[Congressional Record Volume 147, Number 171 (Tuesday, December 11, 2001)]
[House]
[Pages H9160-H9166]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       RAILROAD RETIREMENT AND SURVIVORS' IMPROVEMENT ACT OF 2001

  Mr. QUINN. Mr. Speaker, I move to suspend the rules and concur in the 
Senate amendments to the bill (H.R. 10) to provide for pension reform, 
and for other purposes.
  The Clerk read as follows:
       Senate amendments:
       Strike out all after the enacting clause and insert:

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Railroad 
     Retirement and Survivors' Improvement Act of 2001''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

         TITLE I--AMENDMENTS TO RAILROAD RETIREMENT ACT OF 1974

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

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

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

         TITLE I--AMENDMENTS TO RAILROAD RETIREMENT ACT OF 1974

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

       (a) In General.--Section 4(g) of the Railroad Retirement 
     Act of 1974 (45 U.S.C. 231c(g)) is amended by adding at the 
     end the following new subdivision:
       ``(10)(i) If for any month the unreduced annuity provided 
     under this section for a widow or widower is less than the 
     widow's or widower's initial minimum amount computed pursuant 
     to paragraph (ii) of this subdivision, the unreduced annuity 
     shall be increased to that initial minimum amount. For the 
     purposes of this subdivision, the unreduced annuity is the 
     annuity without regard to any deduction on account of work, 
     without regard to any reduction for entitlement to an annuity 
     under section 2(a)(1) of this Act, without regard to any 
     reduction for entitlement to a benefit under title II of the 
     Social Security Act, and without regard to any reduction for 
     entitlement to a public service pension pursuant to section 
     202(e)(7), 202(f)(2), or 202(g)(4) of the Social Security 
     Act.
       ``(ii) For the purposes of this subdivision, the widow or 
     widower's initial minimum amount is the amount of the 
     unreduced annuity computed at the time an annuity is awarded 
     to that widow or widower, except that--
       ``(A) in subsection (g)(1)(i) `100 per centum' shall be 
     substituted for `50 per centum'; and
       ``(B) in subsection (g)(2)(ii) `130 per centum' shall be 
     substituted for `80 per centum' both places it appears.
       ``(iii) If a widow or widower who was previously entitled 
     to a widow's or widower's annuity under section 2(d)(1)(ii) 
     of this Act becomes entitled to a widow's or widower's 
     annuity under section 2(d)(1)(i) of this Act, a new initial 
     minimum amount shall be computed at the time of award of the 
     widow's or widower's annuity under section 2(d)(1)(i) of this 
     Act.''.
       (b) Effective Date.--
       (1) In general.--The amendment made by this section shall 
     take effect on the first day of the first month that begins 
     more than 30 days after enactment, and shall apply to annuity 
     amounts accruing for months after the effective date in the 
     case of annuities awarded--
       (A) on or after that date; and
       (B) before that date, but only if the annuity amount under 
     section 4(g) of the Railroad Retirement Act of 1974 (45 
     U.S.C. 231c(g)) was computed under such section, as amended 
     by the Omnibus Budget Reconciliation Act of 1981 (Public Law 
     97-35; 95 Stat. 357).
       (2) Special rule for annuities awarded before the effective 
     date.--In applying the amendment made by this section to 
     annuities awarded before the effective date, the calculation 
     of the initial minimum amount under new section 4(g)(10)(ii) 
     of the Railroad Retirement Act of 1974 (45 U.S.C. 
     231c(g)(10)(ii)), as added by subsection (a), shall be made 
     as of the date of the award of the widow's or widower's 
     annuity.

     SEC. 102. RETIREMENT AGE RESTORATION.

       (a) Employee Annuities.--Section 3(a)(2) of the Railroad 
     Retirement Act of 1974 (45 U.S.C. 231b(a)(2)) is amended by 
     inserting after ``(2)'' the following new sentence: ``For 
     purposes of this subsection, individuals entitled to an 
     annuity under section 2(a)(1)(ii) of this Act shall, except 
     for the purposes of recomputations in accordance with section 
     215(f) of the Social Security Act, be deemed to have attained 
     retirement age (as defined by section 216(l) of the Social 
     Security Act).''.
       (b) Spouse and Survivor Annuities.--Section 4(a)(2) of the 
     Railroad Retirement Act of 1974 (45 U.S.C. 231c(a)(2)) is 
     amended by striking ``if an'' and all that follows through 
     ``section 2(c)(1) of this Act'' and inserting ``a spouse 
     entitled to an annuity under section 2(c)(1)(ii)(B) of this 
     Act''.
       (c) Conforming Repeals.--Sections 3(a)(3), 4(a)(3), and 
     4(a)(4) of the Railroad Retirement Act of 1974 (45 U.S.C. 
     231b(a)(3), 231c(a)(3), and 231c(a)(4)) are repealed.
       (d) Effective Dates.--
       (1) Generally.--Except as provided in paragraph (2), the 
     amendments made by this section shall apply to annuities that 
     begin to accrue on or after January 1, 2002.
       (2) Exception.--The amount of the annuity provided for a 
     spouse under section 4(a) of the Railroad Retirement Act of 
     1974 (45 U.S.C. 231c(a)) shall be computed under section 
     4(a)(3) of such Act, as in effect on December 31, 2001, if 
     the annuity amount provided under section 3(a) of such Act 
     (45 U.S.C. 231b(a)) for the individual on whose employment 
     record the spouse annuity is based was computed under section 
     3(a)(3) of such Act, as in effect on December 31, 2001.

     SEC. 103. VESTING REQUIREMENT.

       (a) Certain Annuities for Individuals.--Section 2(a) of the 
     Railroad Retirement Act of 1974 (45 U.S.C. 231a(a)) is 
     amended--
       (1) by inserting in subdivision (1) ``(or, for purposes of 
     paragraphs (i), (iii), and (v), five years of service, all of 
     which accrues after December 31, 1995)'' after ``ten years of 
     service''; and
       (2) by adding at the end the following new subdivision:
       ``(4) An individual who is entitled to an annuity under 
     paragraph (v) of subdivision (1), but who does not have at 
     least ten years of service, shall, prior to the month in 
     which the individual attains age 62, be entitled only to an 
     annuity amount computed under section 3(a) of this Act 
     (without regard to section 3(a)(2) of this Act) or section 
     3(f)(3) of this Act. Upon attainment of age 62, such an 
     individual may also be entitled to an annuity amount computed 
     under section 3(b), but such annuity amount shall be reduced 
     for early retirement in the same manner as if the individual 
     were entitled to an annuity under section 2(a)(1)(iii).''.
       (b) Computation Rule for Individuals' Annuities.--Section 
     3(a) of the Railroad Retirement Act of 1974 (45 U.S.C. 
     231b(a)), as amended by section 102 of this Act, is further 
     amended by adding at the end the following new subdivision:
       ``(3) If an individual entitled to an annuity under section 
     2(a)(1)(i) or (iii) of this Act on the basis of less than ten 
     years of service is entitled to a benefit under section 
     202(a), section 202(b), or section 202(c) of the Social 
     Security Act which began to accrue before the annuity under 
     section 2(a)(1)(i) or (iii) of this Act, the annuity amount 
     provided such individual under this subsection, shall be 
     computed as though the annuity under this Act began to accrue 
     on the later of (A) the date on which the benefit under 
     section 202(a), section 202(b), or section 202(c) of the 
     Social Security Act began, or (B) the date on which the 
     individual first met the conditions for

[[Page H9161]]

     entitlement to an age reduced annuity under this Act other 
     than the conditions set forth in sections 2(e)(1) and 2(e)(2) 
     of this Act and the requirement that an application be 
     filed.''.
       (c) Survivors' Annuities.--Section 2(d)(1) of the Railroad 
     Retirement Act of 1974 (45 U.S.C. 231a(d)(1)) is amended by 
     inserting ``(or five years of service, all of which accrues 
     after December 31, 1995)'' after ``ten years of service''.
       (d) Limitation on Annuity Amounts.--Section 2 of the 
     Railroad Retirement Act of 1974 (45 U.S.C. 231a) is amended 
     by adding at the end the following new subsection:
       ``(i) An individual entitled to an annuity under this 
     section who has completed five years of service, all of which 
     accrues after 1995, but who has not completed ten years of 
     service, and the spouse, divorced spouse, and survivors of 
     such individual, shall not be entitled to an annuity amount 
     provided under section 3(a), section 4(a), or section 4(f) of 
     this Act unless the individual, or the individual's spouse, 
     divorced spouse, or survivors, would be entitled to a benefit 
     under title II of the Social Security Act on the basis of the 
     individual's employment record under both this Act and title 
     II of the Social Security Act.''.
       (e) Computation Rule for Spouses' Annuities.--Section 4(a) 
     of the Railroad Retirement Act of 1974 (45 U.S.C. 231c(a)), 
     as amended by section 102 of this Act, is further amended by 
     adding at the end the following new subdivision:
       ``(3) If a spouse entitled to an annuity under section 
     2(c)(1)(ii)(A), section 2(c)(1)(ii)(C), or section 2(c)(2) of 
     this Act or a divorced spouse entitled to an annuity under 
     section 2(c)(4) of this Act on the basis of the employment 
     record of an employee who will have completed less than 10 
     years of service is entitled to a benefit under section 
     202(a), section 202(b), or section 202(c) of the Social 
     Security Act which began to accrue before the annuity under 
     section 2(c)(1)(ii)(A), section 2(c)(1)(ii)(C), section 
     2(c)(2), or section 2(c)(4) of this Act, the annuity amount 
     provided under this subsection shall be computed as though 
     the annuity under this Act began to accrue on the later of 
     (A) the date on which the benefit under section 202(a), 
     section 202(b), or section 202(c) of the Social Security Act 
     began or (B) the first date on which the annuitant met the 
     conditions for entitlement to an age reduced annuity under 
     this Act other than the conditions set forth in sections 
     2(e)(1) and 2(e)(2) of this Act and the requirement that an 
     application be filed.''.
       (f)  Application Deeming Provision.--Section 5(b) of the 
     Railroad Retirement Act of 1974 (45 U.S.C. 231d(b)) is 
     amended by striking the second sentence and inserting the 
     following new sentence: ``An application filed with the Board 
     for an employee annuity, spouse annuity, or divorced spouse 
     annuity on the basis of the employment record of an employee 
     who will have completed less than ten years of service shall 
     be deemed to be an application for any benefit to which such 
     applicant may be entitled under this Act or section 202(a), 
     section 202(b), or section 202(c) of the Social Security Act. 
     An application filed with the Board for an annuity on the 
     basis of the employment record of an employee who will have 
     completed ten years of service shall, unless the applicant 
     specified otherwise, be deemed to be an application for any 
     benefit to which such applicant may be entitled under this 
     Act or title II of the Social Security Act.''.
       (g) Crediting Service Under the Social Security Act.--
     Section 18(2) of the Railroad Retirement Act of 1974 (45 
     U.S.C. 231q(2)) is amended--
       (1) by inserting ``(or less than five years of service, all 
     of which accrues after December 31, 1995)'' after ``ten years 
     of service'' every place it appears; and
       (2) by inserting ``(or five or more years of service, all 
     of which accrues after December 31, 1995)'' after ``ten or 
     more years of service''.
       (h) Automatic Benefit Eligibility Adjustments.--Section 19 
     of the Railroad Retirement Act of 1974 (45 U.S.C. 231r) is 
     amended--
       (1) by inserting ``(or five or more years of service, all 
     of which accrues after December 31, 1995)'' after ``ten years 
     of service'' in subsection (c); and
       (2) by inserting ``(or five or more years of service, all 
     of which accrues after December 31, 1995)'' after ``ten years 
     of service'' in subsection (d)(2).
       (i) Conforming Amendments.--
       (1) Section 6(e)(1) of the Railroad Retirement Act of 1974 
     (45 U.S.C. 231e(1)) is amended by inserting ``(or five or 
     more years of service, all of which accrues after December 
     31, 1995)'' after ``ten years of service''.
       (2) Section 7(b)(2)(A) of the Railroad Retirement Act of 
     1974 (45 U.S.C. 231f(b)(2)(A)) is amended by inserting ``(or 
     five or more years of service, all of which accrues after 
     December 31, 1995)'' after ``ten years of service''.
       (3) Section 205(i) of the Social Security Act (42 U.S.C. 
     405(i)) is amended by inserting ``(or five or more years of 
     service, all of which accrues after December 31, 1995)'' 
     after ``ten years of service''.
       (4) Section 6(b)(2) of the Railroad Retirement Act of 1974 
     (45 U.S.C. 231e(b)(2)) is amended by inserting ``(or five or 
     more years of service, all of which accrues after December 
     31, 1995)'' after ``ten years of service'' the second place 
     it appears.
       (j) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2002.

     SEC. 104. REPEAL OF RAILROAD RETIREMENT MAXIMUM.

       (a) Employee Annuities.--
       (1) In general.--Section 3(f) of the Railroad Retirement 
     Act of 1974 (45 U.S.C. 231b(f)) is amended--
       (A) by striking subdivision (1); and
       (B) by redesignating subdivisions (2) and (3) as 
     subdivisions (1) and (2), respectively.
       (2) Conforming amendments.--
       (A) The first sentence of section 3(f)(1) of the Railroad 
     Retirement Act of 1974 (45 U.S.C. 231b(f)(1)), as 
     redesignated by paragraph (1)(B), is amended by striking ``, 
     without regard to the provisions of subdivision (1) of this 
     subsection,''.
       (B) Paragraphs (i) and (ii) of section 7(d)(2) of the 
     Railroad Retirement Act of 1974 (45 U.S.C. 231f(d)(2)) are 
     each amended by striking ``section 3(f)(3)'' and inserting 
     ``section 3(f)(2)''.
       (b) Spouse and Survivor Annuities.--Section 4 of the 
     Railroad Retirement Act of 1974 (45 U.S.C. 231c) is amended 
     by striking subsection (c).
       (c) Effective Date.--The amendments made by this section 
     shall take effect on January 1, 2002, and shall apply to 
     annuity amounts accruing for months after December 2001.

     SEC. 105. INVESTMENT OF RAILROAD RETIREMENT ASSETS.

       (a) Establishment of National Railroad Retirement 
     Investment Trust.--Section 15 of the Railroad Retirement Act 
     of 1974 (45 U.S.C. 231n) is amended by inserting after 
     subsection (i) the following new subsection:
       ``(j) National Railroad Retirement Investment Trust.--
       ``(1) Establishment.--The National Railroad Retirement 
     Investment Trust (hereinafter in this subsection referred to 
     as the `Trust') is hereby established as a trust domiciled in 
     the District of Columbia and shall, to the extent not 
     inconsistent with this Act, be subject to the laws of the 
     District of Columbia applicable to such trusts. The Trust 
     shall manage and invest its assets in the manner set forth in 
     this subsection.
       ``(2) Not a federal agency or instrumentality.--The Trust 
     is not a department, agency, or instrumentality of the 
     Government of the United States and shall not be subject to 
     title 31, United States Code.
       ``(3) Board of trustees.--
       ``(A) Generally.--
       ``(i) Membership.--The Trust shall have a Board of 
     Trustees, consisting of 7 members. Three shall represent the 
     interests of labor, 3 shall represent the interests of 
     management, and 1 shall be an independent Trustee. The 
     members of the Board of Trustees shall not be considered 
     officers or employees of the Government of the United States.
       ``(ii) Selection.--

       ``(I) The 3 members representing the interests of labor 
     shall be selected by the joint recommendation of labor 
     organizations, national in scope, organized in accordance 
     with section 2 of the Railway Labor Act, and representing at 
     least \2/3\ of all active employees, represented by such 
     national labor organizations, covered under this Act.
       ``(II) The 3 members representing the interests of 
     management shall be selected by the joint recommendation of 
     carriers as defined in section 1 of the Railway Labor Act 
     employing at least \2/3\ of all active employees covered 
     under this Act.
       ``(III) The independent member shall be selected by a 
     majority of the other 6 members of the Board of Trustees.

     A member of the Board of Trustees may be removed in the same 
     manner and by the same constituency that selected that 
     member.
       ``(iii) Dispute resolution.--In the event that the parties 
     specified in subclause (I), (II), or (III) of the previous 
     clause cannot agree on the selection of Trustees within 60 
     days of the date of enactment or 60 days from any subsequent 
     date that a position of the Board of Trustees becomes vacant, 
     an impartial umpire to decide such dispute shall, on the 
     petition of a party to the dispute, be appointed by the 
     District Court of the United States for the District of 
     Columbia.
       ``(B) Qualifications.--Members of the Board of Trustees 
     shall be appointed only from among persons who have 
     experience and expertise in the management of financial 
     investments and pension plans. No member of the Railroad 
     Retirement Board shall be eligible to be a member of the 
     Board of Trustees.
       ``(C) Terms.--Except as provided in this subparagraph, each 
     member shall be appointed for a 3-year term. The initial 
     members appointed under this paragraph shall be divided into 
     equal groups so nearly as may be, of which one group will be 
     appointed for a 1-year term, one for a 2-year term, and one 
     for a 3-year term. The Trustee initially selected pursuant to 
     clause (ii)(III) shall be appointed to a 3-year term. A 
     vacancy in the Board of Trustees shall not affect the powers 
     of the Board of Trustees and shall be filled in the same 
     manner as the selection of the member whose departure caused 
     the vacancy. Upon the expiration of a term of a member of the 
     Board of Trustees, that member shall continue to serve until 
     a successor is appointed.
       ``(4) Powers of the board of trustees.--The Board of 
     Trustees shall--
       ``(A) retain independent advisers to assist it in the 
     formulation and adoption of its investment guidelines;
       ``(B) retain independent investment managers to invest the 
     assets of the Trust in a manner consistent with such 
     investment guidelines;
       ``(C) invest assets in the Trust, pursuant to the policies 
     adopted in subparagraph (A);
       ``(D) pay administrative expenses of the Trust from the 
     assets in the Trust; and
       ``(E) transfer money to the disbursing agent or as 
     otherwise provided in section 7(b)(4), to pay benefits 
     payable under this Act from the assets of the Trust.
       ``(5) Reporting requirements and fiduciary standards.--The 
     following reporting requirements and fiduciary standards 
     shall apply with respect to the Trust:
       ``(A) Duties of the board of trustees.--The Trust and each 
     member of the Board of Trustees shall discharge their duties 
     (including the voting of proxies) with respect to the assets

[[Page H9162]]

     of the Trust solely in the interest of the Railroad 
     Retirement Board and through it, the participants and 
     beneficiaries of the programs funded under this Act--
       ``(i) for the exclusive purpose of--

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

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

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

       ``(iii) The Trust shall provide the President, the Railroad 
     Retirement Board, and the Director of the Office of 
     Management and Budget a copy of the management report when it 
     is submitted to Congress.
       ``(F) Enforcement.--The Railroad Retirement Board may bring 
     a civil action--
       ``(i) to enjoin any act or practice by the Trust, its Board 
     of Trustees, or its employees or agents that violates any 
     provision of this Act; or
       ``(ii) to obtain other appropriate relief to redress such 
     violations, or to enforce any provisions of this Act.
       ``(6) Rules and administrative powers.--The Board of 
     Trustees shall have the authority to make rules to govern its 
     operations, employ professional staff, and contract with 
     outside advisers, including the Railroad Retirement Board, to 
     provide legal, accounting, investment advisory, or other 
     services necessary for the proper administration of this 
     subsection. In the case of contracts with investment advisory 
     services, compensation for such services may be on a fixed 
     contract fee basis or on such other terms and conditions as 
     are customary for such services.
       ``(7) Quorum.--Five members of the Board of Trustees 
     constitute a quorum to do business. Investment guidelines 
     must be adopted by a unanimous vote of the entire Board of 
     Trustees. All other decisions of the Board of Trustees shall 
     be decided by a majority vote of the quorum present. All 
     decisions of the Board of Trustees shall be entered upon the 
     records of the Board of Trustees.
       ``(8) Funding.--The expenses of the Trust and the Board of 
     Trustees incurred under this subsection shall be paid from 
     the Trust.''.
       (b) Conforming and Technical Amendments Governing 
     Investments.--Section 15(e) of the Railroad Retirement Act of 
     1974 (45 U.S.C. 231n(e)) is amended--
       (1) in the first sentence, by striking ``, the Dual 
     Benefits Payments Account'' and all that follows through 
     ``may be made only'' in the second sentence and inserting 
     ``and the Dual Benefits Payments Account as are not 
     transferred to the National Railroad Retirement Investment 
     Trust as the Board may determine'';
       (2) by striking ``the Second Liberty Bond Act, as amended'' 
     and inserting ``chapter 31 of title 31''; and
       (3) by striking ``the foregoing requirements'' and 
     inserting ``the requirements of this subsection''.
       (c) Means of Financing.--For all purposes of the 
     Congressional Budget Act of 1974, the Balanced Budget and 
     Emergency Deficit Control Act of 1985, and chapter 11 of 
     title 31, United States Code, and notwithstanding section 20 
     of the Office of Management and Budget Circular No. A-11, the 
     purchase or sale of non-Federal assets (other than gains or 
     losses from such transactions) by the National Railroad 
     Retirement Investment Trust shall be treated as a means of 
     financing.
       (d) Effective Date.--The amendments made by this section 
     shall take effect on the first day of the month that begins 
     more than 30 days after enactment.

     SEC. 106. ELIMINATION OF SUPPLEMENTAL ANNUITY ACCOUNT.

       (a) Source of Payments.--Section 7(c)(1) of the Railroad 
     Retirement Act of 1974 (45 U.S.C. 231f(c)(1)) is amended by 
     striking ``payments of supplemental annuities under section 
     2(b) of this Act shall be made from the Railroad Retirement 
     Supplemental Account, and''.
       (b) Elimination of Account.--Section 15(c) of the Railroad 
     Retirement Act of 1974 (45 U.S.C. 231n(c)) is repealed.
       (c) Amendment to Railroad Retirement Account.--Section 
     15(a) of the Railroad Retirement Act of 1974 (45 U.S.C. 
     231n(a)) is amended by striking ``, except those portions of 
     the amounts covered into the Treasury under sections 
     3211(b),'' and all that follows through the end of the 
     subsection and inserting a period.
       (d) Transfer.--
       (1) Determination.--As soon as possible after December 31, 
     2001, the Railroad Retirement Board shall--
       (A) determine the amount of funds in the Railroad 
     Retirement Supplemental Account under section 15(c) of the 
     Railroad Retirement Act of 1974 (45 U.S.C. 231n(c)) as of the 
     date of such determination; and
       (B) direct the Secretary of the Treasury to transfer such 
     funds to the National Railroad Retirement Investment Trust 
     under section 15(j) of such Act (as added by section 105).
       (2) Transfer by the secretary of the treasury.--The 
     Secretary of the Treasury shall make the transfer described 
     in paragraph (1).
       (e) Effective Date.--
       (1) In general.--Subject to paragraph (2), the amendments 
     made by subsections (a), (b), and (c) shall take effect 
     January 1, 2002.
       (2) Account in existence until transfer made.--The Railroad 
     Retirement Supplemental Account under section 15(c) of the 
     Railroad Retirement Act of 1974 (45 U.S.C. 231n(c)) shall 
     continue to exist until the date that the Secretary of the 
     Treasury makes the transfer described in subsection (d)(2).

     SEC. 107. TRANSFER AUTHORITY REVISIONS.

       (a) Railroad Retirement Account.--Section 15 of the 
     Railroad Retirement Act of 1974 (45 U.S.C. 231n) is amended 
     by adding after subsection (j) the following new subsection:
       ``(k) Transfers to the Trust.--The Board shall, upon 
     establishment of the National Railroad Retirement Investment 
     Trust and from time to time thereafter, direct the Secretary 
     of the Treasury to transfer, in such manner as will maximize 
     the investment returns to the Railroad Retirement system, 
     that portion of the Railroad Retirement Account that is not 
     needed to pay current administrative expenses of the Board to 
     the National Railroad Retirement Investment Trust. The 
     Secretary shall make that transfer.''.
       (b) Transfers From the National Railroad Retirement 
     Investment Trust.--Section 15 of the Railroad Retirement Act 
     of 1974 (45 U.S.C. 231n), as amended by subsection (a), is 
     further amended by adding after subsection (k) the following 
     new subsection:
       ``(l) National Railroad Retirement Investment Trust.--The 
     National Railroad Retirement Investment Trust shall from time 
     to time transfer to the disbursing agent described in section 
     7(b)(4) or as otherwise directed by the Railroad Retirement 
     Board pursuant to section 7(b)(4), such amounts as may be 
     necessary to pay benefits under this Act (other than benefits 
     paid from the Social Security Equivalent Benefit

[[Page H9163]]

     Account or the Dual Benefit Payments Account).''.
       (c) Social Security Equivalent Benefit Account.--
       (1) Transfers to trust.--Section 15A(d)(2) of the Railroad 
     Retirement Act of 1974 (45 U.S.C. 231n-1(d)(2)) is amended to 
     read as follows:
       ``(2) Upon establishment of the National Railroad 
     Retirement Investment Trust and from time to time thereafter, 
     the Board shall direct the Secretary of the Treasury to 
     transfer, in such manner as will maximize the investment 
     returns to the Railroad Retirement system, the balance of the 
     Social Security Equivalent Benefit Account not needed to pay 
     current benefits and administrative expenses required to be 
     paid from that Account to the National Railroad Retirement 
     Investment Trust, and the Secretary shall make that transfer. 
     Any balance transferred under this paragraph shall be used by 
     the National Railroad Retirement Investment Trust only to pay 
     benefits under this Act or to purchase obligations of the 
     United States that are backed by the full faith and credit of 
     the United States pursuant to chapter 31 of title 31, United 
     States Code. The proceeds of sales of, and the interest 
     income from, such obligations shall be used by the Trust only 
     to pay benefits under this Act.''.
       (2) Transfers to disbursing agent.--Section 15A(c)(1) of 
     the Railroad Retirement Act of 1974 (45 U.S.C. 231n-1(c)(1)) 
     is amended by adding at the end the following new sentence: 
     ``The Secretary shall from time to time transfer to the 
     disbursing agent under section 7(b)(4) amounts necessary to 
     pay those benefits.''.
       (3) Conforming amendment.--Section 15A(d)(1) of the 
     Railroad Retirement Act of 1974 (45 U.S.C. 231n-1(d)(1)) is 
     amended by striking the second and third sentences.
       (d) Dual Benefits Payments Account.--Section 15(d)(1) of 
     the Railroad Retirement Act of 1974 (45 U.S.C. 231n(d)(1)) is 
     amended by adding at the end the following new sentence: 
     ``The Secretary of the Treasury shall from time to time 
     transfer from the Dual Benefits Payments Account to the 
     disbursing agent under section 7(b)(4) amounts necessary to 
     pay benefits payable from that Account.''.
       (e) Certification by the Board and Payment.--Paragraph (4) 
     of section 7(b) of the Railroad Retirement Act of 1974 (45 
     U.S.C. 231f(b)(4)) is amended to read as follows:
       ``(4)(A) The Railroad Retirement Board, after consultation 
     with the Board of Trustees of the National Railroad 
     Retirement Investment Trust and the Secretary of the 
     Treasury, shall enter into an arrangement with a 
     nongovernmental financial institution to serve as disbursing 
     agent for benefits payable under this Act who shall disburse 
     consolidated benefits under this Act to each recipient. 
     Pending the taking effect of that arrangement, benefits shall 
     be paid as under the law in effect prior to the enactment of 
     the Railroad Retirement and Survivors' Improvement Act of 
     2001.
       ``(B) The Board shall from time to time certify--
       ``(i) to the Secretary of the Treasury the amounts required 
     to be transferred from the Social Security Equivalent Benefit 
     Account and the Dual Benefits Payments Account to the 
     disbursing agent to make payments of benefits and the 
     Secretary of the Treasury shall transfer those amounts;
       ``(ii) to the Board of Trustees of the National Railroad 
     Retirement Investment Trust the amounts required to be 
     transferred from the National Railroad Retirement Investment 
     Trust to the disbursing agent to make payments of benefits 
     and the Board of Trustees shall transfer those amounts; and
       ``(iii) to the disbursing agent the name and address of 
     each individual entitled to receive a payment, the amount of 
     such payment, and the time at which the payment should be 
     made.''.
       (f) Benefit Payments.--Section 7(c)(1) of the Railroad 
     Retirement Act of 1974 (45 U.S.C. 231f(c)(1)) is amended--
       (1) by striking ``from the Railroad Retirement Account'' 
     and inserting ``by the disbursing agent under subsection 
     (b)(4) from money transferred to it from the National 
     Railroad Retirement Investment Trust or the Social Security 
     Equivalent Benefit Account, as the case may be''; and
       (2) by inserting ``by the disbursing agent under subsection 
     (b)(4) from money transferred to it'' after ``Public Law 93-
     445 shall be made''.
       (g) Transitional Rule for Existing Obligation.--In making 
     transfers under sections 15(k) and 15A(d)(2) of the Railroad 
     Retirement Act of 1974, as amended by subsections (a) and 
     (c), respectively, the Railroad Retirement Board shall 
     consult with the Secretary of the Treasury to design an 
     appropriate method to transfer obligations held as of the 
     date of enactment of this Act or to convert such obligations 
     to cash at the discretion of the Railroad Retirement Board 
     prior to transfer. The National Railroad Retirement 
     Investment Trust may hold to maturity any obligations so 
     received or may redeem them prior to maturity, as the Trust 
     deems appropriate.

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

       (a) Projections.--Section 22(a)(1) of the Railroad 
     Retirement Act of 1974 (45 U.S.C. 231u(a)(1)) is amended--
       (1) by inserting after the first sentence the following new 
     sentence: ``On or before May 1 of each year beginning in 
     2003, the Railroad Retirement Board shall compute its 
     projection of the account benefits ratio and the average 
     account benefits ratio (as defined by section 3241(c) of the 
     Internal Revenue Code of 1986) for each of the next 
     succeeding five fiscal years.''; and
       (2) by striking ``the projection prepared pursuant to the 
     preceding sentence'' and inserting ``the projections prepared 
     pursuant to the preceding two sentences''.
       (b) Certifications.--The Railroad Retirement Act of 1974 
     (45 U.S.C. 231 et seq.) is amended by adding at the end the 
     following new section:


       ``computation and certification of account benefit ratios

       ``Sec. 23. (a) Initial Computation and Certification.--On 
     or before November 1, 2003, the Railroad Retirement Board 
     shall--
       ``(1) compute the account benefits ratios for each of the 
     most recent 10 preceding fiscal years, and
       ``(2) certify the account benefits ratios for each such 
     fiscal year to the Secretary of the Treasury.
       ``(b) Computations and Certifications After 2003.--On or 
     before November 1 of each year after 2003, the Railroad 
     Retirement Board shall--
       ``(1) compute the account benefits ratio for the fiscal 
     year ending in such year, and
       ``(2) certify the account benefits ratio for such fiscal 
     year to the Secretary of the Treasury.
       ``(c) Definition.--As used in this section, the term 
     `account benefits ratio' has the meaning given that term in 
     section 3241(c) of the Internal Revenue Code of 1986.''.

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

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

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

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

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

     SEC. 203. REPEAL OF SUPPLEMENTAL ANNUITY TAX.

       (a) Repeal of Tax on Employee Representatives.--Section 
     3211 is amended by striking subsection (b).
       (b) Repeal of Tax on Employers.--Section 3221 is amended by 
     striking subsections (c) and (d) and by redesignating 
     subsection (e) as subsection (c).
       (c) Effective Date.--The amendments made by this section 
     shall apply to calendar years beginning after December 31, 
     2001.

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

       (a) Rate of Tax on Employers.--Subsection (b) of section 
     3221 is amended to read as follows:
       ``(b) Tier 2 Tax.--
       ``(1) In general.--In addition to other taxes, there is 
     hereby imposed on every employer an excise tax, with respect 
     to having individuals in his employ, equal to the applicable 
     percentage of the compensation paid during any calendar year 
     by such employer for services rendered to such employer.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the term `applicable percentage' means--
       ``(A) 15.6 percent in the case of compensation paid during 
     2002,
       ``(B) 14.2 percent in the case of compensation paid during 
     2003, and
       ``(C) in the case of compensation paid during any calendar 
     year after 2003, the percentage determined under section 3241 
     for such calendar year.''.
       (b) Rate of Tax on Employee Representatives.--Section 3211, 
     as amended by section 203, is amended by striking subsection 
     (a) and inserting the following new subsections:
       ``(a) Tier 1 Tax.--In addition to other taxes, there is 
     hereby imposed on the income of each employee representative 
     a tax equal to the applicable percentage of the compensation 
     received during any calendar year by such employee 
     representative for services rendered by such employee 
     representative. For purposes of the preceding sentence, the 
     term `applicable percentage' means the percentage equal to 
     the sum of the rates of tax in effect under subsections (a) 
     and (b) of section 3101 and subsections (a) and (b) of 
     section 3111 for the calendar year.
       ``(b) Tier 2 Tax.--
       ``(1) In general.--In addition to other taxes, there is 
     hereby imposed on the income of each employee representative 
     a tax equal to the applicable percentage of the compensation 
     received during any calendar year by such employee 
     representatives for services rendered by such employee 
     representative.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the term `applicable percentage' means--
       ``(A) 14.75 percent in the case of compensation received 
     during 2002,
       ``(B) 14.20 percent in the case of compensation received 
     during 2003, and
       ``(C) in the case of compensation received during any 
     calendar year after 2003, the percentage determined under 
     section 3241 for such calendar year.
       ``(c) Cross Reference.--

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

       (c) Rate of Tax on Employees.--Subsection (b) of section 
     3201 is amended to read as follows:
       ``(b) Tier 2 Tax.--
       ``(1) In general.--In addition to other taxes, there is 
     hereby imposed on the income of each employee a tax equal to 
     the applicable percentage of the compensation received during 
     any calendar year by such employee for services rendered by 
     such employee.
       ``(2) Applicable percentage.--For purposes of paragraph 
     (1), the term `applicable percentage' means--

[[Page H9164]]

       ``(A) 4.90 percent in the case of compensation received 
     during 2002 or 2003, and
       ``(B) in the case of compensation received during any 
     calendar year after 2003, the percentage determined under 
     section 3241 for such calendar year.''.
       (d) Determination of Rate.--Chapter 22 is amended by adding 
     at the end the following new subchapter:

             ``Subchapter E--Tier 2 Tax Rate Determination

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

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

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


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

       ``(c) Definitions Related to Determination of Rates of 
     Tax.--
       ``(1) Average account benefits ratio.--For purposes of this 
     section, the term `average account benefits ratio' means, 
     with respect to any calendar year, the average determined by 
     the Secretary of the account benefits ratios for the 10 most 
     recent fiscal years ending before such calendar year. If the 
     amount determined under the preceding sentence is not a 
     multiple of 0.1, such amount shall be increased to the next 
     highest multiple of 0.1.
       ``(2) Account benefits ratio.--For purposes of this 
     section, the term `account benefits ratio' means, with 
     respect to any fiscal year, the amount determined by the 
     Railroad Retirement Board by dividing the fair market value 
     of the assets in the Railroad Retirement Account and of the 
     National Railroad Retirement Investment Trust (and for years 
     before 2002, the Social Security Equivalent Benefits Account) 
     as of the close of such fiscal year by the total benefits and 
     administrative expenses paid from the Railroad Retirement 
     Account and the National Railroad Retirement Investment Trust 
     during such fiscal year.
       ``(d) Notice.--No later than December 1 of each calendar 
     year, the Secretary shall publish a notice in the Federal 
     Register of the rates of tax determined under this section 
     which are applicable for the following calendar year.''.
       (e) Conforming Amendments.--
       (1) Section 24(d)(3)(A)(iii) is amended by striking 
     ``section 3211(a)(1)'' and inserting ``section 3211(a)''.
       (2) Section 72(r)(2)(B)(i) is amended by striking 
     ``3211(a)(2)'' and inserting ``3211(b)''.
       (3) Paragraphs (2)(A)(iii)(II) and (4)(A) of section 
     3231(e) are amended by striking ``3211(a)(1)'' and inserting 
     ``3211(a)''.
       (4) Section 3231(e)(2)(B)(ii)(I) is amended by striking 
     ``3211(a)(2)'' and inserting ``3211(b)''.
       (5) The table of subchapters for chapter 22 is amended by 
     adding at the end the following new item:

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

       (f) Effective Date.--The amendments made by this section 
     shall apply to calendar years beginning after December 31, 
     2001.

         Amend the title so as to read: ``An Act to modernize the 
     financing of the railroad retirement system and to provide 
     enhanced benefits to employees and beneficiaries.''.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from New 
York (Mr. Quinn) and the gentleman from Tennessee (Mr. Clement) each 
will control 20 minutes.
  The Chair recognizes the gentleman from New York (Mr. Quinn).
  Mr. QUINN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I rise today in steadfast support of H.R. 10, the 
Railroad Retirement and Survivors' Improvement Act of 2001.
  H.R. 10 is identical to the railroad retirement reform legislation 
passed by the House earlier this year with over 380 votes. 
Consideration of the bill today is merely a procedural step required 
pursuant to its Senate approval to move the legislation to the 
President's desk for signature.
  Built into the legislation is an automatic safety net behind the 
future investment strategy. The railroad retirement system now has 
reserves of more than 6 years of benefit payments. Under the bill, 
future payroll taxes would automatically adjust to reflect the 
performance of pension investments. If reserves fall below the 4-year 
benefit levels, automatic employer tax increases would be triggered. If 
reserves go above the 6 years in the future, further tax reductions for 
railroads and either tax relief or additional benefits for workers 
would be provided.
  This bill, Mr. Speaker, enjoys one of the highest levels of 
bipartisan support in recent congressional history. It is sound, 
commonsense legislation that helps our railroads stay competitive while 
providing needed retirement benefits for all rail workers and their 
families, without costing the American taxpayers a single dime.
  I want to commend our committee full chairman, the gentleman from 
Alaska (Mr. Young), the ranking member, the gentleman from Minnesota 
(Mr. Oberstar), and the subcommittee ranking member and my partner, the 
gentleman from Tennessee (Mr. Clement), for their leadership on this 
legislation.
  This is the workers' own money, Mr. Speaker. They deserve to improve 
its returns and their benefit payments. I urge all Members to support 
H.R. 10.
  Mr. Speaker, I reserve the balance of my time.
  Mr. CLEMENT. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I say to the gentleman from New York (Mr. Quinn), it is 
good to have him back. He has just had back surgery, and I am glad he 
has made a speedy recovery. We need him here very badly.
  Mr. Speaker, it is my sincere pleasure to manage H.R. 10, the 
Railroad Retirement and Survivors' Improvement Act of 2001.
  Today, as the ranking member of the Subcommittee on Railroads, in 
fact, it is even a greater pleasure to be here today than the two 
previous times this exact same measure has come to the floor and passed 
with unequivocal, overwhelmingly strong majorities.
  The reason for my happiness is simple: with the passage of this bill 
today, all that will remain is the President's promised signature 
before the over 250,000 railroad employees and the 700,000 retirees and 
survivors of railroad workers can finally have what they have deserved 
for years: a modern and equitable retirement plan.
  It has been this goal that has led Democrats and Republicans alike to 
work together with rail management and rail labor to craft a measure so 
sound that it had 368 cosponsors as it passed through the House this 
summer by a vote of 384 to 33.
  As the ranking member of the Subcommittee on Railroads, I can 
personally speak of the hard work and total commitment to this issue by 
the gentleman from New York (Chairman Quinn) and all members of our 
subcommittee on both sides of the aisle.
  This support, along with the tireless leadership of the ranking 
member, the gentleman from Minnesota (Mr. Oberstar), and the gentleman 
from Alaska (Chairman Young), built a train that could not be stopped. 
Whether temporarily stalled by procedure or debate, railroad retirement 
reform continued to move forward, despite the opposition of the few who 
wish to derail it.
  Thus it brings me great satisfaction today that this bill can finally 
depart this branch of government and begin its journey carrying 
enhanced benefits toward the workers and retirees of our Nation's rail 
system.
  The overwhelming majority of the Members know that this is a good 
bill. They know it has the support of both management and labor. This 
is a vote that should require little soul searching. Members know that 
this is right for railroad workers and their survivors. They know it is 
right for the industry and for America as a whole.
  I urge my colleagues to vote yes on the bill. It is time we retired 
the debate on railroad retirement and let America's railroad workers 
and survivors enjoy the financial health and security they have worked 
long and hard for.
  Mr. Speaker, I want to say this, too, as we close. I want to thank 
our staff, Democrat and Republican staff alike. On the Democratic side, 
I might say, Mr. Speaker, I want to thank Ward McCarrager, Frank 
Mulvey, David Hymsfeld, Steve Gardner, Rachel Carr.
  I want to thank our full committee and the staff of the Subcommittee 
on Railroads. All of them have done a great job bringing about a great 
bill.
  Mr. Speaker, I reserve the balance of my time.
  Mr. QUINN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I would simply say at this point that I thank the 
gentleman

[[Page H9165]]

from Tennessee for his kind remarks. This is one of our subcommittee's 
clear issues we have been working on now since we came here together in 
a bipartisan way. We know that it is a bipartisan issue.
  I thank my good friend, the gentleman from Tennessee (Mr. Clement), 
for his kind words.
  Mr. CLEMENT. Mr. Speaker, I yield 1 minute to the gentleman from 
Michigan (Mr. Smith).
  (Mr. SMITH of Michigan asked and was given permission to revise and 
extend his remarks.)
  Mr. SMITH of Michigan. Mr. Speaker, let me just express my concern at 
scheduling a bill that requires taking $15 billion out of the general 
fund to be on the suspension calendar.
  I am concerned that this is going to end up being a disadvantage to 
railroad workers, because the railroad has said when they need more 
taxes, they will increase the tax rate. So here again, I am very 
concerned that we are taking this bill that is so expensive up on 
suspension; and I would, at the appropriate time, ask for a roll call 
vote.
  I rise in opposition to H.R. 10. I do not oppose what this bill is 
trying to accomplish. Railroad workers should have the opportunity to 
invest their money in the stock market and earn a higher rate of 
return. I oppose this bill because it will not achieve its intended 
goal. This bill would cut taxes and raise benefits for railroad 
retirement beneficiaries in exchange for promises to pay higher taxes 
in the future. This is an irresponsible and shortsighted approach to 
reform.
  This bill's supporters will dispute this. They will say things like 
this bill ``modernizes'' the system. They will say, ``it's their money, 
we should let them invest it.'' They will say, ``we only want to let 
the railroads do what everyone else does.'' Don't believe it for a 
minute.
  First, this bill does not modernize the railroad retirement system. 
There's nothing ``modern'' about increasing benefits today while 
putting off tax increases until tomorrow. That's the oldest trick in 
the book.
  Second, despite what we will hear from the other side, it's not their 
money. The railroad retirement program has paid out more in benefits 
than it has collected in payroll taxes every single year since 1957. 
The surplus that exists today in the railroad retirement trust fund is 
made up entirely of taxpayer subsidies enacted by Congress over the 
years.
  Third, even if the railroads were responsible for all of the money in 
the trust fund, that does not mean they can afford to increase benefits 
and reduce payroll taxes at the same time. According the actuaries at 
the Railroad Retirement Board, the higher returns earned from investing 
in the stock market won't pay for the tax cuts and benefit increases 
they have proposed. As a result, this bill will reduce the trust fund 
by nearly 65% and trigger an automatic payroll tax increase of nearly 
70% on employers.
  The supporters will insist the bill places the responsibility to pay 
future benefits on the railroads if their investments don't work out. 
But, let me read to you what the railroad industry thinks of its 
responsibility. Here is a quote from the United Transportation Union 
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 [8/15/01] reported:

       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 falls below four 
     times annual benefits, so that's protection that would mean 
     all U.S. railroads would face insolvency before the federal 
     liability applies.

  Let me repeat the last sentence because some of my colleagues might 
have missed its implication. The article says, ``all railroads would 
face insolvency before the federal liability applies.''
  That statement might seem overly dramatic until you take a look at 
the estimates prepared by the Railroad Retirement Board. According to 
the actuaries, the bill would increase the employer payroll tax by 
nearly 70 percent over the next twenty-five years. That's an increase 
the railroads readily admit they cannot afford to pay.

  Finally, those who support this bill will insist they only want to 
let the railroads invest their own funds--so-called Tier II--like 
everyone else. Unlike other private sector pension plans that must 
comply with the funding requirements of the Employee Retirement Income 
Security Act (ERISA), this bill would allow the railroads to reduce 
their payroll taxes and increase their benefits before they ever earn a 
single penny on Wall Street.
  Moreover, it should be noted that despite claims to the contrary, the 
bill would not be limited to the use of Tier II funds. The National 
Association of Retired Veteran Railroad Employees (NARVE) continues to 
tell its members--

       . . . not a dime of Tier 1 money is used for railroad early 
     retirement, either under current law or under our reform 
     bill. The money for early retirement is paid for entirely by 
     rail workers and employers through Tier 2 taxes. . . .

  In reality, the amendment requires all of the funds remaining in the 
Social Security Equivalent Benefit Account (Tier I) at the end of each 
year be transferred to the new railroad investment account and used to 
pay for Tier II benefits. That means, Social Security funds will be 
used to pay early retirement benefits for railroad workers.
  Now, don't get me wrong, I'm not opposed to railroad workers retiring 
at age 60, or any other age they can afford. But, I am opposed to using 
social security funds to pay for non-social security benefits. That is 
exactly what this bill does. I understand the frustration railroad 
workers must feel having to come to Congress to ask for legislation to 
improve their retirement benefits. However, the railroad retirement 
program is not just an industry pension fund. It is also a federal 
entitlement program that is ultimately backed up by the U.S. taxpayer.
  Congress has a duty and a responsibility not only to consider what is 
best for the railroads, but also what is fair to the taxpayers. As 
currently written, this bill would essentially allow the railroads to 
borrow $15 billion--interest free--from their own pension fund to pay 
for lower taxes and higher benefits and then try to make them pay it 
back at a rate they cannot afford. Fixing this bill would require a 
number of changes. Foremost among these changes would be the 
requirement that the railroads actually earn a higher rate of return on 
their investments before they reduce their taxes and increases their 
benefits.
  I believe railroad workers deserve the opportunity to invest in the 
stock market and earn a higher rate of return. I would like to help 
develop a plan to accomplish this goal. Unfortunately, the bill before 
us today is fundamentally flawed. I would urge my colleagues who care 
about the future of Railroad Retirement to vote against this bill. 
Railroad workers deserve better and we can do better.

                              {time}  1845

  Mr. CLEMENT. Mr. Speaker, I yield myself such time as I may consume.
  We have fully debated this. I hear the gentleman from Michigan's (Mr. 
Smith) point of view. I do not agree with it.
  Mr. OBERSTAR. Mr. Speaker, our long struggle to improve the lot of 
the Nation's 250,000 railroad workers and 700,000 retirees and to 
provide relief for our Nation's financially ailing railroad industry is 
finally coming to an end. The Senate is to be congratulated for 
expeditiously considering the railroad retirement reform legislation 
and for passing it overwhelmingly, 90-9. The Senate-passed bill, H.R. 
10, is identical to H.R. 1140, enacted by the House on July 31, 2001, 
by an equally strong vote of 384-33.
  This bill is the product of an historic agreement reached by railroad 
labor and management following two years of often-difficult 
negotiations. The benefit improvements and tax cuts are made possible 
by changing the current law that limits the investment of Railroad 
Retirement Trust Fund assets to government securities.
  The proposed changes in the law governing how Railroad Retirement 
Trust Fund assets can be invested will not affect the solvency of the 
Railroad Retirement system. The Tier I portion of the program, which 
provides Social Security level benefits, will continue to be invested 
only in government securities. Only Tier II funds, the part of the 
system that provides pension plan type benefits above Social Security 
benefit levels, will be eligible for investment in assets other than 
government securities. The projected increases in trust fund income 
from these changes are based on fairly conservative forecasts of the 
rates of return that could be earned from such a diversified 
portfolio--about two percentage points above the return on government 
securities. Most importantly, if the investments fail to perform as 
well as expected, workers' pensions are further protected as this 
legislation requires that the railroads absorb any future tax increases 
that might be necessary to keep the system solvent. Ultimately, the 
Federal government continues to be responsible for the security of the 
Railroad Retirement System.

[[Page H9166]]

   The proposed legislation provides the first major benefit 
improvements in railroad retirement in more than 25 years. The primary 
benefit improvement are:
  (1) The age at which employees can retire with full benefits is 
reduced from 62 years to 60 years with 30 years of service as it was 
before changes made in 1983.
  (2) The number of years required for vesting in the Railroad 
Retirement System is reduced from ten years to five years similar to 
most other pension plans.
  (3) The benefits of widows and widowers are improved so that a 
surviving spouse's annuity would be guaranteed to be no less than the 
amount the retiree was receiving in the month before his or her death, 
and
  (4) If the retirement plan becomes overfunded, benefits are 
automatically improved.
  H.R. 4844 also reduces significantly the payroll taxes paid by the 
railroads. By the third year following passage of this bill, the 
railroads stand to gain nearly $400 million annually for lower payroll 
taxes. All of these savings go directly to the railroads' bottom lines 
and can be used to make investments needed in the railroad 
infrastructure and to improve the wages and working conditions of 
railway workers.
  It is important to note that nothing in this legislation alters the 
fundamental nature of the program. Railroad retirement benefits will 
continue to be guaranteed, in the final analysis, by the United States 
Government.
  Last year, the House passed this bill overwhelmingly, but the Senate 
failed to act before the 106th Congress ended. This year the House, 
once again passed this important measure by an overwhelming margin--and 
this time the Senate has acted. Only the bill number is different from 
what the House has already passed.
  This is a good bill. It is good for workers, it is good for retirees 
and their survivors, it is good for the railroads, and it is good for 
the country. I urge all Members to support it today so we can get it to 
the President before the holiday seasons.
  Mr. RAHALL. Mr. Speaker, I am pleased that the House will finally 
have the opportunity to send the ``Railroad Retirement and Survivors' 
Improvement Act of 2001'' to the White House to be enacted into law. We 
will send this bill to President Bush for his signature shortly.
  In the Third District of West Virginia, I represent 8,300 citizens 
who will benefit from this bill. This ranks southern West Virginia 
seventh in the nation. The bill will double benefits for widows of 
railroad retirees, reduce the retirement age from 62 to 60 years of age 
with 30 years of service, and allow a person to be vested in the system 
after five years of service, rather than 10 years, as currently 
required.
  I constantly hear from anxious constituents asking when the bill will 
be enacted. Projections suggest benefits, which are modest to begin 
with, will nearly double after this bill passes. This bill means a lot 
to railroad retirees. It is an example of the type of legislation in 
which people can see direct benefits to improve their daily lives and 
quality of life.
  We have endured a long, rough road getting to this day. This bill 
includes the exact provisions of H.R. 4844, which I helped to write in 
the 106th Congress, and which passed the House by an overwhelming bi-
partisan vote of 391-25 on September 7, 2000.
  My constituents were disappointed and frustrated last year when the 
bill was not enacted into law, especially since it is a product of two 
years of negotiation between railroad workers and management of the 
railroad industry.
  Now, in the 107th Congress, we have done our job in the House. We 
passed the House version of Railroad Retirement bill H.R. 1140, on July 
31st by another overwhelming bi-partisan vote of 384-33.
  Finally, the Senate passed the bill last week, on December 5, 2001, 
by a vote of 90-9.
  When this bill becomes law, it will enable railroad retirees and 
widows to enjoy a better quality of life, by receiving the increased 
benefits they greatly deserve, and which they have worked so long to 
earn. They spent their working lives paying into their retirement, and 
they deserve decent, adequate benefits to live comfortably in their 
retirement years.
  Mr. Speaker, I have no further requests for time, and I yield back 
the balance of my time.
  The SPEAKER pro tempore (Mr. Cooksey). The question is on the motion 
offered by the gentleman from New York (Mr. Quinn) that the House 
suspend the rules and concur in the Senate amendments to the bill, H.R. 
10.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of 
those present have voted in the affirmative.
  Mr. SMITH of Michigan. Mr. Speaker, on that I demand the yeas and 
nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.

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