The Senate gets down to work today on a plan that would shave $500 million a year from future cost-of-living raises for federal and military retirees and their survivors.
Uncle Sam now pays slightly more than $2 billion per month to retired civil servants and military personnel. And they get cost-of-living adjustments each March and September that are worth $20 million of each one percent increase in the cost of living.
An estimated three million people, including more than 100,000 here, stand to lose if the Senate and House follow up on plans to eliminate the two cost-of-living adjustments, and limit retirees to a single July 1 adjustment for inflation.
Both the Senate and House have approved budget resolutions that call for a single annual cost-of-living adjustment for government-military retirees. Hearings on the plan begin this morning before the Senate sub-committee on civil service and general services.
The pension cutback plan would hurt retirees because they would have to wait a year, instead of six months, for inflation catch-ups. It would also eliminate the value of compounding from two adjustments a year. In March, retirees got a before-taxes raise of 3.9 percent and, as inflation skyrockets, they are now due a September adjustment of at least 5.6 percent.
Retirees argue that it would be unfair of the government to change rules of the plan they worked under, and paid for. They also fear that this cutback, if implemented, could be just the beginning of other assaults on retirement benefits.
Supporters of the single annual living-cost adjustment say it would put ex-military and federal personnel on the same cycle as Social Security recipients, who now get a July 1 adjustment.
There are arguments, good ones, for both sides. But the one that claims the annuity adjustments - whether they come annually, every six months or three times a day - cause inflation doesn't make sense. The raises are the RESULT of inflation, not the cause of it. The boosts come only after the cost-of-living has gone up. Inflation itself is the real villain. However, that may not stop Congress from cutting back the cost-of-living raises, particularly if President Carter gets behind the plan and makes it part of his anti-inflation program.