[Congressional Record (Bound Edition), Volume 147 (2001), Part 11]
[House]
[Pages 15149-15150]
[From the U.S. Government Publishing Office, www.gpo.gov]




           PRIVATE PENSION BILL FOR RETIRED RAILROAD WORKERS

  The SPEAKER pro tempore. Under the Speaker's announced policy of 
January 3, 2001, the gentleman from Michigan (Mr. Smith) is recognized 
during morning hour debates for 5 minutes.
  Mr. SMITH of Michigan. Mr. Speaker, it is a great morning, but I am 
going to talk about a disconcerting bill that we might be taking up 
today or maybe tomorrow. It is the private pension bill for the 
railroad workers in this country.
  The gentleman from Texas (Mr. Sam Johnson) and I are sending out a 
dear colleague this morning, Mr. Speaker. I hope all staff and workers 
and Members who are concerned about reaching into the Social Security-
Medicare trust fund next year will take a look at this dear colleague, 
and then take a look at the railroad retirement bill that cost $15 
billion.
  I have been working on Social Security since I came here in 1993. In 
working with the Social Security system and researching its origins 
back to 1934, I discovered that the railroad employees were included in 
the social security system at that time in 1934.
  The railroad workers and employers who were tremendously influential 
politically back in the 1930's as they are today, came to Congress and 
said we do not want to be part of the Social Security system, we want 
our own pension system. So government passed a law and took them out, 
and it became sort of a quasi-governmental pension system for this 
private industry--the only private industry that has sort of this 
government back-up of a private pension system.
  The railroad retirement system was established during the 1930's on a 
pay-as-you-go basis just like Social Security; but unlike Social 
Security, which now has three workers to support every one retiree, the 
railroad retirement system has three beneficiaries being supported by 
every one worker. That is why they have come back to Congress so many 
times to ask the American taxpayer to bail out their pension system.
  The disproportionate ratio of beneficiaries to workers is a direct 
result of historical decline in railroad employment. Since 1945, the 
number of railroad workers has declined to 240,000 from 1.7 million. So 
we can see as there are fewer workers, but all the existing retirees 
are living longer life spans, it has come to a tremendous burden on 
that workers asking each worker to have the kind of contribution that 
would support three retirees, so they have not been able to do it.
  Declining employment. Many benefit increases have produced chronic 
deficits. The railroad retirement system has spent more than it has 
collected in payroll taxes every year since 1957. I want to say that 
again. The railroad retirement system has spent more than it has 
collected in payroll taxes every year since 1957. The cumulative 
shortfall since 1957 is $90 billion. That $90 billion has come from 
other taxpayers paying into this private taxpayer system.
  So I think everybody can believe me, Mr. Speaker, when I say the 
influence of the railroad workers and the railroad system has been very 
influential in the United States Congress. Although railroad workers 
and their employers currently pay a 33.4 percent payroll tax excluding 
Medicare and unemployment, the railroad retirement system still spends 
$4 billion more than it collects in payroll deductions each year. So 
every year we are subsidizing

[[Page 15150]]

and putting money back into the railroad retirement system out of the 
general fund.
  Despite the payroll tax shortfall, the railroad retirement system 
remains technically solvent thanks to these generous taxpayer 
subsidies. The American taxpayer has bailed out the retirement system 
to the extent that those retirement funds now claim a $20 billion 
surplus, not a $90 billion deficit. So this bill that is proposed to 
come up takes $15 billion out of the general fund next year and gives 
it to a railroad retirement board investment effort where they invest 
it and spend it for current retirees.
  But the challenge is while we are passing these bills, we are 
reducing the payroll tax that these workers pay in and we increase 
benefits. We have increased benefits for widows, and we allow those 
workers to retire in the railroad system, under this proposed 
legislation that is coming before us, to retire at 60 years old with 
full benefits. Of course, on Social Security what we have done over the 
years is we have increased that, and now we are in the mode of taking 
that full benefit eligibility up to 67 years old for Social Security.
  So in this railroad bill, we have reduced the tax they pay; we have 
increased the benefits. I hope everybody will study this issue very 
closely because if we are going to pass this kind of legislation, we 
should at least take American taxpayers off the hook in the future.

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