The following considerations justify the higher figure : 1. Railroad employment for the first 5 months of calendar year 1961 has averaged only 830,000. Moreover, traffic forecasts for the current quarter are not optimistic enough to support the assumption that the average will be 850,000 for the year. 2. Instead of 50,000 exhaustions of normal benefit rights in fiscal year 1961, there were about 65,000 such exhaustions. 3. The amount of temporary extended benefits paid by June 30, 1961, was 25 percent higher than expected; $10,017,000 was paid to 31,450 claimants by June 30, 1961, as compared with a March estimate of $8 million to 25,000 claimants. The higher-than-expected number of exhaustions in fiscal year 1961 will increase the amount of temporary extended benefit payments for fiscal year 1962 in several ways: 1. It will increase payments in fiscal year 1962 because more individuals not currently qualified for normal benefits will remain on the temporary benefit rolls. 2. It has increased substantially the payments for unemployment in fiscal year 1961 not made until fiscal year 1962 because of normal processing lag. 3. The number of claimants in the beginning of the current benefit year90,000 is about 50 percent heavier than expected, so that there will be more exhaustions of normal benefits this year, and consequently more temporary extended benefits paid. This last item is probably the important variable factor in the revised cost estimate. It is not possible to estimate, with precision, the number of fiscal year 1962 normal benefit exhaustions that will occur before April 1, 1962. In the past 3 fiscal years, the number of exhaustions before April 1, has ranged from 35,000 in 1960 to over 68,000 in 1959. The fact that some 90,000 railroad employees are currently claiming benefits indicates that about 55,000 exhaustions in this period can be expected unless there is a marked improvement in the railroad unemployment situation. On the basis of this assumption, our estimate of the payment of temporary extended benefits is revised from $24 to $30 million. Mr. THOMAS. Tell us what your statement is about. You want a supplemental appropriation of $10 million. Mr. HABERMEYER. That is correct, sir. This is to supplement the $20 million in appropriations we received previously to pay for the Temporary Extended Railroad Unemployment Act enacted this year. This money is made available to us only if, as, and when, we need it to pay these benefits. We have arranged with the Treasury Department Mr. THOMAS. This is a loan, then? Mr. HABERMEYER. That is correct, the same as granted to the States. NEED FOR ADDITIONAL FUNDS AT THIS TIME Mr. THOMAS. What is the nature of the need at this time? Mr. HABERMEYER. Originally we estimated that the cost of the program would be $24 million. We were granted $20 million. The estimate was based on what we considered to be a realistic assumption of railroad employment of about 850,000 on an average for this year. The expectations have not been fulfilled. Railroad employment has averaged about 830,000 employees so far this year; consequently, our unemployment load is much heavier than we anticipated. Mr. THOMAS. You have about 20,000? Mr. HABERMEYER. You mean employees unemployed? Mr. HABERMEYER. No, about 83,000 railroad men drawing benefits. That is, as of the end of July. We had anticipated that the unemployment would be much less than that. During fiscal year 1961, we estimated we would have about 50,000 people who would exhaust their rights to regular benefits; instead, we had 65,000. We anticipated during fiscal year 1961 we would pay out about $8 million to 25,000 claimants. Instead, we paid out $10,017,000 to 31,450 claimants. While employment conditions are improving slightly, it appears now they will not reach the levels we had anticipated when we originally asked for the $24 million. TEMPORARY EXTENSION OF BENEFITS Mr. THOMAS. What is the temporary extension of benefits costing and how many are taking advantage of it? Mr. HABERMEYER. So far we have paid out, through the month of July, about $12,200,000. It was paid to 33,000 people. This program runs through this fiscal year. People may establish eligibility through March 31, 1962. Mr. THOMAS. How do prospects look for the immediate future? Mr. HABERMEYER. They do not look good, Mr. Chairman. Mr. THOMAS. Are you going to have to get the act extended? Mr. HABERMEYER. Our act provides for extended benefits to railroad employees. Mr. THOMAS. It is not a question of coming back and getting legislation? Mr. HABERMEYER. No, sir. Our permanent legislation provides for extended benefits to railroad men who have over 10 years of service. They grant them an additional 13 weeks; for men with more than 15 years they get an additional 26 weeks. These benefits are for people with less than 10 years of service. Mr. THOMAS. You say prospects do not look good for full employ ment. Mr. HABERMEYER. No, sir. The railroad industry has just not been picking up and employment conditions are not good. Mr. THOMAS. From your statement it seems your estimate was better than that of the committee which made the appropriation. Gentlemen, do you have questions? Mr. ROONEY. No questions. Mr. JENSEN. I have no questions. Mr. JONAS. I have no questions. Mr. THOMAS. Anything further, gentlemen? INCREASE IN CONTRIBUTION BY THE RAILROADS Mr. HARPER. Perhaps you noted that the contribution made by the railroads was raised. Mr. THOMAS. One-quarter of 1 percent. Mr. HARPER. Beginning next year, yes, for 1962 and 1963. We will use that money to pay back this loan, but we are also under obligation to pay back the loan in full even if we do not get enough from the increase in contribution rate to do that. Mr. HABERMEYER. Our arrangement with the Treasury Department is that if this quarter of 1 percent for the 2 years is not sufficient to repay the loan, we will earmark a quarter of 1 percent of the regular contributions toward such repayment. STATUS OF THE FUND Mr. THOMAS. In what shape is the fund? Mr. HABERMEYER. Not in good shape. We are about $220 million in the hole. Mr. JONAS. Would you expand on that? Mr. HABERMEYER. În 1959, when the Congress liberalized the unemployment benefits, there was a provision made whereby if the amount of money in the fund at that time was not sufficient to pay the benefits provided for by the legislation, the Board would have borrowing authority to borrow from its retirement fund, which now totals close to $3,900 million. At the present time we have borrowed from our retirement account about $220 million. Mr. JONAS. How many railroad people are drawing benefits up to 52 weeks a year? Mr. HABERMEYER. I don't have that figure. I can furnish it. Mr. HABERMEYER. Yes, sir. Mr. JONAS. About how many would be eligible and are drawing unemployment benefits for as much as a year? Is there any provision for them to do so beyond 52 weeks? Is that the maximum? Mr. HABERMEYER. No, sir. Actually the maximum could run 2 to 212 years. Mr. JONAS. Is there a maximum? Mr. HABERMEYER. Yes, sir. A man has to qualify for benefits in the preceding calendar year by having a certain amount of wages in the industry. If he has those qualifications and has at least 15 years of railroad service, he would be entitled initially to normal benefits of 26 weeks. In addition, he would be entitled to extended benefits of 26 weeks. The qualifying year is a calendar year. The benefit year starts on July 1, so that a man could actually qualify in 2 succeeding years and have unemployment benefits extended for 2 years. Mr. JONAS. By working how much? Mr. HABERMEYER. He would have to work some in each of 2 calendar years. Mr. JONAS. Any minimum requirement? Mr. HABERMEYER. He has to earn at least $500. Then there is a requirement that he cannot draw more in unemployment benefits than he had earned in the preceding calendar year. Mr. JONAS. That is all. Mr. THOMAS. We hope the industry picks up, gentlemen. It is good to see all of you. THURSDAY, AUGUST 17, 1961. DEPARTMENT OF STATE WITNESSES WILLIAM J. CROCKETT, ASSISTANT SECRETARY FOR ADMINISTRATION PEYTON KERR, ACTING ASSISTANT SECRETARY FOR ECONOMIC AFFAIRS FRANK K. HEFNER, DEPUTY DIRECTOR, OFFICE OF INTERNATIONAL ADMINISTRATION, BUREAU OF INTERNATIONAL ORGANIZATION AFFAIRS MANUEL ABRAMS, INTERNATIONAL ECONOMIST, OFFICE OF EUROPEAN REGIONAL AFFAIRS, BUREAU OF EUROPEAN AFFAIRS HENRY H. FORD, DEPUTY ASSISTANT SECRETARY FOR OPERATIONS LUCIUS D. BATTLE, SPECIAL ASSISTANT TO THE SECRETARY THEODORE C. ACHILLES, DIRECTOR, OPERATIONS CENTER, OFFICE OF THE SECRETARY RICHARD S. WHEELER, DEPUTY DIRECTOR, OFFICE OF INTERNATIONAL CONFERENCES MAX ISENBERGH, ACTING ASSISTANT SECRETARY FOR EDUCATIONAL AND CULTURAL AFFAIRS JOHN HAY, DEPUTY DIRECTOR, SECRETARIAT-U.S. NATIONAL COMMISSION FOR UNESCO, BUREAU OF EDUCATIONAL AND CULTURAL AFFAIRS CHARLES F. HAWKINS, CHIEF, FINANCIAL MANAGEMENT STAFF, BUREAU OF EDUCATIONAL AND CULTURAL AFFAIRS PHILIP H. COOMBS, ASSISTANT SECRETARY FOR EDUCATIONAL AND CULTURAL AFFAIRS FRED TEAL, ASSISTANT LEGAL ADVISER FOR THE BUREAU OF CULTURAL RELATIONS AND THE BUREAU OF PUBLIC AFFAIRS Mr. THOMAS. The committee will please come to order. We have with us this morning our friends from the Department of State. Certainly we welcome all of you. Mr. Rooney, will you be good enough to conduct this examination and get the witnesses properly in the record here. There are quite a few of them. Mr. ROONEY. The items for the Department of State are to be found in the committee print beginning at page 59. |