While the Obama administration attempts to fix a federal retirement system plagued by long delays in getting full annuities to retirees, House Republicans are pushing legislation that would significantly cut those retirement payments.
Turning the legislative process backwards, a House subcommittee will hold a hearing Wednesday on legislation six weeks after it was approved by the full chamber. In a normal world, legislators hear testimony on a bill before a vote so they can refine and better understand the measure.
But the eagerness among Republicans to make all federal workers pay more for, in some cases, smaller retirement benefits was so great that they used the retirement system as a vehicle to offset much of the cost of extending the current payroll tax holiday and an extension of unemployment benefits.
Now the House and Senate will confer on their differing versions of the tax holiday legislation. It remains to be seen whether the federal retirement hit, and an extension of the federal pay freeze that is also in the House bill, will survive those discussions.
Meanwhile, 17 Democrats, led by Rep. Elijah E. Cummings (Md.), the top Democrat on the House Oversight and Government Reform Committee, signed a letter to the Senate urging rejection of the House bill.
“Subjecting these dedicated public servants to additional pay cuts and retirement benefit reductions in order to pay for such expenditures as a payroll tax cut for all middle class Americans is unfair and illogical, particularly as the vast majority of federal workers are middle income earners as well,” the letter says.
The bill would reach deep into the pockets of federal employees. The legislation, introduced by Rep. Dave Camp (R-Mich.), would add an additional 12 months to the current two-year freeze on basic federal pay and increase federal workers’ retirement contributions by 1.5 percent over three years, starting in 2013.
The legislation would create a new class of workers, “secure annuity employees,” who would contribute 4 percent of their basic pay to their retirement, instead of the 0.8 percent rate used now. Secure annuity employees would be those hired after Dec. 31, 2012, and who have less than five years of service.
One provision would base their annuities on their five highest annual salaries instead of the current practice of using the highest three. The bill would also eliminate a Social Security supplement for many federal workers, which would reduce their retirement income.
This period before the House and Senate work out their considerable differences on the payroll tax bill gives the House an opportunity to do what it should have done weeks ago — hold a hearing on the impact of reducing federal retirement benefits. Better late than never. The hearing by the House subcommittee on the federal workforce will also take testimony on bills affecting the golden retirement benefits that members of Congress receive.
Their pension benefits are much better than those of other federal workers. To its credit, the committee decided not to go after the pensions of the average worker without also looking at the retirement benefits of federal employees who are elected.
“The American people rightfully demand in their elected Representatives a willingness to live under the laws they pass,” said Rep. Dennis A. Ross (R-Fla.), chairman of the subcommittee. “They are tired of the perks and hypocrisy they witness in their Congress. As representatives of the people we serve, Congress should live under the same rules as everyone else.”
His statement was in a news release headlined: “What’s Good for the Goose is Good for the Gander.”
That release also made clear the chairman’s position on retirement benefits for everyday workers: “The American people are also, rightfully, outraged by the pension benefits guaranteed to a bloated federal workforce, paid for through an ever increasing tax burden on the American worker.”
David B. Snell, retirement benefits services director for the National Active and Retired Federal Employees Association, rebuts that approach in testimony prepared for the hearing. He notes the irony of using cuts to the retirement compensation of middle-class federal workers to make up more than half of what the government would lose by extending the tax holiday for the benefit of the middle class.
“Shared sacrifice is fair, but singling out federal employees and retirees for disparate treatment threatens to do permanent harm to a federal civil service critical to meeting the increasingly complex and deeply important tasks of government,” his testimony says. “At a time when more is being asked of our government, the American public deserves an engaged and efficient workforce; not one members of Congress paint as the source of our country’s problems.”