Description: News Release - 01/04/2000 - The Big Lie

THE UTU, THE BIG LIE, THE 1/4 TRUTH AND THE RAILROAD RETIREMENT DEAL

People who make up propaganda long ago developed a technique called THE BIG LIE. THE BIG LIE is a statement that is so outlandish, so ridiculous, that no one believes anyone would make it up. Then THE BIG LIAR AND HIS ALLIES REPEAT THE BIG LIE over and over again so that it doesn't appear to be outlandish because people keep hearing it. Part of the trick to getting people to believe THE BIG LIE is that there is a half-truth buried in it. The half-truth is used to just give the part of the story favorable to THE BIG LIAR. Recent publications on the UTU website and the leaflet published by The Coalition for a Better Railroad Retirement and put out under the signature of UTU President Charlie Little are examples of THE BIG LIE. But these publications have refined the half-truths used in THE BIG LIE to include quarter truths. Here are the facts.

FACT 1 -- THE RAILROAD RETIREMENT TRUST FUND IS DOING VERY WELL AND HAS A HUGE SURPLUS AND WILL BE DOING EVEN BETTER IN THE FUTURE. In 1983, as a result of huge industry downsizing, Rail Labor made an agreement with Rail management to forego a portion of wage increases and have raise the Railroads' contribution (tax) level put into Railroad Retirement Tier II (our pension) to 16.1%. Railroad workers also put 4.9% in taxes directly into Railroad Retirement Tier II. This 21% was all funded by us - 4.9% by direct payment (taxes) by us and 16.1% payroll taxes by the Railroads paid in lieu of higher wage increases. As a result, the Railroad Retirement Trust Fund is flush and getting better. The railroads knew this and contacted Rail Labor 2 years ago to negotiate changes so they could lower their taxes. (Remember, we got lower wage increases as a result of the high taxes the Railroads pay into Railroad Retirement.

FACT 2 - UTU IS ATTEMPTING TO CUT A DEAL TO GIVE THE RAILROADS A TAX CUT OF BETWEEN 3.25% AND 3.4% ($325 MILLION TO $340 MILLION) PER YEAR OF OUR MONEY. OTHER CRAFTS ARE ALSO CONSIDERING THIS DEAL.

FACT 3 -- IN RETURN RAILROAD WORKERS GET 60 AND 30 WITH FULL BENEFITS AND AN IMPROVED SURVIVOR BENEFIT. WE MIGHT ALSO GET GA46000 -- A MAJOR MEDICAL PLAN WITH A $75,000 LIFETIME CAP - AT AGE 60.

FACT 4 - WE ALREADY HAVE 60 AND 30, BUT AT A REDUCED LEVEL. IF YOU RETIRE NOW AT AGE 60 YOU GET APPROXIMATELY 15% LESS THAN YOU WOULD IF YOU GET A FULL BENEFIT AND IF YOU RETIRE AT AGE 61 YOU GET ABOUT 10% LESS THAN YOU WOULD IF YOU GET A FULL BENEFIT. THE REDUCTION IS COMPUTED UP AT AGE 62.

FACT 5 - ANOTHER POTENTIAL "BENEFIT" THAT IS BEING CONSIDERED IS ELIMINATING THE CAP ON WHAT RAILROAD RETIREES CAN GET. THIS WOULD FIX A PROBLEM THAT CAPS PEOPLE WHO HAVE CONTRIBUTED A GREAT DEAL INTO RAILROAD RETIREMENT BUT HAVE NOT WORKED IN THE INDUSTRY FOR 10 YEARS (THEY ARE CAPPED PRESENTLY AT $1200 PER MONTH, REGARDLESS OF HOW MUCH THE FORMULA SAYS THEY CAN GET) AND AIDS THE HIGHEST PAID RAILROAD WORKERS. IT WOULD ALSO BENEFIT RAILROAD MANAGEMENT AND HIGH PAID UNION OFFICIALS, INCLUDING THOSE NEGOTIATING THE DEAL.

FACT 6 - THE "FRAMEWORK" OF THE DEAL IS THE RAILROADS GET 50% OF THE OVER FUNDING OF RAILROAD RETIREMENT (OUR MONEY FROM TAKING LOWER WAGE INCREASES) AND WE GET 50% IN IMPROVED BENEFITS - A TOTAL OF BETWEEN 6.5% AND 6.8%

FACT 7 - THE RAILROAD RETIREMENT BOARD ORIGINALLY ESTIMATED THAT 55 AND 30 AND THE IMPROVED SURVIVOR BENEFIT WOULD COST 7.8% OVER EXISTING TAX LEVELS (SUBSEQUENTLY REDUCED TO 6.8%) AND 60 AND 30 AND THE IMPROVED SURVIVOR BENEFIT WOULD COST ABOUT 2.5% OVER EXISTING TAX LEVELS (REDUCED TO 1.8%). NOW IT SAYS THAT THE FUND CAN AFFORD BETWEEN A 3.25% AND 3.4% TAX REDUCTION AND STILL PROVIDE 60 AND 30 WITH FULL BENEFITS, THE SURVIVOR BENEFIT AND OTHER BENEFITS. THE COMBINED AMOUNT OF 3.4% TAX REDUCTIONS FOR THE RAILROADS AND 3.4% INCREASE IN BENEFITS FOR RAILROAD WORKERS IS EQUAL TO WHAT THE RAILROAD RETIREMENT BOARD ESTIMATES FULL BENEFITS AT 55 AND 30 AND THE SURVIVOR BENEFIT WOULD COST.

FACT 8 - WE MAY HAVE TO PROVIDE THE RAILROADS WITH SOME INDUCEMENT IN ORDER TO IMPROVE BENEFITS, BUT 50% OF OUR MONEY IS SIMPLY TOO MUCH.

FACT 9 - NO ONE ON THE UNION SIDE HAS ANY EXPERTISE IN THIS SUBJECT AT ALL, YET UTU REFUSES TO USE INDEPENDENT ACTUARIES AND INVESTMENT BANKERS, EVEN THOUGH THE RAILROADS HAVE THEM FOR THEIR SIDE AT EVERY MEETING AND EVEN THOUGH THE RAILROAD RETIREMENT PROJECTIONS HAVE CHANGED AND APPEAR TO ALLOW A TOTAL OF BETWEEN 6.5 AND 6.8% TO BE TAKEN FROM THE FUND WITHOUT ITS BEING IN DANGER.

FACT 10 - ONLY BMWE AND BLE HAVE RETAINED INDEPENDENT ACTUARIES AND INDEPENDENT BANKERS AND AWAIT THEIR REPORT BEFORE JUMPING INTO ANY DEAL. TWU ALSO HAS REJECTED TAKING A POSITION UNTIL THE INDEPENDENT EXPERTS ISSUE THEIR REPORT.