Budget ax may come down on Congress pensions, benefits
Congress pensions are under scrutiny
55 commentsby Dan Nowicki - Nov. 12, 2011 11:08 PM
The Arizona Republic
As Capitol Hill's "supercommittee" continues work on a landmark deficit-reduction plan that could reduce services and restrict benefits for Americans, some taxpayer watchdogs and lawmakers want Congress to first take the ax to the comfortable pensions and retirement packages that its own members enjoy.
Congressional retirement benefits are not as lucrative as some of the worst critics imagine. But they generally are better than those available to typical federal employees and private-sector workers and are a perennial sore spot with some members of the public, particularly when news breaks about a disgraced former congressman who continues to receive his taxpayer-supported payout.
With deficit-reduction fever gripping Washington, Congress is seeing a flurry of bills to reform the retirement perks enjoyed by U.S. representatives and senators. Sponsors hope they will be incorporated in the supercommittee's final recommendations that are due later this month. It may be a long shot -- the entire congressional operating budget is insignificant when it comes to overall government spending -- but reform backers say they are optimistic.
Today, any member of Congress who has served at least five years is vested and, after retirement, can receive a full pension benefit at age 62. In some cases, retired lawmakers can start getting all or part of their pensions at an earlier age. For example, those who enter Congress at a relatively young age and serve at least 20 years can start collecting their pensions as early as age 50.
A pension is only part of the congressional nest egg. Starting in 1984, members of Congress also pay Social Security payroll taxes and receive benefits. They also can participate in a federal 401(k)-style investment program called the Thrift Savings Plan in which they can make pretax salary contributions to their retirement. For those participating in the Federal Employees' Retirement System, the government will match their contributions up to 5 percent. Besides that, lawmakers can take advantage of the same health-care programs as other federal employees and get extra V.I.P. perks such as treatment at Bethesda Naval Hospital in Maryland.
According to a 2011 Congressional Research Service report, 455 retired members of Congress were getting benefits as of Oct. 1, 2009, the most recent date available.
The 275 who retired under the older Civil Service Retirement System pulled in an average annual annuity of $69,012, CRS reported. The 180 former members who retired under the newer FERS, which debuted in 1987, or a combination of the two systems, received a more modest average annual pension of $40,140.
One national political expert said the amount of money is so relatively small that reining in congressional retirement benefits would do almost nothing to help the Joint Select Committee on Deficit Reduction, as the 12-member, bipartisan supercommittee is formally known, reach its goal of finding $1.5 trillion in savings over 10 years by Nov. 23.
But leading by example could help lawmakers make the case that they also are sharing in the suffering.
"It's more an issue of symbolism than substance, but the symbolism is significant at a time when a number of public employees are facing cutbacks in their own pensions," said John J. "Jack" Pitney Jr., a political scientist at Claremont McKenna College in Southern California who has written extensively about Congress.
"And there is talk about some kind of reform of Social Security that would curb benefits for future retirees. So one can see why people would be leery of providing any kind of pension to members of Congress, even though the amounts are not particularly lavish."
Changes proposed this year range from eliminating the defined-benefit congressional pension to raising the pension retirement age to at least 65 to expanding the array of crimes that would cause a convicted former member of Congress to relinquish his pension.
"I don't think the Founding Fathers of this country really intended for somebody to come to Congress and make it a career to where there's an expectation that they're going to draw a pension," said Rep. Mike Coffman, R-Colo., who has introduced legislation to dump the congressional pension. "I think they envisioned a citizen legislature, whereby people came from other successful backgrounds to the Congress and didn't see it as a path to a career where they would draw a financial benefit for the rest of their lives."
Retirement system's roots
Though federal pensions date to the Civil Service Retirement Act of 1920, enacted 15 years before Social Security was created, members of Congress weren't added to the pension system until 1942, the CRS report said. And, according to congressional researchers, public outrage was immediate and the outcry killed the program after only two months.
Lawmakers gave themselves pensions again in 1946, partly, in the law's words, as "an inducement for retirement for those of retiring age or with other infirmities" that would allow for an infusion of younger blood in Congress.
The congressional pension system has evolved through the decades and has faced public criticism on and off at least since the 1970s. Defensive lawmakers say misinformation about their pensions is rampant and they frequently must respond to angry constituents who are under the false impression that they don't have to pay for Social Security or that they continue to collect their full congressional salaries for life.
Snopes.com, a website dedicated to debunking urban legends and Internet rumors, has a page responding to various congressional pension canards found in viral e-mails.
Still, it remains politically touchy to argue that members of Congress, many of whom are independently wealthy and who earn $174,000 a year, deserve a federal pension.
"My own view is we should encourage people in public service and in the private sector to save for their retirement," said former Rep. Matthew McHugh, D-N.Y., who was in Congress from 1975 to 1993 and is a past president of the United States Association of Former Members of Congress.
"It's good not just for the individuals, but it's good public policy, and it's good for the country to have people who have some retirement benefits when they retire. You can argue about whether this one is unduly generous or if people are paying enough in -- those are legitimate questions that people can differ about -- but as a matter of policy, I think it is a good idea for people to have a retirement program wherever they work."
Generally speaking, the annuity that the retired member of Congress gets every year from his or her pension is calculated through a formula based on the average salary for the lawmaker's three highest-paid years in a row, the lawmaker's age and years of service. Because of the political unpredictability of congressional service, the lawmakers pay more into the retirement system than typical federal workers and also reap better benefits, which taxpayers help bankroll. Specific details on the pensions of individual members of Congress are not considered public information by the U.S. Office of Personnel Management, so watchdogs can only estimate how much a particular lawmaker's retirement package is worth. A retired lawmaker's pension cannot begin at more than 80 percent of his or her final salary.
"The formula is way better than for most other federal employees," said Pete Sepp, executive vice president of the National Taxpayers Union, one of several groups calling on the supercommittee to take on congressional pension reform. "You can retire at an earlier age and your years of service count for more than they would, for example, if you were a Cabinet secretary."
Congressional pensions also are dramatically better than what private-sector employees in the same pay range can expect, he said.
Rep. Bobby Schilling, R-Ill., and Sen. Sherrod Brown, D-Ohio, are championing a bill to push the congressional pension retirement age from 62 to the Social Security retirement age of between 65 and 67 and have written the supercommittee chairs asking them to include the measure in their deficit-reduction package.
Schilling told The Arizona Republic that the change, which he said could save taxpayers from $10 million to $15 million over 10 years, would put lawmakers more in line with "regular American folks" who can't retire at such an early age with such a limited amount of service.
"Some people argue, 'Well, that's not a whole lot of money,' but the problem with the deficit and the debt is that we've got so many of these million-to-$10 million deals that turn into billions and trillions," Schilling said.
Examples that have fueled outrage
Fueling the public cynicism about congressional pensions are multiple incidents in which notorious ex-congressmen continued to collect their often lucrative benefits.
The late former long-serving Rep. Dan Rostenkowski, D-Ill., never lost his six-figure congressional pension despite serving three years in federal prison for mail fraud. He was later pardoned by President Bill Clinton. Rep. James Traficant, D-Ohio, was expelled from the House in 2002 and went to prison on corruption charges but also kept his pension.
Veteran Rep. Randy "Duke" Cunningham, R-Calif., who was convicted and sentenced to prison in a bribery case, continues to collect his retirement benefits, too. In all, the National Taxpayers Union estimates that taxpayers spend more than $800,000 annually on the pensions of corrupt former members of Congress.
Furor over Cunningham and the lawmakers who were implicated in the Jack Abramoff lobbyist influence-peddling scandal prompted Congress in 2007 to pass an ethics bill that revokes the pension of any former lawmaker convicted of bribery and certain other corruption-related crimes.
Critics say the legislation didn't go far enough because indicted lawmakers often negotiate plea agreements that result in them pleading guilty to lesser charges that aren't covered by the law. Sens. Richard Blumenthal, D-Conn., and Mark Kirk, R-Ill., this year have teamed up on a bill that would expand the list of applicable crimes to include tax evasion, obstruction of justice and other felonies.
A final conviction also is necessary for the lawmaker to lose the pension. Former three-term Rep. Rick Renzi, R-Ariz., was indicted in 2008 on charges that included extortion, wire fraud money laundering and left office under a cloud but has yet to come to trial. Even if he is convicted, he wouldn't lose his forthcoming estimated $15,000-a-year pension as his crimes are alleged to have occurred before enactment of the 2007 pension law.
Also free to keep their pensions are disgraced former representatives such as Anthony Weiner, D-N.Y., and David Wu, D-Ore., who resigned earlier this year amid embarrassing sex-related scandals but have not been charged with any crimes.
"There's this whole question of moral opprobrium that often surrounds many lawmakers leaving office," Sepp said. "There's really no effort to enact a reform in that direction. I suppose you could, for example, pass a bill that says any lawmaker who is expelled or censured could be deprived of his or her pension henceforth. But I see no move in Congress to do that."
McHugh said he understands that the public doesn't like it when a convicted criminal receives a congressional pension and has no sympathy for such wrongdoers. However, he added, there's not much Congress can legally do about their pensions after the fact. "From a contract perspective, it seems to me that if they paid in, they should get what they paid for," McHugh said.
Prospects for reform are uncertain
The outlook for congressional pension reform this year remains unclear. Bills that affect a lawmaker's personal wallet have a habit of not going anywhere, said Sepp, who has been tracking congressional pension issues for more than 30 years.
"I think in a normal year, this would be dead on arrival," Coffman said of his bill to eliminate the congressional pension. "The only reason why I'm optimistic is that we're in the difficult position of having to make very tough decisions concerning so many other Americans to navigate our way out of this fiscal crisis. So I think the pressure is going to be on us to show that we have skin in the game by making a sacrifice."
If Coffman's legislation becomes law, lawmakers would still have the federal 401(k) program and Social Security for their retirement. Credits accrued before the effective date of the legislation would be honored, but lawmakers such as Coffman, who is in only his third year of service and not yet vested, wouldn't get a pension.
Other lawmakers contacted by The Republic seemed amenable to the idea of getting rid of or scaling back congressional retirement benefits.
"I believe in this concept that you come, you serve for a while, and then you go home," freshman Rep.David Schweikert, R-Ariz., said. "And maybe not having a pension system would help encourage that."
Sen. John McCain, R-Ariz., said he would support revisiting the 2007 pension-forfeiture law if it needs updating.
"Everybody is tightening their belts and I would hope that we could tighten our belts here in Congress as well," McCain said.
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