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Federal Diary

Congress Takes Another Run At Giving Breaks to Retirees

By Stephen Barr
Sunday, March 27, 2005; Page C02

The legislative table has been set, once again, for federal retirees.

Bills have been introduced in the House and Senate to repeal two parts of Social Security law that penalize numerous government retirees. Bills that would permit federal and military retirees to pay their health insurance premiums with pretax dollars also have been put in the legislative hopper.

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The proposals, of course, are not new. Hearings on them have been held in the past, and members of Congress have shown interest in the issues (a House bill last year to repeal the two Social Security provisions garnered 300 cosponsors). But each year, the table has been cleared and the proposals shelved, apparently because of concerns over cost.

Despite that history, key members of Congress, the National Active and Retired Federal Employees Association, Federally Employed Women and other groups are not giving up. If Congress and the Bush administration agree to make large-scale changes to Social Security, it's possible that laws that are burdensome to federal retirees could be changed, according to congressional aides.

This year, Sen. Dianne Feinstein (D-Calif.), joined by Sen. Susan Collins (R-Maine) and others, and Reps. Howard P. "Buck" McKeon (R-Calif.) and Howard L. Berman (D-Calif.) are again sponsoring bills to repeal the Government Pension Offset and the Windfall Elimination Provision, two Social Security laws. Rep. E. Clay Shaw Jr. (R-Fla.) has introduced a comprehensive Social Security bill that would reduce the benefit cut caused by the offset.

The offset reduces an individual's survivor benefits under Social Security by two-thirds of the amount of the public pension, and the windfall provision reduces Social Security for retirees who paid into Social Security and also receive a government pension.

The two laws apply to about 6 million government workers, including 1 million federal employees hired before 1984. Many of the non-federal workers are in 16 retirement systems, including state retirement programs in California and Maine, that operate outside of Social Security.

Collins, in a Senate speech this month, said estimates show that nine of 10 public employees affected by the offset lose their entire spousal benefit, "even though their deceased spouses paid Social Security taxes for many years."

Collins added: "What is most troubling is that this offset is most harsh for those who can least afford the loss -- lower-income women. In fact, of those affected by the [offset], 73 percent are women. . . .

"The [offset] reduces benefits for more than 200,000 of these individuals by more than $3,600 a year -- an amount that can make the difference between a comfortable retirement and poverty," Collins said.

Feinstein said the windfall provision results in a penalty of more than $300 a month because government pensioners receive their Social Security benefits under a less generous formula than the one used to calculate monthly checks for private-sector retirees.

She called the two provisions "unfair. . . . I do not understand why we would want to discourage people from pursuing careers in public service by essentially saying that if you do enter public service, your family will suffer by not being able to receive the full retirement benefits they would otherwise be entitled to."

As Congress left town on spring break, Feinstein had eight cosponsors for her bill, including Sens. Arlen Specter (R-Pa.) and John F. Kerry (D-Mass.). McKeon and Berman had 220 co-sponsors for their House version.

Another bill important to many retirees, involving "premium conversion," has been introduced by Sen. John W. Warner (R-Va.) and Reps. Thomas M. Davis III (R-Va.) and Jon Porter (R-Nev.). The legislation would allow civil service and military retirees to pay health care premiums with pretax dollars, a perk that civil service employees got in 2000.

The bills would cost billions of dollars over the next decade, administration officials project. In particular, officials have stressed that Congress created the offset and windfall to prevent government workers from receiving more favorable treatment under Social Security than comparable private-sector workers who spend a lifetime paying into the system.

Feinstein said she was "very aware that we are facing extraordinary deficits and that fixing the problem . . . will be expensive." She added, "I am open to considering all options."

E-mail: barrs@washpost.com

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