- The Washington Times - Tuesday, September 2, 2003

The spouses of about-to-retire federal workers are told they must be prepared to live with two changes: They will have half the income they are accustomed to living on and twice the mate (husband or wife) they are used to having around.

Add one more item to that list of dubious prospects: The day someone retires from the federal government, health insurance costs go up, even as his or her income drops — usually about 40 percent to 50 percent.

What happens is the moment a CIA agent, an Interior Department lawyer or a postal letter carrier becomes a retiree he or she loses the option to pay health premiums with pretax dollars. The same holds true for people who retire from almost any other private-sector job.

That option, called Premium Conversion, doesn’t sound like much. But not having it means the just-retired individual can expect his tax bill to go up $300 to $500 per year.

That’s why legislation by Rep. Thomas M. Davis III, Virginia Republican, to extend Premium Conversion to retired feds is at or near the top of the must-pass legislative lists of many groups representing both retired and active duty civil servants.

The bill faces a tough battle in the final months of Congress for one reason: cost.

Congressional protectors of the federal purse realize that allowing 2 million retirees to get the tax break would hurt tax revenue. And it would almost certainly prompt a demand for equal treatment from the majority of the nation’s retirees who wouldn’t benefit from it.

President Clinton extended the PC option to federal workers with a stroke of the pen. But allowing retirees — any retirees — to do it would require legislation that amends the federal tax code.

And that won’t be easy unless backers can convince Congress that it is a good deal because it would allow retirees to buy more or better health insurance, thus shift some of the burden of their generally higher health care costs from the taxpayers to private insurance companies.

Otherwise the rules will continue as they are, hitting retirees where it hurts most at a time when they can least afford it.

Federal pay raise

President Bush’s decision to try to limit the January 2004 federal pay raise to 2 percent won’t win him many friends among government workers.

But the move — which Congress will probably overturn anyhow — could help some Washington area Democrats seeking re-election next year. Chief among then is Rep. James P. Moran, Virginia Democrat, who may face a tough campaign next year.

Mr. Moran jumped out in front this year when the president budgeted a 2 percent raise for feds but a 4.1 percent raise for military personnel. He got the House Appropriations Committee to include language that pledges the same 4.1 percent raise for both groups.

Reps. Steny H. Hoyer, Maryland Democrat, and Frank R. Wolf, Virginia Republican, also helped ensure that the language was approved. It will probably be inserted in the Treasury-Postal Service Appropriation bill that is considered veto-proof.

Congress has a 10-year track record of raising the January federal increase above limits set by both President Clinton (who tried seven times to get smaller raises) and now Mr. Bush, who has twice been out-maneuvered by Congress.

The only hope Mr. Bush has to hold the line on the federal pay raise is to link it to national security. He has said — and will repeat — that the nation can’t afford the extra billions of dollars it would take to give civilians the same raises as military personnel. But that’s a long shot.

Congress, especially in an election year, likes to be generous with civil servants who form a huge voter bloc in obvious places, such as the Washington-Baltimore area, and in less obvious places like Cincinnati; Dallas-Fort Worth; Huntsville, Ala.; Ogden, Utah; Georgia; Alabama; South Carolina and Alaska, which have large federal voter blocs.

In a close election, in many congressional districts, a fighting mad group of feds and family members could provide the margin of victory. Which is why congressional Democrats — while condemning the proposed lower pay raise — are secretly smiling.

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

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