93d Congress, 2d Session House Document No. 98-371

VETOING H.R. 15301, AN ACT TO AMEND THE

RAILROAD RETIREMENT ACT OF 1937 TO

REVISE THE RETIREMENT SYSTEM FOR EMPLOYEES OF EMPLOYERS COVERED THEREUNDER, AND FOR OTHER PURPOSES

MESSAGE

FROM

THE PRESIDENT OF THE UNITED STATES

VETOING H.R. 15301, AN ACT TO AMEND THE RAILROAD

RETIREMENT ACT OF 1937 TO REVISE THE RETIREMENT

SYSTEM FOR EMPLOYEES OF EMPLOYERS COVERED

THEREUNDER, AND FOR OTHER PURPOSES

38-011

OCTO3ER 15, 1974.-Message and accompanying act

ordered to be printed as a House document

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 1974

93d Congress, 2d Session House Document No. 93-371
To the House of Representatives:

I am returning today without my approval, H.R. 15301, a bill which

would finance a long-standing deficit in the Railroad Retirement

System at the expense of the general taxpayer.

The Railroad Retirement System, under current law, is headed

toward bankruptcy by the mid-1980s. This condition arises largely

because benefits have been increased 68 percent since 1970 without

requiring the beneficiaries of the system, railroad employees and

employers, to pay the added costs.

This bill proposes to solve the financial problems of the Railroad

Retirement System by placing a seven billion dollar burden on the

general taxpayer, requiring him to contribute $285 million to the Railroad Retirement Trust Fund each year for the next twenty-five years.

In return for his seven billion dollar contribution, the general taxpayer

would earn no entitlement to benefits and would receive no return on

his investment.

At a time when the taxpayer is already carrying the double burden

of taxes and inflation, legislation such as this is most inappropriate.

Recognizing the financial straits of the Railroad Retirement System,

the Executive Branch in 1970 proposed and the Congress authorized

an independent study of the System. After eighteen months of careful

work, the study group recommended that the benefits be financed

" * * * on an assured, fully self-supporting basis by contributions

from the railroad community through the crisis period of the next

20 to 30 years and then beyond."

Following receipt of the report, the Congress directed representatives of railroad employees and management to submit their combined

recommendations for restoring financial soundness to the System,

taking into account the report and the specific recommendations of

the Commission.

The bill which is now before me is true neither to the recommendation of the Commission nor to the charge placed on the industry by

the Congress.

Forcing the general taxpayer to carry an unfair burden is not the

only defect in this bill. It would also establish a special investment

procedure for the Railroad Retirement Trust Fund.

Under the bill, the interest paid by the Treasury on Railroad Retirement investments and Federal securities would rise when interest rates

increase but would not fall when they decrease. This "heads I win;

tails you lose" arrangement, with the taxpayer being the loser, has

been suggested before, but never adopted. It should not be a part of

the solution to the Railroad Retirement System's financial problem.

Furthermore, the provisions of the benefit formula are so complex

that they would be extremey difficult to administer and virtually impossible to explain to the persons who are supposed to benefit from it.

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Now is the time to simplify the benefit structure of the Railroad Retirement System, not make it more complex. Splitting administrative

responsibility between the Railroad Retirement System and the Social

Security System over benefits that depend on entitlement under the

Social Security Act is bad law. Full responsibility for administering

Social Security benefits should be vested in the Social Security Administration, not divided among agencies with resultant uncertainty as to

who should be held accountable.

I believe it is our obligation to the general taxpayer to see that the

problems of this system are overcome by the industry and people it

serves-those who have benefitted from it in the past and will continue

to receive its benefits in the future. Other industries-other parts of

the transportation industry-pay for their own pension systems. There

is no justification for singling out the railroads for special treatment.

There are only two ways this obligation can be met-by increasing

revenues or by limiting benefits or by a combination of both. Administration spokesmen have proposed constructive ways to achieve this

goal, but our proposals have not received serious consideration by

the Congress.

We are in need of a better railroad retirement system and a financially sound one. This bill does not meet that need. I urge the Congress

to reconsider that need and to develop a new bill which is fair to the

taxpayers as well as to the beneficiaries of the Railroad Retirement

System. This Administration stands ready to help in any way it can.

GERALD R. FORD.

THE WHITE HOUSE, October 12, 1974.

H.D. 371