Congressional perks, the Good, the Bad, and the Misunderstood

        This is partially a reprint/rewrite, since a group member (today) posted today a spam e-mail regarding wildly inflated claims about Congress' perks and implying that they have free health care and the best retirement plan ever. This is a common misconception, stemming , I feel, from our general lack of satisfaction with the Congress of late. I will also, since this was a Facebook conversation, add responses, edited for responder privacy. As I said previously, I'm not a huge fan of the manner in which Congress has functioned recently, but I am a fan of truth when discussing it. There is great willingness, spurred by the spam e-mail school of journalism, to invent ridiculous bullshit misinformation, regarding the institution, so, in the interest of facts, here goes. (Much of this is relevant to today's post, but was written several years ago in discussion with a friend.) 

Initial post (mine):

"Here are the facts (not chain emails, not anecdotal griping) regarding Congressional retirement. I'm not a fan of Congress as of late, but even they deserve at least a factual accounting of their situation.

·       Myth: Members of Congress can retire and receive their full salary after serving just a single, two-year term

This is perhaps the longest running, and most incorrect statement extant regarding Congressional compensation! In fact, a person elected to Congress for just two terms as a member of the US House of Representatives is ineligible for any Congressional retirement whatsoever. We're talking about the difference between $174,000 (current compensation) and Zip, Zero, Nada! That's some difference!! The minimum amount of service to be eligible under the retirement system ("vested" is the term usually used) is 5 years of service.

Congressional pensions, like those of all other federal employees, are financed through a combination of employee and employer contributions. All Members pay Social Security payroll taxes equal to 6.2% of the Social Security taxable wage base ($97,500 in 2007). Members covered by the federal Employee Retirement System (FERS) also pay an additional 1.3% of full salary to the Civil Service Retirement and Disability Fund.

Under both CSRS (the pre-1984 plan) and FERS, Members of Congress are eligible for a pension at age 62 if they have completed at least five years of service. Members are eligible for a pension at age 50 if they have completed 20 years of service, or at any age after completing 25 years of service. The amount of the pension depends on years of service and the average of the highest three years of salary. 

By law, no Member’s retirement annuity may exceed 80% of his or her final salary. This means that no member of Congress can ever retire at full salary, even if they serve 40 years in Congress! As of October 1, 2006, 413 retired Members of Congress were receiving federal pensions based fully or in part on their congressional service. Of this number, 290 had retired under CSRS and were receiving an average annual pension of $60,972. A total of 123 Members had retired with service under both CSRS and FERS or with service under FERS only. Their average annual pension was $35,952 in 2006 (For comparison, this is about the value of my Navy retirement as a senior enlisted man, and I have free medical on top of that!)

• Congressional retirement in perspective:

To put this into perspective, a three term Congressman who loses his seat is "vested" and can draw retirement, but only at age 62, at which time his retirement would be 12.5% of his high three salary years. If you were elected in 2006 at age 36 to the House and were defeated in 2012, you wait 20 years to draw any retirement benefit, and then it would be 12.5% of $174,000, or $21,759. Not bad, but...a Navy Commander, (even if he was Supply Corps or JAG office and had never even gone to sea) retiring at 42 after 20 years would earn a minimum of $50,000 annually and would have been paid over $1 million dollars in retirement by age 62, at which time he also would draw Social Security.

For example, the pension for a Representative or Senator who retired in December 2006 at the end of the 109th Congress with a total of 30 years of service years covered under CSRS and 23 years covered under FERS) and a high-3 salary of $161,800 would be:

$161,800 x .025 x 7 = $28,315 (CSRS) + $161,800 x .017 x 20 = $55,012 (FERS) + $161,800 x .01 x 3 = $ 4,854 (FERS) = total retirement at 62 of $88,181

Comparing again, A Vice Admiral in the navy, at retirement after 30 years (which, assuming he attended Annapolis at 18 would by 50 years old) earns in base pay alone, $167,000 annually plus as much as $40,000 in allowances. If a doctor: add 22k to 36k annually depending on specialty. If a dentist and (at any rank) agreeing to do 4 years naval service, add $50,000. If this theoretical admiral would therefore retire, assuming not medical or dental corps, at 30 years, his immediate retirement would be about $125,000 annually, plus (practically) free medical for life for him and his spouse, at age 50. Before the Congressman retires at 62, on 30 years, the admiral will have been paid over $1.5 million in retirement (not to mention the immensely profitable private sector jobs retired admirals frequently "earn" in their former military area of expertise. Even a Captain retiring on 30 years earns more retirement, longer.

Lest you think this is a military phenomenon, let's look at a civilian 20 year career: firefighter. The average 20 yr NYFD retiree earns in retirement just under $100k annually! NYPD is similar. Obviously firefighters, law enforcement personnel and the military risk their lives while employed, but this is about retirement compensation, not active duty salary. That's what hazardous duty supplements are for. By comparison, Congress does well, but not nearly as well as the lie portrays!

So why this willingness to lie about and castigate Congress and begrudge them their pay? It may be that we feel that, as public servants, they should do exactly as we want, and so some persons are probably delighted with their representation while others are unhappy. It is also an "us" and "them" mentality, in which we single out Congress because they are easy to blame, just as many single out the President for things that are Congress' responsibility. Goodness knows it's easier to blame others than to assume responsibility for one's own shortcomings and misfortunes, and both parties do and have done it!

The real scandal is (or perhaps should be) about what we are willing to pay (or about what Boards of Directors are willing to pay) Business executives, regardless of performance. This is especially troubling in light of reality, which is that many of the economic woes we face are due to the malfeasance of CEOs in the financial sector of American banking and trading. (see housing bubble collapse, 2006-7)

America bitches about what Congressmen earn, yet seem fine with the huge disparity between the average wage earners' pay and that of corporate CEOs. Profits at big U.S. companies broke records in 2011 , and so did pay for CEOs. The head of a typical public company made $9.6 million in 2011, according to an analysis using data from Equilar, an executive pay research firm. Many CEOs have retirement packages and or "Golden parachutes" worth more than $25,000,000.

In Great Britain, the ratio of CEO compensation to that of the average worker is 22:1, in Japan - 11:1, in Germany - 12:1, in the United States - 475:1! Where's the indignation?? (Curiously enough, the two nations whose CEO to Workers' earnings ratio (excluding the USA) is highest are Mexico (47:1) and Venezuela (50:1) - good company, huh??

To illustrate this point, I offer the case of John Boehner, once the second most powerful elected man in America. Boehner came to politics relatively late, since as one of 11 siblings, he had to work his way through college (seven years to graduate). Elected to Congress in 1990, he would have reached 30 years’ service next year (2020) at age 71. At that age, assuming he had continued as Speaker of the House, (higher paid than other Representatives, and deservedly so) he would have drawn a Congressional retirement pension of about $113,000 annually, less than Lebron James earns just for showing up on the court for one game! This for the third person in line for the Presidency. There would be no lump sum payout, no golden parachute. He would be (and is)  responsible for his own healthcare costs as well. There is no Congressional equivalent to TRICARE.

By contrast, consider two executives who "failed" at their jobs in the private sector:

Robert Nardelli, (Home Depot) - bad performance as CEO, share prices down significantly, asked to resign, Consequences: $210 million in cash, $84 million in stock - A quarter of a billion dollars for leaving, having underperformed!

Tony Hayward (BP) - Deep Water Horizon scandal, much criticism of Hayward's handling of it. Consequences: Asked to leave with $1.6 million in salary, and $17.6 million golden parachute.

Yet there are those who begrudge an ex-President (arguably the most taxing and significant job in the world) their taxable pension., currently under $200,000 annually, plus allowance for transition staff, etc.

Again, I have been mightily pissed off at Congress and the President from time to time, but I will never think they are over compensated.

Other individual’s response:

It's not an either/or though. Just because CEOs draw obscene compensation packages does not mean we can't criticize Congress. For what Congress has done for their constituencies lately- i.e. either nothing to help, or promoting policies aimed at at dismantling the middle class- it's debatable whether many of these reps deserve any compensation on the grounds that they are not actually doing their jobs- serving the interests of the people who elected them. Add in the "shadow compensation" that comes with access to power - yeah I know, it's "anecdotal" and unquantifiable with existing information- such as perks from lobbyists, leveraging their congressional positions to obtain high-paying sinecures post-retirement, Congress persons can do just fine, upon leaving Congress. I applaud you for attempting to harness facts instead of emotion but I do object to a line of reasoning that implies Congress isn't so bad compared to corporate excess. They both suck, but for different reasons.

My Response:

I absolutely never even implied that we shouldn't criticize Congress. I was addressing the willingness to forward and present blatantly false information as fact. Believe me retired military,  especially senior officers have the same perks plus better medical, which Congress members must pay for when unelected. When we lie to abase people we weaken our argument. In Congress' case, they condemn themselves by their inaction. Why lower ourselves to that level?  Your initial comment also stated the objection that "Medicare isn't an entitlement, I paid for it." Again, half truth. You paid for some of it! The average male in America will pay about $61,000 in Medicare taxes, but will receive (average, now) $161,000 in benefits. It would be difficult to find an investment plan that did as well. For women the gap is even wider. So, if you only got out what you paid in, you'd be left far short of what Medicare actually pays, unless of course you got really ill, in which case you're fucked! Single payer universal health care in the UK costs less per person and as a percentage of GDP, and no one has to buy a supplemental medical cost or drug plan. just sayin'.

Other's Response:

No one said "military retirees and retired fire fighters and policemen suck". I was merely pointing out the false dichotomy that you implied by the manner in which you stated your argument. You presented the counter-argument by stating, "The real scandal is...". No, that's not the real scandal- they are both real scandals! CEO overcompensation as well as Congressional ineptitude/ malfeasance on the taxpayer's dime are outrageous in their own right. As I said, I commend you for sorting out the facts- absolutely essential if we want to wage effective arguments- I have no quibble with that, at all. But let's also be careful not to engage in false counter-equivalencies even if that was not your intent.

My Response:

I don't think they are equivalencies. We hire (elect) Congressmen and women, their salaries are public record, and there are no golden parachutes, or bonuses for incompetence. No congressman gets to fuck up and take a million (or several) as a reward for quitting. I'm not talking about rumor and innuendo, I'm speaking of the public monies involved. No Congressman got a bonus paid with TARP money. That alas, is not true in the private banking sector. Not much equivalency here, implied or specified. And, XXXX, the entire focus of my initial post was on compensation, as (another friend) would say, you're off topic. You probably didn't see the post which prompted mine.it was related to compensation, and mentioned Medicare, then citing all the gross exaggerations I referred to as relates to Congress. Compensation. Period. I simply pointed out that there are other government employees, both local and federal who are as well compensated, and in some cases better compensated. I then proposed that failed CEOs (citing examples again) are a class unto themselves when it comes to undeserved rewards. I will stand by that position, since the facts bear me out. It is also worthy of note that, while we may rail at Congress as a body, not all are incompetent. For a Ted Cruz, there's an Elizabeth Warren, etc. But one last time - I was writing about compensation. I did wonder if you lumped all well compensated government retirees in the same group, which is why I threw the suck factor out there. You lump CEO overcompensation and Congressional ineptitude /malfeasance as equivalents (or seem to). Not my position. Compensation, period.

Other's Response:

I also stand by my observation that when you say "the real scandal is..." you are implying some sort of either/or equivalency. I would have been silent had you said "perhaps a greater scandal is..." -which means our disagreement, if it even rises to that level, boils down to dancing around word meanings and intent. I do understand what you were really getting at in your post. Hopefully, you also understand what I was trying to point out. I will shut up now.

At this point we stopped until the next day, when  this article was posted:

http://www.washingtonpost.com/blogs/in-the-loop/wp/2015/03/18/a-62-year-old-schock-will-still-likely-receive-his-government-pension/?tid=hpModule_308f7142-9199-11e2-bdea-e32ad90da239&hpid=z15

The gist of the article is the seeming outrage that newly resigned Illinois congressman Tom Shock might receive his pension in about 30 years, based on his 6 years of service in Congress and that this was some sort of Congressional "sweetheart deal" , compared to the rest of the workforce.

I responded:

*****, did you miss this sentence? "Still, if there’s a criminal investigation into Schock’s spending habits and he’s charged it could potentially strip Schock of his retirement annuity" As of now, he has resigned. As any employee in civilian business meeting the requirement, he is "vested." If you were convicted of, say vehicular or DUI manslaughter and jailed and had 401Ks or IRAs you would still be able to get the income stream from them, and that's if you committed a felony. Shock may (will, unless indicted, tried and convicted, I assume you'd still give him due process) get $18k plus at age 62. There will be no appreciation or return on investment. A CEO resigning in disgrace might well be paid $1 million to step down. Assuming 29 years of investment return on the $1 mil golden parachute, at a very conservative rate of return, that CEO will be a multi-millionaire.

 I'm not sure what your point here is. Is it that Shock is a shithead? Undeniably so. Is it that he should not get due process? Really?

 Or is it that you think a Congressional pension plan is really different from a non-governmental one? It is, and not in a good way, in that 1: It's not portable, meaning that once vested, you can't take it with you, two: There is no appreciation, as there would be in a portable plan. and three: unlike a civilian pension, he could lose it if charged with a felony, which is not true of most civilian plans. 

Here's a sample of a state (CT) law related to pensions: "Pensions of public officials and employees can be revoked for conviction of any crime relating to official duties." This is about the same in 24 states, including Illinois, Shock's state. Surprisingly, the remaining states have no such law, ergo, for example, a Washington State teacher convicted as a sex offender continues drawing their pension! So, it turns out, Shock will possibly be held to a higher standard, including loss of pension, which in private enterprise would not be so. I have little problem with this, because he violated a public trust, but he isn't getting a free ride. Your posting of the article seemed to me to be your indication that you thought Shock was getting kid glove treatment. That remains to be seen, and it will be the state of Illinois, most likely which determines what happens next. As near as I can tell, no private pensioner  anywhere in America is close to as much risk of pension loss as government employees in the 24 states (Illinois among them) with stringent "loss of pension for conviction" laws. Shock isn't getting a free ride. Hell, if I'm convicted tomorrow of DUI manslaughter, I would still have full military retirement and medical for life. (don't worry, ain't gonna happen!)