House budget


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House budget

  1. 1. From: Tolman, JohnDate: 04/13/12 07:46:18To: _Legislative Chairmen US GCACc: Tolman, JohnSubject: Republicans continued attack on Rail Labor and RRB. more to follow.Brother and Sisters,Attached is a section of the budget report from the recently passed Ryan budget. This section deals withways to save money and reduce the budget. Once again, the GOP is going after our Railroad RetirementTier 1 benefits in their attempt to hurt labor. I have highlighted the RRB section in yellow for reading,also attached is a summary fact sheet on the bottom supplied by the RRB. This passed on March 29 by avote of 228-191, with 10 Republicans joining all of the Democrats voting against it.Committee Reports112th Congress (2011-2012)House Report 112-421SUMMARY OF COMMITTEE-REPORTED RESOLUTIONThe resolution calls for $517.1 billion in budget authority and $516.8 billion in outlays in fiscalyear 2013. Discretionary spending is $59.9 billion in budget authority and $63.9 billion inoutlays in fiscal year 2013. Mandatory spending in 2013 is $457.2 billion in budget authorityand $452.9 billion in outlays. The 10-year totals for budget authority and outlays are $4.9trillion and $4.8 trillion, respectively.While the Committee recommendation is a disciplined budget that will require committees ofjurisdiction and agencies to set priorities and achieve efficiencies, it does not take the arbitraryapproach that will result from the Budget Control Acts sequester. The House Republicanbudget replaces the sequester. If not replaced, staff estimates show that this function would bereduced by another $4.7 billion below the committee recommendation in fiscal year 2013.ILLUSTRATIVE POLICY OPTIONSReforming the Federal Governments income security programs can both strengthen the safetynet and protect taxpayers. Among reforms that could be considered by the committees ofjurisdiction are the following.
  2. 2. DISCRETIONARY SPENDINGReduce Spending on the Low Income Home Energy Assistance Program [LIHEAP]. This budgetassumes the same level of funding for LIHEAP in President Obamas fiscal year 2013 budgetrequest. This saves approximately $500 million in budget authority for fiscal year 2013.MANDATORY SPENDINGBlock Grant the Supplemental Nutrition Assistance Program [SNAP]. Spending on SNAP--formerly known as the Food Stamp Program--has increased dramatically over the past threeyears. SNAP spending grew from $20.6 billion in 2002 to nearly $40 billion in 2008, and isprojected to be over $80 billion in 2012. While the increase between 2008 and 2012 is partiallydue to the recession, SNAP spending is forecast to be permanently higher than previousestimates even after employment has recovered. A variety of factors are driving this growth,but one major reason is that while the States have the responsibility of administering theprogram, they have little incentive to ensure it is well run.The budget resolution envisions converting SNAP into an allotment tailored for each Stateslow-income population, indexed for inflation and eligibility. This option would make no changesto SNAP until 2016--after employment has recovered--providing States with time to structuretheir own programs. It would also envision improving work incentives by requiring a certainamount of people to engage in work activity, such as job search, community service activitiesand education and job training. This proposal is estimated to save $122.5 billion over 10 years.Eliminate Broad-Based Categorical Eligibility. Broad-based categorical eligibility allows forhouseholds to be made eligible through receiving a minimal Temporary Assistance for NeedyFamilies [TANF] fund benefit or service. Typically, an individual is made eligible by receiving aTANF brochure or being referred to a social services `800 telephone number. This allowsindividuals to qualify for SNAP benefits under less restrictive criteria. For example, 40 statescurrently have no asset test for receiving SNAP benefits.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 providingfamilies with $1.00 in LIHEAP benefits in order to increase SNAP benefits (see `CategoricalEligibility above). This proposal would eliminate that abuse.Reform Civil Service Pensions. In keeping with a recommendation from the NationalCommission on Fiscal Responsibility, this option calls for Federal employees--includingMembers of Congress and staff--to make greater contributions toward their own retirement. Itwould 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 theFederal Employee Retirement System. This would achieve significant budgetary savings and alsohelp facilitate a transition to a defined contribution system for new Federal employees that
  3. 3. would give them more control over their own retirement security. From a fiscal responsibilitystandpoint, this option would replace a system that is creating unfunded future liabilities fortaxpayers 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 forrailroad retirees are supposed to mimic Social Security benefits, but they are more generousthan Social Security in many ways. This option would conform Tier 1 so that its benefits wouldequal those of Social Security, with an estimated savings to taxpayers of $2 billion over 10years.Reform the Pension Benefit Guaranty Corporation [PBGC]. Currently, the PBGC faces a $26billion unfunded liability. While this budget does not assume the Presidents proposal, itrecognizes the need to reform the PBGC to ensure that a future taxpayer funded bailout doesnot occur. Potential savings could total an estimated $8.34 billion over 10 years.Eliminate the Failed Troubled Asset Relief Program [TARP] Housing Subsidies. This resolutionsupports jettisoning the loan subsidy initiative, Home Affordable Modification Program [HAMP],created by the Obama administration as part of TARP for homeowners delinquent on mortgagepayments. While the program announced in early 2009 that it would help up to four millionhomeowners avoid foreclosure, since then it has made only 762,839 loan modificationspermanent--just 19 percent of the target. Eliminating HAMP could save $1.4 billion over 10years.Unemployment Insurance. This budget resolution assumes that unemployment benefitexpansions and extended benefits expire as scheduled under current law and does not assumeanother extension of emergency unemployment insurance benefits. The previous expansionshave increased UI benefits to 99 weeks--the longest that had ever been offered prior to thisrecession, and have been extended a record 11 times.Reform Supplemental Security Income. Welfare programs typically pay benefits on a slidingscale. However, SSI is different, paying an average of $600 for each and every child in ahousehold 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 onSSI 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 along list of reforms that we do not have time to get into, but we would say for very largefamilies 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 theseprograms and begin devolving them to the States. This would build upon the historic progressof bipartisan welfare reform in the late 1990s. These reforms transformed cash welfare byencouraging work, limiting the duration of benefits, and giving states more control over how
  4. 4. 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 RETIREMENT TIER 1 BENEFITS TO SOCIAL SECURITY  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.
  5. 5.  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.Frats,JohnJohn P. TolmanVice President & National Legislative RepresentativeBrotherhood of Locomotive Engineers & TrainmenTeamsters Rail Conference25 Louisiana Ave. N.W.Washington, D.C.