1. Veto of Railroad Retirement Benefits Legislation --October 12, 1974

To the House of Representatives:

I am returning today without my approval, H.R. 15301, a bill which would finance a long-standing deficit in the Railroad Retirement System at the expense of the general taxpayer.

The Railroad Retirement System, under current law, is headed toward bankruptcy by the mid-1980s. This condition arises largely because benefits have been increased 68 percent since 1970 without requiring the beneficiaries of the system, railroad employees and employers, to pay the added costs.

This bill proposes to solve the financial problems of the Railroad Retirement System by placing a seven billion dollar burden on the general taxpayer, requiring him to contribute $285 million to the Railroad Retirement Trust Fund each year for the next twenty-five years. In return for his seven billion dollar contribution, the general taxpayer would earn no entitlement to benefits and would receive no return on his investment.

At a time when the taxpayer is already carrying the double burden of taxes and inflation, legislation such as this is most inappropriate.

Recognizing the financial straits of the Railroad Retirement System, the Executive Branch in 1970 proposed and the Congress authorized an independent study of the System. After eighteen months of careful work, the study group recommended that the benefits be financed ". . . on an assured, fully self-supporting basis by contributions from the railroad community through the crisis period of the next 20 to 30 years and then beyond."

Following receipt of the report, the Congress directed representatives of railroad employees and management to submit their combined recommendations for restoring financial soundness to the System, taking into account the report and the specific recommendations of the Commission.

The bill which is now before me is true neither to the recommendation of the Commission nor to the charge placed on the industry by the Congress.

Forcing the general taxpayer to carry an unfair burden is not the only defect in this bill. It would also establish a special investment procedure for the Railroad Retirement Trust Fund.

Under the bill, the interest paid by the Treasury on Railroad Retirement investments and Federal securities would rise when interest rates increase but would not fall when they decrease. This "heads I win; tails you lose" arrangement, with taxpayer being the loser, has been suggested before, but never adopted. It should not be a part of the solution to the Railroad Retirement System's financial problem.

Furthermore, the provisions of the benefit formula are so complex that they would be extremely difficult to administer and virtually impossible to explain to the persons who are supposed to benefit from it. Now is the time to simplify the benefit structure of the Railroad Retirement System, not make it more complex. Splitting administrative responsibility between the Railroad Retirement System and the Social Security System over benefits that depend on entitlement under the Social Security Act is bad law. Full responsibility for administering Social Security benefits should be vested in the Social Security Administration, not divided among agencies with resultant uncertainty as to who should be held accountable.

I believe it is our obligation to the general taxpayer to see that the problems of this system are overcome by the industry and people it serves--those who have benefitted from it in the past and will continue to receive its benefits in the future. Other industries--other parts of the transportation industry--pay for their own pension systems. There is no justification for singling out the railroads for special treatment.

There are only two ways this obligation can be met--by increasing revenues or by limiting benefits or by a combination of both. Administration spokesmen have proposed constructive ways to achieve this goal, but our proposals have not received serious consideration by the Congress.

We are in need of a better railroad retirement system and a financially sound one. This bill does not meet that need. I urge the Congress to reconsider that need and to develop a new bill which is fair to the taxpayers as well as to the beneficiaries of the Railroad Retirement System. This Administration stands ready to help in any way it can.

Gerald R. Ford

The White House,

October 12, 1974.

The fortieth anniversary of the Social Security Act celebrates an important milestone in responsibile public service.

I continue to be impressed by the steady responsiveness of the Social Security program to the changing needs of our people. This occasion gives me a welcome opportunity to salute the hard work and dedication that have assured the program's success. I warmly commend the employees of the Social Security Administration whose efforts are such a positive influence on the lives of countless fellow citizens.

I know that all who are associated with the Social Security Administration will remain firm in their commitment to provide a greater freedom from dependence to the most vulnerable members of our society. By so doing, they uphold not only a splendid tradition of service but a primary goal of our Government.

To the Congress of the United States:

I ask the Congress to join with me in making improvements in programs serving the elderly.

As President, I intend to do everything in my power to help our nation demonstrate by its deeds a deep concern for the dignity and worth of our older persons. By so doing, our nation will continue to benefit from the contributions that older persons can make to the strengthening of our nation.

The proposals being forwarded to Congress are directly related to the health and security of older Americans. Their prompt enactment will demonstrate our concern that lifetimes of sacrifice and hard work conclude in hope rather than despair.

The single greatest threat to the quality of life of older Americans is inflation. Our first priority continues to be the fight against inflation. We have been able to reduce by nearly half the double digit inflation experienced in 1974. But the retired, living on fixed incomes, have been particularly hard hit and the progress we have made in reducing inflation has not benefitted them enough. We will continue our efforts to reduce federal spending, balance the budget, and reduce taxes. The particular vulnerability of the aged to the burdens of inflation, however, requires that specific improvements be made in two major Federal programs, Social Security and Medicare.

We must begin by insuring that the Social Security system is beyond challenge. Maintaining the integrity of the system is a vital obligation each generation has to those who have worked hard and contributed to it all their lives. I strongly reaffirm my commitment to a stable and financially sound Social Security system. My 1977 budget and legislative program include several elements which I believe are essential to protect the solvency and integrity of the system.

First, to help protect our retired and disabled citizens against the hardships of inflation, my budget request to the Congress includes a full cost of living increase in Social Security benefits, to be effective with checks received in July 1976. This will help maintain the purchasing power of 32 million Americans.

Second, to insure the financial integrity of the Social Security trust funds, I am proposing legislation to increase payroll taxes by three-tenths of one percent each for employees and employers. This increase will cost no worker more than $1 a week, and most will pay less. These additional revenues are needed to stabilize the trust funds so that current income will be certain to either equal or exceed current outgo.

Third, to avoid serious future financing problems I will submit later this year a change in the Social Security laws to correct a serious flaw in the current system. The current formula which determines benefits for workers who retire in the future does not properly reflect wage and price fluctuations. This is an inadvertent error which could lead to unnecessarily inflated benefits.

The change I am proposing will not affect cost of living increases in benefits after retirement, and will in no way alter the benefit levels of current recipients. On the other hand, it will protect future generations against unnecessary costs and excessive tax increases.

I believe that the prompt enactment of all of these proposals is necessary to maintain a sound Social Security system and to preserve its financial integrity.

Income security is not our only concern. We need to focus also on the special health care needs of our elder citizens. Medicare and other Federal health programs have been successful in improving access to quality medical care for the aged. Before the inception of Medicare and Medicaid in 1966, per capita health expenditures for our aged were $445 per year. Just eight years later, in FY 1974, per capita health expenditures for the elderly had increased to $1218, an increase of 174 percent. But despite the dramatic increase in medical services made possible by public programs, some problems remain.

There are weaknesses in the Medicare program which must be corrected. Three particular aspects of the current program concern me: 1) its failure to provide our elderly with protection against catastrophic illness costs, 2) the serious effects that health care cost inflation is having on the Medicare program, and 3) lack of incentives to encourage efficient and economical use of hospital and medical services. My proposal addresses each of these problems.

In my State of the Union Message I proposed protection against catastrophe health expenditures for Medicare beneficiaries. This will be accomplished in two ways. First, I propose extending Medicare benefits by providing coverage for unlimited days of hospital and skilled nursing facility care for beneficiaries. Second, I propose to limit the out-of-pocket expenses of beneficiaries, for covered services, to $500 per year for hospital and skilled nursing services and $250 per year for physician and other non-institutional medical services.

This will mean that each year over a billion dollars of benefit payments will be targeted for handling the financial burden of prolonged illness. Millions of older persons live in fear of being stricken by an illness that will call for expensive hospital and medical care over a long period of time. Most often they do not have the resources to pay the bills. The members of their families share their fears because they also do not have the resources to pay such large bills. We have been talking about this problem for many years. We have it within our power to act now so that today's older persons will not be forced to live under this kind of a shadow. I urge the Congress to act promptly.

Added steps are needed to slow down the inflation of health costs and to help in the financing of this catastrophic protection. Therefore, I am recommending that the Congress limit increases in medicare payment rates in 1977 and 1978 to 7% a day for hospitals and 4% for physician services.

Additional cost-sharing provisions are also needed to encourage economical use of the hospital and medical services included under Medicare. Therefore, I am recommending that patients pay 10% of hospital and nursing home charges after the first day and that the existing deductible for medical services be increased frown $60 to $77 annually.

The savings from placing a limit on increases in Medicare payment rates and some of the revenue from increased cost sharing will be used to finance the catastrophic illness program.

I feel that, on balance, these proposals will provide our elder citizens with protection against catastrophic illness costs, promote efficient utilization of services, and moderate the increases in health care costs.

The legislative proposals which I have described are only part of the over-all effort we are making on behalf of older Americans. Current conditions call for continued and intensified action on a broad front.

We have made progress in recent years. We have responded, for example, to recommendations made at the 1971 White House Conference on Aging. A Supplemental Security Income program was enacted. Social Security benefits have been increased in accord with increases in the cost of living. The Social Security retirement test was liberalized. Many inequities in payments to women have been eliminated. The 35 million workers who have earned rights in private pension plans now have increased protection.

In addition we have continued to strengthen the Older Americans Act. I have supported the concept of the Older Americans Act since its inception in 1965 and last November signed the most recent amendments into law.

A key component of the Older Americans Act is the national network on aging which provides a solid foundation on which action can be based. I am pleased that we have been able to assist in setting up this network of 56 State and 489 Area Agencies on Aging, and 700 local nutrition agencies. These local nutrition agencies for example provide 300,000 hot meals a day five days a week.

The network provides a structure which can be used to attack other important problems. A concern of mine is that the voice of the elderly, as consumers, be heard in the governmental decision-making process. The network on aging offers opportunities for this through membership on advisory councils related to State and Area Agencies on Aging, Nutrition Project Agencies and by participation in public hearings on the annual State and Area Plans. Such involvement can and will have a significant impact on determining what services for the aging are to be given the highest priorities at the local level.

The principal goal of this National Network on Aging is to bring into being coordinated comprehensive systems for the provision of service to the elderly at the community level. I join in the call for hard and creative work at all levels-- Federal, State and Area in order to achieve this objective. I am confident that progress can be made.

Toward this end, the Administration on Aging and a number of Federal Departments and agencies have signed agreements which will help to make available to older persons a fair share of the Federal funds available in such areas as housing, transportation, social services, law enforcement, adult education and manpower--resources which can play a major role in enabling older persons to continue to live in their own homes.

Despite these efforts, however, five percent of our older men and women require the assistance provided by skilled nursing homes and other long term care facilities. To assist these citizens, an ombudsman process, related solely to the persons in these facilities, is being put into operation by the National Network on Aging. We believe that this program will help to resolve individual complaints, facilitate important citizen involvement in the vigorous enforcement of Federal, State and local laws designed to improve health and safety standards, and to improve the quality of care in these facilities.

Today's older persons have made invaluable contributions to the strengthening of our nation. They have provided the nation with a vision and strength that has resulted in unprecedented advancements in all of the areas of our life. Our national moral strength is due in no small part to the significance of their contributions. We must continue and strengthen both our commitment to doing everything we can to respond to the needs of the elderly and our determination to draw on their strengths.

Our entire history has been marked by a tradition of growth and progress. Each succeeding generation can measure its progress in part by its ability to recognize, respect and renew the contributions of earlier generations. I believe that the Social Security and Medicare improvements I am proposing, when combined with the action programs under the Older Americans Act, will insure a measure of progress for the elderly and thus provide real hope for us all.

Gerald R. Ford

The White House,

February 9, 1976.

Thank you very, very much, Bill Young, a very close and very dear friend of mine. I am most grateful for that really warm welcome and very, very kind words. Congressman Lou Frey, Congressman Skip Bafalis, Judge Roess, Mayor Schuh, Senator Ware, honored guests, ladies and gentlemen:

Happy Valentine, and I hope you have many, many, many more happy Valentines.

In 1952 Winston Churchill, then a mere 77 years old, had been called into the service of a country for a second term as Prime Minister of Great Britain. Smiling impishly, he told the British House of Commons, and I quote: "Everyone has his day, and some days last longer than others."

I am happy to be here today with so many people who are enjoying a long and sunny day in the sunshine city of St. Petersburg in the Sunshine State of Florida.

The careers of Winston Churchill and others who rose to prominence in their later years, reminds us all, if we need to be reminded, that advancing years need not mean a retreat from an active, eventful, and enjoyable life, and all of you represent the best of that.

Nor should advancing years be the certain bearer of poor health, a meager income, or social isolation. The ancient philosophers taught us that the measure of civilization's advancement can be found in the treatment of its elders.

For more than 40 years, through the vehicle of social security and other programs, America has made a firm commitment of support for older citizens of our society.

I pledge to you this morning that I will continue to uphold that commitment. In recent years, there has been dramatic progress in our efforts to meet the continuing needs of America's older generation. But I want to do better, and with your help and with the help of the Congress, I will, and I am sure we will.

As President, I intend to do everything in my power to help our Nation demonstrate its deep concern for the dignity and the well-being of our older generations. For those who need our help we have already a number of Federal programs providing assistance in a variety of ways.

The social security program, the largest of its kind in this world, will pay almost $83 billion to more than 32 million Americans in fiscal year 1977. That is more than a $10 billion increase over the current year.

Here in Florida the Social Security Trust Fund will pay an estimated $4,400 million to participants in the next fiscal year. In my budget for fiscal year 1977, I am recommending that the full cost-of-living increase in social security benefits be paid during the coming year.

Now let me assure you of one thing very emphatically: My administration fully intends to preserve the integrity and the solvency of the social security system for your benefit and that of all working Americans, men and women, now as well as in the future.

I think that is good news, but now let's have some bad news.

This year it is projected that the Social Security Trust Fund will run a deficit of about $3 billion. Next year, unless my reforms are adopted, we will run a deficit of $3.5 billion. If this trend continues, there will be no social security for old or young. As long as I am President, we are going to keep social security protection and every other retirement program strong, sound, and certain. And we will do it.

Yesterday, the Department of Labor announced that wholesale prices were unchanged in January. In fact, wholesale prices have shown no appreciable change since October of last year. This is more good news in our fight against inflation, and we are going to keep the pressure on.

In addition to the social security program, we are continuing our strong commitment to benefit programs for more than 3 million railroad, military, and Federal Government employees. Of course, that means we will do the same job for the veterans who live here and live elsewhere in 49 other States.

After many, many years of sacrifice and hard work, you have contributed to America, you have earned the respect, and you have earn more than the prospect of poverty in your retirement years.

In my budget, the supplemental security income program, or SSI, will pay almost $6 billion in Federal benefits to more than 5 million disabled and disadvantaged older Americans in 1977--170,000 of them right here in Florida.

Let's be frank. There have been some problems with this program, as you probably know, because the SSI replaced a great number of federally assisted State programs and inevitably there was some confusion in the process.

We have already begun to take extensive steps to correct these problems, and we will make sure that if any American qualifies for these benefits, he or she will get them, period. Those who don't qualify won't be taking money that you should have.

In the field of health care, the Federal Medicare program in 1976 will provide more than $17 billion for the health care of 24 million older and disabled Americans, about 1,400,000 right here in the great State of Florida. But there are flaws in this program, which actually help raise the cost of your medical care and which fail to protect you adequately against the economic burdens of prolonged illness.

I have proposed major improvements in the Medicare program to make it serve you better. One of the most important improvements is the creation of a system of health insurance that would pay all but a very small fraction of the catastrophic cost of complex or extended care and treatment.

I don't have to tell you that medical treatment is very, very expensive today. Hospital costs have risen by more than 200 percent since 1965, to an average cost of $128 per day. If you have to stay in a hospital or a nursing home or under doctor's care for a very, very long time, it puts an incredible strain on your lifetime savings and on your peace of mind. And that strain is felt by your loved ones as well.

All of us know of cases in which someone in the family or a close friend or a member of your church has been stricken with an illness that lingers on and on and on. We know of the pain and of the heartache associated with a prolonged illness. We know that being sick and bedridden for a long, long time is bad enough without having a person's income and life savings dwindle away as the medical bills keep piling up. This must not continue, and it won't with my program.

Let me put it this way. There is no reason that older Americans should have to go broke just to get well or stay well in the United States of America. Under my proposal the individual's contribution would go up slightly, but consider what the increase would provide.

Nobody eligible for Medicare would have to pay more than $500 a year for hospital or nursing home care. And this does not mean that you pay the first $500 of your total cost. You would pay only 10 percent of the total cost, or $500, whichever is less. And the maximum annual cost to you for covered doctor's services would be $250, or 20 percent, whichever is less. Medicare would pay the rest, whether it costs $1,000 or $10,000 or $50,000. It is a good program, and we are going to make it.

If the Congress passes my program, the ruinous economic burden of catastrophic illness is one thing you will never have to worry about again. Another of my programs would consolidate 16 Federal health programs, including Medicaid, into a single $10 billion block grant program to the States.

If we can consolidate these programs, we can make them more humane and more effective. We can improve the services that they provide to you and millions like you, and we can get those services to more people who really, really need them.

Programs of this kind, despite some abuses, do a tremendous amount of good. For some of our neighbors, they provide the means for life itself. They provide the food, the services, the health care, without which some people would not be able to enjoy this beautiful sunshine today in St. Petersburg and in Florida.

It is all too easy to say that the Federal Government is too big, that this program and that program ought to be cut out of the Federal budget, tossed back to the States to cope with, if their taxpayers will permit it. It is not that simple, and you know it and I know it.

I am concerned, as you are, about the growth of the Federal budget. I have been fighting to hold down the Federal budget in a responsible way for 27 years, 25-plus years in the Congress, a few months as Vice President, and approximately 18 months as your President.

You all know how hard I have been trying for the last 18 months to get control of the inflation which has done so much economic damage to all Americans. During 1974, when I became President, inflation was raging at an annual rate of more than 12 percent, eating away at everybody's buying power but absolutely devouring the livelihood of people on fixed incomes.

I knew that something had to be done to bring that situation under control. I knew that deficit spending by the Federal Government was a major contributor to inflation and that slowing the growth of Federal spending was essential to solving the problem.

I have used my constitutional power, that of veto, 46 times since becoming President, trying to hold down the level of Federal spending, trying to break the back of inflation. To hold down the cost of living, we must hold down the cost of government. It is just that simple. We have made some very encouraging progress with these vetoes, saving the taxpayers about $10 billion. The inflation rate that was 12 percent has been cut nearly in half.

That is not good enough. That is progress, real progress that helps especially people on fixed incomes more than anybody else in our society. Just yesterday the Department of Labor announced the wholesale prices stayed level in January. In fact, wholesale prices have shown no appreciable change since October.

I want to drive that point home. This is more good news in our fight against inflation, and we are going to keep the pressure on, and we are going to be successful.

You have probably heard that we had some other good economic news just about a week ago. Employment [Unemployment] in January took its sharpest drop in 16 years. Ninety-six percent of all jobs lost during the depression have been recovered.

America is getting back to work, and we are going to make better and better and better progress in reducing unemployment. But there is so much more that we have to do. I want all Americans, young or old, black or white, rich or poor, to live in dignity and security and in peace.

If we can continue making the progress America has made in the past, we will see that wonderful goal achieved. Too often people forget just how far and how fast we have come as a nation. We have our problems, and we are not afraid to admit them.

Honesty in this situation is essential, but I think it is time people stop running down America. I think it is time we remember how richly blessed this Nation is. You, or many of you, in this audience have seen much of America's phenomenal progress with your own eyes. In the space of your lifetime, man has taken himself from the horse and buggy and explored the far reaches of space.

Diseases which were once crippling and killing millions of Americans have now been conquered. America's population has more than doubled since 1910. Life expectancy, which in 1910 was only 50 years, is today more than 71 years.

The gross national product, the index of our total production, is now seven times greater than it was in 1910. To put it another way, the strength and growth of the American economy provides the average American living today with 3 times more in goods and services than Americans enjoyed in 1910. No other generation of Americans has achieved such growth, and all of us thank you from the bottom of our hearts.

In 1910, some 156,000 young people graduated from America's high schools. Last year's college graduates totaled 944,000. That is another indication of the progress we are making in this great country.

In 1910 there was no regularly scheduled radio broadcasting in the United States. Nobody had ever heard of television--maybe a few very, very outstanding scientists. Today, we are living in an age of instant and global communications. These examples--and there are many, many, many more--serve to remind us of how much has changed, of how much progress there has been in health, wealth, education, communication, law, and in every other aspect of life in our great country.

The fact is that you, your generation, has been the greatest pioneer of progress and change in the entire history of the human race.

But some things, thankfully, have not changed at all. We are still a people in America with love of freedom, and after 200 years that love is undiminished. We are still a nation dedicated to progress and peace in the world. We are still a nation of compassion. We are still, as Lincoln called us a century ago, the last, best hope of Earth.

The United States is a great country, the greatest in the world. You helped to make it that way, and this Nation will never, never, never forget your contribution, past, present, or future.

And we will never forget the lesson which President Eisenhower taught us from the wisdom of years: "America is not good because it is great," the President said, "America is great because it is good."

Thank you very, very much.

WHILE the press is here, I think it might be appropriate to point out to them the reason for this meeting.

As everybody knows, I submitted to the Congress a very constructive proposal for the purpose of maintaining the financial integrity of the social security trust fund. This was submitted at the time of our budget or economic program, at the time of the State of the Union and, unfortunately, it appears that the Congress is going to fail to recognize the problem and tragically fail to do anything to solve the problem.

This concerns me very greatly, because we have 39 million individuals, most of them older, who are depending upon the financial soundness of the trust fund. And we leave literally millions and millions more who are paying into the trust fund, who are counting on the financial integrity of that fund.

This administration feels an obligation to protect the investment of those who are retired and those who are counting on retirement. The purpose of this meeting is for me to get the up-to-date information from the responsible people in the executive branch who, I'm sure, are likewise concerned, as I am, about the current situation.

The Congress cannot fail the older people and others who are either on retirement or about to retire. We expect some action. They cannot fail to respond to this very important and, I think, critical need.

Simple arithmetic indicates that the social security trust fund is headed for trouble. Unless the Congress acts to ensure that the fund takes in as much as it pays out, there will not be adequate security for old or young.

In my State of the Union Message in January, I proposed a payroll tax increase of .3 percent each for employees and employers, to increase revenues into the trust fund to ensure that benefits will be available to all who have earned them.

My proposed increase would cost workers, with a maximum taxable income, less than a dollar a week. This increase will help stabilize trust funds so that current and future recipients can be assured the benefits that they have earned. I urge the Congress to take the earliest possible action on my proposal to preserve the integrity of the social security trust fund.

I AM today submitting to the Congress a proposal which will correct a serious flaw in the social security system's formula for determining benefits. The new benefit formula contained in my proposal will prevent social security payment levels from being distorted by unusually high periods of inflation while helping to protect the financial integrity of the system itself.

This proposal is the last of three components of my 1977 budget and legislative programs intended to ensure a secure and viable social security system. My program calls for a full cost-of-living increase for all beneficiaries, scheduled to take effect in checks sent out in July of this year.

It calls for an increase in social security payroll contributions by three-tenths of 1 percent for both employers and employees. This increase would remedy the immediate short term financing problems facing social security. It would stop the drain on the trust funds which are now expected to pay out about $4 billion more in benefits each year than they take in. This correction would cost no employee more than $1 per week in additional contributions.

The third component of my program is the legislation I am transmitting today to correct a serious flaw in the social security benefit structure. If left unchanged, this flaw could damage the underlying principles of social security and help create severe long-range financial pressures on the system. My proposal would eliminate this flaw and be a major step towards resolving the long-range financial problem. It would help stabilize the system and permit sufficient time for careful and thorough analysis of the remaining future financial pressures.

Both of these proposals are vital. While I am very happy that a full cost-of-living increase will be included in July's social security checks, I regret to say that the Congress has avoided its responsibility to provide a means of paying for the full cost of the system.

If we are successfully to preserve the financial integrity of the social security system, we need prompt action on both of my proposals. I strongly urge the Congress to move immediately and without further delay to enact both of them into law.

To the Congress of the United States:

In accordance with the Impoundment Control Act of 1974, I report a net increase of $11.1 million in the amount previously deferred for the Social Security Administration's Limitation on construction account.

The details of the revised deferral are contained in the attached report.

Gerald R. Ford

The White House,
September 14, 1976.