President Carter plans to ask Congress to take away one of the two COLAs (cost-of-living-adjustments) federal, postal and military personnel receive each year.
Insiders say the president within the next two weeks will request the substantial, controversial COLA change as part of an inflation-fighting legislative package. Congressional leaders have already been briefed on the proposals.
Under the plan, the nearly three million U.S. retirees (including more than 100,000 in metro Washington) would get a single COLA beginning in July of next year. That is the same COLA formula used for persons drawing social security.
Reducing the frequency of COLAs -- which come every March and September for federal retirees -- would save the Treasury (and cost retirees) an estimated $800 million in "extra" raises caused by compounding. Retirees groups disgree with that price tag. But they agree the twice-yearly COLAs are worth millions and are necessary to help people keep pace with skyrocketing inflation.
Government retirees received a 6.9 percent raise in September 1979 based on increased living costs. A 6 percent adjustment (before taxes) went into effect March 1.
Aides expect Carter will wait until after March 25 primaries in New York and Connecticut before proposing the COLA change. New York state, incidentally, has 135,000 federal retirees. All of them are old enough to vote.
The ideas of reducing the number of COLAs was proposed a couple of years back by congressional budget committees looking for long-term saving. The White House rejected them, then. But, as an aide said recently, "given the state of the economy, it looks like an idea whose time has come."
Administration officials realize they are likely to lose a lot of federal-military retiree votes. But they think the overall economic situation and the political demands for a dramatic action to cut inflation will offset adverse reaction.
Retirees register and vote in greater numbers than any other age group. It has been said that college students attend rallies; the 50-plus are group votes.
An administration economic-planner said he expects the president to be "up front" with the COLA proposal and announce it is a keystone of his economic package to Congress. If he doesn't, however, he expects the COLA cutback will be handled through "congressional initiative" with strong support from the White House.
Reminded that postal and retiree groups have raised more than $3 million to lobby against any drastic retirement changes this year, a top official said, "they are going to need the money."
Federal unions and retiree groups will be mobilizing their troops to fight the COLA cutback. There are primaries April 1 in Kansas and Wisconsin. Each state has about 16,000 federal retirees, plus an unknown number of retired military personal.
The COLA cutback would become to important side issue in other primaries. Pennsylvania (with 78,000 retirees) votes April 22. Texas (86,000 retirees) has a May 3 primary. There are also the District of Columbia (56,000 federal retirees) and Indiana primaries on May 6. Indiana has 23,000 retired federal workers, and North Carolina, with 28,000 ex-federal civilians, also has a May 6 primary.
Retirees groups will argue that the twice-yearly COLA formula was a trade-off several years back when Congress reduced the pension-adjustment formula. And they will argue -- correctly -- that their adjustment, even if they came monthly, follow inflation and do not cause it. But the political tide is running against the retirees, and indeed the entire federal retirement program. It appears there will be a COLA cutback, no matter who is in the White House.