Statement by the President Upon Signing Bill To Amend the Railroad Retirement Act of 1937
I HAVE TODAY signed S. 3616, "To amend the Railroad Retirement Act of 1937 to provide increases in benefits, and for other purposes."
The bill provides generally for a 10 percent increase in existing benefits under the Railroad Retirement Act. The principal exceptions are those widows, spouses, and survivors who are now receiving benefits under the social security minimum guarantee provisions.
I take this action for two reasons: First, it will help thousands of retired railroad employees and their wives to meet their day to day living expenses. Secondly, the Senate Labor and Public Welfare Committee has indicated its unanimous determination to act promptly in the next session of the Congress on a measure which will finance the cost of these benefit increases. Representatives of railroad labor organizations also have given firm assurances that they will propose at the opening of the next Congress a program to assure adequate financing of the railroad retirement system. It is imperative that satisfactory legislation for this purpose be proposed and enacted.
Failure to take this action would mean that the time will come when the existing reserve fund of the railroad retirement system will be exhausted. Then the program would be left without sufficient income to meet its benefit obligations to the thousands of hard-working railroad employees who are now contributing to the fund. It has been proposed that the burden of higher employee payroll taxes might be offset through a special exemption which would exclude employee contributions from income tax and from tax withholding provisions of present law. Neither such a device nor other Federal contribution, whether directly or indirectly made, would be equitable. This was made clear when the administration opposed the proposal at the time of its recent consideration in the Congress. It would amount to an indirect assessment of the rest of the community for improvements in the retirement system for a single industry.
From the establishment of the railroad retirement system in 1937, it has been clearly intended that the benefits be financed entirely by employer and employee payroll contributions. The rate payable by railroad employees is 6 1/4 percent on compensation up to $350 a month. Employers pay an equal amount. For some time it has been a matter of concern to the executive branch of the Government that the combined payroll tax rate of 12 1/2 percent is not sufficient fully to finance the estimated future liabilities of the railroad retirement program.
The Sixth Actuarial Evaluation of the railroad retirement program, issued in May of this year, states in part as follows:
"... The difference between the 14.13 percent needed to finance the liabilities of the Railroad Retirement Act and the 12.5 percent currently collected is $86,390,000 a year, which indicates that an increase in the revenues is needed, if the system is to be maintained on a sound reserve basis. At the present time the current disbursements for benefits amount to approximately 97.5 percent of the taxes currently collected, and the time when disbursements will exceed taxes at the current rate of 12.5 percent is imminent .... "
It is estimated that the benefit increases provided in S. 3616 will cost $83 million a year at a level premium basis, raising the deficiency to $169 million a year. At present tax rates and existing payroll levels, this obviously will aggravate the dangers referred to in the evaluation report. Corrective action is imperative. It should be taken promptly in the next session of the Congress.
Note: As enacted, S. 3616 is Public Law 1013, 84th Congress (70 Stat. 1076).
Dwight D. Eisenhower, Statement by the President Upon Signing Bill To Amend the Railroad Retirement Act of 1937 Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/233017