Office of Personnel Management Director Constance Horner says a congressional plan to cancel next month's 3.1 percent raise for federal retirees would lead to such major problems in getting the right checks to the right people on time that it would end up as a political liability for the Reagan administration. If the raises are to be canceled, it should be done in a more timely fashion, she indicated.
Horner, who held a top post at the Office of Management and Budget before her appointment to the civil service watchdog agency, spelled out her views in a letter this week to OMB Director James C. Miller III.
Although she favors major budget-cutting actions, Horner said, the deadline has passed for reprogramming the computers to rescind the January increases.
"While I know the administration favors a freeze," she wrote, ". . .we now face major political problems resulting from intractable technical factors" if the raise is delayed.
In their consideration of several budget-cutting proposals, Senate-House conferees are discussing a freeze next year on all federal cost of living adjustments except for Social Security.
The 3.1 percent COLA scheduled to show up in paychecks next month will cost the government about $1.6 billion a year. Among the recipients are more than 100,000 federal and military retirees in the Washington area.
If Congress votes to freeze COLAs at this late date, Horner said, OPM problems with computer reprogramming could result in as many as 40,000 recipients -- those who retired last month or moved recently -- not getting checks in January. It also could lead to "hundreds of thousands of overpayments and underpayments" to other retirees, she said.
"In short," she wrote, "the administration will be blamed for monumental mispayment problems for months to come."
Horner said that while "I can appreciate the political imperative to freeze COLAs, it would be irresponsible to knowingly condone egregiously erroneous benefit payments. The administration must take a strong stand on this point and ensure that whatever is enacted includes a realistic effective date or provides a statutory recognition of the practical realities."