 10-year lookback average before,
and if that average gets below 4 years' annual payments, then they have
an automatic tax increase. That waits too long and allows the fund to
go down to 1.3 annual payments before the tax is really kicked in--
maybe it is kicked in in the last couple years, but it doesn't catch
up.

So the fund is in jeopardy. The payments are in jeopardy. The whole
concept of paying railroad retirement is in serious jeopardy because we
didn't do a good enough job, when we created this change, to make sure
it would be solvent. So I have an amendment--really a simple
amendment--that says instead of looking back over 10 years, look back
over 5 years. I think it is a reasonable amendment, one that if the
railroad employees could look at, they would support in a minute,
absolutely, totally, completely. It is a good provision to try to make
sure there will be a trust fund there instead of allowing it to dip so
low.
I urge my colleagues to support the amendment. I yield the floor.
The PRESIDING OFFICER. The Senator from Montana.
Mr. BAUCUS. Mr. President, basically, this amendment offered by the
Senator from Oklahoma is just unnecessary. In fact, he used my chart.
My chart makes a case that is much worse than would occur under the
bill.
I am just trying to present the facts so people can make a reasonable
judgment. I looked at the balance on a year-by-year basis. That is what
that chart shows. Under the bill before us, there is a 10-year rolling
average lookback which means that lower level on the chart would never
get that low under the bill. The Senator from Oklahoma wants to change
it from 10 to 5. Even 5 will not get that low.
The main point is that many people have looked at this issue from
different directions and have concluded that this legislation is a good
way to deal with the excess balance in the railroad retirement trust
fund. By increasing some benefits, by lowering taxes, and yet building
in some automatic auditing devices, that comports with requiring the
actuary to report whether the trust fund is actuarially sound in the
current year and succeeding years under various economic assumptions.
I do not know how much better we can do than that. It is very
difficult to predict the future. I remind my colleagues that CBO, in
trying to make 10-year estimates, let alone the 20 years we are talking
about here, has varied its 10-year totals by $1 trillion over a 6-month
period of time. It is because economic assumptions change so quickly,
so often.
We are in a more uncertain world than we were, say, 10, 15, 20, 30,
40 years ago. The actuaries have done the best they can with what they
have. They made three different projections. One is pessimistic, one is
intermediate, one is optimistic. The assumption we have been talking
about is the intermediate. It is not the pessimistic, not the
optimistic; it is the intermediate.
I submit that with the annual reports from the actuaries coming to
the Congress, we will know whether we are getting into trouble or not.
This is the best solution we could come up with at this time, and it
is done on a fair, reasonable basis.
Taking a more pessimistic analysis than provided by the analysis of
the Senator from Oklahoma, the worst case is about the year 2020, 2022,
and that is when the ratio is 1 to two-thirds, balance to costs. The
Social Security actuary says we can get as low as 1 to 1. We are not 1
to 1 today in Social Security. The Social Security actuary says that is
the lowest benchmark with which he deals.
Under our intermediate assumptions, we do not get that low. We get 1
to two-thirds, 1 to 1. I suggest we are even too pessimistic.
I asked the question of the chief actuary how the economic estimates
have been on employment levels, which is the most difficult estimate to
make. His response is: Employment levels over the last 5 years--
railroad employment--have decreased an average of .9 percent per year.
He said this decrease is better than assumption 1. Assumption 1 is the
most optimistic assumption. He says for the last 5 years, the actual
decrease in employment was .9 percent per year, which is better than
provided for in assumption 1. We are talking about the intermediate,
not assumption 1.
He also says employment levels over the last 10 years have decreased
an average of 1.8 percent which falls somewhere in between assumption 1
and assumption 2.
We have been a little too conservative actually. The main point is,
who knows what the world is going to be like in the year 2020? The
Senator from Oklahoma takes the most pessimistic assumption and says we
cannot have that. My Lord, if we are in that bad a shape in 18, 19
years, I can tell my colleagues we are going to be doing a lot of other
things in this body in addition to railroad retirement. I have
confidence in the Congress, in the system. We analyzed this thoroughly.
We will do well.

Mr. NICKLES. Will the Senator yield for a question?
Mr. BAUCUS. In just a second. I also say this measure before us has
73 cosponsors. It was considered last year in September in the Finance
Committee. We had 20 amendments in the Finance Committee. It passed by
a very large margin in the House.
In sum, this amendment is unnecessary, and it is also mischievous
because

[[Page S12359]]

if it were to be adopted, this bill would have to go to conference.
There would be no railroad retirement bill this session, and there
could be no railroad retirement bill this Congress.
I urge Members not to agree to this amendment.
Mr. NICKLES. Will the Senator yield for a question?
Mr. BAUCUS. Yes.
Mr. NICKLES. The Senator said I took the most pessimistic assumption.
I correct him. All my statements and the charts are on the middle
assumption, not the most pessimistic assumption. The most pessimistic
assumption says this bill has real problems. I did not use that. I used
the middle assumption.
Mr. BAUCUS. I stand corrected. Mr. President, most of his analysis
was on the intermediate assumption. At one point, he was talking about
the most pessimistic assumption. My response was to both.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. NICKLES. Mr. President, I do not want to inflate anything. I am
very particular on being factual. I want to correct a mistake I made in
my earliest debate. This came up, frankly, when those of us who had
some concerns about the legislation were informed of it on Monday and
we were to debate it on Tuesday. I cited from memory that this fund had
actually paid out more every year than it had taken in, to the tune of
about $90 billion. That was not factually correct.
The facts are the fund has paid out more than it has taken in every
year since 1957. For the last 43 years, it has actually received
payroll taxes, contributions from employees, and it has made benefit
payments. The benefit payments have exceeded payroll taxes and company
contributions every year for the last 43 years, so I was correct from
1957 on. I wanted to state that, and I will insert that in the Record
as well.
I want to be factually correct. I want my colleagues to understand
that when I state that 20 years from now there is going to be a big
problem if we do not do something because we are getting ready to set
up a system that allows this fund to almost go bankrupt, almost to
where they cannot pay the benefits before we let the tax increase
trigger.
Some people have said: This is self-funding. This is great. We are
going to keep these fund balances between four and six times annual
payments for the next 75 years. If the trust fund balances go up, they
make good investments, they invest in a lot of stocks that did
exceptionally well, great; they can have payroll tax cuts.
If they do poorly, if they get below that four, we will have
automatic payroll tax increases on the employer, not the employee.
Fine, if that works.
Under the middle assumption, the tax increases are not triggered
until well after the fund is depleted because they use a 10-year
average. So they are on a sliding-down scale before the tax increases
trigger, so the fund almost goes bankrupt. It goes down to about 1.3
annual payments before they have the tax increases, and then they are
in serious trouble.
Somebody said this is the law; this does not allow general fund
financing, which is one of the reasons I happened to be concerned about
it. Somebody asks: Why are you so concerned? Ultimately the Federal
Government could be liable. You say: Why? Let me read a couple
statements.
I like to think the railroad companies would take care of their
employees, and if they did, I couldn't care less what benefits they
pay. If this were out of the Federal system, they could pay whatever
benefits they want. I do not care if they have retirement at age 40 if
they pay for it and the Federal Government is not liable for it. I do
not care if they have early retirement.
I do not care if they have a spouse benefit that exceeds 100 percent
if they pay for it.
What I disagree with strongly is if they greatly increase benefits
and underfund the system and then say: If this does not work out,
taxpayers, you pick up the cost. Why should we be asking people in
Minnesota or Oklahoma who make $40,000 a year or $20,000 a year to
increase their taxes to pay benefits for people who make a lot more
money than they do and enable them to retire at age 60 when people in
Oklahoma do not get to retire until they are 65 or 67 and then they
receive benefits far greater than people in Oklahoma receive. I do not
want the people of Oklahoma to have to pay taxes for them to do that.
I will read a couple quotes. Supporters insist the amendment places
responsibility on future benefits on the railroads in the event
investments do not work out.
I will read what the railroad industry thinks of its responsibility.
This is a quote from the United Transportation newsletter dated May of
2000:

The legislation also requires that the railroads would be
responsible if the trust fund falls below a certain level. If
this happens, a tax would automatically be placed solely on
the carriers in order to replenish the fund. In order to add
a final assurance to the integrity of the fund, it is still
bound by the full faith and credit of the United States
Government. They would be required to pay the obligations of
the fund if, for some reason, the other safety nets in place
were insufficient.

Earlier this year, the Lincoln Journal Star--on 8/15 of this year--
stated:

Other unions and the Association of American Railroads are
promoting the bill as a self-financed shoo-in. In fact, the
U.S. government would still back the retirement fund,
acknowledged Obie O'Bannon, vice president of legislative
affairs for the association. But, he pointed out, the
``automatic tax ratchet'' would require the railroads to kick
in more money any time the fund's balance is below four times
annual benefits, so that's protection that would mean all
U.S. railroads would face insolvency before the Federal
liability applies.

I don't want the railroad to go insolvent, but I don't want the
Federal liability to apply either. I don't want our taxpayers across
the country to have to bail this system out because we did a crummy job
of legislating in 2001, and in 20 years we say: Well, we made a
mistake. Darn, Senators Gramm and Nickles were right. Now the railroad
companies are faced with a huge tax increase they cannot pay.
The fund is raising towards insolvency. Taxpayers, would you please
give a supplemental. Let us raid a little more from Social Security--
which they do under this bill, as well. There is about a $2 billion
transfer from Social Security to help pay tier 2 benefits. That is
interesting. I thought we would protect Social Security. But we have a
Social Security bailout for the bill. Maybe we will address that
shortly.
How else do we fix the fund? Are we going to write a check? Is the
Federal Government going to write the check? I don't know. Some people
in the unions say that is what we will do. Some in management say that
is what we will do. I don't think that is the solution.
Let me read the last sentence of the vice president of legislative
affairs for the Association of American Railroads:

All railroads would face insolvency before the federal
liability applies.

I don't want the railroads to become insolvent, nor do I want the
Federal taxpayers to become liable for all the generous benefits. These
benefits, in comparison to retirement benefits in the private sector,
are very generous--overly generous. Find other private pension systems
that offer full retirement at age 60. You won't find very many. Find
other pension systems that offer spousal benefits or survivor benefits
at 100 percent. You won't find very many. I doubt the department stores
offer these kinds of benefits. Manufacturing companies don't offer
these benefits. Yet we are getting ready to do it.
Now I read that if it doesn't work out, taxpayers ``will bail us
out.''
I won't be in the Senate, or I doubt I will be in the Senate, 20
years from now, but if I am, I guarantee I will be opposing a taxpayer
bailout of this industry. And conversely, I hope there will be others
opposing this. This will happen. It is a prediction. It will be in the
Congressional Record.

I hope I am wrong. I hope they find investments that do enormously
well. They might find good investments such as Intel, 10 years ago,
going up in multiples. They might also find investments such as Enron.
I am concerned. Everybody indicated this is not so bad.
I have not raised this on the general issue of debate. This investing
in private funds is a good idea. I love for private individuals
investing for themselves to buy parts of different companies. I am
reluctant to think: What will this board invest in? Mr. President, $15
or $16 billion is a lot of money. What companies will they buy?

[[Page S12360]]

Are they going to be politically correct? Would they buy Microsoft?
Our Government was suing Microsoft. I guess they still have suits
pending against Microsoft. Maybe that is not politically correct. What
about tobacco? Our Government in the previous administration was going
after tobacco. Philip Morris was a good investment the last year.
Microsoft was a good investment the last year. Would they be buying
utility companies? A lot of utility companies are being sued for a lot
of different reasons. Do they have to wash their hands from
investments?
I have concerns when you have a board comprised of rail management
representatives, union representatives, and they select one additional
person they mutually agree upon to invest billions and billions. I have
reservations about that. That is not what I raised this issue on.
For the information of colleagues, we will vote on the Gramm
amendment and the Nickles amendment starting around 4:30. For the
information of our colleagues, we will have the joint prayer service,
which we desperately need, starting at 5 o'clock. The amendment I am
offering says, before we allow the trust funds to be depleted on such a
steep decline, if a 5-year average gets below 4 years, annual payments
trigger the tax increases at that time instead of using the 10-year
average. That would keep this a lot more shallow. It will keep the fund
probably well above 2 or 3 in the annual balance statement, certainly
above 2--not allowed to dip down so deep. That is for the protection of
the railroad retirees and for the protection of taxpayers, to make sure
we will not have to do what the United Transportation Newsletter said:
We can always fall back on the full faith and credit of the U.S.
Government.
I hope that doesn't happen. I will work energetically to see it
doesn't happen. If we keep the trust balance more level, it will not
happen.
I urge my colleagues to support the amendment that would say, instead
of having a 10-year lookback before you trigger an automatic tax
increase, do it over 5 years so we don't allow the trust fund balances
to go as low as they are now projected to by the railroads' own
actuaries of the pension plan.
I yield the floor.
Mr. BAUCUS. Mr. President, I don't see any other Senators wishing to
speak, and the leadership would like to schedule these votes around
4:30, so we have 15 more minutes. I will take that time to make a
couple of points.
First, this amendment offered by the Senator from Oklahoma simply is
unnecessary. It is true that there is a dip. The fact is, on a yearly
basis the dip is as represented on that chart, but the bill before the
Senate will not be as low as represented on the chart. Even if it is as
low as represented on the chart, this is unnecessary.
It is true that there is a question in the year 2021. There are a lot
of questions. We have to do the best we can with what we have. The vast
majority of Senators and House Members have considered and concluded
that this is a fair way to deal with this issue. This issue, if it
arises, will not arise, according to the basis of this debate, for
another 20 years. So we are talking about what may or may not occur in
20 years. Because of the annual reports provided in the bill and the
actuarial estimates on an annual basis, when it gets closer to 20 years
from now, we will have an idea whether or not this is working. If it is
not working, we will make adjustments. This amendment is totally
unnecessary.
A couple of other points. The Senator mentioned there is a lot of
Social Security money going into railroad retirement. I will address
that. It is a point that is not commonly understood. In America today,
clearly, there is a wide variety of industries. Some are new young
industries, service industries; some are older, mature industries, such
as railroad or mining industries. Industries come and go. They expand.
They are just different, which means they have different ratios of the
number of employees paying into Social Security compared with retirees
receiving Social Security in that industry.

Social Security, of course, doesn't collect and pay on an industry
basis. It collects and pays on a national basis. It is a large pool of
Americans, American workers paying into Social Security, and there are
a large number of retirees in America receiving benefits.
So as a practical matter, if we look at an industry, say a mature
industry where there are fewer employees paying into a Social Security
trust fund, and a lot of retirees receiving benefits, in effect there
is a transfer of Social Security to that industry away from a younger
industry where there are so many more employees paying in and so many
fewer retirees receiving benefits. In effect, that is what happens
today in America under Social Security. That is what is happening today
in railroad retirement under tier 1, which is essentially Social
Security. Because it is a mature industry and because there are fewer
employees--railroaders in the industry, compared with the number of
retirees proportionate to the average industry in America--there are
transfers in effect to railroad retirees under tier 1 as is the case
for all industries and for all workers in America today. There is no
difference. There is no difference.
So it sounds as if Social Security is helping out unfairly, enriching
railroad retirees under tier 1. It just is not because the Social
Security tier 1 employees are treated the same way as are employees in
a mature industry receiving benefits.
The second point is it has been suggested here that it is not fair to
lower the retirement age to 60 from 62. After all, the retirement age
under Social Security is higher. It has been suggested that it is not
fair to vest earlier, 5 years instead of 10 years; that it is not fair
that survivor's benefits for a survivor would be 100 percent instead
of, say, 45 percent. And the point is made under Social Security
retirees' survivors get benefits at a later age. So isn't this some
special deal that railroad retirees are getting? It is not fair.
On the face of it that is a question. But, as they say, that is only
half of the story. In the rest of the story, the facts are that tier 2
in railroad retirement is very comparable to a private pension plan
that a company may have for its employees. The company's employees--
retirees, say--would receive benefits under Social Security, tier 1 in
the railroad system, and they receive benefits under their pension
plan, tier 2 in the railroad industry. Many pension plans provide for
an earlier retirement age--not 65 or up to 67, as required in Social
Security, but at an earlier age.
Those people pay Social Security. Those are Social Security retirees.
How does all that work out? What is happening here?
It is very simple. In the private sector pension plans participate in
what is called a bridge with Social Security; that is, under Social
Security the retirement age is 65, but under the private pension plan
if you fully vest--say 30 years employment at, say, 60--the private
pension plan makes up the amount that Social Security does not pay. It
is called a bridge. That is how it works and it makes sense. If Social
Security does not provide those benefits for early retirement age, then
the private pension plan provides the benefits. That is what is
happening in this legislation. It is just the same.

That is, tier 2 would provide the extra benefits under a bridge to
tier 1, in effect. Actually, they don't provide it in tier 1. It is
just that the extra benefits go to the retiree to make up the
difference.
I submit, railroading is pretty hazardous. It is a dangerous
industry. And a 62 retirement age--excuse me, a 60 retirement age after
30 years of hard work as a railroader certainly seems fair to me. There
are other industries not as dangerous or demanding, but this one
certainly is. It is a dangerous industry.
It has been suggested that ERISA provisions ought to apply. Railroad
pensions should be fully funded, and this is not fully funded--as is
the case under ERISA, which is what applies to most private pension
plans.
First of all, Social Security is not fully funded. Maybe it should
be. We would like to work in that direction, but it is not today. But
more important, to fully fund the railroad retirement plan would
require the injection of $40 billion. Then it could be fully funded. We
do not have $40 billion. I think the total revenue of the railroad
system in America is about $40 billion per year, and I think the income
per year is close to $4 billion in the railroad industry.

[[Page S12361]]

Still more to the point, this trust fund, tier 2, would have about
$40 billion today, an extra $40 billion, if Congress in the past had
lived up to its word. It would have it. What am I saying?
Many years ago, Congress--I think it was in 1950--passed something
called dual benefits. The effect of it is that railroad retirees got
dual benefits. They got twice the benefits.
Clearly, that got to be a lot of money for the trust fund. If they
get double benefits for Social Security compared with other retirement
systems, that adds up pretty quickly. Congress decided to change that,
in 1974--to end that. Congress said we are going to end this dual
benefits idea. It is just too expensive. It is just too much.
But we, Congress, will grandfather in prior retirees so they do not
get less than they thought they were going to get. So as a practical
matter, that would have been--those benefits paid prior to 1974 would
have been about $3.5 billion. If the railroad retirement system had
that $3.5 billion--they did not get it, Congress did not give it to
them--today that would be worth about $30 billion, $40 billion.
If Congress had lived up to its word in the past, we could come close
to having enough dollars in the fund to make it fully funded and ERISA
applicable. But ERISA cannot be applicable today because it is $40
billion short because Congress didn't live up to its word.
Nevertheless, I think the provisions in this bill requiring all these
reports assure us of notice, adequately in advance, whether or not
there is going to be a problem during the next 20 years. It could be
just the opposite. It could be a lot better than we expect. But if it
is worse than we expect, there will be more than enough benefits for
Congress to be able to change it.
The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. NICKLES. Mr. President, I will ask unanimous consent to have
printed in the Record the ``Railroad Retirement and Survivors
Improvement Act of 2001 Progress of the Railroad Retirement and Social
Security Equivalent Benefit Accounts under Employment Assumption II.''
It basically says let's transfer $1.586 billion in from Social
Security, or the tier 1 fund, into the tier 2 fund. Social Security is
subsidizing tier 2 benefits.
I also state to my colleagues, a real solution would be if tier 1 is
supposed to be equivalent to Social Security, and people want that--and
then as Senator Baucus says, tier 2, if they want to subsidize Social
Security for a lower retirement, they can do that--let's just put them
under Social Security so we do not intermingle these funds. There is a
little raiding going on. Under this bill, there is about $2 billion,
then, $80-some million almost every year, and then it increases to
almost $100 million every year that is transferred from tier 1 to tier
2.
I do not like it. We are raiding the Social Security fund.
I ask unanimous consent to have this table printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

TABLE 3-II.--RAILROAD RETIREMENT AND SURVIVORS' IMPROVEMENT ACT OF 2001
[Progress of the Railroad Retirement and Social Security Equivalent Benefit Accounts under Employment Assumption II (dollar amounts in millions)]
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Railroad Retirement Account Social Security Equivalent Benefit Account Railroad Retirement Trust
Interest Tier 2 -------------------------------------------------------------------------------------------------------------------------- Fund Combined
Calendar year rate tax rate ------------------------------ balance
(percent) (percent) Benefits and Tax Other Transfer Balance, Benefits and Tax Interest Other Transfer Balance, Benefit Balance end year
administration income inc/exp to RRTF end year administration income income inc/exp to RRTF end year payments Income end year
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2001............................................ 5 21.0 $3,127 $2,870 $1,056 ........ $17,913 5,265 2,225 $77 $2,653 ........ $1,450 ........ ........ ........ $19,363
2002............................................ 8 20.5 57 2,816 ........ $20,673 ........ 5,335 2,254 73 3,145 $1,586 ........ $3,371 $23,802 $20,431 20,431
2003............................................ 8 19.1 59 2,682 ........ 2,623 ........ 5,395 2,279 17 3,181 82 ........ 3,554 4,317 21,194 21,194
2004............................................ 8 18.0 62 2,582 ........ 2,521 ........ 5,489 2,307 18 3,247 83 ........ 3,706 4,267 21,756 21,756
2005............................................ 8 18.0 64 2,621 ........ 2,557 ........ 5,611 2,337 18 3,341 85 ........ 3,830 4,348 22,273 22,273
2006............................................ 8 18.0 67 2,661 (84) 2,510 ........ 5,735 2,367 17 3,351 ........ ........ 3,971 4,247 22,549 22,549
2007............................................ 8 18.0 69 2,703 89 2,722 ........ 5,854 2,395 19 3,440 ........ ........ 4,144 4,483 22,887 22,887
2008............................................ 8 18.0 72 2,746 2 2,676 ........ 5,991 2,423 19 3,637 89 ........ 4,334 4,547 23,100 23,100
2009............................................ 8 18.0 75 2,789 ........ 2,714 ........ 6,160 2,453 20 3,781 93 ........ 4,511 4,602 23,191 23,191
2010............................................ 8 18.0 78 2,833 ........ 2,755 ........ 6,353 2,485 20 3,944 96 ........ 4,682 4,649 23,158 23,158
2011............................................ 8 18.0 81 2,879 (90) 2,708 ........ 6,555 2,517 20 4,019 ........ ........ 4,864 4,490 22,784 22,784
2012............................................ 8 18.0 84 2,926 97 2,939 ........ 6,769 2,551 22 4,201 5 ........ 5,052 4,700 22,432 22,432
2013............................................ 8 18.0 88 2,975 ........ 2,888 ........ 6,997 2,588 22 4,492 106 ........ 5,232 4,716 21,916 21,916
2014............................................ 8 18.0 91 3,026 ........ 2,934 ........ 7,235 2,626 23 4,695 109 ........ 5,408 4,721 21,228 21,228
2015............................................ 8 18.0 95 3,078 ........ 2,983 ........ 7,477 2,667 24 4,899 113 ........ 5,576 4,713 20,366 20,366
2016............................................ 8 18.0 99 3,131 (84) 2,948 ........ 7,725 2,711 23 4,990 ........ ........ 5,721 4,485 19,130 19,130
2017............................................ 8 18.0 103 3,184 91 3,173 ........ 7,971 2,759 25 5,216 30 ........ 5,842 4,647 17,935 17,935
2018............................................ 8 18.0 107 3,240 ........ 3,133 ........ 8,205 2,810 26 5,493 124 ........ 5,940 4,605 16,600 16,600
2019............................................ 8 18.0 111 3,297 ........ 3,186 ........ 8,424 2,865 27 5,660 127 ........ 6,017 4,553 15,136 15,136
2020............................................ 8 19.0 115 3,516 ........ 3,401 ........ 8,621 2,922 27 5,802 130 ........ 6,074 4,661 13,723 13,723
2021............................................ 8 19.0 120 3,579 (58) 3,401 ........ 8,797 2,982 27 5,788 ........ ........ 6,111 4,411 12,023 12,023
2022............................................ 8 20.0 123 3,811 63 3,751 ........ 8,951 3,045 29 5,951 72 ........ 6,132 4,713 10,605 10,604
2023............................................ 8 23.0 123 4,393 ........ 4,270 ........ 9,087 3,108 29 6,087 137 ........ 6,151 5,206 9,660 9,660
2024............................................ 8 23.0 123 4,473 ........ 4,350 ........ 9,207 3,173 29 6,144 139 ........ 6,170 5,215 8,704 8,704
2025............................................ 8 27.0 124 5,268 ........ 5,145 ........ 9,323 3,239 30 6,195 141 ........ 6,176 5,967 8,495 8,495
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Railroad Retirement Board actuaries, 12/3/01.

Mr. NICKLES. Mr. President, we can solve that by putting all railroad
employees, like we put all new Federal employees, under Social
Security. We did it. We put Members of Congress under Social Security.
To me, it would help this problem so we would get away from this little
financial wiggling that has been going on with this fund for a long
time.
Also, I ask unanimous consent to have printed in the Record a table
that I have that shows the benefits for employees and the benefits for
railroad companies, or management, on a year-to-year basis. I alluded
to this in my statement, but I wanted to have the facts with these
charts substantiating my oral comments.
There being no objection, the material ordered to be printed in the
Record, as follows:

RAILROAD RETIREMENT: H.R. 1140 AS PASSED BY THE HOUSE
[In millions of dollars]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Total
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Reduction in Retirement Age...................... 37 121 192 228 259 305 359 397 420 443 2,761
Expansion of Widow/er Benefits................... 83 92 94 95 97 100 102 104 106 108 981
Repeal of RRR Benefit Ceiling.................... 11 14 15 16 18 19 20 22 24 26 185
Reduction in Vesting Requirements................ * * * * * 1 1 1 1 2 6
----------------------------------------------------------------------------------------------------------------------------------------------
New Benefits for Labor..................... 131 227 301 339 374 425 482 524 551 579 3,933
Adjustment in Tier II Tax Rate................... (59) (198) (329) (362) (366) (374) (379) (383) (384) (386) (3,220)
Repeal of Supplemental Annuity Tax............... (59) (79) (81) (79) (77) (76) (75) (75) (74) (74) (749)
----------------------------------------------------------------------------------------------------------------------------------------------
Tax Cuts for Management.................... (118) (277) (410) (441) (443) (450) (454) (458) (458) (460) (3,969)
Stock Market Investment of Trust Funds........... 15,320 (460) (660) (830) (920) (990) (1,060) (1,140) (1,250) (1,340) 6,670
Change in Deficit/Surplus........................ (15,569) (44) (51) 50 103 115 125 159 242 302 (14,568)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: CBO: Provided by Senator Don Nickles, 11/26/01.

[[Page S12362]]

The PRESIDING OFFICER. The Senator from Montana.
Mr. BAUCUS. Mr. President, I ask unanimous consent that there be 4
minutes for debate prior to the vote in relation to the Gramm amendment
No. 2196; that regardless of the outcome of the vote, there be 4
minutes of debate prior to the vote in relation to the Nickles
amendment No. 2175 with the time equally divided and controlled in the
usual form, and that no second-degree amendments be in order to either
amendment nor the language that may be stricken.
Mr. REID. Mr. President, reserving the right to object, I wonder if
Senator Nickles will also agree that we have 1 minute on each rather
than 4 minutes. The Senator wants 4?
The PRESIDING OFFICER. Is there objection? Without objection, it is
so ordered.
Who yields time?
Mr. BAUCUS. Mr. President, I ask unanimous consent that the
amendments the Senate gave consent to earlier be reversed so the first
vote will be on the Nickles amendment No. 2175 and the second vote will
be on the Gramm amendment No. 2196.
The PRESIDING OFFICER. Is there objection? Without objection, it is
so ordered.
Who yields time?
Mr. NICKLES. Mr. President, this amendment is to help protect the
solvency of the trust fund. As the chart shows, the trust fund falls
under the middle scenario. The trust fund falls from about 6 years' of
payments. There is enough money in the trust fund to pay 6 years' worth
of benefits. Under that scenario, if we pass this bill, which we are
going to do, it goes down to about 1.3. I keep hearing 1.6. I believe
it is 1.3--barely enough to pay 1 years' benefit. That is because we
use a 10-year average looking back. The fund has to fall so far before
the tax increase is triggered.
Under this amendment, we strike the 10 years and say let us make it
5. As the fund balance starts to fall under the railroad retirement
assumption, it falls all the way down to $8 billion. We pay $8 billion
in benefits right now.
I am saying, let us not let it go quite that low. Let us look back
over 5 because if it starts falling, that fund gets below the 4 years'
payments--enough to pay for 4 years' worth of benefits--if it gets
below that, let us have the tax increase triggered then. Not 10 years,
it will be 5 years out.
That will keep the fund solvent for railroad retirees. It will
decrease the pressure on the railroad companies later on. It also gives
some protection to taxpayers. It will decrease the likelihood that
there will be a bailout or a necessity for a bailout to be falling on
general revenues or general taxpayers in the year--whether it is 2015,
2017, or 2021, I do not know. Let us not let the fund go all the way
down to almost 1 year's payment before we trigger a tax increase. Let
us do it a little bit earlier. Let us use the 5-year average instead of
the 10-year average.
I used to do this work. Anybody who talks to their actuary will say
that makes a lot of sense. Waiting for a 10-year average would be
absurd.
I yield the floor.
Mr. BAUCUS. Mr. President, this amendment is, first, totally
unnecessary. The actuaries project that the balance of the fund without
this bill over 75 years will be at least one and one-thirds above the
benefits paid. That is the lowest level; that is, about the year 2002,
which is significantly more than the short-term actuarial balance
necessary for Social Security. One and two-thirds; one for Social
Security.
This amendment is totally unnecessary. It is, second, a killer
amendment. If this amendment is agreed to, we will go to conference.
There are not many days left in the session. There will be no railroad
retirement bill passed this year and probably not in this Congress. It
is unnecessary and I particularly urge Members to oppose it.
The underlying bill requires many audit reports, financial and
actuarial reports on a yearly basis on the strength, viability, and the
health of this trust fund. We will have plenty of time and many years
in advance to see whether or not some of the dire predictions made in
this Chamber are accurate.
We have a hard time knowing 10-year budgets in the budget process
around here. We are talking about 20 years down the road. A, it is not
necessary; B, a lot of reports, if the dire predictions do come true;
and, C, it is a killer amendment.
I urge colleagues to oppose this amendment.
Mr. NICKLES. Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The question is on agreeing to the amendment. The clerk will call the
roll.
The assistant legislative clerk called the roll.
Mr. NICKLES. I announce that the Senator from Texas (Mrs. Hutchison)
is necessarily absent.
The PRESIDING OFFICER (Mr. Reed). Are there any other Senators in the
Chamber desiring to vote?
The result was announced--yeas 27, nays 72, as follows:

[Rollcall Vote No. 348 Leg.]

YEAS--27

Allard
Bennett
Bond
Bunning
Burns
Campbell
Cochran
Ensign
Fitzgerald
Frist
Gramm
Grassley
Gregg
Helms
Kyl
Lott
Lugar
McCain
McConnell
Nickles
Santorum
Sessions
Smith (NH)
Thomas
Thompson
Thurmond
Voinovich

NAYS--72

Akaka
Allen
Baucus
Bayh
Biden
Bingaman
Boxer
Breaux
Brownback
Byrd
Cantwell
Carnahan
Carper
Chafee
Cleland
Clinton
Collins
Conrad
Corzine
Craig
Crapo
Daschle
Dayton
DeWine
Dodd
Domenici
Dorgan
Durbin
Edwards
Enzi
Feingold
Feinstein
Graham
Hagel
Harkin
Hatch
Hollings
Hutchinson
Inhofe
Inouye
Jeffords
Johnson
Kennedy
Kerry
Kohl
Landrieu
Leahy
Levin
Lieberman
Lincoln
Mikulski
Miller
Murkowski
Murray
Nelson (FL)
Nelson (NE)
Reed
Reid
Roberts
Rockefeller
Sarbanes
Schumer
Shelby
Smith (OR)
Snowe
Specter
Stabenow
Stevens
Torricelli
Warner
Wellstone
Wyden

NOT VOTING--1

Hutchison

The amendment (No. 2175) was rejected.
Mr. KERRY. Mr. President, I move to reconsider the vote and I move to
lay that motion on the table.
The motion to lay on the table was agreed to.

Amendment No. 2196

The PRESIDING OFFICER. Under the previous order, there are 4 minutes
evenly divided with respect to the Gramm amendment.
The Senator from Montana is recognized.
Mr. BAUCUS. Mr. President, this is an amendment offered by the
Senator from Texas, Mr. Gramm. I strongly urge Members to not vote for
it. It is unnecessary. There are actuarial reports required in this
bill to the Congress, and financials are required annually. We will
know well in advance of any potential problem that may occur in 20
years. This is a killer amendment. If it passes, we have to go to
conference. That means no bill this year. I urge Members not to support
this amendment.
The PRESIDING OFFICER. Who yields time?
The Senator from Texas.
Mr. GRAMM. Mr. President, the amendment is very simple. The amendment
before us says you can invest the railroad retirement trust fund, you
can invest it in stocks and bonds, but you cannot spend out of it until
you have earned something on the investment.
Under the bill before us, you lower the amount of money going into
the fund and you raise benefits before one penny is earned, before one
investment is made, and in fact you take money out so quickly that you
deplete 75 percent of the trust fund before the tax on railroads has to
rise from 13.1 percent to over 22 percent in order to maintain absolute
minimum solvency.
The amendment before us simply says invest the money, earn income on
the money, use the income to lower taxes to fund railroad retirement
and to increase benefits, but don't spend the trust fund's money, spend
the earnings on the money. It is an eminently reasonable amendment. It
is in no way a gutting amendment. If we could have gone to committee
with a bill, I believe this would have been the solution. I understand
my colleagues are for the bill,

[[Page S12363]]

but I think this is a prudent way of doing it. Make the investments, do
it exactly as the bill would do it, but don't spend the principal,
spend the earnings. Don't do the things the bill calls for until you
have the money in hand.
I think that is a simple principle. The people understand it. I would
appreciate if they would vote for it.
The PRESIDING OFFICER. The question is on agreeing to the amendment.
Mr. BAUCUS. Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The clerk will call the roll.
The legislative clerk called the roll.
Mr. NICKLES. I announce that the Senator from Texas (Mrs. Hutchison)
is necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 21, nays 78, as follows:

[Rollcall Vote No. 349 Leg.]

YEAS--21

Allard
Bond
Bunning
Burns
Campbell
Cochran
Ensign
Fitzgerald
Frist
Gramm
Gregg
Helms
Kyl
Lott
Lugar
McCain
McConnell
Nickles
Smith (NH)
Thomas
Thompson

NAYS--78

Akaka
Allen
Baucus
Bayh
Bennett
Biden
Bingaman
Boxer
Breaux
Brownback
Byrd
Cantwell
Carnahan
Carper
Chafee
Cleland
Clinton
Collins
Conrad
Corzine
Craig
Crapo
Daschle
Dayton
DeWine
Dodd
Domenici
Dorgan
Durbin
Edwards
Enzi
Feingold
Feinstein
Graham
Grassley
Hagel
Harkin
Hatch
Hollings
Hutchinson
Inhofe
Inouye
Jeffords
Johnson
Kennedy
Kerry
Kohl
Landrieu
Leahy
Levin
Lieberman
Lincoln
Mikulski
Miller
Murkowski
Murray
Nelson (FL)
Nelson (NE)
Reed
Reid
Roberts
Rockefeller
Santorum
Sarbanes
Schumer
Sessions
Shelby
Smith (OR)
Snowe
Specter
Stabenow
Stevens
Thurmond
Torricelli
Voinovich
Warner
Wellstone
Wyden

NOT VOTING--1

Hutchison

The amendment was rejected.
Mr. FITZGERALD. Mr. President, I would like to bring attention to one
particular segment of the railroad industry--commuter rail. As a
Senator from Illinois, I have had the opportunity to become very
acquainted with the excellent commuter rail system that serves Chicago
and northeastern Illinois. This system--Metra--is the second largest
commuter rail system in the country and is a key part of the overall,
growing, commuter rail industry. Metra employs between 2,500 and 3,000
workers, nearly all of whom are covered under the Railroad Retirement
Board benefit plan.
The extent of commuter rail's growth over recent decades is made
clear by looking at the number of workers that it employs. Nationally,
roughly one-quarter of all rail employees work for commuter and
passenger rail, and it is expected that this number will grow
substantially in the future.
For these reasons, I believe commuter rail, because of its growing
size, importance, and impact, should be represented on the Railroad
Retirement Board of Trustees that is created by this bill. As this bill
moves forward in the legislative process, I hope that I will be able to
work with the chairman and ranking member of the Senate Finance
Committee and other conferees to ensure that commuter rail is
represented on the Board of Trustees.
Ms. MIKULSKI. Mr. President, I rise in strong support of the Railroad
Retirement and Survivors' Improvement Act of 2001. Finally, Congress is
going to consider this important bill. I have been working to improve
the benefits for our retired railroad workers for many years. Today, we
can finally say that promises made are promises kept to our rail
workers and their families.
The people who have made their contribution to family and to society
by working on our Nation's railroads deserve a decent retirement. I
know the job that railroad employees perform is very hard, very
important work. Our country has an obligation to help those who have
worked hard, saved, and played by the rules. That is why I am proud to
have been a sponsor of Railroad Retirement Improvement legislation for
many years and am proud to be a supporter of this bill.
I have been fighting to improve the benefits for railroad workers and
their families since I was first elected to Congress. The retirement
age for railroad workers and their spouses to qualify for railroad
retirement benefits should be lowered. It is difficult for people and
families to plan for their retirement in today's world, even with two
salaries. That is why strengthening retirement benefits for all
Americans has always been one of my highest priorities.
This bill is bipartisan. The House passed their version of this
important bill by an overwhelming vote of 384-33. Seventy-four of my
colleagues are cosponsors of the Senate version of the Railroad
Retirement and Survivors' Improvement Act of 2001. The support for this
measure is clear, and the time to act is now.
The Railroad Retirement and Survivor's Improvement Act expands
benefits for the widows of rail employees and lowers the minimum
retirement age at which employees with 30 years of experience are
eligible for full retirement benefits to 60 years old. This legislation
also reduces the number of years required to be fully vested for tier
II benefits and expands the system's investment authority by creating
an independent, non-governmental Railroad Retirement Trust Fund.
I urge all my colleagues to join me in standing up for our railroad
retirees and their families and support this very important bill.
Mr. REID. I move to reconsider the vote by which the amendment was
agreed to.
Mr. NICKLES. I move to lay that motion on the table.
The motion to lay on the table was agreed to.

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