THE CASE OF COPPER

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP89-00066R000300010015-5
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 6
• Document Creation Date: December 22, 2016
• Document Release Date: March 7, 2011
• Sequence Number: 15
• Publication Date: November 4, 1983
• Content Type: MISC

Norventbei Approved For Release 2011/03/07: CIA-RDP89-00066R000300010015-5
?? k-UNGRESSIONAL RECORD -- SIN - TE
availability of compensatory finds S 15507
nderw?riting export revenues-ma e, by the export of copper for which there were cacility be conditioned on the submission by
age unneeded production of a commodity nderwritten buy o Industrial customers the iWere In effect. ctfi-
during periods of reduced demand and low nancing facility, the member of a business plan wsponsive to
prices. prevailing cortCe ons in the market for or the
the
The IMF resources committed to the com- I O
982, Codelco, the Chilean - ne example will illustrate the point. in commodity concerned
pensatory financing facility are substantial. owned company and the lco r For example, the IMP
t
If these same resources were available to ducer in the world, increased largest oducti achy eoutd be authorized
compensate for the reduction of uneconom- to more than 15%, or 139 000 time tppeo pro- equivalent pensator permit members to draw
financing the com?
Y nancing facility an amount supply in appropriate cases h quhalent t th ---- -
would benefit foreign e result well above the previo
us peak In 197?9- Thenlevel producing (or ant u
all ornri... exchange earnings of Chile ...--. .
e
-rest and assist rather under the compensatory-fiarran a facility e,f r l cobra such sgr
than impede- he easuents would
toration of market bat- in the amount of 3327,000,n0 to compen_ be formulated on a c
ance. contrast tobthe basis. This
The compensatory financing facility was because of lothe ss low would be in
port a copper. ues primarily which penalize a member w sent rules
sRte it for of originally established in 1963. It Was intend- equal to the value of 221,000 tons of That Is Is curtailed or stocks are withheld f om the
ed to provide balance of market because such - or ance expeditiously to members
Yments adversely af- thea1982 average London Metal Exchange Sometha the f actift is Intentional
3% of Free World production at and not beyond the contact of use member. Of u4m
as done by
fected by temporary export revenue short. (LME) price of 67.1 cents per pound. the IMP in the like e
largely attributable to circumstances If Codelco had more sensitively adjusted 1977 International Ong done by
beyond their control. It has been expanded Its productions - Under the
falls long
and liberalized over the years and now pro- market, or if its e
policy to the n of the ligibility for neIMP credit Porting minimum Sugar Asfocksent, ex-
vides exporters of primary commodities up had depended on a responsive business plan, as below prices are are Te4ah~d to bold a der
to 100%, of quota when export earnings fall. ~~ of statics so long the market According to an IMF study, ng was higher and rsubstantial ice of copper r ould f ha eb een the IMF ufferstoclinear. agreed del' Under
equivalent to to about an 7 F 1979 export , thi earns higher hand been avoided not only for Chile permitted to draw an scarpers are
ings fora sample of 74 countries. The but for all other producers of copper the ex amount osaesponding
amounts available under the compensatory pper as well, port earnings taptataa by constl-
amounts facility and additional to the among e them mi some of the the most needy LDCs. For lutingsuchstocks
amounts of ility a epayme on assistance the copper market nces of periods .copper, tin coon
under the regular credit ayments and other Would confirm that Chile's production extreme- t ion es consn
un erl of the IMF. The funds are other sion wits pran important ice of copper the demand are greats The produc. Intend- The to of the MP. The quickly funds
and with ly low pper in 1982. p aetere recession in
As a result of the extremely low rice of to other eligible A thorough same study of trues.
low conditionality. The IMP staff must be copper, the IMF was called on to bail out ties ding c?mpa-
satisfied only that export earn ings from psi- the other LDC producers of copper as well. Bible rabic use of periods. the ensa cry study ti>aaea;rcthe trrtin pos-
mary commodities have fallen temporarily Zambia, Zaire, Peru, and Papua-New Guinea e to g fa.
Illity as asst ka
and that the circumstances are beyond the (Bougainville) together have - drawn agemen t an instrument sty upns p ropa r tttste man-
control of the exporter. $586,000,000 under the IMF's compensatory would ti and In cases
THE CASE r, CO PPER financing facility, their right to do so being member untr
member countries, tea~est of all
The Perverse consequences C E OF PER the com en. based primarily on the low price of co
satory financing facility under the existing ductl Its node isions ha a contributed own signpper An Initi by the of ifi- rsuch a ight now. f nancin Iby to ~ridof un.
rules have been dramatically demonstrated cantle. udY W ?~ be ~ci~!!' timely
over the last several years In the case of In the case of Chile. Codelco and govern- member countries has g M
copper. Copper of u economic production of Copper by its,
Lbethe off
is a strongly cyclical com- meat officials explained Chile's production shifting to U.S. producers
halif of
modity. Consumption tends to have a func. decision on the ground that Codelco's oper- a disproportionate share of the heirden of
tionalrelation to the durables component of ations as a whole were profitable. They also adjustment to the fall In and Ut. workers
free world gross national product (GNP), stated that Chile had substantial ore re-
Recession in the industrialized countries is serves and that the depressed markets pro= aggregate. demo.
translated directly d reduced demand for sided an opportunity for copper.
trausl and lower prices. reduced Is and on mines an en the world force higher-cost t --cost The debates
and and the r d In thrt amend-
terminal lw pri is. London and New many did, meats offered bills of both the the Sena In the
Yom and exchanges dealer markets throughout the Should this form of particularly n North America.
be. Representatives ets v e that the tone. atory work and In-History teaches rket a small hout the Shout be finorm by eda IMF? In this n. exice as bSedate and House eat to
creates a disproportionate Increase in price stance, it was. the ace has been bby n the e Congress h of -+p . the 3 3$g billion
and. conversesY, modest surplus creates a Stabilization of commodity -
disproportionate decrease in price. been a main objective of various prices Lives lion U.S. share of the propoa>wd =43131 billion
The period since the last quarter of 1981 under the United Nations Conference on increase n fire capital base of Ili a
and continuing to date has, without ques? Trade and Development (UNCTAD). Over
tion, been the most difficult of times for the the last 10 years, more that a dozen interna- ORDER TO P
copper industry since the worst of the De. tional meetings have been held by the iiAl E DR 2713:5 ON
pression years. In 1982, copper sold at UNCTAD copper group to examine various THE CALENDAR
prices, in real terms, not seen since 1933.
Mr. STEVENS.
The averse schemes designed to moderate price fluctu- Mr. g e of copper for the year ations in the case of coppe. To I'ttlieni5, I
ask
was below the costs of production of all but have been no visible results.M anwhileh he tuu ne C onus ft
consent that Cite
a handful of the world's producing mi
_ rleul-
tee
nes
decisions and called for severe adjustments
u's
In the interest of corporate survival. A pri-
vate sector Company can continue to oper-
ate at a loss only so long as it has access to
cash to meet its payroll. In fact, adjust.
merits by private sector producers have been
s
ubstantial. It was a period of cutting costs,
reducing staff, and,, in the case of marginal
a
and shutting nd unprofitable mines, admitting failure
losses
. Also some h major producers curtailed
output to conserve reserves and avoid accu-
mulation of stocks.
In the United States alone, these actions
resulted in 1982 in a 25% reduction of mine
production of
a.ic a b
Experience suggests that effective Insecticide Fun - ~~ ? the
stabilization schemes for the major metals c
e ACt, and that&tribe VJXI R~enti.
calendar. Placed an the
are unlikely to be seen or, if attempted, to
endure for very long. Thus, it appears that - Mr. BYRD. the responsibility for constructive response no objection to Mr. the -first re ue tee I-
to market realities will continue to rest on garding the dischar t Q~t re.
Individual producers acting in their own mittee and there S the s; the
self-interest. is 11o Ob
If the strongest producers of any metal second request. 3edion" the
ignore market realities in times of reduced The PRESIDING OFFI
demand, they-ensure a prolongation of out objection, it is so order With,
market imbalance and continuing loss of
revenues for themselves and all other pro-
ducers. If financing available from the IMP E -`-ieve reld alsnauch? producers from the necessity CTAW_Q ION OF FEDERAL .ySI
d
A L.
~?on
developed co Pulley Of less. a
esta?uizing rather than a stabilizing ins I'OWANCE ACT OP + s
in . ies (LDC) copper producers fluence on the markets. 19713
was to maintain or increase production. Ills- STEVENS. Mr, r? WHAT To Do Under the existing IMP rules, the r?venues The rules of the Compensatory financing message t? a I ask
that, tatit es on Chair lay before. the SentalSr a
of the government-owned. Producers from facility should be reviewed and access from the House to the sn
H.R.2077. R~re-
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S 15508
The Presiding Officer laid before the
Senate the follov(ing message from the
House of Representatives:
Resolved, That the House agree to the
amendment of the Senate to the bill (H.R.
2077) entitled "An Act to amend title 5.
United States Code, to extend the Federal
Physicians Comparability Allowance Act of
1978, and for other purposes", with the fol-
lowing amendment:
In lieu of the matter Inserted by said
Senate amendment, insert: That (a) section
5948(d) of title 5, United States Code, Is
amended-
(1) by striking out "September 30, 1983"
and inserting in lieu thereof "September 30,
1985"; and
(2) by striking out "September 30, 1985"
and inserting in lieu thereof "September 30.
1987".
(b) Section 3 of the Federal Physicians
Comparability Allowance Act of 1978 is
amended by striking out "September 30,
1985" and Inserting in lieu thereof "Septem-
ber 30, 1987".
SEC. 2. (a) The Office of Personnel Man-
agement shall study and. within 12 months
after the date of enactment of this Act,
submit to each House of the Congress a
report on the effect which section 5383(b)
of title 5, United States Code (relating to
the maximum aggregate amount payable to
a member of the Senior Executive Service in
a fiscal year) has had with respect to re-
cruitment, retention, and morale of career
appointees in the Senior Executive Service.
(b) Section 3135(a)(7) of title 5, United
States Code, is amended to read as follows:
"(7) for the preceding fiscal year, by
agency-
"(A) the number of performance awards,
and the number of ranks, conferred, as well
as the respective aggregate amounts paid
for such awards and ranks;
"(B) the percentage of career appointees
in such agency who received any such
award, and the percentage who received any-
such rank; and
"(C) the-name of each individual who re-
ceived any such award or rank, the award or
rank received, and a brief summary of the
reasons why such individual was selected;".
Mr. STEVENS. Mr. President, I
move that the Senate concur in the
House amendment with a further
amendment of the Senate. I send that
amendment to the desk in behalf of
myself and the distinguished junior
Senator from New Mexico (Mr. BINGA-
MAN ).
AMENDMENT NO. 2504
The PRESIDING OFFICER. The
amendment will be stated.
The assistant legislative clerk read
as follows:
The Senator from Alaska (Mr. STEVENS),
for himself and Mr. BINGAMAN, proposes an
amendment numbered 2504.
Mr. STEVENS. I ask unanimous con-
sent that further reading of the
amendment be dispensed with. '
The PRESIDING OFFICER. With-
out objection, it is so ordered.
The amendment is as follows:
In lieu of the matter proposed to be In-
serted by the amendment of the House of
Representatives, on page 1 Insert the follow-
ing:
TITLE I-PHYSICIANS
COMPARABILITY ALLOWANCE
SHORT TITLE
SEC. 101. This title may be cited as the
"Federal Physicians Comparability Allow-
ance Amendments of 1983".
JNGRESSIONAL RECORD -- SENt. i"Es
EXTENSION OF AUTHORITY
SEC. 102. (a) The second sentence of sec-
tion 5948(d) of title 5. United States Code, is
amended to read as follows: No agreement
shall be entered into under this section later
than September 30, 1987, nor shall any
agreement cover a period of service extend-
ing beyond September 30. 1989.".
(b) Section 3 of the Federal Physicians
Comparability Allowance Act of 1978 (5
U.S.C. 5948 note) is amended by striking out
"September 30, 1985" and inserting in lieu
thereof "September 30. 1989". I
PAY OF CERTAIN FEDERAL PHYSICIANS FOR
FISCAL YEAR 1982
SEC. 104. (a) Notwithstanding section
5383(b) of title 5, United States Code, the
aggregate amount paid for fiscal year 1982
under sections 4507, 5302. 5384, and 5948 of
such title to an individual specified under
column I below may exceed the amount of
the annual rate payable for positions at
level I of the Executive Schedule in effect
at the end of such fiscal year by not more
than the amount specified under column 1!
below opposite the name of such individual:
Column I: Column II:
Dr. Larry Silver .........:.................. $1,988.66
Dr. Louis Sokoloff ............ >...._.. $5,988.66
Dr. Ichiji Tasaki .......................... $1,488.66
Dr. Paul D. Parkman .................. $1,455.46
Dr. Allan Forbes .......... .............> $1,680.91
Dr Roscoe Brady ......................... $1,488.66
Dr. Martin Cummings ................ $3,988.66
Dr. Manning Feinleib ........... ..._. $1.,488.66
Dr. D. C. Gajdusek ...................- $1,488.66
Dr. Carl Kupfer ............... >........ - $1,988.66
Dr. Toichiro Kuwabara .............. $1,488.66
Dr. Lester Salans ......................... $1,488.66
Dr. Henry Webster ...................... $1,488.66
(b) Subject to the limitation on the aggre-
gate amounts computed under subsection
(a), the amount of any overpayment paid
for fiscal year 1982 (as determined under
section 5383(b) of title 5, United States
Code) and collected during fiscal years 1982
and 1983 from any individual specified in
subsection (a) shall be pa-id to such Individu-
al.
(c) For the purposes of the Internal Reve-
nue Code of 1954, any amounts paid for
fiscal year 1982 under subsections (a) and
(b) of this Act shall be deemed to have been
paid on the date such amounts would have
been paid but for the limitation set forth in
section 5383(b) of title 5. United States
Code.
TITLE II-FEDERAL EMPLOYEES
RETIREMENT ADJUSTMENT
SHORT TITLE
SEC. 201. This title may be cited as the
"Federal Employees' Retirement Contribu-
tion Temporary Adjustment Act of 1983".
STATEMENT OF POLICY
SEC. 202. It is the policy of the Govern-
ment-
(1) that the amount required to be con-
tributed by employees and officers of the
Government who are also required to pay
employment taxes relating to benefits under
title II of the Social Security Act for service
performed after December 31, 1983. be
modified until the date on which such em-
ployees and officers are covered by it new
Government retirement system (the design.
structure, and provisions of which have not
been determined on the date of enactment
of this Act) or January 1, 1986. whichever is
earlier;
(2) that the Treasury be required to pay
into such retirement systems the remainder
of the amount such employees and officers
would have contributed during such period
but for the temporary modification:
(3) that the employing agencies make con-
tributions to the retirement systems with
November 4, 1983
respect to such service in amounts required
by law in effect before January 1. 1984.
without reduction In such amounts;
(4) that such employees and officers
accrue credit for service for the purposes of
the public retirement systems in effect on
the date of enactment of this Act until a
new Government retirement system cover-
ing such employees and officers is estab-
lished;
(5) that any annuity payable under any
present public retirement system based in
any part on service which Is performed after
December 31, 1983, and before January 1.
1986, and for which employment taxes relat-
ing to benefits under title II of the Social
Security Act are paid be offset by the
amount of any benefits payable under such
title with respect to such service;
(6) that such employees and officers who
are first employed In civilian service by the
Government or first take office in civilian
service in the Government on or after Janu-
ary 1, 1984, be transferred to such new Gov-
ernment retirement system as may be estab-
lished for employees and officers of the
Government on or after January 1, 1984.
and before January 1.1986; and
(7) that credit for service performed after
December 31; 1983, by such employees and
officers be transferred to such new Govern-
ment retirement system.
DEFINITIONS
SEC. 203. (a) For the purposes of this
title-
(1) the term "covered employee" means
any individual whose service is covered serv-
ice;
(2) the term "covered retirement system"
(A) the Civil Service Retirement and Dis-
ability System under subchapter III of
chapter 83 of title 5, United States Code;
(B) the Foreign Service Retirement and
Disability System under chapter 8 of the
Foreign Service Act of 1980 (22 U.S.C. 4041
et seq.);
(C) the Central Intelligence Agency Re-
tirement and Disability System under the
Central Intelligence Agency Retirement Act
of 1964 for Certain Employees (50 U.S.C.
403 note); and
(D) any other retirement system (other
than a new Government retirement system)
under which a covered employee who is a
participant in the system Is required to
make contributions to the system in an
amount equal to a portion of the partici-
pant's basic pay for covered service, as de-
termined by the President;
(3) the term "covered service" means serv-
ice which is employment for the purposes of
title II of the Social Security Act and chap-
ter 21 of the Internal Revenue Code of 1954
by reason of the amendments made by sec-
tion 101 of the Social Security Amendments
of 1983 (97 Stat. 67); and
(4) the term "new Government retirement
system" means any retirement system
which (A) is established for officers or em-
ployees of the Government by or pursuant
to a law enacted after December 31, 1983,
and before January 1. 1986. and (B) takes
effect on or before January 1. 1986.
(b) The President shall publish the deter-
minations made for the purpose of subsec-
tion (a)(2)(D) in an Executive order.
CONTRIBUTION ADJUSTMENTS
SEC. 204. (a) An employing agency shall
deduct and withhold only 1.3 percent of the
basic pay of a covered employee under-
(1) section 8334 of title 5. United States
Code;
(2) section 805 of the Foreign Service Act
of 1980 (22 U.S.C. 4045);
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(3) section 21i or the central intelligence tion (a), (b), , this- S15509
Agency Retirement Act of 1964 for Ce (c), (d). (e) (g), or (n) of
n service section and is based, in an
Employees (56 U.S.C. n I Part C of the central 403 note); or to which section 304 (a) .,encyy Retirement Act of 1964 fore Ci
(4) any Certain
Provision of any other covered re- ployees' Retirement Contribution Tempo.
of the rFederal Em- Employees (50 U.S.C. 403 note) is amended
tirement system which requires a partici. rary Adjustment Act of 1983 applies shall be new adding tithe end thereof the following
pin the system to make contributions of reduced by the pant
pthe the basic make a the contributions
ant, any Y Portion of the amount of new subsecton:
for portion tio covered o the
which o performed after of the benefits al which Is payable
b1 Sec. 22s. o The dun under this any part rt and is
December service
Act to such title 11
and before January 1, f the a and is attributable to such service- retired which is any part, on under a i which S c
1986.
Dece Deductions shall be made and with- " employe
sec-
suhh lion based. 'in an part the Federal Feederal service to Employee yees- ' Be-
For the attribu a pa to
nt n use-
provided by such provisions in the this subsection, the portion of the amount merit Act t Contribution
Temporary of covered service which is performed of the benefits which Is payable under title
the Anon -
held or s after January 1, 1986, ais not sub- II of the Social Security Act to as individual went Aof 1983 applies shall be reduced by
o
Ject to n a a new y Government 1. 19 6, and n retirement 11 and it the Social Security service t to which sec- portion ab the der title f antbenefits
system. which is payable under tidII an the Socha
Social
(b) Employing agencies of the Govern- tion 204 (a) of Contribution a Temporary Employees' Security Act to such individual and is an an-
(bshall p make agencies of
with respect ven went Act of r1983 ibu applee shall be AdjustRe- - nutty o such service. Is the
, the -
merit sh o which subsection n sal) with this sec- mined Ac- nutty compered under section shall ca service of
to re-
tion applies under the second sentence of "(A) computing the amount of such bens duction under this subsection shall be cacu-
section
section 8334(a)(1) of title 5, United States fits, including credit for such service; "Iced (b) For before the any purpose reducofttolr under
Code, the second sentence of section 805(a) "(B) computing the amount of such bete- 222(8)[4).
subsection (a) the
of the FService Act of 1980 (22 U.S.C. fits, if any, without Including credit for such ,
of the Foreign ig second sentence of of section service; and up payable the amount of the the benefits
which under title
11 Secu-the o211(a) of the Central Intelligence Agency "(C) subtracting the amount computed ~t~~IW an individual
Retirement Act of 1964 for Certain Employ- under clause (B) of this paragraph from the
tiptop section s 4(*) of alb e
ees (50 U.S.C. 403 note), and aprovision amount computed under clause (A) of this to service to tiptop 204(x) of the
any ocovered retirement 403 note). and any n system re- amount computed Temporary Adjustme Retirement 1983iap.
of any other
contribution by the employing ng "(2) Section 8341 of title 5, United States bon Temporary ern ned by Act of 1983 ap
agency, as If subsection (a) of this section Code, is amended by adding at the end plies crud be cuit for ch s rv ce; banel the of
had not been enacted. (i) computing
thereof the following new subsection: its inompu ng the a such t of su
AMORTIZATION OF CONTRIBUTION DEFICIENCY "(h) The annuity of any Individual which "t2) computing t Including amount of credit suer for such
bene-
Sec. 205 fits. if any, without
. (a) For the purposes of this sec- Is provided by and computed under this sea
lion, the term '*contribution purposes of Lion ands based, in any part, on 'service to service, and
when used term
respect to a covered retire. which section 204(a) of the Federal Employ- "(3) subtracting the amount
whe used with th means- ees' Retirement Contribution Temporary under clause (2) from the amount computed
(ri d
the m, m of the total amount which, Adjustment Act of 1983 applies shall be re- under clause (1),~-
dutteo section
Dut [t excess sof(a), would have been c duced by the portion of the amount of any (d)(1) Wotwithstanding any other
and withheld under a provisien de. benefits which is payable under title II of slon of law, for the purposes of any covered
furred to in section 20nde from the bare, the Social Security Act to such individual retirement system to which an amendment
pay of co fined employees 204 who are t and is attributable to such service, comput_ made by subsection (a), (b), or (c) aces not
such retirement system for horvice to which ed as provided in section 8339(0)(2) of this apply, the annuity of any Individual which
section eve(s) applies, over title.". _IS computed under such system and Is based,
(2) n 2 4(a) amoun deducted and with. (bxl) Section 806 of the Foreign Service In any part, on service to which section 204
held from the basic pof covered employ. Act of 1980 (22 U.S.C. 4046) is amended by (a) applies shall be reduced by the the ees for such service pay as in provided covered motion adding at the end thereof the following new of the amount of any benefits which Ids pay
ees(fo subsection able under title II of the Social Security Act
(b) At the end of each of fiscal years 1984, (m)(1) The annuity of any Individual to such Individual and Is attributable to
1985, and 1986, the head of each agency 84. which Is computed under this section and is such service- In the case of an annuity of a
ministering a covered retirement system- ad- based, In any part, on Service to which sec- participant or former participant, of a sur-
ministering a cover a the amount of tcon- tion 204(a) of the Federal Employees' Re- viving spouse or child of a
tr shall deficiency the amount of the h such tirement Contribution Temporary Adjust- former participant eor dete tsca year In the case the
durin retire- ment Act of 1983 applies shalbe reduced by designated by a participant yof fother ormer par
meet system; and the portion of the amount of any benefits ticipant to receive an annuity under the cov-
(2) shall notify the Secretary of the Tress. which is payable under title I1 of the Social ered retirement system (other than a
cry of the amount of such contribution deft- Security Act to such individual and is attrib- former spouse) the reduction under this
cieney. utable to such service. The reduction under subsection shall be calculated before any re-
(c) An amount equal to the amount of the this subsection shall be calculated before duction in such annuli
contribution deficiency Incurred with re- any reduction under section 814(a)(5). such system for the purpo a of Parks` can
spect to a covered retirement system in any "(2) For the purpose of paragraph (I), the annuity under such system to any tamer
fiscal Year shall be credited to the fund es- portion of the amount of the benefits which spouse of the participant _
tablshed for the payment of benefits under Is payable under title II of the Social Secu- pant based on the service of such g artici
such covered retirement system in thirty rity Act to an Individual and is attributable pant or former participant, partid-
equal annual installments beginning at the to er?vice to which section 204(a) of the (2) For the purpose of X the
end of such fiscal year, as provided In sub- Federal Employees' Retirement Contribu- portion of the amount of the ben fitsl which
section (d). tion Temporary Adjustment Act of 1983 ap- is payable under title II of the Social secu-
(d) Before closing the accounts for each of plies shah' be determined by- city Act to an individual and Is attributable
fiscal years 1984 through 2015, the Sucre- (A) computing the amount of such bene- to service to which section 204(x) applies
fi
Lary of the Treasury shall credit to each ts including credit for such servi; be fund to which subsection (c) applies, as a (B) computing the amount of such bene- s (Al d) c ccsnpu(cng td byamount contribution, out of any money fits, if any, without Including credit for such ( Including credit the for such amount service, ce bene-'
In the Treasury not otherwise appropriated, service; and fi(s Inciof such an amount equal to the total of the (C) subtracting the amount computed ts. Bj computing
any, without including credit for such
contribution deficiencies annu Installments
by subset- ed under clause (A).?', servand
lion ib ti n credited to such fund b s such (2) Section 814 of such Act Is amended by ode clause (B) the the amount computed
(c) be In fiscal year. adding at the end thereof the following new under clause (B) from Lh amount cn
(e) Amounts credited to a fund pursuant subsection: ed under clause (A). nlput-
to subsection (c) shall be accounted for sup- "(e) The annuity of a former spouse TRANSFER or CREDIT TO NEW aE?rtREMEW
sestets from amounts credited to such fund which Is computed under this section and is SYSTEM
pursuant to any other crorst d to law. based, In any part, on service to which sec-
OFFSET a SOCIAL. SECURITY BENEFITS f law. tion 204(a) of the Federal Employees' Re- first becc20 oome employ d i red j ill anal er~v~ by
OT Urement Contribution Temporary Adjust- the or SEC. 206. (a)(1) Section 8339 of title 5, merit Act of 1983 pples shall be reduced by Ian service inethe Governmentfon or after
United e
portion
the am at the endather off the t 1 owing new subs c~ hi h Is payable underotitle II of the Social new Government
lion: of y benefits January 1, 1984? shall be transferred to such
?(0)(1) Any annuity of a retired employee a trib utablet oo susuch ch service, scoomputea:nd Is d as bib Inlt the ease ofare system as may
or Member which is computed under subset- provided in section 806(m)(2).'?.
nye covered employee hed.
who is subject to a covered retirement
I
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S 15510 CC GRESSIONAL RECORD - SENATL November 4, 1983
system on or after January 1, 1984. and (B) the amount which was deducted and interim solution, they will have to pay
thereafter becomes subject to a new Gov- withheld from such basic pay for such cov- the full amount back into the retire-
ernment retirement system- ered service pursuant to section 204 la)
d
an
(1) credit for the service of such employee was not refunded to such covered employee. merit fund.
to which section 204(a) applies shall be a,r,- cmc'trc.,.,- It. is n,v infnntinn i.nn.e.- ?.. t..tr..
system for the purposes of the new Govern- it. One, it reauthorizes the Federal tablishing a new retirement program
merit retirement system; and physicians comparability allowance for these new hires In early 1985. It Is
(2) such service shall be considered not to program for 4 more years. This provi- hope to see a plan established by late
be credit
a
bl
e serv
i
ce for the purposes of lion
l
d
a
rea
y passed the Senate. The 1985. 1 want to make it absolutely
such covered retirement system, House language currently authorizes clear that the provisions of this inter-
effective on the date on which such employ- the program for 2 years. The second Im solution will In no way prejudge
ee becomes subject to such new Govern- en~ttnn ..i11 0~.. - 1:_~ __ ,_.__._
DEPOSIT REQUIREMENTS ment solution for the new Federal the final plan. We are currently in-
hires who will be required to pay both volved in a very extensive study of pri-
Sec. 208. (a)(1)(A) Notwithstanding any the social security and civil service re- vate and public retirement programs Provisi of any roveron of law, the ove employed tirement contributions beginning in utilizing the services of all of the con-red by the Government on December 31, 1983, January 1984. As many Members gressional support agencies plus a
and retires (other than by reason of a di.,;- recall during the social security debate number of private sector firms. Once
ability) entitled to an annuity under a cov- earlier this year, Federal employees that study is completed, it is my inten-
ered retirement system after such date and hired after January 1984, will be re- Lion to draft legislation that would es-
before the earlier of the date on which a quired to pay the social security tax. tablish a new retirement program.
new Government retirement system takes This situation leaves these Individuals
effect or January 1. 1986, shall be consid- in an unenviable position of being re- However. I again want to state that we
ered in computing the amount of such an- do not yet have any particular idea as
Dully only if such covered employee makes quired to pay both social security and
a deposit for such covered service as pro- civil service retirement which will to what this retirement program will
vided in subparagraph (B)._ amount to approximately 14 percent look like.
(B) For the purposes of subparagraph (A), of payroll. I think that most people I ask unanimous consent to -have
a covered employee to whom such subpara- would agree that this is an exorbitant printed in the RECORD a sectional anal-
graph applies shall make a deposit (for the amount of money to pay for a retire- Ysis of this amendment as well as a
covered service to which such subparagraph ment plan. CBO estimate of the cost of this legis-
applies) to the credit of the applicable cov- The General Accounting Office stud- lation. I want a point out that the only
ered retirement system in an amount equal
to the excess of the amount required by law led this problem and reported to our cost of the legislation Is the loss of rev-
(without regard to section 204(a)) over the committee 2 months ago describing enues to the Government In that these
amount which was deducted and withheld the serious problems the Federal Gov- new employees will not be contribut-
from the basic pay of such covered employ- ernment would face in recruitment of ing the full retirement contribution
ee for such service pursuant to section Federal employees under this dual during this period.
204(a) and was not refunded to such covered contribution arrangement. GAO high-
employee, There being no objection, the mate-
(2) agencies such as the Na-
(2) Paragraph (1) does not require a de- lighted Institutes a few e Hss h, NASA, and rial ordered to be printed in the
posit to the credit of a covered retirement RECORD, as follows:
system for the purpose of considering cov- other agencies requiring technical ex- CONGRESSIONAL BUDGET OFFICE.
ered service in computing the amount of a pertise and the difficulties that these U.S. CONGRESS,
survivor annuity under such system in the agencies would find in recruiting the 1Vashington, D.C., November 4, 1983.
case of a covered employee who dies during needed personnel. GAO also pointed To: Jamie Cowen.
a period of continuous service in the em- out that most agencies would find it From: Sherri Kaplan.
ployment of the Government beginning on very difficult to recruit clerical person- Subject: Temporary Reduction In CSR Con-
or before December 31, 1983, tributions for Newly Hired Federal Em-
(b)(1) If a new Government retirement net who cannot afford the extra de-
system is not established, the covered serv- ductions from their paycheck. GAO ployees-Pretifninary Estimate.
ice of a covered employee shall be consid- recommended four options to resolve As you requested, the following table
ered, notwithstanding any other provision this situation. This amendment incor- shows the net effect on the deficit of reduc-
of law, in determining entitlement to and porates a variation on one of those ing contributions to CSR from newly hired
computing the amount of an annuity under federal employees, from 7 percent of pay to
recommendations.
a covered retirement system based on the The amendment temporarily reduces 1.3 percent pay. The estimate, consistent
service of such covered employee only as with your telephone request, assumes newly
provided in paragraph (3), the new hires contributions to the civil hired employees who terminate their feder-
(2) If a new Government retirement service retirement program to give us al employment over the three-year period
system is inapplicable to a covered employee time to design and establish a new re- would not be allowed to receive a refund of
who is employed by the Government on De- tirement program for these Individ- their contributions. Further, the provisions
cember 31, 1983, and retires (other than by uals. The general Idea is to reduce the are expected to expire January 198&
reason of a disability) subject to a covered
ne
hi
'
w
res
contribution to the civil
retirement system after the date on which service
such new government retirement system program to 1.3 percent salary.
takes effect the covered service of such cov- Since these individuals will be paying
ered employee shall be considered, notwith- the full social security contribution,
standing any other provision of law, in de- which will amount to 6.7 percent' of
termining entitlement to and computing the salary next year, the additional 1.3
amount of an annuity under a covered re- percent toward civil service retirement
tirement system only as provided in para- will make them generally comparable
graph (3). with current employees who are re-
(3) The covered service of a covered eon-
[By Ysa1r, in , of eoEssl
1914
1955
1986
Revenues .-......_.........._.._..._..._....__._....._._
_Th
23111
-115
00ay~ - -
-1s
-15
561 elect on nee defidt............ _._........
+10
+215
+100
* less trim $5,0(0.000.
ployee to whom paragraph (1) or (2) applies quired to pay the full civil service con-
shall be considered for the purposes of such tribution plus the medicare tax which The intrabudgetary transactions. &I -
paragraph only if such covered employee is 1.3 percent of salary. This reduction though affected by this temporary measure,
deposits to the credit of the applicable cov- in contributions will last only until would not have any net Impact on the defi-
ered retirement system an amount equal to January 1986, or the establishment of cit and, as you requested are not included In
the excess of- a new program, whichever is earlier. If this estimate. H. should be noted that the
(A) the total amount which would have no new plan is established before Jan- numbers are subject to
been deducted and withheld from the basic change depending
pay of such covered employee for such cov- nary 1986, these new hires will be re- on specific bill language.
ered service tinder such covered retirement quired to pay the full civil service re-
system but for the application of section 204 tirement contribution, and to receive
(a), over credit for their prior years tinder this
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_
_ _'~~.~..r JLL\
As always, I am available to answer
al d
S 15511
uring MIS Interim period if they make the
questions you might have. full deposit under the program as lyeesthis ho willb c new Federal
by law. The two exceptions are for nuiand enti,,lo, who WIII be Covered under
SECTIONAL ANALYSIS OF TNS FEDERAL EM- ployee who becomes entitled to a disability social security beginnin in January
PLOYEES' R67IREMEHT CoNTRlatrrloH TEM- benefit or who dies during service and 1984, would be temporarig ly relieved of
PORARY ADJUSTMENT ACT or 1983 whose survivor becomes entitled to a bene- contributing the full amount to the
Section 1 states that the Act may be cited fit. In these cases, a redeposit is not neces- Federal retirement system. They
as the "Federal Employees' Retirement sary. would contribute the full amount to
Contribution Temporary Adjustment Act of It also provides that If a new retirement social security and 1.3 percent to the
1983", program is not enacted by January 1, 1986,
Federal
Section 2 Is a statement of the policy of those employees hired during the interim sion wo ldtteminaeyat th This enactment
this legislation. It generally provides that period will be required to redeposit full con- of a would termnate la the anuary 1,
.
employees of the federal government who tributions to the respective retirement of a new retirement plan or January 1
for the first time will be covered under the funds to gain credit under the current re- 1986, whichever comes first.
Social Security Act beginning In January of tirement programs for the interim period. The Government would continue to
1984 will temporarily be relieved of the full Mr. DOMENICI. Mr. President, I make contributions to the Federal re-
contribution amount to the various federal support the amendment offered by tirement fund to keep It solvent. Once
retirement systems. Instead, they will con- the senior Senator from Alaska. Sena- a new plan was established for employ-
tribute. In addition to the social security for SaEvsxs. The amendment provides ees hired after January 1984, such em-
amount, L3 percent to the retirement an equitable solution to the l
system covering them. This provision will problem p ogees would be transferred to the
terminate at the earlier of enactment of a of new Federal employees who, under new program. No one would receive
new retirement plan or January 1, 1986. current law, must make full contribu- anyi unearned, windfall benefits. Any
It also provides that the government will tions ,to both social security and civil benefits received by new retirees
assure continuing contributions be made service retirement. during the interim
into the retirement funds to keep the funds As my colleagues know, the biparti- period wben be
solvent, . It also states that once a new plan offset by any social security benefits
s est it also
catering once ne hire pn ran social security reform compromise received for the same period.
1984.
after January of covering such ployees oyees wed mandated social security coverage for There are several elements in this
be transferred to the new program. Finally, all new Federal employees. It did not. Proposal that this Senator commends.
any benefits received during the Interim however. relieve these employees of First, it relieves new Federal employ-
period will be offset by any social security the responsibility of contributing to ees of the burden of contributing In
benefits received. civil service retirement. Many' Mem- full, to both retirement systema. This
Section 3 is a list of definitions. The two bers of the Senate, Including myself, also helps the Federal Government re-
Important definitions are "covered retire- feel this is unjust. cruit and
ment system" and "covered service". retain high egliber etlnploy-
Covered retirement system means the Beginning January 1, 1984, new Fed- e~-
Civil Service Retirement Program, the For- era) employees will be required to pay Second, it assures current and future
eign Service Retirement Program, the Cen- 6.7 percent of salary for social security retirees that the current civil service
tral intelligence Agency Retirement Pro- and medicare and 7 percent for civil retirement trust fund will remain
gram, and any other federal retirement pro- service retirement. This situation is whole, despite the reduction in the
gram which includes employees who will for clearly unfair,, New Federal employees contribution irate for new employees.
the first time be required to make social se- should not be asked to 13.7 In
curity payments beginning in January of cent of sal
ary pay what rev perv- Third, it provlires ent contrabut ut the
1984 and who also are currently required to -about double what amoturt of re tir ement contriions
make contributions to a retirement pro- eryone else pays-for retirement pro- made by current employees and new
gram. testier. Further, such dual contribu- employees.
Covered service means service which be. tions would seriously impede the abili- Mr. President, the distinguished
ginning in January of 1984 Is considered em- ty of the Federal Government to corn- Senator from Alaska has developed a
ployment for the purposes of the Social Se- Pete with other employers for talented compromise package that improves a
curity Act. and capable people. This has been well very unfair situation. The compromise
Section 4 calls for reducing employees' re- documented by a General Accounting Is acceptable to Federal workers and
quired contributions to their retirement Office study.
programs to 1.3% of basic pay. it also re- retiree groups and to
the administra-
quires that agencies continue to contribute When the Senate debated the social lion.
the full employee contribution to the retire- security reform package, Senator LONG I urge my colleagues to support this
ment programs as they do under current offered an amendment to correct this amendment.
law, defect in the legislation. This amend- Mr. BINGAMAN, Mr.
President 5 provides that the Treasury will went provided that new Federal em- fully support the amendment o e;ed
directly appropriate to the retirement funds ployees would not be required to join by the Senator from Alaska (Mr. STa-
the remainder of the employee's contribu- the social security system until a sup- vENs). I commend the Senator for his
tion which the employees are not paying. plemental pension plan was put into efforts in addressing a most serious
Those amounts will be amortized over a 30- place. Governmental employees would
year period.
Section 6 provides that thus have pension benefits comparable h faces
at this time. The amendment
ceived under the retirement programs to workers in the private sector; they provides for temporary retirement cov-
during this Interim period such as survivor would have a company retirement eraEie for those Federal employees
and disability benefits will be offset dollar- plan In addition to social security hired after January 1, 1984. Newly
for-dollar by any social security benefits re- benefits. hire ceived for the same purpose attributable to. The Senate accepted this amend- after Federal 1, 1984, will be tempo-
the interim period. ment. Unfortunate) the House of rarily covered by both social security
Section 7 provides that any federal em- Representatives did not acce 14 ployee hired after January of 1984 and who It was dropped from the bill d during system. This will result from the pas-
becomes shall be transferred to the new gov- conference. I think this was a mistake. sage of the Social Security Amend-
ernment retirement system when that If we want to correct this mistake, we ments of 1983 (Public Law 98-27)
system is established. All credit accrued must do something immediately. In 8 which provided social security cover-
under the current retirement programs weeks, this law takes effect unless we age for all newly hired Federal em-
shall be transferred to the new program and act. In only 2 weeks we are scheduled ployees, including former employees
such credit shall be terminated for benefit to adjourn sine die. This gives us only who are rehired after a break in serv.
ppuarrposes under the current retirement pro- 9 working days.
Section 8 provides that those employees
Congress and the President need to ~Thei Stevens year or mamendment provides
who are currently employed in the federal correct this inequity now. Senator STE- that employees of the Federal Govern-
government but who also will be covered vENs' amendment represents a com- meat who for the first time will be
under the social security program shall only promise that Is fair to present and covered under social security, begin-
be entitled to a benefit based upon service future Federal employees.
ring on January 1, 1984 will be tempo-
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S 15512 CONGRESSIONAL RECORD - SENATE
rarily relieved of the full contribution
amount to the various Federal retire-
ment systems. Such employees would
be required, under the amendment, to
contribute 1.3 percent of salary to the
retirement system, in addition to con-
tributing to social security. This provi-
sion, under the amendment, would ter-
minate at the earlier of enactment of a
new supplemental civil service retire-
ment system or on January 1, 1986.
These employees would be fully cov-
ered under the retirement system for
this temporary period.
The amendment also provides that
the Government will assure continu-
ing contributions be made into the re-
tirement trust.funds to keep the funds
solvent. The amendment also provides
that once a permanent plan is estab-
lished covering new employees hired
after January 1, 1984, such employees
will automatically be covered under
such plan and receive credit for their
prior service under such plan. Another
provision of the amendment would re-
quire that any retirement benefits re-
ceived during the interim period will
be offset by. any social security bene-
fits received.
An analysis of the effect of requiring
new Federal employees to be tempo-
rarily covered by both social security
and civil service retirement was com-
pleted by the General Accounting
Office on August 31, 1983. According
to GAO:
(T)he extra contributions to be required
of new employees would place the Govern-
ment at a competitive disadvantage because
of the substantial reduction In take-home
pay thus adversely affecting recruitment
and retention efforts.
As a result, GAO recommends reso-
lution of this problem prior to Janu-
ary 1, 1984, in order to relieve new em-
ployees.of the unnecessary burden of
contributing to both systems. -
These sentiments were echoed
during the September 14. 1983 hearing
held by the Subcommittee on Civil
Service, Post Office and General Serv-
ices by the witnesses, which included
representatives of the Office of Per-
sonnel Management, and various Fed-
eral employee organizations. Without
objection, I ask unanimous consent
that the testimony of the fund for as-
suring an Independent retirement
(FAIR) on this subject be printed in
the RECORD following my remarks.
The PRESIDING OFFICER.- With-
out objection it is so ordered.
(See Exhibit 1.]
Mr. BINGAMAN. Through the deli-
gent work of Senator STEVENS and his
staff, a solution to this dual coverage
problem, which is embodied in the
Senator's amendment has been
reached and is supported by all parties
Involved. I believe this is an equitable
solution to this very complex problem,
created by the Social Security Amend-
ments of 1983. Newly hired employees
will be relieved of the burden of
having to pay into both systems. Such
new employees will receive retirement
survivor and disability protection as
members of the retirement system.
Further, the civil service and other
Federal retirement systems which pro-
vide primary retirement protection to
an estimated 2.7 million civil servants
and millions more of their family
members will be maintained financial-
ly.
I support this amendment and I urge
Its adoption.
EXHIBIT 1
TESTIMONY OF FUND FOR ASSURING AN
INDEPENDENT RETIREMENT (FAIR)
Mr. Chairman. On behalf of the President
and Chairman of the Board, Vincent Som-
brotto, we appear here today as representa-
tives of FAIR-Fund for Assuring an Inde-
pendent Retirement. Recently, the 26
member organizations voted unanimously to
continue FAIR as a voluntary coalition of
unions and employee organizations con-
cerned with legislative issues affecting all
active and retired federal and postal em-
ployees. At its June 7. 1983 Board of Direc-
tors meeting, new officers were elected: Vin-
cent Sombrotto, Chairman of the Board and
President; Kimberly C. Parker, Secretary;
and Jerry Klepner, Treasurer. My name is
Jerry Klepner. With me this morning are
Kimberly C. Parker, Secretary of FAIR, and
George Gould, Chairman of FAIR's Legisla-
tive Committee.
We are here today at your invitation to
discuss FAIR's position on the situation
facing new federal and postal employees
hired on or after January 1, 1984. Under the
present law, they will be required to pay 7%
Into Civil Service Retirement and an addi-
tional 7% Into Social Security.
As usual. Mr. Chairman, it is a pleasure to
appear before you and your Subcommittee.
We appreciate the interest you have always
shown and continue to show in the welfare
of all government employees and retirees.
We realize the Chairman's time constraint,
therefore, our statement is as short as possi-
ble. With your permission, if necessary, we
request the opportunity to submit addition-
al testimony for the record.
Mr. Chairman, as a coalition representing
federal and postal employees, we anticipat-
ed problems that could arise if Social Secu-
rity coverage was extended to new govern-
ment employees. During the debate on the
Social Security bill this year, on many occa-
sions we took the opportunity to express
our concerns that there would be a dichot-
omy between new and present employees.
That situation becomes a reality on January
1, 1984.
If a solution can be developed to resolve
this dichotomy, we as a coalition of 26 feder-
al and postal unions and employee organiza-
tions believe that any such solution must
meet certain tests to be viable, workable and
acceptable.
And, if a solution is indeed going to be en-
acted into law, it is essential it is agreed to
by all Interested parties.
Mr. Chairman, there are few, If any, Mem-
bers of Congress more knowedgeable In the
legislative process than you. In dealing with
Issues as sensitive as this one, it necessitates
a consensus. To reach that consensus it Is
necessary to thoroughly communicate
among the involved parties. That is why we
appreciate these hearings which give us the
opportunity today to work with you and
your staff on this issue.
Given that opportunity, we would like to
discuss briefly some tests that must be met
If a solution is to be achieved. These tests
are consistent with FAIR's position since Its
inception; any variation from this runs con-
trary to that historical perspective.
November 4, 1.983
First, contributory funding for the Frdrr-
al retirement trust funds must continue. It
Is essential that there be no Interruption
and no reduction in those contribution
levels. Continuing contributions insure that
all options remain available, and insure the
financial solvency and integrity of the Fed-
eral retirement trust funds.
Second, there must be equity between new
employees and present employees. Inegai-
ties in contribution levels could result In
personnel problems. declining morale, and
drops in productivity. To have two employ-
ees at the same pay level, doing the same
job and yet one contributing 7% toward
Civil Service Retirement, and the other con-
tributing 7% to Civil Service Retirement
and 7% to Social Security, is inherently In-
equitable.
For the government to work effectively. It
must be able to attract and retain qualified -
employees. As employee and retiree organi-
zations, we are concerned with the welfare
of current employees and retirees whom we
represent.
As organizations dealing with the business
of government, we are also concerned that
post-1983 hires be treated fairly. And,. that
there be no fragmentation of the federal
workforce.
Mr. Chairman, we welcome the opportuni-
ty to work with you and your staff to devel-
op a solution to the dichotomy between new
and current federal and postal employees.
I will be more than happy to answer any
questions you may have.
The PRESIDING OFFICER. Is
there further discussion on the
amendment?
If not, the question Is on agreeing to
the amendment.
The amendment (No. 2504) was
agreed to.
Mr. STEVENS. I move to reconsider
the vote.
Mr. BYRD. I move to lay that
motion on the table.
The motion to lay on the table was
agreed to.
THE EXECUTIVE CALENDAR
Mr. STEVENS. Mr. President, may I
inquire of my good friend whether be
would be able to concur In a motion I
would like to make to ask unanimous
consent that the Senate go into execu-
tive session In order to consider nomi-
nations on pages 2 and 3. of the Ex-
ecutive Calendar and those on the Set,-
retary's desk, page 4.
Mr. BYRD. There Is no objection on
this side of proceeding with the nomi-
nations on page 2, page 3, and page 4
as requested by the distinguished ma-
jority leader.
EXECUTIVE SESSION
Mr. STEVENS. Mr. President, I ask
unanimous consent that the Senate
proceed into executive session to con-
sider the nominations on pages 2 and
3, and those placed on the Secretary's
desk, on page 4.
There being no objection, the Senate
proceeded to the consideration of ex-
ecutive business.
The PRESIDING OFFICER. The
nominations will be stated.
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