- The Washington Times - Monday, August 13, 2001

Republicans and Democrats are girding for spending battles this fall, but both parties joined forces last week to ignore the budget and overwhelmingly pass a $15 billion boost for railroad retirees.
"This is one of those special occasions in the legislative arena when all parties benefit," said Rep. James L. Oberstar, Minnesota Democrat and one of the measure's 368 co-sponsors.
Rep. Sam Johnson, Texas Republican, was one of just 33 members to vote against the bill, which covers more than 900,000 current and former railroad employees.
He called it a "fake, a fraud and a phony," warning that "it breaks every promise we have made to the American people and treats every other senior citizen as a second-class citizen."
Proponents say the bill is a long-awaited modernization to the railroad retirement program, which has been federally managed since the 1930s. They also contend that the $15 billion projected cost is fictional, a byproduct of an outmoded way of thinking.
Opponents, of which there are few, say the costs are real, the benefits are too generous, and the precedents set are dangerous.
A similar measure passed with a similarly lopsided margin last year in the House. The Clinton administration criticized the bill, saying it threatened to "place the solvency of the railroad trust fund on a less secure ground," and a group of senators vehemently opposed to the measure killed it after it arrived in their chamber.
There has been no official statement of policy from the Bush administration. The White House would not overtly criticize the bill, even though it would let a quasi-government board invest the railroad retirement trust funds in the markets. White House spokesman Scott McClellan said the White House has concerns, and hopes the bill will be revised "to more closely resemble private-sector plans."
The bill contains language telling the Congressional Budget Office and Office of Management and Budget to ignore their rules when estimating the cost of the bill, but House Budget Committee Chairman Jim Nussle, Iowa Republican, voted for the bill.
Likewise, Democrats have warned in other contexts that the budget is dangerously close to dipping into the Medicare and Social Security trust funds, but only one Democrat, Rep. Charles W. Stenholm of Texas, voted against the bill.
Rep. Jim Kolbe, Arizona Republican, said it would have been inconsistent to vote for the railroad bill while pushing his and Mr. Stenholm's Social Security reform bill.
Mr. Kolbe, when asked what pressure he had resisted in voting against the bill, said: "5,482 railroad retirees in my district."
Railroad employees are technically exempt from the Social Security system, but a portion of their benefits, called Tier I benefits, approximate those under Social Security. Those benefits are paid in part by payroll tax rates that match the Social Security tax rates paid by other employers and employees.
Because the number of railroad employees has been steadily declining from a high of 1.4 million in 1950, Social Security has had to supplement Tier I benefits from its trust fund. Those transfers cost Social Security $3.5 billion in 2000, according to the Social Security Administration, and have added up to more than $84 billion since 1950, Mr. Johnson says.
Tier II benefits come in addition to Tier I benefits and are paid for largely through additional payroll taxes on both the employer and the employee, amounting to 21 percent.
Combined, Tier I and Tier II benefits add up on average to about $1,760 a month, according to the Railroad Retirement Board. That compares to the average benefit paid under Social Security of $815 per month.
The Railroad Retirement and Survivors' Improvement Act of 2001 would enrich benefits for the 250,000 currently employed by the railroads, and the 673,000 receiving retirement and disability annuities.
Opponents say the math works only because both Tier I and Tier II trust funds have been and will continue to be subsidized by the Social Security system. While that may be appropriate for Tier I benefits, intended to approximate Social Security benefits, they say, it is not fair to use federal dollars to supplement Tier II benefits.
"We beat our chests and say how we are protecting the Social Security Trust Fund. But we are not, because right now we are going to raid it," said Rep. Christopher Shays, Connecticut Republican.

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