War on Workers: Ryan Budget targets railroad workers, retirees
CLEVELAND, April 16 — The U.S. House of Representatives has
adopted federal budget legislation sponsored by Budget Committee Chairman Paul Ryan
(R-WI) that would have devastating effects on the retirement security of both
active and retired BLET members, as well as all railroad workers. The measure
passed on March 29 by a vote of 228-191, with 10 Republicans joining all of the
Democrats in voting against it.
Perhaps the most devastating portion of the Ryan Budget are the provisions that sponsors claim “would conform Tier 1 so that its benefits would equal those of Social Security, with an estimated savings to taxpayers of $2 billion over 10 years.” Enactment of this legislation would eliminate the Railroad Retirement Occupational Disability program, as well as the “60/30” provision for allowing early retirement for railroad workers at age 60 if they have 30 years of service. Under the legislation, the earliest these individuals could retire would be age 62. Annuities for spouses of these workers also would be negatively impacted in this manner. These provisions would negatively affect the annuities of almost 120,000 non-disabled employees, almost 90,000 spouses and over 62,000 occupationally disabled employees.
The Ryan Budget fundamentally misconstrues the relationship between Railroad Retirement and Social Security, and ignores the fact that all Railroad Retirement benefits above Social Security — whether Tier 1 benefits or Tier 2 benefits — are fully funded by railroad workers and their employers; none of these benefits are funded from the general treasury. Therefore, no actual budgetary savings would result from enactment of this legislation.
“The Ryan Budget’s claim that American taxpayers will realize a savings if our occupational disability and retirement annuities are gutted is so blatantly false,” BLET National President Dennis R. Pierce said, “that even the head of the carriers’ lobbying group has called out Chairman Ryan on his deception, and told him not to ‘interfere’ in our privately-funded industry pension.”
The Ryan Budget also attacks two other key components of the American social compact in a way that would negatively impact active and retired railroad workers. Under current law, new retirees receive Social Security benefits based on the growth in wages. The Ryan Budget would set initial benefits based on the growth in prices, which over time grow at a slower rate. This would harm 70% of Social Security beneficiaries by cutting benefits by roughly 16% for the average new retiree in 2050 and 28% in 2080. These cuts also would affect Tier 1 Railroad Retirement benefits.
The Ryan Budget also would end Medicare as we know it. The Medicare eligibility age would be raised to 67. This, alone, would increase out-of-pocket health care costs by $4,300 a year for nearly 1 million individuals ages 65 and 66, and would cause the costs of the GA 46000 Plan to soar. Further, the Ryan Budget replaces Medicare’s guaranteed benefits with a “premium support” payment that beneficiaries would use towards the cost of private insurance or traditional Medicare starting in 2023.
The amount of this voucher would be based on the second cheapest available plan in the area. There is no guarantee that this payment would actually cover enough of a premium’s cost to actually make the Medicare replacement health care affordable. In fact, it is more than likely that beneficiaries would be left with increased out of pocket costs, because the Ryan Budget caps the amount of the voucher at a half percent above Gross Domestic Product, which is far below the growth in health insurance costs in recent years. In fact, the Congressional Budget Office estimates that new beneficiaries could pay over $1,200 more per year by 2030 and over $5,900 more per year by 2050 under. It also would allow private insurers to cherry pick the younger and healthier beneficiaries, leaving Medicare with a disproportionate share of the oldest, sickest and costliest beneficiaries, driving up costs for the program and setting it on an unsustainable path.
“This budget is one more example of how Republican Paul Ryan and his worker-hating allies are trying to hurt middle class Americans — including the railroad workers who, with the carriers, fully fund their own pension plan,” BLET Vice President & National Legislative Representative John Tolman said. “Also included are the standard targets — Amtrak and its workers and high speed rail, by eliminating funding for high speed rail and limiting overtime for Amtrak workers. But the cuts aren’t limited to only railroad workers. The Ryan Budget also attacks the poor, the sick, the elderly and the nation’s children, while allowing the wealthy to continue to get away with not paying their fair share by extending the Bush tax cuts, retaining oil company subsidies and increasing defense spending by $228 billion.”
While the legislation is not expected to be taken up by the Senate in this session, President Pierce is warning BLET members not to take the threat lightly.
“The presumptive Republican presidential nominee already has publicly stated his support for the Ryan Budget, and Chairman Ryan is reported to be on the ‘short list’ of potential vice presidential candidates,” President Pierce said. “If those who support the Ryan Budget capture the White House and the Senate, and retain the House, this nightmare will become a reality, and our members’ economic security will be set back by decades. We need to remember this on November 6 and vote for candidates who will help working Americans.”
Below is a section of the budget report from the recently passed Ryan budget. This section deals with ways to save money and reduce the budget, however erroneous. Once again, the GOP is going after our Railroad Retirement Tier 1 benefits in their attempt to hurt labor, while in reality realizing no reduction to the deficit. This passed on March 29 by a vote of 228-191, with 10 Republicans joining all of the Democrats voting against it.
112th Congress (2011-2012)
House Report 112-421 (House Congressional Resolution 112)
SUMMARY OF COMMITTEE-REPORTED RESOLUTION
The resolution calls for $517.1 billion in budget authority and $516.8 billion in outlays in fiscal year 2013. Discretionary spending is $59.9 billion in budget authority and $63.9 billion in outlays in fiscal year 2013. Mandatory spending in 2013 is $457.2 billion in budget authority and $452.9 billion in outlays. The 10-year totals for budget authority and outlays are $4.9 trillion and $4.8 trillion, respectively.
While the Committee recommendation is a disciplined budget that will require committees of jurisdiction and agencies to set priorities and achieve efficiencies, it does not take the arbitrary approach that will result from the Budget Control Act's sequester. The House Republican budget replaces the sequester. If not replaced, staff estimates show that this function would be reduced by another $4.7 billion below the committee recommendation in fiscal year 2013.
ILLUSTRATIVE POLICY OPTIONS
Reforming the Federal Government's income security programs can both strengthen the safety net and protect taxpayers. Among reforms that could be considered by the committees of jurisdiction are the following.
Reduce Spending on the Low Income Home Energy Assistance Program [LIHEAP]. This budget assumes the same level of funding for LIHEAP in President Obama's fiscal year 2013 budget request. This saves approximately $500 million in budget authority for fiscal year 2013.
Block Grant the Supplemental Nutrition Assistance Program
The budget resolution envisions converting
Eliminate Broad-Based Categorical Eligibility.
Broad-based categorical eligibility allows for households to be made eligible
through receiving a minimal Temporary Assistance for Needy Families [TANF] fund
benefit or service. Typically, an individual is made eligible by receiving a
TANF brochure or being referred to a social services `800' telephone number. This
allows individuals to qualify for
Eliminate Abuse of LIHEAP: The Low Income Home Energy
Assistance Program [LIHEAP] provides low-income families with help to pay
heating bills. However, many states are providing families with $1.00 in LIHEAP
benefits in order to increase
Reform Civil Service Pensions. In keeping with a recommendation from the National Commission on Fiscal Responsibility, this option calls for Federal employees--including Members of Congress and staff--to make greater contributions toward their own retirement. It would also eliminate the ability for individuals to receive a `special retirement supplement,' which pays Federal employees the equivalent of their Social Security benefit at an earlier age. As the Office of Personnel Management states on its website, this benefit is `unique' to the Federal Employee Retirement System. This would achieve significant budgetary savings and also help facilitate a transition to a defined contribution system for new Federal employees that would give them more control over their own retirement security. From a fiscal responsibility standpoint, this option would replace a system that is creating unfunded future liabilities for taxpayers with a fully funded system: it could save an estimated $112.7 billion over 10 years.
Conform Railroad Retirement Tier 1 Benefits to Social Security Benefits. Tier 1 benefits for railroad retirees are supposed to mimic Social Security benefits, but they are more generous than Social Security in many ways. This option would conform Tier 1 so that its benefits would equal those of Social Security, with an estimated savings to taxpayers of $2 billion over 10 years.
Reform the Pension Benefit Guaranty Corporation [PBGC]. Currently, the PBGC faces a $26 billion unfunded liability. While this budget does not assume the President's proposal, it recognizes the need to reform the PBGC to ensure that a future taxpayer funded bailout does not occur. Potential savings could total an estimated $8.34 billion over 10 years.
Eliminate the Failed Troubled Asset Relief Program [TARP]
Housing Subsidies. This resolution supports jettisoning the loan subsidy
initiative, Home Affordable Modification Program [
Unemployment Insurance. This budget resolution assumes that unemployment benefit expansions and extended benefits expire as scheduled under current law and does not assume another extension of emergency unemployment insurance benefits. The previous expansions have increased UI benefits to 99 weeks--the longest that had ever been offered prior to this recession, and have been extended a record 11 times.
Reform Supplemental Security Income. Welfare programs typically pay benefits on a sliding scale. However, SSI is different, paying an average of $600 for each and every child in a household that receives benefits. This reform would create a sliding scale for children on SSI. Advocates for the disabled have expressed support for creating a sliding scale for children on SSI in the past. For example, Jonathan Stein, a witness for the Democrats at an October 27, 2011 Ways and Means Subcommittee hearing said about this proposal in 1995: `(W)e have a long list of reforms that we do not have time to get into, but we would say for very large families there should be some sort of family cap or graduated sliding scale of benefits.' Providing SSI on a sliding scale would save $3.5 billion over 10 years.
Reform Means-Tested Entitlements. Congress should act to reform means-tested entitlements. These programs have grown rapidly over the past 10 years, and Congress should cap these programs and begin devolving them to the States. This would build upon the historic progress of bipartisan welfare reform in the late 1990s. These reforms transformed cash welfare by encouraging work, limiting the duration of benefits, and giving states more control over how money was being spent. The TANF reforms of the old Aid for Families with Dependent Children cut welfare caseloads in half as poverty rates declined.
The following information is supplied by the Railroad Retirement Board for the facts on this hurtful suggestion.
Tier I Funding Source Fact Sheet
Social Security Benefit Equivalent (SSEB) Account
· Social Security Administration reimburses Railroad Retirement Board for all benefits paid that are identical to Social Security benefits.
· Payments are drawn from the Social Security Trust Fund
· Employees/spouses who reach age 62 and are entitled to a reduced annuity
· Employees/spouses who reach full retirement age and are entitled to a full annuity
· Employees who are totally and permanently disabled
Non-Social Security Benefit Equivalent (NSSEB) Account
· Social Security Administration does NOT reimburse Railroad Retirement Board for benefits that are unavailable under the Social Security Act.
· These annuity payments are funded by Tier 2 taxes, contributed by rail labor and rail industry, based upon long-standing collective bargaining agreements.
There are no public funds or general tax revenues used to pay these annuities.
ANALYSIS OF LEGISLATION THAT WOULD CONFORM RAILROAD
Railroad retirement Tier 1 benefits that are unique (occupational disability) or that exceed the social security benefit (unreduced annuity for employees 60 years old with 30 years of railroad service) are fully funded by taxes paid by rail labor and the rail industry. These taxes are held in the Railroad Retirement Account. When an individual attains eligibility age for a social security benefits, (if the railroad retirement system did not exist), the Social Security Trust Fund pays for the social security portion of the benefits and the remainder is funded by the Railroad Retirement Account. For example, the annuity of an employee who qualifies for a railroad retirement annuity at age 60 because he has 30 years of service will be funded entirely by the Railroad Retirement Account until that person attains age 62. Because that individual would be entitled to a social security benefit at age 62, the Social Security Trust Fund will pay for the portion of the annuity that would have been paid by Social Security and the remainder would be funded through the Railroad Retirement Account Assume such a person has a Tier 1 of $1,000 and begins to receive his annuity at age 60. The Railroad Retirement Account would fund the entire portion until that person reaches age 62. At that time, the individual would be hypothetically entitled to a $600 social security benefit. Therefore, the Railroad Retirement Account would still fund $400 of the Tier 1 and the Social Security Trust Fund would fund the remaining $600 of the Tier 1.
· There are no public funds or general tax revenues used to pay these benefits.
· All railroad retirement benefits are the result of collective bargaining agreements between rail labor and the rail industry. These collective bargaining agreements, beginning in 1935, are the basis for the legislation (Railroad Retirement Act and Railroad Unemployment and Insurance Act) currently enacted.
· There are no actual budgetary savings. This legislation would increase the balance of the Railroad Retirement Trust Fund allowing for the appearance that more reductions in the national budget could be achieved. However, these are taxes paid by rail labor and the rail industry and should not be considered general revenue funds.
· Enactment of this legislation would eliminate the occupational disability program and the 60/30 provision for employees who have worked in the rail industry for at least 30 years and attain age 60. The earliest these individuals could file for a benefit would be age 62, and that annuity would be reduced for early retirement. Moreover, annuities for spouses who are married to these employees and attain age 60 would be negatively impacted in the same manner.
· If this legislation is applied to individuals currently on the rolls, it would negatively affect the annuities of almost 120,000 non-disabled employees, almost 90,000 spouses and over 62,000 occupationally disabled employees.