[Congressional Record Volume 140, Number 36 (Friday, March 25, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: March 25, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                     THE FEDERAL GOVERNMENT BUYOUT

  Mr. BROWN. Mr. President, we acted earlier this week to create a 
buyout for Federal employees. It involves in so many cases, a modest 
amount of money, a sum up to $25,000, for people who have dedicated 
their lives as civil servants for Federal Government. It was associated 
with what I consider to be a very responsible and a sincere effort on 
the part of the President to reduce the Federal payrolls. It is one 
strongly endorsed and joined by Members of this Congress, both the 
Democrats and Republicans, to see if there is not a way we can save 
funding through reduced payrolls.
  I believe that many of these areas of Government will be able to be 
performed well and perhaps even more efficiently with fewer people. As 
we go through that difficult process, I believe that effort will have 
strong bipartisan support. It will have support because it means that 
we will not only save money, but we will focus our resources on better 
alternatives.
  However, I am concerned about the bill that was before us. It 
received overwhelming support from this Chamber, so its passage was 
never in doubt. Part of the reason it had such overwhelming support is 
it not only provided welcome financial assistance to Federal civil 
servants who will be leaving their jobs, but it also was accompanied by 
revenue and budget estimates which indicated that it would ultimately 
save this country money.
  Those estimates were done by sincere people who honestly believed in 
the results. However, I was concerned about those estimates and came to 
the conclusion that they were not ultimately accurate. Far from 
ultimately saving money, there is a chance the program, the way it was 
framed, could well have the opposite impact. While that feeling was not 
widespread, it was indeed sincerely felt by me. I thought two areas are 
of particular concern.
  First of all, one phenomenon that we saw is that when this proposal 
was aired, people who would have normally retired did not take their 
retirement and move on to other jobs. They were, in effect, encouraged 
to stay to wait to see if indeed Congress would pass a buyout package. 
In other words, we had a phenomenon of a delay. The immediate impact of 
consideration of the buyout was not to encourage people to retire, but 
to discourage them from retiring.
  It is not an illogical move for many people. If you retire 
immediately, and receive no bonus, you are not as well off as if you 
stay a while longer and receive a bonus for what you would do anyway.
  I believe the initial impacts of consideration of this measure have 
had that phenomenon. It is not recorded specifically in the numbers 
that this Congress looked at. But I believe part of the impact of this 
discussion was to delay normal retirements, and delay a reduction of 
personnel that would have occurred naturally.
  This significantly affects the numbers, if you look at them. If, 
instead, Congress had turned it down and made it clear that there were 
no special buyout provisions, my guess is people would have not waited 
solely because they thought a buyout would come, but they would have 
done what they planned, and that is retire.
  The second factor that I think was not fully taken into account was 
the fact that our senior civil servants, ones eligible for retirement 
with many years of service, may in some respects be our least expensive 
employees. How is that possible? Most of our pay scales indicate that 
they end up with the higher salaries. The higher salaries are primarily 
related to the positions they hold. Obviously, length of service is a 
factor as well. But if someone who is near retirement, or at 
retirement, and has long service continues to serve, there is a 
marginal cost difference that is not as large as their salary. Let me 
be specific.
  By delaying or giving up their right to immediate retirement, they 
give up that retirement pay. Thus, the marginal cost of having them 
retained in active civil service duty is less than their full salaries 
because while they receive that salary, they are not receiving the 
retirement pay to which they might be entitled.
  Replacing senior people with junior people, who would not be eligible 
for retirement, will mean a marginal increase in cost in some areas. It 
does not represent a marginal decrease because the senior person will 
begin to draw their retirement and the junior person, who is not giving 
up retirement, is elevated to that same spot with the higher salary. 
The higher salary is there. But the offset before retirement is not.
  One could well say, ``Wait a minute. The person who stays on is 
indeed building up the retirement for the future.'' Of course, that is 
correct. But my concern was that in the estimates put together for this 
Congress we did not fully account for the phenomenon of the offset of 
retirement forgone.
  It also seems to me there was a third factor that called into 
question the estimated savings put forth with regard to the buyout 
bill. That is the potential future impact. If indeed Federal employees 
come to believe that this sets a precedent, then indeed it will have 
the wrong kind of impact in future years.
  Instead of having a normal turnover, which will enable us to provide 
jobs for people that wish to join the Federal service, it is quite 
likely that we will end up having a slowdown, a slowdown of retirement, 
when anybody seems to think there is a chance of another buyout coming. 
So the anticipation of future buyouts could well offset any savings 
which could be achieved.
  Those factors, obviously, did not control the vote and did not 
influence the vote. The overwhelming number of Members of Congress felt 
that this was good and responsible policy.
  But this Member, at least, feels that the estimates that we looked at 
did not include all of the factors, and that it set the kind of 
precedent that could well be very costly for this country in the 
future.

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