In defining the term "bills for raising revenue," Justice Story states: "*** the practical construction of the Constitution

[a]nd, indeed the history of the origin of the power already suggested abundantly proves that it has been confined to bills to levy taxes in the strict sense of the words, and has not been understood to extend to bills for other purposes, which may incidentally create revenue" (1 Story on the Constitution, sec. 880).

PRECEDENTS OF THE SUPREME COURT Justice Story's definition of a "bill for raising revenue" under article I, section 7 of the Constitution has been adopted by the Supreme Court and has been used by it as the measuring stick in each of the cases coming before the Court involving an interpretation of that constitutional provision.

For example, in United States v. Norton, 91 U.S. 569, 23 L. ed. 454 (1876), the issue arose as to whether the act creating the postal money order system was a bill to raise revenue, under article I, section 7. The contention was made that it was a bill to

raise revenue since it provided that the Postmaster General was authorized to use a part of the moneys collected to pay post office employees.

The Supreme Court, however, applying Justice Story's definition of what constituted a bill for raising revenue, rejected the contention. The Court reasoned that since the primary purpose of the act was not to raise revenue, indeed Congress showed "a willingness to sink money, if necessary, to accomplish that purpose," the act was not "made for the direct and avowed purpose of creating revenue or public funds for the service of

the Government," and was, therefore, not a bill to raise revenue within the meaning of article I, section 7.

In Twin City National Bank v. Nebeker, 167 U.S. 196, 42 L. ed. 134 (1897), a contention was made that the act providing for a national currency was unconstitutional since that part of the act which imposed a tax upon the amount of notes held by a national banking association was originated in the Senate and the tax amounted to a bill to

raise revenue under article I, section 7.

The Court, however, after setting forth Justice Story's definition of a revenue bill, found that the act in question was not a bill to raise revenue despite the provision for the levying of a tax. The Court stated (167 U.S. at 202):

"The main purpose that Congress had in view was to provide a national currency based upon U.S. bonds, and to that end it was deemed wise to impose the tax in question. The tax was a means of effectually accomplishing the great object of giving the people a currency that would rest, primarily, upon the honor of the United States, and be available to every part of the country. There was no purpose by the act or by any part of its provisions to raise revenue to be applied in meeting expenses or obligations of the Government."

In Millard v. Roberts, 202 U.S. 429, 50 L. ed. 1090 (1906), the Senate initiated an act which required certain railroads to eliminate grade crossings and to construct a railroad depot. A sum of money was to be paid to the railroads to be raised by the levy of a tax on the property of area residents. The Court, relying on its decision in Twin City National Bank v. Nebeker, supra, held that the tax did not convert the act into a bill to raise revenue. The Court concluded, "Whatever taxes are imposed are but means to the purposes provided by the act" (202 U.S. at 437).

PRECEDENTS OF THE HOUSE OF REPRESENTATIVES

1. On March 29, 1922, a motion was made on the door of the House that a bill authorizing the extension of time for payment of a debt incurred by Austria be sent to the

The Speaker decided that the bill was not one to raise revenue as defined in article I, section 7, and stated:

"The best definition the Chair has seen is in the 13th of Blatchford, where the court says:

"Certain legislative measures are unmistakably bills for raising revenue. These impose taxes upon the people either directly or indireclty, or lay duties, imports, or excise for the use of the Government, and to give to the persons from whom the money is exacted no equivalent in return, unless in the enjoyment in common with the rest of the citizens of the benefit of good government' " (8 Cannon's Precedents of the House of Representatives, sec. 2278 (1936)).

2. On May 4, 1922, the Speaker was called upon to decide whether a bill banning the importation of narcotics was a revenue bill since it also had provision for the raising of revenue. The Speaker decided that the bill was not a revenue bill stating:

"The Chair concludes that it is not privileged; that while [the bill] relates to revmain purpose of the bill is not to raise reveenues, yet that that is incidental; that the nue; and that therefore it is not privileged" (8 Cannon's Precedents of the House of Representatives, sec. 2279 (1936)).

3. On December 18, 1920, the Speaker was called upon to decide whether a Senate resolution reviving the activities of the War Finance Corporation constituted a revenue bill. During the ensuing debate a member of the House stated:

"[Article I, section 7 of the Constitution] provides that bills for the purpose of raising resentatives. It does not provide that laws revenue shall originate in the House of Repwhich take the effect and which will have the effect either of raising revenue or producing a deficit shall originate in the House *** No one can tell whether the passage of this resolution, if it shall be carried out in the spirit of the resolution, will produce revenue or produce a deficit. But everyone knows that the purpose of the law is not to produce revenue" (6 Cannon's Precedents of the House of Representatives, sec. 315 (1936)).

The Speaker decided that such questions were for the House rather than the Speaker, and the House voted that the bill was one which the Senate could originate.

Applying these precedents specifically to the Senate committee's amendment to H.R. 3157, it would appear that no serious question arises concerning the infringement of the House prerogative to originate revenue

measures.

Although the Railroad Retirement Tax Act is a part of the Internal Revenue Code, the proceeds derived from it are devoted exclusively to the payment of benefits under and the expenses of administering the Railroad Retirement Act; no part of the proceeds is devoted to general revenue purposes.

In the early years of the railroad retirement system it was the practice to appropriate annually to the railroad retirement account the estimated proceeds of the Railroad Retirement Tax Act, and to make adjustments in subsequent appropriations to correct any inaccuracy in the estimates.

However, by title V of Public Law 452, 82d Congress, 2d session, 1952, it was provided that there is appropriated:

"For annual premiums after June 30, 1952, to provide for the payment of all annuities, pensions, and death benefits, in accordance with the provisions of the Railroad Retirement Acts of 1935 and 1937, as amended (45 U.S.C. 228-228s), and for expenses necessary for the Railroad Retirement Board in the administration of said acts as may be specifically authorized annually in appropriation acts, for crediting to the railroad retirement account, an amount equal to amounts cov

This is a standing appropriation to the railroad retirement account that operates in each subsequent fiscal year; annual appropriations are then made from the account (not from general funds) for administrative expenses.

Thus it has been established by law that the Railroad Retirement Act and the Railroad Retirement Tax Act are integral parts of a single insurance system. They are as closely related as the premium clauses and the benefit clauses of an insurance policy. When the House passes a bill that enlarges the insurance protection it necessarily opens up for consideration the question of the adequacy of the premium to cover the insurance benefits as so enlarged. In this instance the House chose to enlarge the deficit by enlarging the benefits without enlarging the premium. It would be indefensibly restrtictive of the jurisdiction of the Senate to say that it is foreclosed from giving consideration to and possibly making amendments of the premium provisions to deal with the deficit in a different way.

The indefensibility of such a restriction upon the Senate is well illustrated by the facts before the Senate Committee on Labor

and Public Welfare in its consideration of H.R. 3157. That these facts motivated the amendment adopted by the committee appears clearly from the committee report (s. Rept. 645, 89th Cong., 1st sess.). These facts are:

1. The enlargement of benefits provided by the bill introduced an additional cost estimated at $14 million per year without any premium to cover these costs;

2. The railroad retirement system was already currently incurring an actuarial deficit equivalent to a level of about $20 million per year;

3. After the passage of H.R. 3157 by the House and before its consideration by the Senate committee, Congress had enacted the social security amendments of 1965 (Public Law 89-97). The social security amendments had a far-reaching effect on the financing of

the railroad retirement system:

a. By reason of certain minimum and maximum provisions in the Railroad Retirement Act that are contingent upon the provisions of the Social Security Act, many railroad retirement benefits were automati

cally increased;

b. By reason of the railroad retirement tax rates being contingent upon the social security tax rates the scheduled railroad retirement tax rates prior to 1973 were reduced with a consequent reduction in income;

c. By reason of the increase in the social security maximum taxable wage base to $6,600 per year the railroad retirement account would be adversely affected in the interchange of funds between the two systems so long as the railroad retirement maximum taxable wage base remained at $450 per month ($5,400 per year);

d. Congress made provision for the administration of the medicare program so far as railroad employees are concerned by the Railroad Retirement Board, but to become effective only if and when the railroad retirement monthly tax base should be the equivalent of one-twelfth of the social security annual tax base.

Financially, the effect of the social security amendments was to enlarge the pre-existing deficit and the additional deficit to be created by H.R. 3157 by an additional $28 million per year.

To deny to the Senate the jurisdiction to consider and legislate in light of these events, largely supervening House passage of the bill, is to deny to the Senate jurisdiction to legislate intelligently.

Under any such restrictive jurisdiction the only courses open to the Senate in its con

sideration of H.R. 3157 would be to accept the enlargement of the deficit, even though it might consider the enlargement of the deficit unwise, or to reject the enlargement of benefits because it was unwilling to enlarge the deficit.

Furthermore, it is inherent in the structure of the railroad retirement system that the maximum limit of taxable compensation is also the maximum limit of creditable compensation for benefit purposes. Certainly no one can deny that the Senate has jurisdiction to originate increases in the maximum compensation creditable for benefit purposes. But that jurisdiction would as a practical matter be also effectively negated if it lacked jurisdiction to increase the corresponding base in the Railroad Retirement Tax Act.

Mr. MORSE. Mr. President, I ask unanimous consent to have printed in the RECORD another memorandum dealing with the facts of the bill itself.

There being no objection, the memorandum was ordered to be printed in the RECORD, as follows:

MEMORANDUM: COMPARISON OF CARRIERS' INCREASED RAILROAD RETIREMENT TAX LIABILITIES UNDER H.R. 3157, AS AMENDED BY THE SENATE COMMITTEE ON LABOR AND PUBLIC WELFARE, WITH SCHEDULED INCREASES IN TAX LIABILITY PRIOR TO 1965 LEGISLATION Under the present maximum taxable and creditable compensation base of $450 per month ($5,400 per year) in the railroad retirement system the level projected taxable payroll is $4.3 billion per year. If the monthly maximum base is increased to $550 ($6,600 per year), as proposed in H.R. 3157 as amended by the Senate committee, the level projected taxable payroll becomes $4.775 billion per year, an increase of $475 million. Under present provisions of the Railroad Retirement Taxing Act scheduled increases in the tax rate are contingent upon increases in the social security tax rate. By reason

of scheduled increases in the social security tax rate in effect prior to the 1965 amendments of the Social Security Act (Public Law 89-97) the railroad retirement tax rate was scheduled to increase by one-half of 1 percent each on carriers and employees on January 1, 1966, and by another one-half of 1 percent on each beginning January 1, 1968. These scheduled increases in tax rates would have increased the carrier tax obligations, based on a $4.3 billion taxable payroll, by $21.5 million per year in 1966 and another $21.5 million in 1968, or a total of $43 million.

However, the Social Security Amendments of 1965 have reduced the 1966 and 1968 scheduled increases in the social security tax rate, and thereby automatically reduced the increases in the scheduled railroad retirement tax rate, with the consequence that the railroad retirement tax rate in 1966 will be 8.35 percent each on carriers and employees as compared with the previously scheduled 8.625 percent, and in 1967 and 1968 will be

8.4 percent as compared with the previously scheduled 9.125 percent in 1968.

If the tax rate increases scheduled under the law as it stood at the beginning of this year had not been changed by the social security amendments, and the present $450 monthly base were also retained the carrier tax liability for 1968 would be $392.375 mil

lion. The carriers, by seeking to retain the present base despite the reduction in scheduled rates are trying to reduce that liability to $361.2 million, and thus pay $31.175 million less than they had been scheduled to pay.

By contrast, if the new reduced rate is applied to the increased taxable payroll that would result from increasing the base to $550 per month their liability in 1968 would be $401.1 million, i.e., only $8.725 million over the $392.375 million they were already scheduled to pay.

The decrease in scheduled social security tax rates, and the consequent decrease in scheduled railroad retirement tax rates, was made possible only by the fact that the social security tax base was increased to $6,600 per year. In objecting to an increase in the railroad retirement tax base to the same level as the social security base, the carriers are seeking to avail themselves of the lower rate made possible by an increased the lower rate made possible by an increased base without paying on the increased base.

The foregoing figures are exclusive of the cost of medicare. In this connection it should be observed that during the last preceding Congress, and without change of position during the present Congress, the railroad managements agreed with the railway labor organizations that railroad employees should participate equally with other employees in the benefits of whatever medicare program might be enacted. At the time of this agreement it was generally believed that the medicare program would cost employers and employees each one-half to three-quarters of 1 percent of taxable payroll. The actual

scheduled cost under Public Law 89-97 is 0.35 percent of payroll in 1966 and will not exceed three-quarters of 1 percent until 1987. This reduction below anticipated rates is likewise made possible by increasing the taxable wage base to $6,600 per year.

Mr. MORSE. Mr. President, one who has those memoranda has all that is needed to support my argument that we are dealing with a matter which, under are dealing with a matter which, under the precedents of the Supreme Court and the precedents of the House itself, raises no constitutional question.

Mr. LONG of Louisiana. Mr. President, the Senator from Oregon made reference to arguments I made myself reference to arguments I made myself involving this general problem. I made that argument after hearing the statethat argument after hearing the statement by the then majority leader, Mr. from Oregon is citing as a precedent, Johnson, in the very case the Senator but said that where the Senate originated a bill inserting a tax, the House nated a bill inserting a tax, the House declined to send the bill back to the declined to send the bill back to the Senate, but, instead, passed its own bill, sent that bill to the Senate, and the sent that bill to the Senate, and the Senate passed that bill. The very case the Senator from Oregon cites, includthe Senator from Oregon cites, including my statement, shows that the House ing my statement, shows that the House should act first.

If the Senator from Oregon is right in what he says, the Finance Committee what he says, the Finance Committee would have had a right to originate the social security bill and the medicare bill. would have had a right to originate the social security bill and the medicare bill. The Senate Finance Committee agreed The Senate Finance Committee agreed so strongly to the contrary that our chairman and the committee declined chairman and the committee declined to hold hearings on that bill until the to hold hearings on that bill until the House acted and sent the Senate a bill. House acted and sent the Senate a bill.

sent to the House a bill, S. 1734, to conThis year, in this session, the Senate serve and protect domestic fisheries. In connection with that bill the Senate imposed a 50 percent tax to protect fisheries.

The House sent the Senate back a blue sheet, which in polite language stated sheet, which in polite language stated that the bill "in the opinion of this House contravenes the first clause of the seventh section of the first article of the seventh section of the first article of the Constitution of the United States, and is Constitution of the United States, and is an infringement of the privileges of this House, and that the said bill be respectHouse, and that the said bill be respectfully returned to the Senate." That is That is what happened.

The Senate sent back a polite message to the effect that this was not correct to the effect that this was not correct procedure and "here is your bill back."

The House returned the bill, which it had a perfect right to do.

This particular measure imposes a tax of about $90 million. In my opinion, that involves much more than incidental revenue.

I am not arguing about the necessity of the tax. It may well be necessary to have it, and that we will do it in due course.

When revenues are to be raised, those measures should originate in the House. The Senate Committee on Finance sometimes has to wait 3 months for the House to send to the Senate revenue bills so the Senate may act on them. Religiously and respectfully, the Finance Committee respects the House of Representatives in respect to the Constitution; and circumspect as we are, we feel we should show the same consideration and insist on the same consideration for others who have the same responsibility we have.

Mr. President, this matter was discussed with the policy committee. After we discussed it, it was agreed that a point of order would be made by the policy committee on this side of the aisle.

This Senator, as a ranking member of the Finance Committee, as well as being a member of the policy committee, believes it to be his responsibility and duty to do so, but I do not stand alone.

I hope the Senate will stand with those of us who take this view on revenue bills, in connection with a bill which is not a revenue bill, both in connection with the precedents laid down, which have already been mentioned-and even the Senator's case which he cites as a precedent sustains that position-and will this is a tax on a nonrevenue bill. consider the House's point of view that

Mr. MORSE. Mr. President, I wish to reply briefly to the point made by my friend the Senator from Louisiana. I am completely lost in his maze of comments concerning the action taken on May 5, 1959, as being a precedent for his present position. I read every word spoken on the floor of the Senate on May 5, 1959. It was perfectly obvious that the Senate did not take the position that the House had a constitutional right to originate this particular measure. The language of the Senator from Louisiana makes it crystal clear that that was not the position he took on May 5, 1959. On the contrary, the Senator was for leaving the Senate bill. He suggested to the majority leader that we should not go along with the objections because, in the view of the Senator from Louisiana, that would be downgrading the Senate.

On May 5, 1959, the Senator from Louisiana thought the railroad retirement bill was set out in the proper framework of a Senate bill and he was for passing the Senate bill, not the House bill.

The point was raised in that debate very clearly that the Senate did not recognize any constitutional right of the House to originate all those bills in the first instance. It was perfectly clear from the statements of the then majority leader, Mr. Johnson, the chairman of the subcommittee which handled the railroad retirement bill, the senior Senator from Oregon, and the minority leader, that we were not going to take the

House bill on any constitutional right of the House, but because we recognized the parliamentary realities that confronted the Senate, and that we had a better chance of getting the bill on the books. But there is no precedent, by the slightest stretch of the imagination, in the May 5, 1959, case, that there was any admission on the part of the Senate that the House had the constitutional right to originate the bill. This was what we call accommodation between the two Houses. There was no waiver of the right of the Senate to originate the legislation. That is perfectly clear.

Let me say if that action is a precedent-it does not have the slightest relevancy, but if the Senate did agree in May 1959, to do that-it does not rewrite the Constitution of the United States.

We cannot amend the Constitution of the United States by decreeing on the floor of the Senate that a bill is a revenue bill. That is a question of law.

All the Senate did was to parliamentarily accommodate the House of Representatives on May 5, 1959, in order to have a railroad retirement bill passed. The Chairman of the Railroad Retirement Committee and Mr. Johnson, the then-majority leader of the Senate, and Mr. DIRKSEN, as the minority leader of the Senate, agreed among themselves that that would be an appropriate parliamentary procedure to follow.

Let the senior Senator from Oregon state again for the RECORD, because it will be read 10, 15, 20 years from now, that not a word can be found in the May 5, 1959, RECORD of any admission on the part of the Senate that it had encroached upon the power of the House of Repre

sentatives in that it had initiated a revenue bill.

To the contrary, it was our position that it was not a revenue bill within the meaning of article I, section 7 of the

Constitution of the United States, referred to by Justice Story in the Nebeker case, from which I have already quoted at length.

There is before the Senate the clear issue of whether or not the Senate is going to send the bill back to committee, or to some other committee, or refuse to take action on it because of a point of order, because we have said once again, acting as "Justices of the U.S. Supreme Court" that article I, section 7 of the Constitution of the United States would be violated thereby.

Let us face up to the issue. If there is any real question about the constitutionality of the bill, let us pass it and let the Supreme Court decide it. I tell Senators, in my judgment, the decision that will be rendered. There will be an even briefer decision than Justice Story rendered in the Nebeker case. The Court will dismiss it in a paragraph or two, unless it recites the Nebeker case and also the Roberts case, at the time the leader of the Senate referred to when the position was taken on May 5, 1959, that a constitutional question was not involved.

It is my opinion-and every Senator is entitled to his opinion-that this adds up to a parliamentary maneuver to avoid a decision on the substantive merits of the amendment. I am ready to vote on the

substantive merits of the amendment. I am perfectly willing to vote on the substantive merits because I am satisfied the bill is constitutional.

I have great respect for my colleagues in the Senate, but I prefer to walk a few steps from the Senate of the United States to that great cathedral of justice, the U.S. Supreme Court Building, for constitutional rulings.

I am satisfied what that ruling would be if the bill were passed, and whether or not the Senate, in passing it, acted constitutionally.

The Supreme Court will render a decision that the so-called tax features of the bill are incidental thereto and do not constitute a revenue measure in the sense that a revenue measure must originate in the House.

Mr. LONG of Louisiana. I do not quarrel with the Senator on this matter. If he has a different interpretation of the Constitution than I hold, when it says revenue bills shall originate in the House, so far as I am concerned, that applies to the $90 million tax. He is entitled to his opinion, and I am entitled to my opinion. A Senator should vote to uphold the Constitution of the United States. I do not have to vote for something I think is unconstitutional and rely upon the Supreme Court tional and rely upon the Supreme Court to tell me I did an unconstitutional act to tell me I did an unconstitutional act and save me from my own mischief.

If I believe it is wrong I should abide by my oath. That is my judgment.

The Senator said that it did not create a precedent for what we are doing ate a precedent for what we are doing here. I heard the majority leader say that we had not done an unconstitutional act. The House took the attitude that we had. Having proceeded to say that we had not done anything unconstitutional, we then proceeded to act as though we had. We passed the House bill. The House bill was enacted into law and signed by the President. We went along with the argument of the

House on the House contention that we had done something unconstitutional something unconstitutional, but said to We said, in effect, that we had not done the House, in effect, "Even so, we will do it your way."

So far as the merits of the amendment

are concerned, what we are talking about here is a matter of increasing the tax here is a matter of increasing the tax base and increasing the tax on the working people and on the railroads. It means that the average workingman means that the average workingman would have to pay $10 a month more to get the benefits of the medicare proposal that we added to the Social Security bill, which was passed recently. Am I stating the situation correctly?

Mr. PELL. That is not completely correct. The tax would be paid half and half by the railroad industry and by those workers who earn more than $450 a month. It would not cover hospital care through railroad retirement or social security. There would be, however, other benefits.

Mr. LONG of Louisiana. Would it cover medical benefits?

be considered in connection with a revenue bill. The bill before us is not a revenue bill. I hold in my hand another bill, which the House in all propriety, in my judgment, based on the precedents that have been in effect in the time that I have been a Senator, declined to consider. The bill concerns fisheries. We imposed a tax, and the House politely sent the bill back to us.

I am sure the Senator would not say that the House took the wrong attitude. The House of Representatives has consistently acted in this fashion, at least while I have been a Member of the Senate. There is that precedent even in the 1959 debate, to which reference has been made. The House sent S. 1734 back to us with a polite note, rejecting it.

Mr. PELL. In this connection there should be printed in the RECORD a letter from the Executive Office of the President, Bureau of the Budget, addressed to the committee which says:

We are opposed to this measure, as is the Railroad Retirement Board. However, we understand that you have introduced an amendment to this bill which would equate the wage base of the railroad retirement system to that of the social security system. We believe this provision is desirable not only because it will assist in keeping the railroad retirement and social security systems in step but because it will assist in maintaining the financial soundness of the railroad retirement system. We hope that this provision will receive favorable consideration by your committee.

I ask unanimous consent to have printed in the RECORD at this point the entire letter from the Bureau of the Budget.

There being no objection, the letter was ordered to be printed in the RECORD, as follows:

EXECUTIVE OFFICE OF

THE PRESIDENT, BUREAU OF THE BUDGET, Washington, D.C., August 31, 1965. Hon. CLAIBORNE PELL, Chairman, Subcommittee on Railroad Retirement, Committee on Labor and Public Welfare, U.S. Senate, New Senate Office Building, Washington, D.C. DEAR MR. CHAIRMAN: Your committee has under consideration H.R. 3157, a bill "To amend the Railroad Retirement Act of 1937, to eliminate the provisions which reduce the annuities of the spouses of retired employees by the amount of certain monthly benefits."

We are opposed to this measure, as is the

Railroad Retirement Board. However, we understand that you have introduced an amendment to this bill which would equate the wage base of the railroad retirement system to that of the social security system. We believe this provision is desirable not only because it will assist in keeping the railroad retirement and social security systems in step but because it will assist in maintaining the financial soundness of the railroad retirement system. We hope that this provision will receive favorable consideration by your committee.

Sincerely yours,

something that we can take care of later something that we can take care of later in the session or next year. in the session or next year. It ought to

Mr. LONG of Louisiana. We ought to pass on the question ourselves. We ought to exercise our own best judgment. We have a responsibility, just as the House has its responsibility. We should discharge our own responsibility.

The PRESIDING OFFICER. The Chair submits the question to the Senate as to whether the Senate, under the Constitution, has the right to consider this amendment, or whether the point of order is well taken on H.R. 3157, an act to amend the Railroad Retirement Act.

Mr. MORSE. Mr. President, I ask for the yeas and nays.

The yeas and nays were not ordered. Mr. MORSE. Mr. President, I suggest the absence of a quorum.

The PRESIDING OFFICER. The

clerk will call the roll.

The legislative clerk proceeded to call the roll.

Mr. LONG of Louisiana. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

The PRESIDING OFFICER. Without objection, it is so ordered.

system would be about $87 million a year. About $39 million of this amount would be applied to reducing the $62 million deficit to about $23 million.

Mr. President, in view of that language, it seems to me that to say the financing features or the tax features of the bill are incidental is not being realistic at all. They are very substantial. I shall support the point of order made by the distinguished Senator from Louisiana [Mr. LONG].

The PRESIDING OFFICER. The yeas and nays have been ordered, and the clerk will call the roll.

The legislative clerk called the roll. Mr. LONG of Louisiana. I announce that the Senator from Maryland [Mr. BREWSTER], the Senator from Idaho [Mr. CHURCH], the Senator from Ohio [Mr. LAUSCHE], the Senator from Wyoming [Mr. MCGEE], the Senator from Virginia [Mr. ROBERTSON], and the Senator from Ohio [Mr. YOUNG] are absent on official business.

I also announce that the Senator from Minnesota [Mr. MCCARTHY], the Senator

The yeas and nays were ordered. Mr. MORSE. Mr. President, a parliamentary inquiry.

The PRESIDING OFFICER. The Senator will state it.

Mr. MORSE. The pending question, as I understand, is the point of order raised by the Senator from Louisiana [Mr. LONG], that the pending legislation is unconstitutional because of the allegation that it violates article I, section 7 of the Constitution, which prescribes that revenue shall measures originate in the House.

The PRESIDING OFFICER. Senator is correct.

Mr. MORSE. Therefore, a vote of “nay” against the point of order will be a vote to sustain the constitutionality of the pending proposal offered by the Senator from Rhode Island [Mr. PELL]. Is that correct?

The PRESIDING OFFICER. A vote of "nay" would dispose of the point of order, and the amendment would continue to be before the Senate for action. A vote of "yea" would sustain the point of order, and the proposal would be removed from the Senate.

Mr. MORSE. I respect the Chair's language, but I respectfully say it means the same thing that I said.

Mr. MILLER. I point out that in the committee report on page 2, the committee states:

There is now an actuarial deficit in the financing of the railroad retirement system of about $20 million a year, and Public Law 89-97 (approved July 30, 1965) will add about $28 million to the deficit, bringing it to a total of about $48 million a year on a level basis. The enactment of the bill H.R. 3157 would add to this deficit about $14 million a year, bringing the total deficit to about $62 million a year on a level basis.

On page 3 of the committee report this statement appears:

By reason of such increase in the taxable compensation base, the railroad retirement taxable payroll would be about $4.8 billion a year, and the additional tax income to the

On this vote, the Senator from Ohio [Mr. LAUSCHE] is paired with the Senator from New York [Mr. KENNEDY]. If present and voting, the Senator from Ohio would vote "yea," and the Senator from New York would vote "nay."

On this vote, the Senator from Virginia [Mr. ROBERTSON] is paired with the Senator from Wyoming [Mr. McGEE]. If present and voting, the Senator from Virginia would vote "yea," and the Senator from Wyoming would vote “nay.”

Mr. KUCHEL. I announce that the Senator from Kentucky [Mr. MORTON] and the Senator from Massachusetts [Mr. SALTONSTALL] are necessarily absent.

The Senator from Utah [Mr. BENNETT] and the Senator from Nebraska [Mr. HRUSKA] are detained on official business.

On this vote, the Senator from Nebraska [Mr. HRUSKA] is paired with the Senator from Maryland [Mr. BREWSTER]. If present and voting, the Senator from Nebraska would vote "yea," and the Senator from Maryland would vote "nay."

On this vote, the Senator from Utah [Mr. BENNETT] is paired with the Senator from Kentucky [Mr. MORTON]. If present and voting, the Senator from Utah would vote "yea," and the Senator from Kentucky would vote "nay."

AMENDMENT OF
OF RAILROAD RE-
TIREMENT ACT OF 1937 AND RAIL-
ROAD TAX ACT

The Senate resumed consideration of the bill (H.R. 3157) to amend the Railroad Retirement Act of 1937 to eliminate the provisions which reduce the annuities of the spouses of retired employees by the amount of certain monthly benefits, to amend the railroad retirement tax, and for other purposes.

Mr. PELL. Mr. President

The PRESIDING OFFICER (Mr. TyDINGS in the chair). The Senator from Rhode Island is recognized.

Mr. PELL. Mr. President, the bill H.R. 3157, now under consideration by this body, would change the Railroad Retirement Act so that payment of an annuity to a spouse of a retired railroad employee could be made in the full amount even though she is at the same time entitled to monthly benefits under the Railroad

Retirement Act or Social Security Act derived from her own employment. The present law requires a reduction in the spouse's annuity by the amount of benefits derived from her own employment, as well as by the amount of certain other benefits to which she may be entitled. The spouses' annuity is the only benefit under the Railroad Retirement Act which cannot now be paid in full concurrently with other benefits under the Social Security and Railroad Retirement Acts, although in the past there were others. The discriminatory provisions against spouses should be removed.

The change in the law as to spouse's annuities would, of course, increase the costs of the railroad retirement system. It is estimated that the added costs of this change would be about $14 million a year on a level basis. When H.R. 3157 passed the House in June of this year, there was a deficit on a long-range actuarial basis in the financing of the system of about $20 million a year. A deficit in this amount is considered to be within the range of actuarial tolerance, and the system was regarded as being in a satisfactory financial condition. Since that time, Public Law 89-97, the Social Security Amendments of 1965, has been enacted. The changes in the Social Security Act will have the effect of increasing certain direct financial benefits under the Railroad Retirement Act and will add an estimated $28 million a year to the costs of the system, increasing the deficit to about $48 million a year.

With a deficit of this amount, the railroad retirement system is now in an unsatisfactory financial condition and the additional costs of the effect of this bill on spouses' annuities would cause the financial conditions to be considerably worse. The deficit would then be approximately $62 million a year. The system cannot, of course, endure in an unsatisfactory financial condition.

The committee is cognizant of the fact the situation cannot be corrected unless additional revenue is obtained. It, there

fore, amended the bill to change the limit on creditable and taxable compensation for the railroad retirement system from the present flat $450 a month to an amount equal to one-twelfth of the limit on annual taxable wages for the social security system. As we know, the annual taxable wage base for social security has been raised to $6,600 from $4,800, an increase of $1,800 a year. The effect of the amendment would be to raise the base for the railroad retirement system to $550 a month from the present $450, an increase of the equivalent of only $1,200 a year.

The increase in the base will provide additional benefits for those railroad employees whose earnings exceed $450 a month and who will have to pay additional tax amounts. Those employees who do not earn over $450 a month will pay no additional taxes and will gain no credits toward higher benefits.

The increase in the compensation base will reduce the deficit from the projected $62 million a year to approximately $24 million a year. The railroad retirement system would then be in a satisfactory financial condition. It is estimated that the change in base would produce an ad

ditional $87 million a year in the tax income. Over one-half of this amount, $48 million, would be required to pay the additional benefit amounts and the remainder, $39 million, would apply to the reduction of the deficit.

land in yielding to me. As he well knows, the original bill on this proposal was introduced by me, so far as the Senate is concerned. It was a companion bill to one introduced by Representative HARRIS, of Arkansas, in the House of Representatives, which passed without this amendment.

In the financing of the recent improvement of social security benefits, the Congress has relied principally on an increase in the wage base for the increase in tax rates was relatively slight.

Tax rates for the railroad retirement system are, under existing law, automatically geared to the tax rates for the social security system, although the railroad rates are approximately twice as large. Therefore, the increases in the social security tax rates will be reflected in the railroad retirement rates. There is not now a coordination as to the earnings base. Historically, the railroad retirement base has always, except for a few months in the late 1950's, equaled or exceeded the social security base. It is also significant that even with the change, a substantially lower percentage of gross railroad earnings would be taxable than was the case when the system was first established, and the monthly base was only $300.

The increase in the railroad retirement tax base will, of course, add to the taxes of railroad companies, but the larger increase in the social security tax base will also add to the taxes for companies in industry covered by the social security system.

Finally, it is to be noted that if there is a difference in the taxable wage law, those under railroad retirement or compared with those under social security, then the hospital insurance program would be administered by the Social would be administered by the Social Security Administration rather than by the Railroad Retirement Board Retirement Board as would be the case if this amendment would be the case if this amendment were adopted.

In reporting this bill, it is recognized that benefits will will accrue to those workers who pay the additional tax. Under the heading of "Conclusion," on page 5 of the report, it is stated:

It is further recognized, because of the

matching contribution of industry and labor, that those workers earning more than $450 per month and living more than 5 years after retirement will receive more than they have retirement will receive more than they have paid into the railroad retirement fund. This will naturally be a factor bearing on any future decisions in labor-management negotiations.

Mr. DOMINICK. Mr. President, will the Senator from Rhode Island yield?

Mr. PELL. I am happy to yield to the Senator from Colorado.

Mr. DOMINICK. I appreciate the courtesy of the Senator from Rhode Is

It seems to me that this is wrong. This is the reason we included it in the bill. The bill passed the House, as I recall, almost unanimously, in a form without any taxation being added to it at all.

Mr. President, I suggest that the action which has just been taken by the Senate may easily result in the defeat of the entire bill, because I am positive that the House will not absorb this degree of autonomy by the Senate over what the House considers to be its private reserve.

Therefore, I believe that serious trouble lies ahead, so far as the future of the bill is concerned.

I intend to vote for it, because this was my original bill. I voted against the Pell amendment in subcommittee. I voted against it again on the floor. I am still going to vote for the bill, in the hope that we can get something out of conference. Perhaps, if the House remains adamant, we can show the Senate that if it is going to do anything for the spouses, it had better take the bill in the original draft as it was first introduced.

Mr. President, we are dealing with economic benefits which will accrue to 41,000 persons. Many of them will disappear as time goes on, which is inevitable to all of life, so that the drain on the retirement fund, which has been mentioned over and over again, will progressively decrease as time goes on.

It has already been stated that it would be 4 years before we really had to worry about retirement funds in any way whatsoever. whatsoever. Therefore, it seems to me, for us to take the position that we must move now, so far as railroad retirement funds are concerned, is quite premature.

This assumes that Congress would not do anything after full hearings before the proper committee, in order to take care of the problem, if we presented it to them.

Thus, we are taking an action with the wrong committee, insofar as revenues are concerned, even within the Senate, not speaking of the fact that it comes from the wrong House.

I appreciate the Senator from Rhode Island yielding to me so that I may make these points, which I believe are important. They should be included in the RECORD. All Senators should know that the action taken in the Senate today may easily result in the inevitable defeat of the bill, if the Senate is refusing to move, and if the House will refuse to move-as I am sure it will.