[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.

                          ____________________