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   Reader question and answer

Question:

The union folks are claiming that Gov. Romney plans to move the railroad retirement system into social security (which would reduce the benefits of those who have worked on the railroad for many years), and that is a basis to vote for Obama. To me this is not very smart since Obama has an all-out war on coal, nevertheless it is the argument they are using...

Could you please confirm or deny this plan?

Long Answer:

(short answer found below at the bottom)

This is an untrue rumor by the democrat-aligned unions in the important coal and railroad regions in Virginia and West Virginia, and told to railroad workers and retirees nationwide.

Innuendo and Untrue Argument #1:

Different unions are making different arguments and the stories are changing.
A common claim: Republicans tried to take away benefits but democrats stopped them.

Fact: The House Budget did not mention the railroad retirement.
(It set general spending levels for the federal budget, but the Senate rejected it.)

Official government site for the budget voted on in 2012: H.Con.Res.112 "Establishing the budget for the United States Government for fiscal year 2013 and setting forth appropriate budgetary levels for fiscal years 2014 through 2022."

The above page has a link "Text of Legislation" which takes the reader to three versions:
  1) H.CON.RES.112.RH Version that came out of committee on March 23, 2012.
  2) H.CON.RES.112.EH Version passed by House on March 29th.
  3) H.CON.RES.112.PCS Version voted down by Senate on May 16th.

None of the versions mentioned or took away any railroad retirement benefits.
(Verify by reading the text in the above links if there is any doubt.)

The above official site also has a link "Major Congressional Actions" to the voting record.
At the bottom of that link, the House votes are recorded here and the Senate vote here.

Democrat unions falsely claim that vote was on a different resolution that mentioned railroad benefits. (Verify title: Vote was on H.Con.Res.112 with its name as noted above.)

The different resolution, called "an original measure, H.Rept.112-421", was introduced March 23rd and never voted on. (This resolution was a report, not a bill, and all references to the report were removed from the Budget bill that congress voted on.)

Also, lied about by the unions, House Report 421 did not specify to take away benefits.

Under a section titled "Illustrative Policy Options," House report 421 stated committees have jurisdiction to determine what specific spending measures can be presented for a vote, but said that committees could consider proposing to "Conform Railroad Retirement Tier 1 Benefits to Social Security Benefits."

Committees never did that, and unions have already talked to committee members on why that cannot and should not be done.

In fact, the Railroad Retirement Board specifically stated in a memo they posted on their site that "No such legislation has been introduced."

More details and facts are given on this, in addressing recent claims by BLET:

ROMNEY, OBAMA, RAILROAD RETIREMENT AND BLET »

Innuendo and Untrue Argument #2:

Unions claim Romney, multiple times, praised the House Report 421, and therefore he plans to do away with railroad retirement benefits.

Actual Facts: Romney
  1) Praised the Budget Roadmap (it did not mention railroad retirement)
  2) Praised the Budget Blueprint (it did not mention the railroad retirement)
  3) Praised the Passed Budget H.Con.Res.112 (it did not mention railroad retirement)
  4) Never praised Report 421 (it suggested committees could review tier 1 benefits)

The roadmap came out first, then the blueprint and Romney praised those. The report came out March 23rd and Romney did not praise it. After the Budget, H.Con.Res.112, was passed on March 29th, Romney praised the budget, which although it had deficit spending, had spending limits that were not out of control.

Other Facts:

Mitt Romney has no plan to take away railroad benefits, and it would go against his stated philosophies to introduce such a plan.

This is merely an attempt to swing the vote to Obama by using untrue scare tactics.

Mitt Romney has laid out his plan to reform social security and it does not mention and does not touch the railroad retirement. (See summary by NY Times below.)

Mitt Romney has never introduced or stated any plans to modify the railroad retirement.

Reason:

The railroad retirement is healthy and currently does not need reforming:

“Barring a sudden, unanticipated, large decrease in railroad employment or substantial investment losses, the railroad retirement system will experience no cash-flow problems during the next 23 years. The long-term stability of the system, however, is still questionable. Under the current financing structure, actual levels of railroad employment and investment return over the coming years will largely determine whether corrective action is necessary.”

But Social Security needs reforming:

“Social Security began running deficits in 2010, paying out $48.9 billion more in benefits than it received through payroll taxes. Nor will these deficits ever end, meaning that without reforms, Social Security will continue to add billions to the deficit and debt each year.”

Background:

Railroad workers pay into a separate railroad retirement instead of paying into social security:

“While railroad retirement tier I payroll taxes are coordinated with social security taxes so that employers and employees pay tier I taxes at the same rate as social security taxes, both railroad employees and employers pay additional tier II taxes which are used to finance railroad retirement benefit payments over and above social security levels.”

“Railroad Retirement Tier I ... payroll taxes on employers and workers are the same as for Social Security, but Tier I allows railroaders with at least 30 years of service to retire at age 60 with full benefits for themselves and spouse. The cost of early retirement is funded by Tier II payroll taxes, which also fund additional Railroad Retirement benefits similar to private-sector pension plans where they still exist.

“The average Railroad Retirement benefit paid current retirees is some $1,700 more monthly than paid to Social Security recipients, while the Railroad Retirement spouse benefit is some $500 more than paid spouses under Social Security.

“Carriers pay the bulk of the additional Railroad Retirement taxes – 12.1 percent on payroll up to $81,900 per employee, while employees pay 3.9 percent on the same earnings. This significant pension benefit is what the railroads rely on to keep our professional workforce on the job until retirement.”

See the following links for additional details:

One reason the railroad retirement is so much better off than social security might be because of the Railroad Retirement and Survivors' Improvement Act of 2001, Public Law 107-90, co-sponsored by Senate Majority Leader Tom Daschle and signed into law on December 21, 2001 by President Bush.

"The new law provides for the transfer of railroad retirement funds from the Railroad Retirement Accounts to a new National Railroad Retirement Investment Trust (RRIT), whose Board of seven trustees is empowered to invest Trust assets in non-governmental assets, such as equities and debt, as well as in governmental securities.

"The Trust will not be treated as an agency or instrumentality of the Federal Government. Its Board of Trustees will be comprised of seven members: three members selected by rail labor to represent the interests of labor; three members likewise selected by rail management to represent management interests; and one independent member selected by a majority of the other six members...

“The new law also allows for railroad retirement benefit payments in the future to be issued by a qualified non-governmental financial institution, rather than the Treasury Department."

In other words, the democrat congress pushed to privatize the railroad retirement, it received strong bi-partisan support, and it was signed by the republican president. This law gave full 60/30 benefits to employees retiring before 62, among other benefits, and has resulted in a higher payout of benefits that previously.

Ironically, now Pres. Obama is saying he would never privatize the troubled social security, and accuses the Republicans of wanting to destroy social security through privatization (CBSNews.com).

Basis of Union Claims:

The basis unions use for spreading their rumors is that the 222 page draft resolution, House Report 112-421, that accompanied Paul Ryan's initial budget bill (i.e. budget plan) included the following paragraphs:

“Illustrative policy options... that could be considered by the committees... are the following:

“... Conform Railroad Retirement Tier 1 Benefits to Social Security Benefits.”

Mitt Romney praised the "vision" and "principles" laid out in Paul Ryan's blueprint for the fiscal year 2013 budget resolution (which said nothing about changing the railroad retirement), and in the budget passed by the house on March 29, 2012 (of which none of the versions said anything about changing the railroad retirement either):

“We are making progress. The House of Representatives has unanimously rejected President Obama’s vision of an America with higher taxes, unlimited spending, and expansive government... I look forward to working with Congress to achieve fiscal discipline and passing a budget that moves us toward a simpler, smarter, and smaller federal government.” — Mitt Romney on March 29th (when budget passed with no RRIT changes)

“I’m very supportive of the Ryan budget plan.” — Mitt Romney on March 20th (referring to blueprint, which had no RRIT changes, before the House Report 112-421 was released)

Mitt Romney never endorsed the House Report mentioning the railroad retirement. And contrary to union claims, the House didn't include any proposals on the railroad in the budget they passed on March 29th. (That is why this site links to the text of the passed budget so people can verify that, which the union sites originally did not do.)

Even at that, the unnecessary and ill-advised proposal would not have reduced benefits once they kick in, as some unions claim. The only certain or likely change (which would have been bad enough) would have been to hold the retirement to 62 and older, as social security currently does, verses allowing full retirements at 60 for those with 30 plus years in, as the tier I benefits currently allow.

The unions are spreading big, false rumors based on innuendo and congress proposing in a report for committees to consider a much more minor change (which they did not do) than combining the railroad retirement with social security and removing all the tier II benefits (which probably would be illegal and impossible to achieve anyway).

Mitt Romney is not proposing to change the railroad retirement. If he had, it would only have been for the same purpose as social security (to save the retirement -- but it doesn't need saving), and he would have followed the same principles that he used in his social security reform plan:

• Make reforms to ensure there will be benefits for new and future workers

• Do not change current retirees benefits

• Do not change benefits of those who have worked many years or near retirement

His reform plans for Social Security and Medicare provide a good template for how Mitt Romney would have revised other retirement systems had they been in trouble and needed rescuing.

The New York Times explains that approach in the following article:

“Romney delivered his most important speech yet. It was politically astute and substantively bold, ... Romney grasped the toughest issue — how to reform entitlements to avoid a fiscal catastrophe — and he sketched out a sophisticated way to address it.

“The speech was built around the theme that government should be simpler, smarter and smaller. First, he established his bona fides. Romney reminded his listeners that when he went to work at the Winter Olympics in Salt Lake City, he inherited a $370 million deficit. He left behind a $100 million surplus that went into an endowment fund.

“Then he argued that over the decades government has become bloated and lethargic. In World War II, the Navy commissioned 1,000 ships a year and had 1,000 employees in the purchasing department. Today, Romney said, we commission nine ships a year but have 24,000 employees in the department.

“Romney then laid out a measured fiscal strategy, starting with a promise to bring federal spending down to 20 percent of gross domestic product, which is about the precrisis average. He then turned to entitlements...

“The experts were impressed. The Romney campaign operates like a smooth-running White House, with a process to identify the core issues, cull ideas and present options to the candidate.

“In his speech, Romney proposed some sensible Social Security reforms: gradually raise the retirement age and slow the growth of benefits for richer retirees. His Medicare plan is more radical because the problems are more fundamental...

“Romney proposed keeping Medicare just as it is for everybody currently in or close to the system. But he would slowly introduce a premium support system, with less-affluent beneficiaries receiving more support than more-affluent ones.

“Many reporters claimed that the Romney approach is similar to the Paul Ryan plan. It’s actually closer to the plan that Pete Domenici, a former Republican senator, and Alice Rivlin, a former Clinton budget chief, devised. Romney would create a premium support system, but he would also give seniors the option of a government-run insurance plan that works a lot like the current fee-for-service Medicare.

“This is politically smart... But it is also substantively smart...

“Romney is running in an atmosphere in which it is extremely difficult to remain serious and substantive. Yet he is doing it. Democrats should not underestimate him.”

Short Answer:

No one, neither Mitt Romney nor Barack Obama, has plans to combine the railroad retirement with social security, or to reform the railroad retirement plan.

The real question railroad workers need to ask is which one will provide a stable enough economy that the pension fund will securely grow (not lay stagnant or shrink) providing enough funds to support additional retirees, and ensure the industry thrives so there will be enough new workers to pay into the system when existing workers retire?

~ Based on Correspondence on Jun 13, 2012, updated Jun 30th, Aug 21st and in Sep.


Medicare and Railroad Retirement

Democrat allied unions and press are misleading workers on the railroad retirement and Medicare.

How they mislead and misrepresent on Medicare is how they mislead and misrepresent on the Railroad Retirement Investment Trust (RRIT).

(Democrats are cutting Medicare benefits and access then denying it and claiming republicans would do that.)

Even when Mitt Romney and his campaign co-Chair (Gov. John Sununu) debunk such claims, the democrat allied sources argue and stick to their guns.

Gov. Sununu (Romney's campaign co-Chair) argues with CNN talking head about what Mitt Romney's social security and Medicare plans are:

CNN- Aug 14, 2012

Mitt Romney debunks democrat claims about what his Medicare plan is, and explains it:

Barack Obama: "If we didn't do anything, then Medicare and Medicaid would gobble up, basically the entire federal budget."

Yet one year later, all Obama has done is take $716 billion from Medicare to pay for Obamacare:

“The ACA also includes a number of other provisions related to health care that are estimated to reduce net federal outlays (primarily for Medicare)... by an estimated $711 billion.”

President Obama’s Senior Campaign Aide Stephanie Cutter Brags that President Obama “Achieved” $700 Billion in “Cuts In Medicare.”

Face the Nation - Aug 12, 2012

While over half of Doctors would severely restrict or close their practice to Medicare patients:

Hospitals would do the same:

And factcheck.org reports:

“The new law (Obamacare a.k.a. ACA) is guaranteed to result in benefit cuts for one class of Medicare beneficiaries — those in private Medicare Advantage plans... Currently, about 1 in every 4 Medicare beneficiary is enrolled in a Medicare Advantage plan...

“The promise that "benefits will remain the same" is just as fictional as the town of Mayberry was when Griffith played the local sheriff.”

Wall Street Journal finds Romney ad pummeling dems on Medicare fair and accurate:

"Either Mr. Obama's apologists can defend raiding one insolvent entitlement to finance another one and own the cuts. Or they can say these Medicare cuts don't really count as cuts, as the media fact checkers are suddenly finding ways to do. In which case it means repudiating Mr. Obama's repeated claims that the Affordable Care Act reduces the deficit..."