The lame duck Congress that took such a beating at the polls earlier this month may have that last laugh on the taxpayers who voted so many long-time members out to pasture. Insiders tell this column that a move will be made to give members of Congress a $10,000 raise and to allow members who were defeated, or who plan to retire in January, to cash in on a 7.7 percent cost-of-living raise that went into effect in September for already-retired federal and military personnel.
The effect of either or both actions would be to increase the lifetime annuities of most members of Congress retiring early next year.
Senate-House conferees took the first step yesterday when they modified a Carter administration proposal to eliminate this year the so-called "look-back" benefit that allows federal workers to retire and receive the pension benefits of the last COL increase. The original proposal was to eliminate the look-back feature as soon as the president signed the measure. It is part of the giant budget reconciliation bill. Conferees agreed to extend eligibility for the 7.7 percent look-back feature 45 days beyond the date it is signed into law. That would give members of Congress quitting in January time to retire and still get the 7.7 percent raise.
Still to come is a plan, quietly cleared by Senate and House leaders, to remove a congressionally imposed ceiling on top federal salaries. The effect of that action, which may be tied to the veto-proof continuing resolution that Congress must act on before Dec. 5, would be to raise the salary of members of Congress from $60,662.50 to $70,900. Members who are retiring would not have long to enjoy the $10,000-plus pay raise. But it would raise their average salary -- on which retirement computations are made -- and give some members (with the 7.7 percent look-back bonus) lifetime annual annuity increases worth several thousand dollars per year.
Congressional leaders would neither confirm nor deny the possibility of a last-minute pay increase that would also benefit thousands of federal workers now frozen at $50,112.50. But senior Democratic and Republican senators said privately that such a move is being discussed. The idea is to attach it to the continuing resolution which expires early next month. That resolution, which must be passed by Congress before it adjourns, allows federal agencies whose budgets have not been approved to continue operating at current levels until their budgets are finally okayed.
Pay raise backers apparently feel that any heat from the public over the last-minute pay raises will be partially deflected because they are being made by an outgoing Congress for the benefit of an incoming Congress.
The extension of time to qualify for the 7.7 percent COL raise will benefit federal and postal workers who want to retire, but would like to wait until 1981 for tax purposes. If they had to retire this year to qualify for the 7.7 percent raise, their 1980 tax bills would be higher because they would also be paid off for any unused leave. If they can retire next year, however, and get the leave payments in the 1981 tax year they will save a bundle, in some cases.
Federal annuities are tax-free until the retiree gets back all he or she contributed to the fund. That normally takes about 18 months, so 1981 retirees would have smaller tax bites for their leave payments because their annuities, in most cases, would be tax-free for 1981.