Federal workers who enjoy their own independent retirement system are slowly being steered toward the less-generous Social Security program by this budget-cutting Congress.
A key test could come tomorrow. The House Ways and Means Committee again takes up the issue of whether to impose a 1.3 percent Medicare tax on federal workers to help finance costs of that major Social Security program.
That so-called Medicare tax would take a bite--from $108 to $450 per year depending on salary--from the paycheck of every federal and postal worker starting in January.
The GOP-controlled Senate Finance Committee has already voted the Medicare tax for feds. Last week the House Ways and Means Committee, run by the Democrats, also approved it during discussions on ways to cut Social Security costs.
But opponents of the Medicare tax for government employes (who are outside Social Security) hope to get the House committee to consider the tax plan tomorrow when they take up proposals to boost Social Security revenues.
Union leaders and members of Congress who represent large blocs of government employes fear that a Medicare tax would ultimately lead to forced Social Security coverage for the nation's 2.8 million federal and postal workers.
Social Security offers better protection to short-term workers and their families. But its retirement benefits are much lower than those of the Civil Service plan. Individuals under the CS system pay 7 percent of gross salary into the fund. And their annuities are subject to federal taxes.
Contributions to Social Security are 6.7 percent of salary (up to $32,400). Benefits are tax-free.
A blue-ribbon Social Security task force is due to make its report, which will almost certainly recommend full coverage for future federal workers, shortly after the November elections.
Sen. Ted Stevens (R-Alaska) has drafted legislation that would bring new federal workers under Social Security. His program would set up a three-level system of Social Security, define contributions under a modified CS plan and provide a voluntary investment plan.
Stevens firmly believes his system would mean better benefits for federal workers, and head off budget cutters who simply want to patch the two systems together. Although Stevens is a staunch friend of government workers, most U.S. unions and retiree groups oppose his plan.
Robert Honig, staff director of the Federal Government Service Task Force, says he has "serious concerns" about the Stevens bill. The bipartisan congressional unit has been studying it for months.
"Our major concern which is shared by some major private firms," Honig says, "is that it would set up a defined contribution rather than defined benefit plan" making it difficult for workers to figure out what future pension benefits would be.
"The burden of economic risk is shifted from the employer to the employe in a very perilous economic environment," Honig says.
Stevens' Social Security-Civil Service-investment plan has interested many people who think it could improve the financial situation of both benefit programs, and make it possible for federal aides to get bigger annuities through investments.
But the plan is so complicated that even its backers believe it must be studied carefully. Stevens wants it explained thoroughly to feds, before any action is taken.
Honig says he doesn't think Congress, because of the budget and economic situation, will have the time or interest to give the Stevens bill the consideration it deserves, and Stevens wants it to get, this year.
But in the meantime, with the Medicare tax proposal, Congress is lifting the flap of the Social Security tent, and nudging federal and postal employes to come at least part way (1.3 percent to be exact) inside.