GOP group calls for cuts in federal retirees' benefits to fund Katrina relief

By Karen Rutzick

A group of Republican House members called Wednesday for cuts to some federal retirees' benefits to help offset the cost of Hurricane Katrina recovery.

The House Republican Study Committee released a package of recommendations known as "Operation Offset"

Wednesday that called for calculating retirement annuities for federal employees based on an average of their five highest-earning years of service. Currently, employees' annuities are based on a high three-year average. Adding two years of lower pay would tend to decrease the average, and thus reduce retirees' defined benefits.

The Republican Study Committee, headed up by Rep. Mike Pence, R-Ind., is made up of about 100 House Republicans who push conservative social and economic policies. The RSC said it estimates the change in retirement calculations would save $5.2 billion over ten years.

The RSC also recommended lowering the government subsidy for some federal retirees who participate in the Federal Employees Health Benefits plan. RSC members said they want to "reduce health benefits for new retirees who had relatively short federal careers, although it would preserve their right to stay in the program." Currently, the government pays for 72 percent of all participants' premiums, regardless of the length of their federal careers.

According to a Congressional Budget Office analysis, under the proposal backed by the RSC, "the government's share of premium costs would be cut by two percentage points for every year of service less than 30. In the case of a retiree with 20 years of service, for example, the government's contribution would decline from 72 percent of the weighted average premium to 52 percent."

Charles Fallis, president of the National Active and Retired Federal Employees Association, said the proposals are insulting to federal employees.

"Not only would these proposals dishonor the government's obligation to its workers, but it also makes public service a much harder sell," Fallis said.

National Treasury Employees Union President Colleen Kelley echoed Fallis' sentiments.

"This is a deeply flawed proposal that falls disproportionately on the backs of those who can least likely afford it," Kelley said.

The RSC placed the retirement benefits proposals, which were only two among dozens of cost-saving suggestions, under the title "Tough Choices in Tough Times" in its report.

The entire package of RSC spending-cut proposals, which total $500 billion, has generated friction within the House Republican Conference, lawmakers and aides said Wednesday.

"The leadership has said repeatedly that we are willing to look at offsets that make sense," a GOP leadership aide said. "But what they are offering is just not realistic."

Most of what conservatives are advocating in "Operation Offset" is a rehash of policies fiscal conservatives have long trumpeted -- funding cuts for NASA and the Corporation for Public Broadcasting, eliminating so-called pork in the highway bill, cutting subsidies for Amtrak, and reining in foreign aid, among others.

Still other politically untenable proposals -- such as postponing the Medicare prescription drug program for one year -- have some members concerned that conservatives are "giving ammunition" to Democrats to attack them on the already politically sensitive issue heading into the 2006 election cycle.

"We need to be focusing on our fiscal record right now," the aide said.

Susan Davis and Peter Cohn of CongressDaily contributed to this report.