The House Post Office and Civil Service Committee rejected a 4 percent ceiling on annual inflation adjustments for federal pensions yesterday in the first act of defiance by a congressional committee of budget-cutting orders approved by Congress last month.
Brushing aside the pension ceiling approved only a day before by the Senate Governmental Affairs Committee, the House panel endorsed only $113 million in estimated savings by 1985. That is less than 4 percent of the $3.2 billion in savings it had been ordered to make.
Unless reversed later in the budget compliance process, the action means a loss of more than $5 billion of the $27.2 billion in savings that Congress, under its "reconciliation" process, ordered committees to make so spending is brought in line with its three-year budget targets.
"To meet the reconciliation targets of the budget resolution, we would have to further squeeze civil service retirees and surviving widows and children. I cannot support such action, and I doubt whether a majority of committee members can either," Committee Chairman William D. Ford (D-Mich.) said in a letter earlier this month.
In response, the panel's ranking Republican, Edward J. Derwinski (Ill.) said, "At a time when there is widespread concern about, and emphasis on, the budget and considerable public resentment over cost-of-living adjustments which are unmatched in some private sectors of the economy, you cannot pretend to be offering federal annuitants practical treatment.
"It will build public indignation, not public support. It is political miscalculation at its worst."
Republicans, who put together a conservative coalition with Democratic "Boll Weevils" to pass the budget, are expected to fight on the House floor to impose the pension ceiling and thereby come at least closer to meeting the committee's savings target.
But, with the heavy political risks of tampering with pensions in an election year, House passage of a pension ceiling is by no means assured, with some Democrats already referring to the planned package of cost-of-living adjustment savings as the "un-COLA" package.
And, despite Senate committee approval of the plan, Senate leadership sources say the floor action on the issue is in some doubt there, too.
The action by Ford and other committee Democrats appeared to be in line with a strategy outlined earlier by House Speaker Thomas P. (Tip) O'Neill Jr. (D-Mass.) to make Republicans fill any gaps left by committees that fail to meet their targets. Ford pointedly noted that he would ask the House Rules Committee to allow the Republicans an opportunity to push for an amendment on the House floor to impose the pension ceiling.
In the House committee, Republicans Frank R. Wolf (Va.) and Benjamin A. Gilman (N.Y.), joined Democrats in the 18-to-8 vote approving the stripped-down savings measure, minus the pension cap. Earlier, a move by William E. Dannemeyer (R-Calif.) to impose the 4 percent pension growth limit was rejected on a voice vote.
Conceding "we don't have the horses here," Derwinski indicated that he would prefer to avoid an all-out committee fight in favor of "doing noble battle on the House floor in full view of the American people."
While the committee was dealing directly only with civil service pensions, the House Budget Committee said the effect of the action was to keep the present system, under which pensions are pegged to the Consumer Price Index, for all government retirees, including the military. The roughly 3 million civilian and military government retirees received an 8.7 percent cost-of-living increase this year and, under the existing CPI formula, would receive increases as large as 7.2 percent over the next three years.
As anticipated by the first budget resolution for fiscal 1983 and as approved by the Senate Governmental Affairs Committee, the 4 percent ceiling in each of the next three years would save about $5 billion through 1985, including $2.8 billion that fell under the Post Office and Civil Service Committee's jurisdiction.
The pension cap is also seen by some as the opening wedge for restraint in growth of other inflation-indexed programs, such as Social Security, ruled off-limits for this year's round of budget-cutting by President Reagan and Democratic congressional leaders.
In addition to rejecting the pension ceiling, the House committee yesterday included language stipulating that the budget's proposed 4 percent ceiling on pay raises for active federal workers become a floor as well, thereby guaranteeing workers no less than a 4 percent increase over the next three years.
Savings approved by the committee included $33 million over three years from rounding down pension benefits to the next lowest dollar, instead of the current system of rounding them to the nearest whole dollar, and $80 million over the same period from starting payment of benefits at the start of the month after retirement, instead of the day after work ends.
Several other House committees are expected to balk at meeting their targets, although probably not as spectacularly as the Post Office and Civil Service Commitee did. Senate committees have generally exceeded their targets.