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EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON, D.C. 20503
STATEMENT OF ADMINISTRATION POLICY (THIS STATEMENT HAS BEEN COORDINATED BY OMB WITH THE CONCERNED AGENCIES.)
September 7, 2000
(House)
H.R. 4844 - Railroad Retirement and Survivors' Improvement Act of 2000
(Shuster (R) Pennsylvania and 305 cosponsors)
The Railroad Retirement and Survivors' Improvement Act of 2000, H.R. 4844,
would create a Trust to manage the investment of railroad retirement
assets, including in private securities; reduce the pension tax rate; and
expand railroad retirement benefits. The Administration recognizes the
need for, and supports, modernization of the railroad retirement system by
improving the level of benefits provided to railroad widows (and widowers).
The Administration is concerned that the bill, with the benefit expansions
and tax-rate reductions in their current form, would place the solvency of
the railroad trust fund on a less secure ground. This concern is
heightened by the fact that the bill would draw down the balances in the
trust fund, and relies on a large future tax increase to meet the system's
already anticipated obligations. The Administration is also concerned that
this particular proposal to invest public trust fund monies in private
assets could encourage excessive risk without sufficient safeguards or
oversight, in a fashion that would set an unfortunate precedent.
Pay-As-You-Go Scoring
H.R. 4844 would affect receipts and direct spending; therefore, it is
subject to the pay-as-you go requirements of the Omnibus Budget
Reconciliation Act of 1990. The Administration has not yet completed its
estimates of the costs of the bill, however in the absence of a full offset
to its costs, H.R. 4844 could cause a significant sequester of mandatory
Federal programs, such as Medicare and farm price supports.