Such dollar-equivalent increase would go to all railroad retirement beneficiaries other than those covered by the minimum guaranty provisions of the Railroad Retirement Act. This latter group-comprising about 30 percent of all beneficiaries and consisting mostly of widows, other survivors, and some relatively short-service employees— have already been provided benefit increases by virtue of the recent 1972 amendment of the Social Security Act-Public Law 92-336. Thus, the dollar amount pass-through we are suggesting would assure that all railroad beneficiaries will receive an increase on a fair basis. This dollar pass-through, similar to the procedure followed in the 1968 amendment to the Railroad Retirement Act, would not substantially affect the financial condition of the railroad retirement account either for better or for worse as compared with the situation prior to the recent social security amendment. It would, therefore, serve to hold the line on an interim basis against further impairment of railroad retirement financing, pending careful consideration of the Commission's report on the condition and needed restructuring of the railroad retirement system. Now, Mr. Chairman, if I may make two additional brief comments, in this hearing Mr. Dennis a few moments ago did accurately state that he has sought during the entire life of the Railroad Retirement Study Commission to urge the management side to engage in collective bargaining on the issues that he saw coming up, with considerable insight I may say. We did maintain however that his urging for collective bargaining over the last 17 months was premature because we did not note with any specificity what it is that we should bargain about. I think our posture in that regard-and I served as consultant to the railroad management member on that Commission-I do believe that our position was a sound one in that regard. As Mr. Dennis has said this afternoon, we will shortly, next month, from both sides-the management side and the union side be getting into negotiations on these very complex issues. Senator CRANSTON. On that point, do you share his optimism that negotiation can lead to a solution of the problems confronting the parties? Mr. BEHLING. Mr. Chairman, I can only say that I would hope so. I share his feeling that these are enormously complicated issues. The railroad retirement system, as Chairman Yntema has observed, is a very complex pension system. It is not going to be unraveled in a day. It is not going to be simple for the two sides to get together, but I am sure that the Congress, as well as the directly involved parties I am sure that the Congress wants us to make that kind of effort, and I would hope that the Congress agrees with us that we should have an opportunity, and not have some of the issues foreclosed by quick action by the Congress specifically in regard to this 20 percent increase. Senator CRANSTON. Thank you very much. (The prepared statement of Mr. Behling follows:) Statement of Burton N. Behling Transportation Consultant appearing for the Association of American Railroads Hearings on H. R. 15922 and S. 3852 (H. R. 15927) before the Subcommittee on Railroad Retirement Senate Committee on Labor and Public Welfare August 9, 1972 My name is Burton N. Behling. I am a Transportation Consultant and a former Vice President of the Association of American Railroads. I am appearing here on behalf of the railroads in regard to the bills presently before you - H. R. 15922 and S. 3852, which I understand is identical to H. R. 15927. We support H. R. 15922, which provides for certain technical amendments developed by the Railroad Retirement Board to simplify its administration of the Railroad Retirement Act, with attendant economies and efficiencies in the prompt handling of applications for annuities to certain classes of beneficiaries. From our examination of these technical amend ments we believe that they are necessary steps to reduce complexities and avoid delays in the award of annuities and we are assured that they will not result in significant increases or decreases in the amounts of benefits. Turning now to S. 3852 (H. R. 15927), we strongly object to its enactment. That bill would, on a temporary basis extending to June 30, 1973, increase benefits under the Railroad Retirement Act by 20 percent, the same percentage by which social security benefits were increased by P. L. 92-336 (H. R. 15390), signed July 1, 1972. Superficially, it might appear that, as a matter of course, all railroad retirement benefits should now be increased the same percentage by which social security benefits were recently increased to become effective September 1, 1972. There are compelling reasons, however, why such a conclusion should be rejected, for the circumstances are vastly different. - 2 The Congress in 1970, in P. L. 91-377, responding to warnings that the railroad retirement system was heading toward serious financial difficulties, established a special Commission on Railroad Retirement to conduct a study of that system and its financing. The Commission is about to report its findings and recommendations for the consideration of the parties directly involved and of the Congress. Those findings and recommendations will confirm and, indeed, intensify the earlier concerns regarding the financial condition and outlook of the railroad retirement system. In short, the Commission's report will show that the railroad retirement system is heading rapidly toward a financial crisis and, even without further increases in benefits, will probably be bankrupt in about 16 years unless necessary corrective steps are taken. When allowance is made for more recent developments, that conclusion is consistent with the testimony in 1970 of then Chairman Howard Habermeyer of the Railroad Retirement Board that the railroad retirement account would be exhausted in 20 to 25 years if the 15 percent benefit increase enacted in 1970 were to become permanent. Pending the study and report of its special Commission, the Congress made temporary that increase and also the further 10 percent increase of 1971. Now it is proposed in S. 3852 (H. R. 15927) to provide still another large percentage increase in railroad retirement benefits. A 20 percent increase at this time would mean that the level of railroad retirement benefits would have been increased by more than 50 percent compounded - 3 since 1969 (15 percent on January 1, 1970, 10 percent on January 1, 1971, and 20 percent on September 1, 1972.) These are very large increases when applied percentagewise to railroad retirement benefit levels, which are much higher than social security benefit levels. S. 3852 (H. R. 15927) proposes to make the further 20 percent increase temporary, with an expiration date of June 30, 1973. However, as to this temporary feature, it must be observed that increases once provided are, to say the least, difficult to withdraw or modify later on. In these circumstances, we believe it would be most imprudent to enact the bill at this time, before there has been opportunity to consider deliberately the soon-to-be released report and findings of the Commission which Congress saw the need to establish. There is no urgency or crisis that would justify hasty action at this time to further increase railroad retirement benefits by 20 percent. Existing railroad retirement levels already compare favorably with those received by most other groups under social security and other pension programs. As the forthcoming report of the Commission on Railroad Retirement points out - Only about half of the workers in private employment in |