THE INCOMING Reagan administration either does or does not intend to slow down the rise of federal retirement benefits. The confusion over successive press conferences by Mr. Reagan's economic advisers, over the weekend, entitles you to draw either conclusion. But there's another conclusion that you can draw more certainly. The new administration needs to take a careful, not very friendly, look at the present practice of giving the federal pensions two cost-of-living increases every year.
Perhaps that sounds like a technical and trivial point. Technical it is, but -- as the congressional budget office pointed out earlier this year -- it's far from trivial. Shifting to one annual cost-of-living adjustment would save about a billion dollars a year.
As long as all retirement benefits are considered untouchable, exercising effective control of the budget will remain exceedingly difficult. Mr. Reagan's advisers are now evidently urging a board review of all of these benefits. Most of the changes under discussion would take effect only years into the future, but the cost-of-living adjustment offers one possibility for an immediate impact on current spending.
Most of the rhetoric about budget cutting and budget balancing steps delicately around the central truth that nearly half of the federal budget is now a great insurance fund. It provides an enormous variety of health insurance, crop insurance, unemployment insurance, disability insurance and retirement insurance. Pensions alone now constitute almost 30 percent of federal spending. The largest part of it is Social Security.But there are the separate, and very large, outlays for military and civilian federal employees' retirement benefits. They currently are running over $30 billion a year with the twice-a-year adjustments contributing to their rise.
Social Security benefits, in contrast, are adjusted only once a year. That annual increase is a decent and reasonable provision, protecting elderly people's monthly checks from erosion by rising prices. But if one adjustment a year is good enough for the people on Social Security, why isn't it good enough for the federal personnel?
One frequent rebuttal is that, having begun to grant two increases a year to the federal pensioners, Congress has an implicit obligation to keep it up. But that's a debater's point, not an argument. It implies that no public benefit can ever be revised in any direction except upward.
Changes in pension benefits ought to be approached slowly and very carefully. People living on federal pensions certainly deserve as much protectin against inflation as retired people living on Social Security. But they aren't entitled to more and better protection. Of all the pension provisions, the semi-annual inflation bump is the one that Mr. Reagan's budget cutters ought to consider first.