- The Washington Times - Monday, July 21, 2003

It’s probably premature for federal employees to break out the (domestic) champagne for a thank-you-Congress party, but it may be a good idea to get the charcoal and the steaks ready, because things are looking pretty good on two bread-and-butter issues:

• Last week, the House Government Reform subcommittee on civil service approved legislation that would let retirees pay their health insurance premiums — which can run several hundred to several thousand dollars per year — in pretax dollars. Doing that reduces their taxable income by the amount of their premiums, and that cuts their tax bill.

For the typical retiree, it could mean an extra $300 to $500 in income each year, enough to upgrade their health insurance, which goes up around 10 percent each year.

Active-duty feds — and many private-sector employees — have the premium-conversion option, but it cannot be extended to federal or private retirees unless Congress changes the tax code. The bill is expected to fly through pro-civil-service committees in the House, but it could run into trouble when it reaches the tighter-fisted Senate Finance and House Ways and Means committees.

• A political fix that would benefit feds appears to be in as part of the debate over a prescription-drug benefit under Medicare. The Senate and House have approved versions that are different, but not drastically. Democrats and Republicans are making the usual charges against each other.

Almost lost in the rhetoric politicians deem essential in the battle for the hearts and votes of seniors is that the House voted overwhelmingly to exempt the Federal Employees Health Benefits Program from any higher prescription-drug costs and increased deductibles that may be approved as part of the overall Medicare prescription bill.

In other words, it would give a major cost benefit to anyone under the federal program. Among those people are most members of Congress and most congressional staffers.

Opponents, mostly liberal Democrats, attacked the exemption as hypocritical and high-handed. But they didn’t yell loud and they didn’t yell long, and they disappeared when the vote was taken. Republicans said making the federal health plan better was a first step for all American seniors.

Both parties apparently have agreed to suspend disbelief (which happens all the time) and find ways to give everybody his or her political shot, while making sure nobody important gets hit. While it would drive a freshly minted civics teacher wild, the deal is a boon to current and future federal retirees and their families.

The not-so-good news

Feds who are worried about losing job security, guaranteed pay raises or even the job itself continue to watch the Defense Department “transformation” bill. It comes in two versions — the Senate plan is more union-friendly, the House bill is not — that are part of the Defense Authorization Act.

Two dozen conferees from both houses and both parties will iron out the details that could give Defense a free hand to eliminate automatic 3 percent longevity pay raises in place of a performance-based system. The Pentagon also could be authorized to engage in only critical bargaining over key (as decided by Defense) issues with unions, instead of being required to meet and grieve over grass-roots squabbles.

Many workers fear that pay changes, including pay banding — combining three or four civil service grades into one band — could trim raises or encourage favoritism. Many are equally concerned that the emphasis on privatizing some federal civil service jobs, and giving some military duties to feds, could interrupt or derail their career tracks.

Windfall/Offset

More members of Congress are signing on to bills that would repeal — not just modify — the so-called Windfall and Offset formulas that can reduce or eliminate Social Security benefits of federal retirees, teachers and their spouses. We’ll have an updated head count, and progress report, next week.

Mike Causey, senior editor at FederalNewsRadio.com, can be reached at 202/895-5132 or mcausey@federalnewsradio.com.

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