Is Congress really going to take on a congressional perk?
Prediction: The following bill would have near-universal public support. From The Hill:
While vast numbers of the private-sector workforce have seen their pensions vanish over recent decades and find themselves with precarious, market-based 401(k) plans, members of Congress receive both a pension and a quality employer-match plan.
According to at least two lawmakers, it’s time for elected officials to join the real world.
“If you compare the private sector to what the folks in the federal government get, in the federal government you not only get healthcare benefits, you get a 401(k) that has a higher match than most private-sector companies,” Rep. Tim Griffin (R-Ark.) told The Hill.
“Then on top of that you get the pension,” Griffin said. “Most private-sector folks don’t get a pension.”
In an effort both to identify cost savings amid the nation’s growing debt crisis and to give federal lawmakers more credibility in addressing related financial issues, Griffin and Rep. Mike Coffman (R-Colo.) have recently introduced separate proposals for the elimination of pension benefits for members of Congress.
In mid-November, Griffin put forward legislation terminating congressional pensions for future elected officials. Two months earlier, Coffman introduced stricter legislation to eliminate lawmakers’ pensions.
I’ll believe this is more than political posturing when I see a bill actually become law — especially if said law applies to current members going forward, not just future ones. That said, I guess it’s a good sign of sorts that some pols believe there’s value in posturing this way. And a more solid reason for hope that this is part of a serious effort to fix the nation’s finances, not just score political points, comes later in the story:
Cutting member pensions and relying instead on the Thrift Savings Plan represents a savings of hundreds of millions of taxpayer dollars. But, Griffin pointed out, that amount is just a drop in the bucket compared with the hundreds of billions that could be saved by eliminating pension benefits across the federal government.
“This for me is less about the money you save and it’s more about being credible when we take on the bigger issue of civil service pensions, because that is where the real money is,” Griffin explained.
More broadly, these kinds of efforts — again, if they are actually successful — represent perhaps a better option than term limits to curb political careerism. Make their retirement benefits more like those in the real world. Subject them to the same kind of insider trading laws imposed on people in the real world. Keep going in that vein, and maybe staying in Washington for decades won’t be so much more appealing than returning to the real world.
– By Kyle Wingfield
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195 comments Add your comment
Kyle Wingfield
November 30th, 2011
3:50 pm
Bart @ 2:07: If you didn’t mean to imply that CEO pay is the only source of (potential) pension contributions, why don’t you tell us what some other sources are? Because your comment certainly seemed to pin all the blame on CEO pay.
Btw, $200-250 a month is a lot more than $233 a year. You’re going to need a lot more sources.
May I suggest, again, that the culprit instead has much more to do with increasing longevity (meaning companies have to pay those pensions for a great deal longer than in yesteryear, and they decided they can’t afford it) and increased global competition, both for the company (to sell their goods and products) and among workers (meaning workers are in a worse position to demand the kind of pay/benefits they once did).
ld
November 30th, 2011
3:53 pm
ANSWER: Lawyers & ‘fine print’ are decreasing benefits for employee class.
Most, if not all, “retirement” contracts w/employees/unions contain a ‘fine print’ ‘out’– benefits cannot be changed for anyone unless changed for the entire “class” of beneficiaries. When my dad retired from one of those ‘yankee’ companies that came south as textile and many other manufacturing companies went overseas in pursuit of lower wages, he and his co-workers believed they would have supplemental health insurance to pay for what Medicare did not. Within a few years after his forced retirement, however, and as soon as the vast majority of his age group that should have received those benefits had retired, they all received notice that the insurance was cancelled for ALL that wouldn’t start paying their own premium. Their not-very-strong and not-well-led union reps & counsel had let this ‘out’ be slipped in unnoticed or underappreciated while accepting LESS OF A RAISE THAN NEEDED TO KEEP UP W/CARTER ERA INFLATION TO GET THE RETIREMENT INSURANCE ‘PERK’. They were neither paid the wage they were worth nor long received the so-called ‘benefit’ for which they had foregone the wage increase.
Kyle Wingfield
November 30th, 2011
3:58 pm
sailfish, UGA 1999: Sorry, I’ve been writing my Thursday column. What exactly am I supposed to verify or refute here?
Nope
November 30th, 2011
3:58 pm
Kyle: carlosgvv: If they’re all rich, why do they care about getting a congressional pension?
Come on Kyle. That is WAY naive. The rich get richer by loopholes like this. You think rich people say “oh I’ve got enough money. I don’t need anymore.” Of course they do not. They want as many tax breaks and loopholes as they can get in order to grow their enormous wealth.
Kyle Wingfield
November 30th, 2011
4:03 pm
Nope @ 3:58: Sorry, left the /sarc off.
Lil' Barry Bailout (Revised Downward)
November 30th, 2011
4:03 pm
Perhaps we should try to decrease the effect of gravity while we’re at it. Would make airplanes more efficient.
ld
November 30th, 2011
4:04 pm
I should have added ignorance and/or misplaced trust on part of employee class are decreasing their ‘benefits’. They are letting this be done to them by the way the vote–at the polls and in the union halls.
Though I’ve never been nor wanted to be a member of a union, unionizing may be the only way workers of the future can get fair wages–especially w/all the illegals competing for blue collar jobs that have flooded this country since Ronald Reagan et al gave them amnesty TO KEEP WAGES LOW. When the GOP starts imposing/enforcing $evere civil and criminal penalties on employers and landlords & others that ’support’ getting the illegals to come and stay here–the lure and crutches for their illegal activity–THEN AND ONLY THEN will I believe the GOP is serious about stemming this flood–a potential national security threat and, as they age, a looming drag on our ‘entitlement’ economy. Some now estimate the number of illegals here to be over a dozen million.
Oh wait. W/a Perry presidency (albeit unlikely) the ‘from-out-of-nation’ illegals could get college education cheaper than ‘out-of-state ‘ students so maybe those blue collar jobs will open up. (enter sarcastic sneer here)
Same ol' Song and Dance
November 30th, 2011
4:05 pm
Kyle Wingfield
November 30th, 2011
12:09 pm
If they’re all rich, why do they care about getting a congressional pension?
Why do the rich care about a few percentage tax increase when it could be invested in America and help get our economy going?
Lil' Barry Bailout (Revised Downward)
November 30th, 2011
4:07 pm
If we’re going to require companies to pay more to their retirees, couldn’t we also pass a law requiring Bart Abel to hire some folks he doesn’t need and pay them above-market wages and retirement? It’s the same thing–fascism. And Obozo would love it.
Truth Squad
November 30th, 2011
4:10 pm
I support any bill that cancels the pensions of Congress and SCOTUS. They should do this before they start cutting the pensions of others as well as “reforming” Social Security and Medicare.
I also believe that members of Congress, as well as SCOTUS, should either receive zero health insurance from tax payers or nothing more than what those on Medicaid receive.
ld
November 30th, 2011
4:12 pm
Kyle: may I suggest that pensions promised have not been as fully funded by employers as they should have been, especially since an increase in longevity has been predicted for decades and employers, who knew or reasonably should have known about it, have chosen immediate gratification of profit rather than meeting future obligations.
ld
November 30th, 2011
4:13 pm
Truth Squad: (4:10 p.m.)
A M E N !!!!!!!!!!!!!!!!!!!!!!!!!!
carlosgvv
November 30th, 2011
4:15 pm
Kyle – 12:09
1. I did not say they are all rich. I said MOST of them are rich.
2. The rich always want to get even richer. Few, including the rich, turn down free benefits.
Hillbilly D
November 30th, 2011
4:17 pm
May I suggest, again, that the culprit instead has much more to do with increasing longevity (meaning companies have to pay those pensions for a great deal longer than in yesteryear, and they decided they can’t afford it)
That’s a valid point but it begs a larger question: why were these companies allowed to go for so many years (decades even), underfunding the pensions they were promising? They gave the funds short shrift in the interest of puffing up the short term profit figures. There’s an awful lot of blame to go around there but they knew the entire time that they weren’t putting as much in the funds as they should have, to meet their promises. They were just kicking the can down the road, to be dealt with on somebody else’s watch. Borders on fraud in my opinion but the powers that be looked the other way the whole time.
ld
November 30th, 2011
4:18 pm
Coffman might be a good VP pick; or maybe the GOP convention will take a look at the current offerings, have the same reaction as many of us—”ICK” and open it to new nominees that could include him–after all, his fellow congressmen are going to want him OUT of Congress after a suggestion THEY ‘tighten their belts’ in any way.
Hillbilly D
November 30th, 2011
4:18 pm
id
Sorry didn’t see your 4:12 before I posted. Didn’t mean to step on your line, so to speak.
ld
November 30th, 2011
4:21 pm
Another reason is that while it is now more difficult for an individual to go bankrupt and clear all debts, the same is not true of businesses–many, including most airlines (now including even American Airlines) know that if they file Chapter 11 they can shaft the employee class which has little to no clout and little to no sympathy from judges–certainly not much, if any, from the GOP appointed ones..
ld
November 30th, 2011
4:22 pm
Hillbilly D
Great minds think alike.
Bill
November 30th, 2011
4:22 pm
In terms of gaining credibility, this makes sense. It would be even better if they shared the same healthcare as the rest of us.
For the record, and for everyone who says they are all crooks: Howard Coble of NC (Republican, I am a Democrat) has never participated in the congressional pension.
MarkV
November 30th, 2011
4:22 pm
As far as political posturing is concerned, there is no doubt that this is one. But that is only a minor point. Another minor point is Kyle’s prediction that such a bill would have near-universal public support. With the low opinion of Congress, that is a safe bet.
But there is a more fundamental issue here, and Kyle touches upon it at the very beginning it – I am sure unintentionally – when he calls the 401(k) plans “precarious.”
pre·car·i·ous: 1. Not securely held or in position; dangerously likely to fall or collapse.
2. Dependent on chance; uncertain.
That is an issue that really divides people of Kyle’s philosophy from others. They would love everybody who is employed, and especially federal employees, to be in a precarious position regarding the retirement. Pensions are a bane for them, because they are much safer. If you have a precarious retirement plan, you keep your mouth shut; you do not make waves.
It is a difference in philosophies. Some people would like everybody who works hard to have a safe retirement future. Others would like employees in all sectors to have their retirement plan precarious. “Maul halten und weiter dienen.”
Road Scholar
November 30th, 2011
4:23 pm
Also, have them pay the true cost of their health club. And put AlLL the operating budget under one pay item in the budget instead of hiding it amongst 20 different budgets.
UGA - yes it obvious where you got your degree
November 30th, 2011
4:23 pm
UGA1999
November 30th, 2011
2:53 pm
sailfish…”blame congress” OK GREAT IDEA, LETS DO THAT. Being that Obama had the supermajority in the Congress for the first two years of his presidency and ran up more debt in that amount of time than any other president in history. Thanks for pointing that out.
This shows your ignorance. Obama did not have a supermajority for 2 years. Dems had a window of a few months due to Minnesota Fraken, and before Ted Kenneday wasn’t healthy enough in his last few days to even vote in the Senate. Do your research.
Bill
November 30th, 2011
4:26 pm
There are two ways (or more) to approach this. One is to reduce congressional pensions and healthcare to the level enjoyed by the rest of us. A second approach is to create a national pension and healthcare plan that everyone participates in. Relieving business of pensions and healthcare should make them more competitive.
ld
November 30th, 2011
4:26 pm
Can’t speak to norm, but in GA I know of a couple of judges that ran as Dems years ago before GOP came to majority/power here in Georgia but that, in private at least, acknowledged they were Republican and only running as a Democrat because, at that time, only Democrats could be elected. Also, in Georgia, these same judges are the ones that wanted the party label removed from the ballots so long-serving Democrats could be replaced with Republicans.
ragnar danneskjold
November 30th, 2011
4:30 pm
Funny, I have been thinking on this issue recently. Like the proposal. The direction I was planning to urge was a limitation on all Federal pensions, a cap of $50,000 per year for any individual, whether president or District Court judge or latrine cleaner at the NLRB (by coincidence, positions of roughly the same value.)
ld
November 30th, 2011
4:30 pm
Bill
Both ways are too logical for Congress to adopt.
But hope springs eteranal.
Bill
November 30th, 2011
4:32 pm
UGA is also wrong on several counts with the contention that Obama, “ran up more debt in that amount of time than any other president in history.” This is pure fallacy. The current debt to gdp ratio (raw numbers are meaningless) is around 100% and expected to level off next year. At the end of WWII, it was 120%. We did not cut, we invested. We invested in education and housing for GIs, in rebuilding Europe and Japan, in the space program, and the interstate highway system. What happened with all that spending? Debt to gdp dropped every year until about 1982. Since then, it has risen every year, except for a couple of years under Clinton. When GW Bush took office it was around 65%. When he handed the reins over to Obama it was up to 90%
ld
November 30th, 2011
4:33 pm
ragnar danneskjold
hehehehehehehehehe
the brain and the heart were arguing which of the two of them were the most important organs in the human body; the a..hole, tired of listening to them, closed up for several days and soon both the brain and heart decided the a..hole was the most important organ in the body.
If it were not for the people that clean up after the rest of us as well as themselves, what would our quality of life be like?
Great (last) point.
Hillbilly D
November 30th, 2011
4:43 pm
Mark V @ 4:22
Good point about the difference in philosophies. I’ve never owned a business but I have run businesses for other people. There is a similar difference in philosophies about how to pay people. One is that you pay your employees the least you can; the other is you pay your people the most you can. I always went with paying the most I could. I always felt like everybody suffered in poor times, so everybody should share in the good times. Happy, contented employees were always the most productive in my experience, so it was sound business, as well as just being the right thing to do.
ld
November 30th, 2011
4:43 pm
Because of cost associated w/being a member of a country club, it’s a good bet many golfers (golf often thought of as ‘the rich man’s sport’) are GOP and understand the term, “handicap”.
The enormous deficit and crashing economy was a severe handicap that the Obama administration had that neither the Bush/Cheny nor the Clinton/Gore administration came close to having, yet most GOP want to tall/compare the numbers as if the playing fields had been equal.
While I’ve considered Obama/Biden administration seriously inept from the moment they supported repeating the bank bailout w/o conditions as Bush/Cheny had done, any unbiased assessment recognizes the obvious hole the current administration has been trying to climb out of before it can even get to leval ground.
Then, too, Bush/Chaney had SEVEN years of GOP US House, US Senate AND WHITE HOUSE. W/two wars off-the-books and tax cuts for the wealthiest not offset by any decrease in corporate wellfare or any other offset, it was mostly under that SEVEN years of the Bush/Chaney that this hole into which the flaming economy is trapped was dug.
ld
November 30th, 2011
4:46 pm
During all the SEVEN years of GOP control, I do not recall any effort to offset the tax cuts w/ spending cuts for members of Congress.
Hillbilly D
November 30th, 2011
4:49 pm
Id@ 4:26
I’ve known of people like you, who said they were really Republicans but ran as Democrats so they could get elected. I’ve also known some who were the reverse. My area went from being one party Democratic to one party Republican in one or two election cycles. For nearly my whole voting life, if I want to participate in elections for local offices, I have no choice as to which primary I vote in. The primary is basically the general elction for most offices.
As far as your original point, the real lesson there is that most will do anything to get elected.
Bill
November 30th, 2011
4:49 pm
ID,
Good points. The Bush tax cuts were supposed to create jobs. Job growth was anemic throughout the administration. If we had not had those tax cuts, we would not have the debt problem (not crisis, but problem) today.
MarkV
November 30th, 2011
4:53 pm
Hillbilly D @4:43 pm
The world would be a different, better place if every employer had your philosophy.
Bart Abel
November 30th, 2011
4:54 pm
Bart…your comment certainly seemed to pin all the blame on CEO pay.
Yes Kyle, I can see how it did seem that way. I believe I clarified that.
I also believe that I did provide some other sources of pension contributions.You can also look to non-compensatory perks (corporate planes, corporate apartments,…), the employer 401(k) match, costs and debt associated with acquisitions (again, frequently for the benefit of upper management and at the expense of shareholders and consumers), and on and on.
May I suggest that you take a look at the PBS link to the Elizabeth Warren interview to see another reason why companies found that they couldn’t afford to pay the pensions (hint: they simply decided that they didn’t want to make the promised contributions anymore..so they risked the money for returns that didn’t pan out)?
ld
November 30th, 2011
4:56 pm
If at BOTH THE STATE AND FEDERAL LEVEL, ALL income from EVERY source were taxed w/same tax scale–a flatter tax leading eventually (when country is in the black) a near flat or flat tax and the ONLY exemption of any kind or nature were a PERSONAL/INDIVIDUAL exemption (equal to poverty level) w/everyone being required to file or have their guardian file for them as individuals and, except for extreme hardship (must be reassessed annually) everyone pay at least $1 in taxes
And I do mean taxing unemployment, INHERITANCE, CAPITAL GAINS — everything equally — too, same table; same personal exemption for each person (w/ 1/2 same deduction for each dependent)
ALONG W/a balanced budget amendment, w/only exception war declared by congress against a specific nation or group of nations
AND, IF (like, NOW) we could sever the link between individual congressmen and individual expenditures (w/block grants for catagories of expenditures to states which states must match w?% rather than Congress enacting massive omnibus bills) and end pork barrell spending and cronyism projects
Maybe we could eventually get prior debt paid off and not be leaving the handicap of massive debt to the next generation.
ld
November 30th, 2011
4:58 pm
“IF”
Bill
November 30th, 2011
4:59 pm
Kyle, RE: Bart’s point.
I think that in part, he is talking about the growing disparity in pay between CEOs and workers. In the 1960’s, CEOs made about 40 times what the lowest paid worker made. Now, it is more like 400 times.
You mathematical calculation related to redistributing CEO pay into employee pensions made me think of something Andrew Carnegie once said. He was asked why he paid his employees so little, but made big contributions to causes (Libraries, etc.) His response was, “If I pay them more, they will just eat a little more and drink a little more. This way I can make a real difference.” I think your argument is in this same paternalistic tradition.
Bill
November 30th, 2011
5:04 pm
Id,
I like much of your idea. However, to restrain the speculators that caused this mess, I think we need to treat capital gains differently. One of the things that hurts US competitiveness most is our penchant for short term thinking. This is driven by the demand for monthly and quarterly numbers from Wall Street. I would like to see a sliding tax on capital gains. If you hold your investment for less than one year, you pay a large tax on the gains. The longer you hold it, the less you pay, up to about 5 years. This would discourage speculators and day traders who add absolutely no value to the system.
ld
November 30th, 2011
5:08 pm
The best “regulation” to fix the ‘problems’ associated w/CEO pay is FOR ALL PUBLICALLY TRADED COMPANIES a law be enacted that requires that an exact amount be approved as annual salary for each position w/i each company that is a managment position, that NO bonuses or perks or benefits may be awarded until a minimum of six months into the next fiscal year AND that all such perks and bonus must, in specific detail, be presented to and voted on and authorized by the shareholders AFTER they see the job that the management has done. Also, that no retirement or benefit package can be awarded w/o shareholder vote and only after that management person has retired–they get only what their efforts prove to have been worth to the shareholders.
As it now stands, the click at the top vote each other salaries, perks, benefits over which shareholders have no say.
Family owned businesses and businesses not publically seeking outside investors would be exempt from this rule.
Bill
November 30th, 2011
5:13 pm
Id,
You also need a “Claw-back” provision that allows you to recover money if obvious problems occur outside the 6 month window.
Streetracer
November 30th, 2011
5:14 pm
Bill @ 4:32
Don’t know what the debt to GDP was when Bush took office, but I recently read that in the late fall of 2006 it was 62% of GDP. Since it is now more than 100% of GDP, the D’s have done an admirable job of debt creation; 60+% in 5 years. Pretty good growth rate.
Also a little perspective on Kyle’s assertion about adding $233 to the pension fund. If that $233 earned 5%/yr for 10 yrs, it would increase pension payment by $32/month for 1 year. Isn’t very much.
Problem with all pension plans (including Social Security) is that as life expectency increased, retirement age did not. When Social Security was enacted, and retirement age set at 65, average life expectency was more like 62.
Kyle Wingfield
November 30th, 2011
5:15 pm
Bill @ 4:26: “A second approach is to create a national pension…”
Social Security on steroids? Seriously?
Hillbilly D
November 30th, 2011
5:18 pm
Andrew Carnegie was one of the grand hypocrites of all-time, in my opinion. Not only did he cut his workers pay, so he could give more away and make himself look good. He also worked tirelessly for arbitration as means to end war, all the while profiting from the build of the U S Navy, as much as he could. He talked a good game but he didn’t walk the walk.
Kyle Wingfield
November 30th, 2011
5:18 pm
Bill @ 4:59: Nothing paternalistic on my part, just mathematical.
retired early
November 30th, 2011
5:25 pm
Employees pay into their own pension plans the same way they pay into a 401K. These pensions in most cases are not “free”. I paid 8% of my gross income for 30 years to get a pension of 60% of my salary. The reason these pension plans have failed is the fault of the companies and government entities that administer them. Some, like the city of Atlanta and the state of California were far too generous with their benefits. This problem was exposed because of the stock market collapse in 2007. I “paid for my pension” thank you very much.
ld
November 30th, 2011
5:35 pm
Bill
My thinking would be that businesses, as an entity, would not be paying tax–shareholders would pay tax on their income distributed to them from the businesses. [NOTE; W/ above "CEO problem" fix (5:o8 p.m.) I would add that shareholders and tax law should determine more reasonable paremeters of expense accounts as well. Executives tend to 'expense' what the rest of us pay w/wages]
All “small businesses” would file financial statments –gross income less expenditures =net profit. Reinvested profit would not be taxed–all income distributed to investors from it would be taxed as income to the investor.
Some provision could be made for a business to “hold” a percentage of its profits in an emergency fund here in the US in a separate limited-use escrow account–w/limitations on uses permitted for any funds not taxed–not to be used as management salaries, bonuses, perks. Taxed if not used for limited use purposes–but rather used for reinvestment in the business in a manner that updates the business and/or makes maintains and supports jobs for the employee class here in the USA.
Money currently held overseas in personal, private or business accounts that is brought home (supposedly billion$) could be placed in a separate, limited-use escrow account and same provisions would apply–reinvest or shareholders pay tax on it.
Reinvestment must be an INCREASE in investment to qualify for business tax exemption.
If distributed to shareholders and shareholders receiving it would be taxed under new flatter– and at least temporarily– higher rate
If a business INCREASES its US investment in its business WITHIN THE US dollar for dollar (excluding management salary, benefits, perks–actual job producing investment or equipment/asset update investment) –any amount not reinvested would be taxed at rate applicable when earned and ‘hidden’ in the overseas tax shelter.
Maybe not fully thought out–may have some bugs–but at least worth considering. The idea is to encourage reinvestment to modernize and create jobs here.
Bart Abel
November 30th, 2011
5:36 pm
retired early,
Technically, employee contribution plans fall under the category of pensions. But generally, pensions are understood to be defined-benefit plans to which employers make the entire contribution and make the decisions about how to invest. You’re talking about another animal–the inferior kind that has led to lower retirement security for most Americans.
@@
November 30th, 2011
5:38 pm
Is Congress really going to take on a congressional perk?
Fatigue and conditioning. I read that as “…take on a congressional PERP?”
Bill
November 30th, 2011
5:38 pm
Streetracer,
I think the numbers you cite are a little off, but no matter. Not sure how you go from 62% to 100% and call that 60+% growth. However, my point is that if we look at it in the long term, we see three things. 1) This is not a crisis of unprecedented proportions. We have been in worse shape. 2) Cutting is not the answer. We need to invest in infrastructure and grow the economy. 3) Debt to GDP ratio improved from the end of WWII until the Reagan era. After supply side theories took hold, it has gotten steadily worse. As for the pension issue. I would agree that $32 a month is not very much, but that is not the point. How about if you give me $32 a month from your pension? After all, it is not very much money. It is the paternalism that is so distasteful.