THE COMING CRISIS IN FEDERAL RETIREMENT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86B00338R000400620041-7
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 4
• Document Creation Date: December 21, 2016
• Document Release Date: September 16, 2008
• Sequence Number: 41
• Publication Date: March 10, 1983
• Content Type: OPEN SOURCE

Approved For Release 2008/09/16: CIA-RDP86B00338R000400620041-7
E 942 CONGRESSIONAL RECORD - Extensions
Street Journal on the technical prob-
lems created by interest and dividend
withholding. It is clear from this arti-
cle that Implementing withholding
will be very expensive.
It should not be surprising to Mem-
bers that last week the Treasury acted
to exempt itself from the burden of
withholding on the bulk of its securi-
ties for an additional 6 months. Even
though the Treasury exempted itself
for 6 months businesses will have to
start withholding on dividends on July
1, and banks will have to start with-
holding on certificates of deposit on
July 1. Banks will also have to have
computer programs in place July 1, in
order to do the calculations that will
be required to withhold on savings ac-
counts and other types of accounts
that will still be required at the end of
the year.
The article follows:
[From the Wall Street Journal, Mar. 9,
19831
BANKS GRAPPLE WITH SOFTWARE IN
WITHHOLDING
(By Virginia Inman)
When the government decided to with-
hold tax money from interest income, It cre-
ated a computer nightmare for banks.
Beginning July 1, banks must keep 10% of
the interest they pay customers and send
the money to the Internal Revenue Service.
For people in bank computer departments
and in software and data-processing compa-
nies serving financial institutions, the dead-
line is uncomfortably close.
"We're already working day and night
against that July 1 deadline," says Chris
Jensen, president of Jack Henry & Asso-
ciates, a Monett, Mo., software company
with 180 banks as customers. Taking advan-
tage of the low demand for computer time
at night, the company's development direc?
tor has been working a 12-hour shift, from 1
p.m. to 1 a.m., to get the system ready.
The IRS Issued preliminary withholding
regulations in September, but a spokesman
says final rules won't be ready for a couple
of weeks. Banks still have unanswered ques-
tions, especially about how to handle cer-
tain kinds of trusts. Regulations have al-
ready changed somewhat, and banks fear
further alterations.
SOME HAVE MOVED SLOWLY
Even without changes, the job requires
computer departments to do in nine months
what some say ideally should take two
years. Some banks have moved slowly,
hoping Congress would repeal the act,
which became law last August. The law af-
fects all interest-bearing instruments-sav-
ings and NOW accounts, certificates of de-
posit, and bonds. Dividends also are liable to
withholding. Usually banks use different
software packages, often written at differ-
ent times by different people, to handle dif-
ferent instruments. To comply with the new
law, computer programmers must modify
numerous software systems.
"It's just one huge, huge job, and it's
going to require all my resources from now
to June," says John Brewington, corporate
executive officer for operations at Virginia
National Bankshares Inc., Norfolk. The pro-
ject uses the equivalent of 15 to 20 full-time
employees, but all 200 programmers and sys-
tems analysts have contributed at least
some time. Mr. Brewingtoh estimates that
altering the bank's' software will cost about
$2 million, "not a little bit of change for this
institution," which has assets of $3.9 billion.
POSTPONING OTHER PROJECTS
Putting time and money into designing
withholding systems means postponing
work on other projects. Max Hopper, execu-
tive vice- president for retail information
and processing services at Bank of America,
says delays in product development will cost
the bank at least $8 million In lost profit, $3
million more than the bank will spend to
change its software system.
John Williams, chairman of Computer
Services Inc., a Paducah, Ky., bank-serving
company, says designing withholding soft-
ware has delayed the release of a new indi-
vidual retirement account processing system
and microcomputer applications, as well as
improved electronic funds transfer and
automatic teller-machine offerings. Though
he admits companies like his will profit
from the law, Mr. Williams says, "there are
just far more valuable things to be done."
Software suppliers usually have mainte-
nance agreements that require them to keep
customers' systems up-to-date as regulations
change.
Systematics Inc., a Little Rock, Ark., soft-
ware company, must change six major soft-
ware systems, excluding those for trusts,
and install the. changes in 41 data systems.
Eight full-time programmers have been
working for three or four months on the
project, which will cost the company "well
over $1 million," says Walter M. Smiley,
chief executive. About two weeks ago, when
several governors suggested' withholding by
states, Systematics programmers redesigned
their work to accommodate state withhold-
ing.
SEEKING EXTENSIONS
Some people are calmer than others. Fran
Sperling, assistant vice president in product
management at Security Pacific National
Bank in Los Angeles, says the bank's with-
holding system for deposit instruments is
95% complete. Advised that chances of
repeal were low, the bank started planning
software changes in late September. "We're
feeling pretty comfortable where we stand
right now," says Mr. Sperling.
The bank's trust department, isn't quite as
happy. "We're holding off on going to cus-
tomers as long as we think we can, because
until we see the final regs, we aren't exactly
sure what to tell them," says David L.
Blanchfield, senior vice president for the fi-
nancial management group. If final trust
regulations differ much from proposed
rules, creating software could become a
problem.
William E. Campbell, head of software de-
velopment for Chemical Bank, says he
doesn't think all the bank's software, par-
ticularly for its securities systems and cor-
porate trusts, will be ready by July 1. Like
other banks and software companies,
Chemical will have to ask for an extension
in some areas. How receptive to such re-
quests the government will be is unclear.*
WHAT'S NEXT? THE KITCHEN
SINK?
HON. JOSEPH M. GAYDOS
OF PENNSYLVANIA
IN THE HOUSE OF REPRESENTATIVES
Wednesday, March 9, 1983
? Mr. GAYDOS. Mr. Speaker, I used
to think America was importing every-
thing from abroad except the kitchen
sink. Alas, I find we may soon be doing
that too-if we are not already.
According to an article I read in a
recent issue of the Sunday-Review,
. IF
of Remarks March 10, 1983
published in Greensburg, Pa., Ameri-
cans can expect a wave of imported
pots, pans, tableware, and small elec-
tric appliances in the near future.
The catalyst for this new surge, the
article indicates, was a display held by
47 Italian housewares manufactures at
the Italian Trade Center in New York.
More than 10,000 American retailers
viewed the products, many of which
had never been seen in the United
States before.
Why a show in New York when simi-
lar fairs are held regularly in Milan
and heavily attended by American
shoppers? Dr. Giorgio Corrias, the
Italian trade commissioner in New
York, explained why in the news arti-
cle.
Dr. Corrias is reported as saying the
American market has become very im-
portant to Italian manufacturers. In
1981, the article states, one-fifth of all
imported coffeemakers, electric food
processors, slicers, choppers, and
grinders came from Italy. The figure
was 31 percent for similar nonelectric
food preparation utensils, according to
the report.
Poor economic conditions in Western
Europe were said to have forced manu-
facturers there to look elsewhere for a
market where they could sell their
products and keep their employees
and plants in operation.
"We looked at your market figures
and that persuaded us to come to the
United States," the article quotes Gio-
vanni Colombo. Mr. Colombo is identi-
fied as being with a firm that makes
pots, pans, and pressure cookers and
was showing in New York for the first
time.
Mr. Speaker, if we already are im-
porting food processors, pasta makers,
woks, electric rice cookers, coffee-
makers, and other kitchen utensils
and tools, can sinks be far behind?*
HON. NEWT GINGRICH
OF GEORGIA
IN THE HOUSE OF REPRESENTATIVES
Wednesday, March 9, 1983
? Mr. GINGRICH. Mr. Speaker, I rec-
ommend these two documents to all
my colleagues who are concerned
about the future of the civil service re-
tirement system.
[From OPM News, Feb. 22, 19831
REFORMS SEEK SELF-SUPPORTING. COST-CON-
TROLLED PENSIONS, SOCIAL SECURITY TO
CovER NEW FEDERAL EMPLOYEES
MIAMI, FLA.-Reforms aimed at control-
ling escalating federal pension system costs,
restoring the system's financial health and
original purpose, and making the system
fairer to the taxpaying public were dis-
cussed here today by Donald J. Devine, Di-
rector of the U.S. Office of Personnel Man-
agement (OPM).
"Few Americans realize that the true debt
of the Civil Service Retirement System
(CSRS) now totals one half trillion dollars
($500 billion). On a per person basis, the un-
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March 10, 1983 CONGRIESSIIONAIL RECORD - Extensions of Remarks IE 941
Chairwoman, Civil Service Subcommit- 1. Sanderson's attorney, Paul Cooper, ac- substantially in the matter as an EPA em-
tee, Committee on Post Office and knowledges that it is possible that Sander- ployee in order to be in violation. Also, after
Civil Service. son used his EPA staff to schedule meetings 60 days a financial disclosure statement is
'
required.
JAMES H. ScHEUER, with clients and may have used a govern-
Subcommittee on Natural ment car for personal business. However, he
Chairman
,
Resources, Agriculture Research & En- asserts that this is a common practice that U.S. ENVIRONMENTAL
vironmen4 Committee on Science and goes with Sanderson's rank. PROTECTION AGENCY,
Technology. 2. The investigation shows that in Sander- Washington, D. C., April 20, 1982.
Enclosures: As stated. son's case timekeeping procedures were vir- Mr. FRED F. FIELDING,
U.S. ENVIRONMENTAL tually nonexistent. He did not provide Counsel to the President,
PROTECTION AGENCY, anyone at EPA with an accurate report of The White House, Washington, D.C.
Washington, D.C., April 20, 1982. his time. His time cards were automatically DEAR MR. FIELDING: Enclosed you will find
MEMORANDUM submitted. On five occasions he was paid for an advance copy of our Investigative Report
days he did not work. concerning allegations of conflict of interest
Subject: Briefing Paper-James V. Sander- 3. Personnel procedures were not followed, involving James W. Sanderson.
son. . At the conclusion of his first period of em-
To: It should be noted that, as required, this
Anne M. Gorsuch, Administrator. plOyment on July 25, 1981, Sanderson's ter-
From: Matthew N. Novick. Inination was not processed. Later, on Octo- report was formally submitted to the Jus-
Enclosed you will find an advance copy of ber 4, 1981, when he returned to EPA his tice Department on April 14, 1982 for a pro-
-our Investigative Report concerning allega- termination papers for the first period were secutive opinion. Bob Andary, attorney,
tions of conflict of interest involving James processed. Public Integrity Section (Telephone 724-
W. Sanderson. 4. When Sanderson returned to EPA his 7061), is handling the case and promised to
It should be noted that, as required, this SF-61, appointment affidavit was dated Oc- have an opinion by May 7, 1982. This report
report was formally submitted to the Jus- tober 13, 1981, and given to Sanderson. He should not be considered complete until we
tice Department on April 14, 1982 for a was not sworn in as required, nor did he sign have Mr. Andary's opinion.
prosecutive opinion. Bob Andary, attorney, the affidavit on the date indicated. Because this report was intended for pres-
Public Integrity Section, (Telephone 724- 5. There exists an unresolvable conflict in entation to the Justice Department it con-
7061) is handling the case and promised to testimony between Steven Durham on one tains no conclusions or opinions; nor does it
have an opinion by May 7, 1982. This report hand, and David Standley, James Thomp- directly address itself to the question of ap-
should not be considered complete until we son, and Gene Lucero on the other. All pearance of conflict of interest although the
have Mr. Andary's opinion. three men said Durham told them that his evidence gathered could be used to make
As you are aware, this investigation was decision not to approve the Colorado water that determination. Executive Order ' No.
based upon a series of six letters received standards and stream classifications was out 11222 and 40 CFR 3 states that a special
from Patricia Schroeder, Congresswoman. of his hands as he was following instruc- government employee "must refrain from
As this investigation was well under way tions from Headquarters. Durham denies any use of his public office which is moti-
before all the letters were received, the having said this. vated by, or gives the appearance of being
report only covers the allegations contained 6. Thompson said Durham's change of motivated by the desire for private gain."
in the first four letters. mind regarding approval of the Colorado While it appears that Mr. Sanderson took
In her last two letters, Congresswoman water standards coincided with a telephone pains to "wall himself off" from his law cli-
Schroeder raises an issue unrelated to the call Durham received from Sanderson. Both ents while acting as an EPA employee, it was
of . thrust l edr present rt investigation case known his Durham and Sanderson denied the allega- not always evident to others that he was not
Dene related Andrus in a court which EPA case i knoas tion that Sanderson directed Durham to comingling his private business with his
Denver v. insuring that Denver Water withhold approval of the standards. public employment.
Board e for complies that the provisions of the tee q Durham's change in position regarding As you are aware, this investigation was
Bcomplies with alleged the that Sanderson, approval of the Colorado water standards based upon a series of six letters received
se. is a ting as It tto representing coincides with a conversation Thompson from Patricia Schroeder, Congresswoman. As
the Da private v Water Department, , attended ed had with William Pederson, attorney, EPA this investigation was well under way before
the Denver a Office of General Counsel. Pederson told all the letters were received, the report only
provisions of oft the set- for sheThompson that he received a call from San- covers the allegations contained in the first
meetin of purpose of e of with
discussing the Corps
"m n The dequestion here seems as a private attorney inquiring about four letters.
"was this a matter that ahe was pending before be the options a Regional Administrator would in her last two letters, Congresswoman
og have in regard to the Colorado water qual- Schroeder raises an issue unrelated to the
EPA or t party to the set-
tlement?" ntwas EPA merely a party transmit- ity standards. The options that Pederson thrust of our present investigation. This
he These Congresswoman allegations were Justice ted d b by the Consswomto the Justtice gave Sanderson were the same options that issue related to a court case known as
Department and are presently being evalu- Durham said he had after the alleged call Denver v. Andrus in which EPA is responsi-
ated by Mr. Andary and the FBI for investi- from Sanderson. ble for insuring that the Denver Water
gation. We will keep you apprised of the 8. In Pederson's testimony he relates how Board complies with the provisions of the
outcome. he and Perry and Thompson all agreed that settlement. It is alleged that Sanderson,
Because this report was intended for pres- they had no concern about a possible con- acting as a private attorney, representing
entation to the Justice Department it con- flict of interest on the part of Sanderson be- the Denver Water Department, attended a
tains no conclusions or opinions; nor does it cause the State had withdrawn its submis- meeting with the Corps of Engineers for the
directly address itself to the question of ap- sion of the standards. This was a faulty purpose of discussing provisions of the set-
pearance of conflict of interest although the premise as the State had not withdrawn its tlement. The question here seems to be
evidence gathered could be used to make submission. "was this a matter that was pending before
that determination. Executive Order No. 9. Sanderson acted as a conduit for Colo- EPA or was EPA merely a party to the set-
11222 and 40 CFR 3 states that a special rado State Senate President, Fred Ander- tlement?" These allegations were transmit-
government employee "must refrain from son, to obtain legal advice from EPA's ted by the Congresswoman to the Justice
any use of his public office which is moti- Office of General Counsel on proposed law Department and are presently being evalu-
vated by, or gives the appearance of being S.B. 10. Frank Traylor, Director of the Colo- ated by Mr. Andary and the FBI for investi-
motivated by the desire for private gain." rado Department of Public Health, testified gation. We will keep you apprised of the
While it appears that Mr. Sanderson took that Sanderson saw him in May as a private outcome.
pains to "wall himself off" from his law cli- attorney representing Coors and tried to in- Sincerely yours,
ents while acting as an EPA employee, it fluence him regarding S.B. 10. MATTHEW N. Novicx.o
that
h
ti
ti
i
ows
ga
on s
nves
was not always evident to others that he 10. Finally, the
was not commingling his private business with although it is legally permissable, Sander-
his public employment. Because of his cau- son frequently did work for clients on days
tion in not violating the letter of the law, I he was employed at EPA. He claimed that
feel that as far as the issues addressed in on these days he worked 10 to 14 hours. He
this report are concerned, there has been no also claimed that he worked over 24 days of
violation of Federal criminal statutes (USC two hours or more at EPA without compen-
Title 18) as alleged. I believe the Justice De- sation. This claim could be viewed as an at-
partment will decline prosecution. tempt to avoid the additional legal restric-
there are numerous areas of tions imposed after 60 days' employment.
In addition
,
interest in the evidence gathered that could After 60 days' employment, an employee
prove troublesome or embarrassing to the has a conflict of interest if he represents a
Agency should someone choose to make client who had a matter pending before
them an issue. The following areas are iden- EPA. If he worked less than 60 days he
tified for your convenience: must have been involved personally and
WITHHOLDING: "COMPUTER
NIGHTMARE"
HON, NOkMAN E. ??Ii OURS
OF NEW HAMPSHIRE
IN THE HOUSE OF REPRESENTATIVES
Wednesday, March 9, 1983
p Mr. D'AMOURS. Mr. Speaker, I
would like to share with my colleagues
in excellent article from today's Wall
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March 10, 1983 CONGRESSIONAL RECORD - Extensions of Remarks
funded liability of CSRS is much greater
than that of the Social Security system.
While Social Security outlays grew 1,209
percent between 1960 and 1981, CSRS out-
lays grew 1,891 percent. More critically,
while Federal employee contributions have
increased 427 percent, government contribu-
tions have grown 2,351 percent. Clearly,
CSRS needs reform even more than does
the Social Security system," said Devine.
"The $20.8 billion annual contribution by
the Federal Government (which does not in-
clude $9 billion in interest-paid on govern-
ment securities) makes CSRS the fourth
largest Federal entitlement program. Most
federal employees believe that their retire-
ment system is funded entirely by the seven
percent salary contributions they make and
the matching amount contributed by their
employing agencies. But it's just not true.
"In actual fact. OPM, through payments
drawn directly from the U.S. Treasury, adds
another 26 percent of payroll just to fund
current benefit payments and meet legal re-
quirements. Even with this heavy commit-
ment of general revenue, the unfunded lia-
bility of the system is huge and growing.
During 1980 and 1981 alone, the unfunded
liability of CSRS grew by nearly 24 per
cent. There is growing concern that Ameri-
can taxpayers will be unwilling to continue
supporting such a large level of expenditure
through a system that desperately needs
these reforms," Devine continued.
Noting that CSRS benefits are quite gen-
erous in comparison to private sector pen-
sion practices, Devine pointed out that "fed-
eral employees can retire with full benefits
at age 55 with 30 years of service, whereas
most private sector employees can not do so
until age 65. In fact, half of all federal em-
ployees retire before age 60, compared with
only 7 percent who do so in the private
sector.
"While federal employees receive full
benefits (56 percent of their pretax salary)
when they retire at age 55, with 30 years of
service, private sector employees receive the
equivalent of a 75 percent income reduction
at age 55. Put another way, a federal em-
ployee will receive about double the amount
in total pensions paid over a lifetime in com-
parison with a private sector individual who
retired at age 55."
Unlike most private sector pension plans,
CSRS benefits are fully indexed to the Con-
sumer Price Index (CPI). Most private
sector retirees receive indexed Social Secu-
rity benefits, but their private sector add-on
pensions rarely are indexed. "Only 42 per-
cent of all private sector retirees have an
add-on pension plan in addition to their
Social Security benefits, only three percent
have guaranteed indexing built into their
private pensions and benefits for the re-
mainder are increased, on the average, at
rates of three percent per year of less,"
Devine said.
"The generous cost of living raises which
result have created a situation in which a
federal employee who retired in 1972 at the
same time as a typical private sector friend,
and received the same initial retirement
pay, is today receiving at least 25 percent
more in monthly benefits than his friend,"
Devine continued.
Typical private sector employers pay a 5.4
percent retirement contribution for Social
Security, as well as an additional 11 percent
of salary for add-on staff plans for those
companies which provide such plans. The
Federal Government pays 7 percent from
agency payrolls and the additional 26 per-
cent through the U.S. Treasury. The total
33 percent government contribution repre-
sents nearly twice the typical private sector
payment.
"Even if one adds in the long term (40
years) employer's share of the Social Secu-
rity unfunded liability. for ? the private
sector, the employer share still represents
only 31 percent of payroll. Allocating the
equivalent unfunded CSRS liability over 40
years would require the Federal Govern-
ment to pay an incredible 85 percent of pay-
roll in employer retirement costs, which is
far, far more than any private sector em-
ployer would pay," Devine said.
"At one time, more generous retirement
benefits for Federal employees could be Jus-
tified on the basis that federal employees
were underpaid compared to the private
sector. However, several public and private
studies now indicate strongly that federal
employees no longer trail the private sector
in pay. We are very concerned that the
more than two-thirds of Americans sur-
veyed in polls who believe that federal em-
ployees are over-paid in salary and benefits,
like retirement, will turn against the system
unless reforms are made. No retirement
system can survive in the long run in the
face of such substantial public disenchant-
ment. These reforms are designed to head
off that kind of rebellion among the taxpay-
ers," Devine continued.
The retirement system reforms described
today were developed at OPM, and were in-
cluded in the President's Fiscal 1984 Federal
budget. One proposal would raise the age of
retirement with full benefits to 65 with 30
years of service. Retirement at age 55 would
remain an option for federal employees but
those choosing to do so would be charged an
actuarial reduction for early retirement.
Due to the gradual phase-in of the proposed
reforms, employees eligible for retirement
at enactment would not be affected by the
changes.
AdJustments for those below age 55 are.
also phased-in to account for past contribu-
tions to the retirement system. The actuar-
ial reduction for early retirement for each
year below age 55 with 30 years of service
would be one-half of one percent per year.
For an individual who is 54 at the time of
enactment, for example, there would be a 5
percent reduction for retirement at age 55.
Once the proposed reforms are fully imple-
mented, persons retiring at age 55 would re-
ceive 50 percent of full retirement income. A
person retiring at age 60 would receive 75
percent of full retirement income.
Two important benefits are expected to
result from the proposed reforms. Federal
employees would be encouraged to work
longer, thus providing the public with the
added benefit of accumulated experience in
the civil service, and the CSRS would re-
ceive additional revenue and incur reduced
outlays.
Among other proposed changes are provi-
sions designed to insure that, in future
years, CSRS will be fully supported by
equal contributions from employees and the
Federal Government. Employee contribu-
tions are presently seven percent of payroll
and would rise to nine percent in Fiscal
Year 1984 and 11 percent in Fiscal Year
1985. As a result of this change, true actuar-
ial value of retirement benefits would be -set
at a level of 22 percent of payroll, fully sup-
ported by employee and agency contribu-
tions. Benefits paid by CSRS would remain
competitive with private sector pension
plans.
Other proposed changes freeze the cost of
living allowance for retirees in Fiscal Year
1984 and return CSRS benefit calculations
to an average of the "high five" years of an
employee's earnings history, rather than
the present high three years. This change
would be implemented in there years. All
off-budget federal agencies would also be re-
E 943
quired to meet the full costs of funding the
system.
A separate staff plan is being developed by
OPM for new federal employees who would
be covered under the Social Security
system, as an add-on benefit system. Putting
new Federal workers under Social Security
was proposed by the - President's Commis-
sion on Social Security, and has been en-
dorsed by the Administration. The com-
bined cost of the new Social Security-plus-
staff plan would equal that of the modified
CSRS retirement plan, and benefits would
be comparable.
"The net effect of these reform propos-
als," Devine concluded, "will be to put the
Civil Service Retirement System on a sound
financial foundation, ensuring that it will
continue to provide benefits to retired feder-
al employees and their dependants. These
reforms are in the interest of the federal
employee who depends upon CSRS and the
taxpayers who must pay for the system and
its benefits."
[From the Washington Post, Feb. 4, 1983]
THAT PROPAGANDA ABOUT FEDERAL PENSIONS
(By Sylvester J. Schieber)
Several of the organizations that repre-
sent federal civilian and postal workers have
begun a full-scale attack on the proposal to
cover new federal workers under Social Se-
curity. In each instance, the presentation
distorts the actual facts pertinent to the
consideration of this proposal made by the
National Commission on Social Security
Reform.
The attack is being staged through a
series of newspaper and radio advertise-
ments. In addition, a set of statistical analy-
ses that purport to show the cost of the pro-
posal are being distributed around Capital
Hill. Finally, op-ed pieces by union leaders
have appeared in the newspapers (for exam-
ple, Kenneth Blaylock's piece in The Post
on Jan. 27). These presentations make three
basic points.
First, without new contributions the Civil
Service Retirement System (CSRS) would
go bankrupt, and taxpayers would have to
shoulder the burden. The implication is
that employee contributions ensure the sol-
vently of the CSRS-dry up the contribu-
tions and benefits cannot be paid.
,The fact is that if employee contributions
were the only source of income to CSRS the
fund would be depleted by 1987 or 1988 at
the latest. Even if the system operated in
the fashion that many federal workers be-
lieve (i.e., employee contributions plus a
matching agency contribution plus trust
fund interest) the fund would be depleted
sometime between 1993 and 1995; The fact
of the matter is that the current CSRS is
primarily dependent on taxpayer support on
whatever basis the cost of the system is con-
sidered.
There are those who argue that taxpayer
support is now required because of past im-
prudence: massive liabilities (i.e., benefit
promises) were accumulated but never
funded. The National Federation of Federal
Employees argues that "the unfunded defi-
cit originated because the federal govern-
ment failed to pay its share into the fund
from 1920 to 1956." This perception ignores
the recent unprecedented growth of these
unfunded obligations.
Of the roughly $500 billion in unfunded
benefit promises on the CSRS books at the
end of fiscal year 1981, nearly one-quarter
(23.8 percent) arose during 1980 and 1981.
Not only is the current CSRS largely de-
pendent on taxpayer support to meet cur-
rent benefit payments; it continues to accu-
mulate added liabilites for future genera-
tions of taxpayers as well.
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E 944
0
. 41
CONGRESSIONAL RECORD - Extensions of Remarks
The second point opponents of expanded
Social Security coverage argue is that cover-
ing new federal workers will mean higher
future budget costs for federal retirement.
The annual budget cost of federal retire-
ment equals the total benefits paid minus
employee contributions. The Senate Gov-
ernmental Affairs Committee recently re-
leased an analysis that shows that covering
new federal workers under Social Security
and providing them with supplemental pen-
sion protection could actually reduce the
budgetary burden of federal retirement.
The savings of such a program depend on
the level of benefits provided by the com-
bined elements of the system and the level
of total contributions required of those who
would participate in it. It is unlikely that
the relative level of retirement benefits
going to future federal workers will be any
higher than now. Further, it can be easily
demonstrated that the future net contribu-
tions of federal workers to Social Security
would be roughly equivalent to their cur-
rent contributions to CSRS.
The third point opponents of Social Secu-
rity coverage of federal workers argue is
that such a policy would ultimately raise
Social Security costs. There has never been
a set of cost estimates by any of the respon-
sible parties that shows the net -cost of
Social Security rising as a result of covering
federal workers. Wishing that the numbers
showed such a cost increase, or merely
saying it, does not make it so. In actuality,
the estimates by the Social Security actu-
aries have consistently shown significant
short- and long-term savings for other pay-
roll taxpayers if federal workers are covered
under Social Security.
Federal workers have borne the brunt of
some reprehensible political rhetoric in
recent years. They now feel they are being
singled out to bear an unjust share of a
budget-balancing exercise.
One of the reasons they are being singled
out on the pension side is that they stand
alone in many regards.. They do not partici-
pate in Social Security, although three-
fourths ultimately get benefits. They re-
ceive better cost-of-living allowances than
most retirees. Finally, they are perceived to
retire earlier than most workers. Whether it
is right or wrong, there is a broad percep-
tion that CSRS provides much more gener-
ous protection to federal workers.than is
available to taxpayers who bear most of the
CSRS cost.
This perception has led to proposals in
the 1984 budget that would raise the CSRS
contribution from 7 percent to 11 percent of
salary by 1985, an increase of 57 percent.
Workers reaching retirement eligibility at
age 55 after 1984 would only get half the
benefits now provided by CSRS and would
have to work until age 65 to get full bene-
fits. By comparison, the national commis-
sion recommendations on raising Social Se-
curity taxes would only increase program
revenues by about 4 percent between 1983
and 1989. Their recommendations for delay-
ing the 1983 COLA and taxing benefits
amounts to about 4 percent of projected
cash benefits over the period.
If federal workers were participating in
Social Security, they would be subject to
the same changes that were being discussed
for the rest of society for their basic retire-
ment program costs and benefits. If they
had a supplemental retirement program
that compared with those provided by other
large employers, they could get much great-
er public sympathy and support against ar-
bitrary changes in their own retirement pro-
grams.
Even with carefully worded statements
and supporting analyses, federal workers
and retirees have a difficult case to make to
the general public. Attempting to confuse
the Social Security policy discussion or to
destroy the compromise package through
partial or misleading analyses of federal
pension costs will not help their cause, their
credibility, or their standing with the
public.
TRIBUTE TO A DEDICATED
LEADER WILLIAM B. HOPKINS
HON. NORMAN F. LENT
OF NEW YORK
IN THE HOUSE OF REPRESENTATIVES
Wednesday, March 9, 1983
Mr. LENT. Mr. Speaker, I rise to
bring to the attention of my col-
leagues a signal honor being accorded
to a distinguished resident of Long
Island, N.Y. I refer to William B. Hop-
kins, of Dix Hills, N.Y., an outstanding
business and civic leader, known
throughout Long Island for his selfless
efforts on behalf of his community.
In the world of business, Bill Hop-
kins has distinguished himself as
president of Roosevelt Raceway, and
in a number of offices in the Long
Island,Association of Commerce & In-
dustry. -
However, Bill is not the type of man
to confine his activities to the world of
business. His interests and activities in
community affairs have been numer-
ous and outstanding. But nowhere has
he given of his time and energy more
unstintingly than as an advocate for
and leader of the Long Island Commit-
tee for Soviet Jewry, to support and
assist the thousands of Soviet Jews
seeking the freedom to practice their
religion in the country of their choice.
As a Member of Congress who has
worked closely with the Long Island
Committee for Soviet Jewry to chal-
lenge the oppression and persecution
to which the courageous Soviet Jews
are being subjected, I am well ac-
quainted with Bill Hopkins' outstand-
ing efforts in this vital human rights
cause. I know of his personal dedica-
tion and devotion to the work of the
committee. I know of his strong lead-
ership in organizing support for the
committee and for the many-faceted
efforts- it undertakes on behalf of
Soviet Jews seeking freedom.
I am particularly pleased, therefore,
to inform my colleagues that my good
friend Bill Hopkins is being awarded a
signal honor by the Long Island com-
mittee at its annual Freedom Dinner
to be held this coming Sunday, March
13, 1983. In recognition of his selfless
efforts in support of the human rights
cause, the Long Island Committee for
Soviet Jewry is honoring him with the
1983 Freedom Award.
Certainly, no one has done more to
deserve this honor than Bill Hopkins.
I know that my colleagues in the
House of Representatives join me in
offering our congratulations and com-
mendation to Bill Hopkins for his out-
standing leadership in efforts to gain
freedom for persecuted Soviet Jews,
and tQ_offer our best wishes for his
future work in support of the cause of
Soviet Jewry.o
THE EMERGENCY COMMODITY
DISTRIBUTION ACT OF 1983
HON. MARIO BIAGGI
OF NEW YORK
IN THE HOUSE OF REPRESENTATIVES
Wednesday, March 9, 1983
Mr. BIAGGI. Mr. Speaker, on Feb-
ruary 17, I introduced the Emergency
Commodity Distribution Act of 1983
along with my colleagues CARL PER-
KINS, WILLIAM FORD, and GEORGE
Mn.LER of the House Education and
Labor Committee. I believe that H.R.
1535 represents a humane and well-
thought out response to the pressing
need before us to distribute surplus
USDA commodities to the hungry, the
needy, and the elderly of this Nation.
The Emergency Commodity Distri-
bution Act of 1983 requires the Secre-
tary of Agriculture to distribute ware-
housed commodities to eligible organi-
zations which assist the needy as well
as existing child and elderly feeding
programs. Right now, the Secretary of
Agriculture is sitting on hundreds of
millions of pounds of these food-
stuffs-including dairy, wheat, and
honey. Despite the pleas of Congress
and organizations involved in donating
food to the hungry, the Secretary has
chosen to ignore our requests to
expand the current cheese giveaway
program to other useable food items.
The House Education and Labor
Committee, where I am the senior
New York member, has conducted two
hearings on the commodity distribu-
tion issue and our response to the tes-
timony presented before us was H.R.
1513, which represents a refinement of,
similar legislation I introduced earlier
this year, H.R. 1162. This bill, H.R.
1513, sets up no new bureaucracy but
instead, uses existing transportation,
storage, and distribution routes to get
out the food to the people.
I commend our colleagues on the
Appropriations Committee who in-
cluded $50 million in the jobs bill,
H.R. 1718, and passed by the House
last week, for the distribution of emer-
gency food and shelter. These funds
would be appropriated by a national
board, comprised of representatives of
volunteer organizations. While I am
supportive of providing funds to such
organizations at the local level, I do
not believe that this legislation will
address the total commodity prob-
lem-that being insuring that the Sec-
retary, in fact, does expand the list of
available surplus commodities to those
who can use them, and does, in fact,
distribute them without charge or
credit to States. .
For the benefit of my colleagues, I
am inserting into the RECORD a copy of
H.R. 1513 as well as an analysis of its
provisions. I commend the work of all
our colleagues in the House that are
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