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First Gov  

September 7, 2000

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.