PRESIDENT REAGAN, whose proposals took a drubbing in Congress yesterday, appears to believe that the country can't afford all those early retirements. That's why he had urged Congress to impose stringent reductions in the Social Security benefits for people who retire before the age of 65. In his view, it's sheer economic necessity. But if that's true, it's fair to ask why he didn't apply the same rule -- and still doesn't -- to the federal government's own employees.
Early retirement is offered much earlier, and on far more attractive terms, under the civil service retirement system than under Social Security. If you are eligible for Social Security you can retire at the age of 62 instead of 65 -- if you are willing to take a 20 percent cut in your monthly check for the rest of your life. The president wants to discourage that practice by increasing the penalty to a 45 percent cut in the monthly check. But a civil servant with 30 years' government service can retire at the age of 55 with no penalty at all. If any agency is being reduced in size or reorganized, the people who work there are frequently able to retire at 55 with only 20 years' service.
The cost of the civil service retirement system was $2.7 billion in 1970, but will be about $17.6 billion this year. The Congressional Budge Office has just published a useful study of the system, and the possibilities for curbing the extraordinary rate at which it outlays are rising. The CBO points out that most civil servants now retire before the age of 60 -- which, in view of the incentives, is hardly astonishing.
The incentives are doubly powerful because of an irrational rule on which Congress has traditionally insisted. The rule holds that no civil servant's salary can be larger than a congressman's and, since Congress declines to raise its own salary, it has created a ceiling against which several levels of the civil service are now bumping. Pay scales get carried upward by the cost-of-living adjustments until they hit that maximum, and there they stick. In many agencies, the boss makes no more than his assistants and deputies. As compensation policy alone it's lunatic, but it also plays against the pension system in a way that is peculiarly corrosive.
The congressional ceiling doesn't apply to pensions, which are routinely increased, twice a year, in step with inflation. That's why there are people who, having taken early retirement from the upper ranks of the civil service a few years ago, now find themselves literally getting more from their pensions -- because of the inflation adjustments -- than they would be earning in salary if they had stayed on their jobs working full time. The civil service retirement system not only actively encourages early retirement, but encourages it most strongly for those people who are the ablest, just at their height of their capacities and their careers. If Mr. Reagan thinks that early retirement is costing the country too much, the remedy shouldn't have started with the unemployed auto worker with a sore back who, at the age of 62, was applying for Social Security. It should start with the highly skilled civil servant who has hit the top of a truncated pay scale and, at the age of 55, is heading for the door.