Max Baucus: “If I may respond to that chart, if the current law is not changed, the tier 2 balances will keep rising from the current…”

“If I may respond to that chart, if the current law is not changed, the tier 2 balances will keep rising from the current $15 billion, $16 billion, up to $20 billion, $27 billion; it will just keep going up, according to actuaries. Under the reform proposal, the railroad retirement account balance comes down, but there is a provision written in this bill which says there must be a certain level of reserves maintained in the tier 2 portion. The actuaries certify the investment and tax changes in the railroad retirement legislation will produce a system that achieves solvency over the next 75 years. CBO has looked at it, and they agree. The reason it is coming down is that so much excess payroll taxes have been paid in, the balances have been going up more than they need to. They are coming down because taxes are going to be reduced a little--I assume the Senator from Wyoming likes lower taxes; this Senator certainly does--and also because the benefits are increased to conform with the modern era and with other industries. One example is retirement age. This is tough work, that of a railroad worker. In industries where there is physical danger and demanding physical work, the age to retire with full benefits is usually earlier than age 65. The reform legislation makes that change for railroad retirement.”