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Miles, Clarence R., department of governmental affairs, Chamber of Com.

merce of the United States of America, Washington, D. C., letter of, addressed to Senator Ives, in re railroad retirement and railroad unemployment benefits.-The bills:

S. 994. To amend the Railroad Retirement Act of 1937, the Railroad

Unemployment Insurance Act, and subchapter B of chapter 9 of the

Internal Revenue Code, anf for other purposes.
S. 2055. To amend the Railroad Retirement Act of 1937 so as to pro-

vide full annuities, at compensation of half salary or wages, for

persons who have completed 30 years of service...
S. 2228. To amend the Railroad Retirement Act of 1937 with respect

to the minimum annuity pavable under such Act.
S. 2300. To increase all benefits under the Railroad Retirement Act,

as amended
S. 2423. To amend sec. 3 (a) (c) (e). sec. 5 (a) (i) i and ii

, and sec. 6, (a) of the Railroad Retirement Act, approved Aug. 29, 1935, as

amended.. S. 2437. To amend the Railroad Retirement Act of 1937, as amended.. S. 2438. To amend the Railroad Unemployment Insurance Act, as

amended.

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RAILROAD RETIREMENT AND RAILROAD UNEMPLOYMENT

INSURANCE ACTS AMENDMENTS

WEDNESDAY, MAY 19, 1948

UNITED STATES SENATE,
COMMITTEE ON LABOR AND PUBLIC WELFARE,
SUBCOMMITTEE ON RAILROAD RETIREMENT,

. C. The subcommittee met, pursuant to notice, at 10 a. m., in the hearing room of the Committee on Labor and Public Welfare, Capitol Building, Senator Irving M. Ives (chairman of the subcommittee) presiding

Present: Senators Ives (presiding), Jenner, and Hill.

Senator Ives. The subcommittee will come to order. This hearing is being conducted by a special subcommittee authorized by the full membership of the Senate Committee on Labor and Public Welfare. The hearing will be directed, with two exceptions, to a consideration of all bills which have been referred to the Labor and Public Welfare Committee and which are designed to amend either the Railroad Retirement Act or the Railroad Unemployment Insurance Act. The two exceptions are S. 670, upon which hearings were conducted by the Subcommittee on Labor during the first session of the Eightieth Congress, and S. 1970, which does not directly affect annuities payable under the Railroad Retirement Act.

The bills upon which the subcommittee will receive testimony include the following bills, which will be included in the record :

S. 994, by Senator Hawkes, to amend the Railroad Retirement Act of 1937, the Railroad Unemployment Insurance Act, and subchapter B of chapter 9 of the Internal Revenue Code, and for other purposes.

S. 2055, by Senator McMahon, to amend the Railroad Retirement Act of 1937 so as to provide full annuities, at compensation of half salary or wages, for persons who have completed 30 years of service.

S. 2228, by Senator Stewart, to amend the Railroad Retirement Act of 1937 with respect to the minimum annuity payable under such act.

S. 2300, by Senator Morse, to increase all benefits under the Railroad Retirement Act, as amended.

S. 2423, by Senator Thomas of Utah, to amend section 3 (a) (c) (e), section 5 (a) (i) i, and ii, and section 6 (a) of the Railroad Retirement Act, approved August 29, 1935, as amended.

S. 2437, by Senator Aiken (for himself and others), to amend the Railroad Retirement Act of 1937, as amended.

S. 2438, by Senator Aiken (for himself and others), to amend the Railroad Unemployment Insurance Act, as amended.

Due to the fact that time is of the essence, the subcommittee has found it necessary to limit the length of these hearings and to limit

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Senate bill No Due to the extreme importance of bills on the Senate calendar, it is inadvisable for this subcommittee to continue these hearings berond marer, in its 12 noon of each day's schedule. The subcommittee will hear each of urzed these vi the witnesses scheduled for each day between the hours of 10 a. m. more than to and 12 noon.

Monment and The witnesses are therefore requested in their oral testimony to Senator Ives. summarize the main points covered in their printed briefs. The full til nou take w text of the printed brief will be made a part of the official record of lif you have the hearings. The subcommittee trust that all interested parties 0 m apreciate the need for cooperating in meeting the time objectives of this hearing and of compiling a fuìl and satisfactory record within the limitations set forth.

I might add that I shall try to divide the time as equitably as I can, and insofar as I am personally concerned I shall keep my questions to a minimum in order that the witnesses themselves may have as much opportunity as posible to present their own cases, because the subcommittee and the full committee are desirous of having as much

compensatio information as may be obtainable on the printed record of the hearing.

This morning there are two major witnesses to be heard, Mr. William J. Kennedy, Chairman of the Railroad Retirement Board, who will be assisted by Mr. David B. Schreiber, Mr. Walter Matscheck, and Mr. · Joseph B. Musher, the Actuary for the Railroad Retirement Board

. One hour from the time you start will be allotted to those gentlemen al Security They will be followed by Mr. Frank C. Squire, a member of the Railroad Retirement Board, who will be allotted 15 minutes. If we have not considered everything in that period of time, the gentlemen who desire to say more can reappear and we will allocate further time to them.

Our first witness this morning, as I indicated, is Mr. William J. Kennedy, Chairman of the Railroad Retirement Board. STATEMENT OF WILLIAM J. KENNEDY, CHAIRMAN, RAILROAD

RETIREMENT BOARD Mr. KENNEDY. Mr. Chairman and members of the subcommittee, my name is William J. Kennedy, and I am Chairman of the Railroad Retirement Board, 814 Rush Street, Chicago, Ill. I appear before you today in response to a telegram of May 12, 1948, and Mr. Rogers, clerk of the committee, who informed me that I would have 30 minutes to summarize the views of the Board on S. 994, 2055, 2228, 2300, 2423

, 2137, and 2438, and that an additional 30 minutes should be reserved for questions from members of this subcommittee.

After I have summarized the views of the Board on the bills under consideration, I shall be glad to have your questions. I might say here, however, that I am not a lawyer, an economist, or an actuary. Parenthetically, I have found that being an administrator does not require a knowledge of the legal, actuarial, statistical, or economic sciences. I shall therefore refer questions in these fields to Mr. David B. Schreiber, our associate general counsel; Mr. Walter Matscheck, our director of research; and Mr. Joseph Musher, our chief actuary.

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The majority of the Board is against the enactment of S. 994. The the entire Board is against the enactment of S. 2055, 2228, 2300, and 2423.

The majority of the Board favors the enactment of S. 2437 and 2438. i I shall discuss these bills in numerical order.

Senate bill No. 994: In our report of March 12, 1948, on S. 994 we a set out in great detail the Board's views in opposition to this bill. hoor. Moreover, in its memorandum filed with you yesterday the Board sum

marized these views. In the limited time allotted to me here I can do no more than to point out the effect of the bill on the present railroad retirement and unemployment insurance systems, as follows:

Senator Ives. May I interrupt you just a moment, Mr. Kennedy? ve Will you take whatever time you think you need to develop these points,

and if you have any occasion to ad lib as you go along, will you please Parte do so?

Mr. KENNEDY. Thank you very much, Mr. Chairman.

1. The bill would reduce survivor benefits to the same inadequate level now payable under the Social Security Act.

At this time I would like to depart from my prepared statement and prin interject this thought: The truth of the matter is that if this bill were

enacted the benefits for survivors of railroad employees would be lower than under the Social Security Act. This would be so because creditable compensation for survivor benefits under the Railroad Retirement

Act is subject to two limitations: First, the excess over $300 in any one Vi month is excluded; and, second, the excess over $3,000 in any one year

is excluded; while under the Social Security Act only the second limitation is applicable—that is, there is no limitation on the amounts earned in any one month. Consequently, a man covered under the Social Security Act and working only 6 months in a year at $500 a

month would be credited with the full $3,000 for that year; while if BE he were covered under the Railroad Retirement Act he would be cred

ited with only $1,800 for that year. The obvious effect of this would be to reduce the survivor benefits under the Railroad Retirement Act to a level lower than under the Social Security Act. Under the present Railroad Retirement Act the adverse effect of the first limitation is compensated for by higher survivor benefits; but since the bill would eliminate this compensating feature survivor benefits under the Railroad Retirement Act would be lower than under the Social Security Act.

Coming back now to my prepared statement.

2. The bill would eliminate the provisions for combining service under the railroad retirement and social-security systems for the purposes of survivor benefits. The effect of this would be to make it impossible for large numbers of survivors to qualify for benefits under either system; and, in some cases, would make it possible for survivors to qualify for overlapping benefits under both.

3. The bill would require for total disability annuities based on less than 30 years of service, and for occupational disability annuities, that the disability be service connected. These limitations on both total disability annuities and occupational disability annuities would be so restrictive as to virtually eliminate all disability annuities except for totally disabled employees who have had 30 years of service or who are at least 60 years of age. Over 95 percent of disabilities among railroad workers are not service connected. The Board believes that the disability provisions of the Retirement Act should not be weakened.

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Senate bill No. 99Due to the extreme importance of bills on the Senate calendar, it

out in great det: is inadvisable for this subcommittee to continue these hearings bevond ver. in its mem 12 noon of each day's schedule. The subcommittee will hear each of trzed these views. the witnesses scheduled for each day between the hours of 10 a. m. bore than to poin and 12 noon.

wirement and unen The witnesses are therefore requested in their oral testimony to Merator Ives. May summarize the main points covered in their printed briefs. The full lrou take whatei text of the printed brief will be made a part of the official record of the hearings. The subcommittee trust that all interested parties apreciate the need for cooperating in meeting the time objectives of Mr. Kensedy. Th this hearing and of compiling a full and satisfactory record within the

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e now payable or I might add that I shall try to divide the time as equitably as I can, and insofar as I am personally concerned I shall keep my questions to herjet this though a minimum in order that the witnesses themselves may have as much sted the benefits 1 opportunity as posible to present their own cases, because the sub

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compensation for information as may be obtainable on the printed record of the hearing.

This morning there are two major witnesses to be heard, Mr. William ath is excluded's J. Kennedy, Chairman of the Railroad Retirement Board, who will be scluded; while u assisted by Mr. David B. Schreiber, Mr. Walter Matscheck, and Mr. · Joseph B. Musher, the Actuary for the Railroad Retirement Board One hour from the time you start will be allotted to those gentlemen Mal Security Act road Retirement Board, who will be allotted 15 minutes. If we have not considered everything in that period of time, the gentlemen iho - with only $1,80 desire to say more can reappear and we will allocate further time to them.

Our first witness this morning, as I indicated, is Mr. William J. Kennedy, Chairman of the Railroad Retirement Board. STATEMENT OF WILLIAM J. KENNEDY, CHAIRMAN, RAILROAD

RETIREMENT BOARD Mr. KENNEDY. Mr. Chairman and members of the subcommittee, mig name is William J. Kennedy, and I am Chairman of the Railroad Retirement Board, 844 Rush Street, Chicago, Ill. I appear before you today in response to a telegram of May 12, 1948, and Mr. Rogersible for large clerk of the committee, who informed me that I would have 30 minutes to summarize the views of the Board on s. 994, 2055, 2228, 2300. 23 2437, and 2438, and that an additional 30 minutes should be reserved for questions from members of this subcommittee.

After I have summarized the views of the Board on the bills under consideration, I shall be glad to have your questions. I might here, however, that I am not a lawyer, an economist, Parenthetically, I have found that being an administrator does no require a knowledge of the legal, actuarial, statistical, or economic B. Schreiber, our associate general counsel; Mr. Walter Matscheck sciences. I shall therefore refer questions in these fields to Mr. David our director of research; and Mr. Joseph Musher, our chief actuart.

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