Effort to Cut Retirement Benefits May Be Sidetracked

A budgetary maneuver on Capitol Hill could sidetrack, at least for an undetermined time, an effort to reduce the value of federal employee and retiree health insurance and annuity benefits.

The Senate last week approved a budget outline for the fiscal year now nearly a month gone that sets the stage for that chamber to later vote on planned tax policy changes needing only a simple majority–in other words, without support from any Democrats. That measure focuses almost solely on tax policy. Apart from ordering unspecified savings of $1 billion in natural resources programs, it does not tell congressional committees to achieve savings in programs under their control.

That is in sharp contrast to the House-passed version of the measure, directs the Oversight and Government Reform Committee to save $32 billion over 10 years in programs it oversees. That panel has relatively little control over spending other than federal retirement and the FEHB, leading to a general assumption that it would look to those programs to carry out such an order.

The options would include shifting more of the FEHB premium burden onto enrollees, requiring employees to contribute more toward retirement, reducing the value of benefits for future retirees, and ending the civil service retirement benefit for those hired after a future date.

However, rather than take the two measures to a conference, Republican leaders expect to have the House accept the Senate bill. The immediate goal would be to clear the way for the planned tax policy measure to be considered sooner, although it would also have the effect of relieving the pressure on the oversight panel to produce savings.

Even before the latest development, there had been speculation that lawmakers would set aside any directive to reduce spending, due to the difficulties in enacting the separate legislation that would be needed. Possible changes to those programs still could be pushed, however. Such ideas have circulated on Capitol Hill for years and the White House included several of them, along with limiting COLAs on annuities, in its budget proposal in the spring.