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7336547
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Veto Message to the House for H.R. 15301, financing a long-standing deficit in the Railroad Retirement System [Veto Statements and Announcements]
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7336547
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Veto Message to the House for H.R. 15301, financing a long-standing deficit in the Railroad Retirement System [Veto Statements and Announcements]
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White House Press Releases (Ford Administration)
Press Releases
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U.S. House of Representatives. (03/04/1789 - )
Legislation
Vetoes
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1974-10-12
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1974
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Digitized from Box 3 of the White House Press Releases at the Gerald R. Ford Presidential Library
FOR IMMEDIATE RELEASE
October 12, 1974
Office of the White House Press Secretary
THE WHITE HOUSE
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.
more
(OVER)
2
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 extremely difficult to
administer and virtually impossible to explain to the
persons who are supposed to benefit from 1t. 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 admin-
istering 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
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