ONE REASON it's so hard to be "fair" when it comes to cutting the federal budget is that some of the budget's most favored beneficiaries are protected by agreements negotiated back in the days when federal money seemed inexhaustible. Consider, for example, the lucky recipients of railroad retirement pensions. Working on the railroad may not be much of an attraction these days, but there's much to said for it.
Railroad retirees are currently eligible for a package of benefits for themselves, their survivors and spouses that becomes fully payable when the retiree is 60. The system is enormously complex--a two-tiered benefit structure is further embellished with longevity bonuses and "windfall" add-ons for non- railroad employment. Unlike typical corporate pensions, benefits are also paid to spouses at no added cost to the retiree and the full pension is not only automatically adjusted for cost-of-living increases, but is also tax-free. For all this, railroad workers now contribute only slightly more than other workers must pay for vastly inferior Social Security benefits.
So generous is the system that the Congressional Budget Office calculated, in a recent study, that the typical railroad worker retiring next year will get benefits that exceed his highest previous take-home pay by as much as 29 percent. That kind of generosity can get mighty expensive--especially in an industry in which employment has shrunk so drastically that there are now almost two retirees drawing benefits for every one worker supporting them.
Actually, the railroad retirement system has been in a state of financial crisis throughout most of its 47-year history. Every time one of these crises has become acute, the railroad companies and unions have taken their case to Congress--the companies arguing that generous benefits were needed to encourage retirement in their shrinking industry and the unions arguing in behalf of the workers' welfare. In the last such encounter-- during the tumultuous budget-cutting days of last summer--the petitioners got less gentle treatment than usual. Some benefits were liberalized but others were cut and the payroll tax--mostly paid by the companies--was raised to a hefty 22 percent.
Even so, the railroad retirement system is still in shaky financial condition. It remains, moreover, not only a substantial drain on the ailing railroad industry (substantial parts of which are now subsidized by the government), but also a direct claimant for over $2 billion a year in Social Security and general tax revenues. The CBO report recommends several possible changes in the system's benefits and funding, and a similar report from the administration is due sometime this year. Taking back promises isn't a happy business, but at a time when the nation's poorest citizens are sustaining real losses, a hard look at the railroad retirement system is in order.