THE LOAD of unfinished business facing Congress now that the budget resolution impasse has been broken is staggering. Each commitee must deal with the many legislative changes required by July 2 to meet the new spending targets.
A number of these changes entail the elimination of longstanding differences in the way various programs treat people in similar situations. For example, a very few programs in the federal repertoire are indexed semi-annually to inflation, while many more are indexed once a year. The budget resolution assumes that all of the benefit programs indexed semi-annually -- military and Civil Service retirement, food stamps and child nutrition -- will be moved to an annual system to match the great bulk of federal efforts. In 1981, that change alone would save the taxpayers about $1.3 billion. The food stamp program has already been changed, in amendments that passed a few weeks ago. The rest of these changes should be enacted as well.
Especially within the Washington area, ferocious resistance has been generated by the proposal to shift Civil Service retirement to annual indexing. In 1981, this step would save $500 million that would otherwise go out in retirement checks -- a cut that seems reasonable when you examine the Civil Service retirement system against other pension plans, and against its own massive unfunded liability. There are no private pension plans in the country with automatic semi-annual cost-of-living clauses. Only 3 percent of private plans have any automatic increase at all, 63 percent are adjusted on an ad hoc basis and, in 37 percent of the plans, retirees get no adjustment at all after they apply for benefits, no matter how far inflation has outstripped their income.
In addition, the Civil Service system is not a self-supporting fund that maintains a balance on the basis of the 7 percent employee/7 percent employer contribution. In 1979, an additional $8.8 billion was appropriated directly to the fund. In 1980, it is estimated that retirement benefits will cost more than 36 percent of federal payroll costs: 14 percent of that is the ordinary contribution by employer and employee, and the remainng 23 percent is to keep the fund solvent. Though designed as a contributory system, Civil Service retirement is in a bad financial shape because the benefits now paid out far exceed what was paid in. Retirees are reaping much higher benefits than their contributions could have financed, so it is only fair to ask them to share in the penny-pinching that is being imposed across the government.
In that context, an additional change from semi-annual adjustments is warranted -- one that, mysteriously, was proposed neither by the president nor by any members of Congress: milk price supports. There is absolutely no reason, save its remarkable political clout, that the dairy industry should enjoy the unique status of having milk subsidies recalculated semi-annually. Tightening the benefit programs is sensible and deserves support. But the retirees and poor people who are asked to forgo the six-month adjustments in income that they have come to expect might find the change easier to take if they were joined by one of the best-subsidized industries in America.