Last week, we published an article about a proposal to cut government spending (in particular cutting federal retirement benefits) to help pay for damage caused by hurricanes that have hit the Gulf Coast.
Question from Readers
Not surprisingly, the most virulent reaction from readers was the proposal to change the method for calculating retirement benefits for federal employees. Some of our readers wrote in and asked several variations of this question: “I am retiring soon. How likely is this proposal to become a reality?”
No one knows for sure what Congress will or will not do–especially when it comes to spending tens of billions of dollars on a politically popular topic that is hot. When the dust settles, the question then becomes, “How do we pay for this?”
A lot of proposals will be bandied about. Some of the proposals in the recent report on possible ways to cut spending will be enacted. In the final analysis, it comes down to politics. Which groups have the clout in Congress to keep their program from being cut or eliminated?
With this caveat, here is my best guess: The proposal to cut federal retiree pensions by changing the method of calculations from a high three to high five years of service won’t be enacted.
If I were a federal employee eligible to retire in the near future, I would not lose sleep over the issue. Here’s why.
Feds Have Politically Savvy Supporters
Federal employees have considerable clout in Congress. Consider the proposals made by most recent administrations to make major changes to the civil service system. Jimmy Carter got a proposal through Congress to enact the Civil Service Reform Act of 1978. He did it by getting the AFGE National President to accompany him in town meetings around the country. In effect, he sought and got the support of the largest federal employee union to verify that these changes to the civil service were a good idea. Even with President Carter’s personal support and the support of Ken Blaylock appearing with him, it took tremendous effort and spending of political talent to get the changes enacted.
President Bush has proposed making major changes to the civil service system and got changes through Congress. The federal employee unions have been fighting the proposals at every step of the way and have had some success in court in delaying and modifying the new system. The big difference between the 1970’s when the CSRA was passed and today? The terrorist attacks on New York and Washington. The political atmosphere supported major changes. The country was rivited. Something had to be done. And something was done with the creation of the Department of Homeland Security and the proposed personnel rule changes for the Department of Defense.
That is not the case with the additional spending for disaster recovery along the Gulf Coast. The proposal to effectively cut retirement benefits for civil service employees is not likely to fly. It has not been proposed by the administration (contrary to several comments sent in by readers in response to our article on the subject). It is possible President Bush will put his support behind the proposal to cut retirement benefits but that is not too likely.
There are plenty of groups who will work to defeat the proposal and create enough political heat to prevent this proposal from going very far. For example, the National Active and Retired Federal Employees Association (NARFE) issued a press release denouncing the proposal and federal employee unions have jumped in as well. There are also a number of Congressmen who will jump at the chance to hammer the proposal in Congress because there are a lot of federal employees who vote in their district.
In short, in all likelihood the political heat surrounding the proposal to cut retirement benefits will be sufficient to prevent this from going very far.
There are likely to be cuts in other programs or a freeze on federal spending–perhaps an across-the-board spending freeze. There is not likely to be a cut in your retirement benefits–at least not in the immediate future.
If you are still worried, write to your Congressman and voice your concerns. You can also contact NARFE or your local union to ask how to best voice your concerns.
But for those who are retiring in the near future? Spend your time wisely. Calculate your retirement income and take care of your Thrift Savings Plan investments. Write to your Congressman. Get mad if you want to before you write your letter. But don’t get an ulcer worrying about the proposal to cut your retirement benefits in the near future.