WATCHING WASHINGTON, RAILWAY AGE JUNE 2025 ISSUE: Students of freight railroading are conversant with how Congress and the Surface Transportation Board’s predecessor Interstate Commerce Commission imposed on the industry such rigid economic regulation that railroads became starved of investment capital, were forced to defer normalized maintenance and failed to meet customer wants.
Just in time, Congress recognized how and why the railroad industry was on the cusp of chaotic market failure and took bolt cutters—the 1980 Staggers Rail Act—to the regulatory chains. Private-sector freight railroading was thus rescued from the clutches of insolvency with renewed ability to serve customers.
For the industry’s (freight and passenger) retirement, survivor, disability, sickness and unemployment programs financed by railroad employer and employee payroll taxes and administered by a three-member independent Railroad Retirement Board (RRB), it is customer service déjà vu. Government again is the villain. The victimized customers are railroad employees in danger of losing, or facing delay in receiving, benefits for which they and their railroad employers collectively pre-paid.
As background, Railroad Retirement programs are born of Great Depression hardships. After Congress mirrored them for application to other industries, it left the rail programs separate. As for retirement benefits, rail workers receive an equivalent to Social Security (Tier I, for which equivalent payroll taxes are collected), plus a second retirement benefit akin to a private pension plan (Tier II, which additional payroll taxes finance). Other railroad benefit programs similarly are financed through carrier and employee payroll taxes deposited into a dedicated National Railroad Investment Trust (NRIT) from which benefits and RRB administrative expenses are paid
As for NRIT, it is managed by seven trustees, three from management, three from labor and an independent member chosen by those six. NRIT is empowered by statute to invest in government and private-sector assets. The latest available 2023 return on investment was 12.1%.
Notwithstanding that railroads and rail employees alone fund RRB-administered benefit plans, Congress treats NRIT’s $26.5 billion surplus as if it were (which it is not) part of the General Treasury. It is accounting legerdemain intended to help mask the enormousness of federal budget red ink. The deception serves only to harm rail workers by eroding RRB’s ability to provide them with prompt and seamless payment of benefits.
Unlike perennially underwater federal budgets, whose imbalance is manifest in the $36 trillion national debt, NRIT has a surplus projected to remain so for at least 75 more years. This is because rail labor and management agree on the essentiality of imposing sufficient payroll taxes to assure NRIT solvency. Payroll taxes rise and fall as a mechanism and motive to manage the benefits programs efficiently.
It is this responsible financial husbandry that has made financially secure Railroad Retirement programs a target of irresponsible congressional budget writers and Executive Branch mandarins.
Although law prevents these cohorts from expropriating the NRIT surplus, their erroneous treatment of it, as if it were part of the General Treasury, and their restricting its use by RRB, fabricates an illusion of lower annual federal deficits. Collaterally damaged is RRB, the programs it administers, and rail workers and their families for which the programs are designed.
In 2023, for example, Congress temporarily reduced Railroad Retirement unemployment and sickness benefit payments by 5.7%. Only because NRIT was flush with cash to pay those benefits did Railroad Retirement present itself as convenient prey. By restricting the payout of those earned benefits, congressional accounting desperados portrayed their own budgets as less underwater while leaving thousands of furloughed and sickbed rail workers to
struggle financially.
Unlike Congress, which is unable to balance a budget, railroad employers, which alone fund unemployment and sickness benefits, scrupulously pay to keep NRIT fully solvent through a sliding scale of contributions between 2.15% and 12% of payroll, based on claims experience.
In another instance, Congress imposed, then canceled, a 25% reduction on what RRB may spend to do its job. According to sources within RRB who asked not to be identified, the forced spending reduction would have resulted in the furlough of 160 of RRB’s 728 employees, caused the closing of numerous field offices where initial retirement benefit claims must be applied for in person, and halted upgrades to RRB’s aging computer systems, telecommunications and software.
Separately, Congress has been flat-lining RRB’s own budgets as another gimmick to make the General Treasury appear less broke, this despite RRB spending is out of the NRIT, which is distinct and apart from the General Treasury.
RRB’s congressionally set budget for this fiscal year is about the same, dollar-wise, as it was in 2012. Not once has it been increased by the rate of inflation, which cumulatively between 2012 and 2025 is 39%. While there has been no meaningful increase since 2012 in what RRB is permitted to spend annually, the prices of RRB purchased goods and services, employee compensation, rents, utilities and supplies have soared by near 40%.
Congressional flat-lining of RRB budgets for no fiscally sound reason has prevented hiring to fill vacancies. RRB employment has dropped almost 25%, from 884 in 2012 to 667 today.
Then there is a POTUS 47 blanket hiring freeze on federal government agencies in his desire to reduce government’s footprint. Given RRB’s employee attrition rate, and the two to three years required to train new specialists in the intricacies of RRB programs, RRB’s ability to function efficiently is gravely compromised. If RRB’s claims backlog is to be reduced, say RRB sources, RRB employment must rise to at least 850. Agan, while the money to fill RRB vacancies exists in dedicated NRIT accounts, Congress won’t allow it to be spent, and POTUS 47 separately is blocking new hiring.
Although RRB’s business plan is to process disability claims within 90 days, staffing shortages have resulted in 18-month delays, say RRB sources. They told Railway Age that RRB was forced to make a difficult choice to prioritize the processing of new retirement applications over claims processing and payments so as to “minimize” wait times for new retirees.
Restrictions on RRB spending also hobble what are said to be “urgently needed” upgrades to information technology systems essential to processing retirement applications; processing and paying claims; and enabling audits and investigations that uncover, prosecute and reclaim funds lost to fraud
and abuse.
Another looming undermining of RRB’s ability to serve its rail employee customers is a POTUS 47-controlled General Services Administration that ordered RRB to close seven of its 53 field offices—another ploy to mask unrelated federal budget red ink. Although the order was cancelled, it may not be permanent, given the POTUS 47 Administration’s near daily flip-flops.
Truth is that even closing all 53 RRB field offices would not save the General Treasury a single penny. Field offices, as with all RRB administrative expenses, are funded 100% by the solvent NRIT. Sadly, staffing shortages created by spending restrictions on RRB and POTUS 47’s hiring freeze forced the closing of RRB’s Louisville, Ky., field office. RRB sources say that wouldn’t have occurred had RRB spending not be restricted or the POTUS-47 hiring freeze not been in place.
Executive Branch directives targeting RRB are so politically problematic to 10 House Republicans that they wrote POTUS 47 in April asking he throttle them back. Given extensively reported fear among congressional Republicans of reprisals from this vengeful President when disagreeing with him, their in-writing plea is an exceptional indicator of the harsh reality facing soon-to-retire railroaders and all railroaders who may need to file disability, sickness and unemployment claims.
The 10 Republicans are Don Bacon (Neb.), Rob Bresnahan Jr., (Pa.), Brian K. Fitzpatrick (Pa.), Nick LaLotta (N.Y.), Michael V. Lawler (N.Y.), Ryan Mackenzie (Pa.), Carol Miller (W.Va.), Chris Smith (N.J.), Pete Stauber (Minn.), and Michael Turner (Ohio).
Perhaps similarly principled members of Congress will demand an end also to the abhorrent accounting hijack of NRIT’s surplus that deviously helps to mask the size of federal budget deficits while imposing needless human suffering through RRB spending restrictions.
Nowhere is the “Don’t Tread on Me!” slogan more appropriate than to be applied to the various Railroad Retirement programs that are fully funded by railroads and their employees for the exclusive use of rail workers.
This issue is not at the top of C-suite concerns but is a topper for those keeping trains moving in all conditions. It would help build bridges of understanding and respect if top officers led the fight.
Railway Age Capitol Hill Contributing Editor Frank N. Wilner is author of “Railroads & Economic Regulation” and “Understanding the Railway Labor Act,” available from Simmons-Boardman Books, 800-228-9670.
