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''POSTMASTERS FAIRNESS AND
RIGHTS ACT"
March 8, 2000
H.R. 3842
IN THE HOUSE OF REPRESENTATIVES
Mrs. Morella introduced the following bill which was referred to the Committee on__
____________________
A Bill
To amend the provisions of title 39, United States Code, relating to the
manner in which pay policies and schedules and fringe benefit programs for
postmasters are established.
Be it enacted by the Senate and House of Representatives of the United
States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the "Postmasters Fairness and Rights Act".
SECTION 2. POSTMASTER TO BE
COVERED BY AGREE-
MENTS RELATING
TO PAY POLICIES
AND SCHEDULES AND
FRINGE BENEFIT
PROGRAMS.
Section 1004 of the title 39, United States Code, is amended by
redesigning subsection (g) and (h) as subsections (i) and (j), respectively, and by
inserting after subsection (f) the following:
(g)(1) The Postal Service shall, within 45 days of each date on
which an agreement is reached on a collective bargaining agreement between the Postal
Service and the bargaining representative recognized under section 1203 which
represents the largest number of employees, make a proposal for any changes in pay
policies and schedules and fringe benefit programs for postmasters which are to be in
effect during the same period as covered by such agreement.
(2) The Postal Service and the postmasters organization (or, if more
than 1, all postmasters organizations) shall strive to resolve any differences concerning
the proposal described in paragraph (1).
(3) If, within 60 days following the submission of the proposal, the
Postal Service and the postmasters' organizations (or organizations) are unable to reach
agreement, either the Postal Service or the postmasters' organization (or organizations
jointly) shall have the right to refer the dispute to an arbitration board established
under paragraph (4).
(4) An arbitration board shall be established to consider and decide a
dispute arising under paragraph (3) and shall consist of 3 members, 1 of whom shall be
selected by the Postal Service, 1 by the postmasters' organization (or organizations
jointly), and the third by the 2 thus selected. If either the Postal Service or the
postmasters' organization (or organizations ) fail to select a member within 30 days
after the dispute is referred to an arbitration board under this subsection, or if the
members chosen fail to agree on the third person within 5 days after their first meeting
the selection shall be made by the Director of the Federal Mediation and Conciliation
Service.
(5) The arbitration board shall give the parties a full and fair
hearing, including an opportunity for each party to present evidence in support of its
claims and an opportunity to present its case in person, by counsel or by such other
representative as such party may elect. Decisions by the arbitration board shall be
conclusive and binding upon the parties. The arbitration board shall render its
decision within 45 days after its appointment.
(6) Costs of the arbitration board shall be shared equally by the Postal Service and the
postmaster's organization (or organizations), with the Postal Service to be responsible
for one-half of those costs and the postmaster's organization (or organizations) to be
responsible for the remainder.
(7) Nothing in this subsection shall be considered to affect the
application of section 1005."
SECTION 3. RIGHT OF
POSTMASTERS'
ORGANIZATIONS TO
PARTICIPATE IN
PLANNING AND
DEVELOPMENT OF
PROGRAMS.
The second sentence of section 1004(b) of title 39, United States code
is amended by striking "or that a managerial organization (other than an organization
representing supervisors) represents a substantial percentage of managerial
employees,"and inserting or that a managerial organization (other than an
organization representing supervisors or postmasters) represents a substantial percentage
of managerial employees, or that an organization qualifies as a postmaster' organizations.
SECTION. 4 POSTMASTERS
AND POSTMASTERS'
ORGANIZATIONS
DEFINED.
Subsection(i) of section 1004 of title 39, United States Code , as so redesigned by
section 2, is amended by striking "and" at the end of paragraph (1), by striking
the period at the end of paragraph (2) and inserting a semicolon, and by adding at the end
the following: (3) 'postmaster means an individual who mangers, with or without the
assistance of subordinate managers or supervisors, the operations of a post office; and
(4) postmasters' organization means, with respect to a year, any organization of
postmasters whose membership as of June 30th of the preceding year included not less than
20 percent of all individuals employed as postmasters as of that date."
SECTION. 5
TECHNICAL AND
CONFORMING
AMENDMENTS.
(a) Section 1003(e) of title 39, United States Code, is amended in
the matter before paragraph (1) by inserting "agreements under section 1004(g)
after "regulations,"
(b) Section 1003(a) of title 39, United States Code, is amended in the
first sentence by inserting "section 1004(g) of this title," :before
"section 8G".
SECTION 6.
EFFECTIVE DATE.
The amendments made by this Act shall take effect after the end of the
90-day period beginning on the date of enactment of this Act.
Issue #1
Postmaster Quality and Fair Compensation
Issue #2
The Future of the U.S.P.S.
Issue #3
Federal Retirement and the
FY' 01 Budget
Issue #4
Health Security and the FEHBP
Issue #5
Retirement Equity
Information provided by Bob Levi, NAPUS Government Relations
Director
Issue
# 1
POSTMASTER QUALITY SECURITY AND FAIR COMPENSATION
The Postal Reorganization Act of 1971 (Title 39 of the
United States Code) envisioned an independent Postal Service reliant on a top notch cadre
of management personnel that would deliver quality postal products to the American public.
Postmasters have kept their part of the bargain, working to provide U.S. citizens
with the best postal service in the world. Recently, Postmasters have been
forced to find creative ways in which to maintain the high quality of Postal Services,
while having to tap a miserly budget. The current flawed consultative process
hinders the Postal Service from optimizing its management personnel due to low moral,
unacceptable operating budgets, and a declining number of qualified Postmaster
applicants. It is time for a fair process for determining acceptable Postmaster
compensation.
NAPUS' Position:
Background:
Outstanding results in customer satisfaction surveys and
record on-time delivery numbers aptly document Postmaster success in serving as model
postal managers. Furthermore, the positive fiscal status of the U.S. Postal Service,
despite keen competition from our competitors is attributable to Postmasters realizing
extraordinary operational efficiencies. Miraculously, Postmasters successfully
maintain quality services despite the fact that frozen or reduced operating budgets have
precluded our ability to fill personnel vacancies and upgrade postal facilities.
Tragically, the Postal Reorganization Act, and subsequent amendments to it do not provide
for a fair and equitable process for determining how Postal Headquarters can reward
its Postmasters for the extraordinary service they provide to the Postal Service and the
mailing public. NAPUS will be working with Congress to explore strategies in which
to rectify this long-standing oversight.
Post offices throughout the nation are without career
Postmasters to guide them. One of the many by-products of this phenomenon is a
substantial reduction in window hours. Also, communities around the country are left
without the most aggressive advocate for quality postal services in their community their
Postmaster. The reason for this situation is simple. The current method for
deciding Postmaster compensation has made it very difficult for the Postal Service to
recruit and retain highly qualified Postmasters. Compensation issues are compounded
by the inability for Postmasters to be taken seriously when discussing operational or
budget matters with Postal Headquarters which would enhance the quality of postal services
provided to postal patrons. It is obvious that Postmaster morale and the quality of
Postal Services are adversely affected by the present situation.
Title 39 of the United States Code created the U.S. Postal
Service, including the process for compensating its employees. Under the law, craft
employees (e.g., clerks, letter carriers, mail handlers) are entitled to
collective-bargaining, which includes interest arbitration should the Postal Service and a
union find that they cannot come to an agreement on their own. The decision of a
neutral arbitrator is binding upon both parties. In contrast, management and
supervisory personnel are granted consultative rights which provide for
"discussion" on compensation issues and working conditions Nevertheless,
Postal Headquarters make unilateral decisions on theses issues, without an agreement by
its management and supervisory partners. For this reason, consultation has not
yielded fair and equitable Postmaster compensation or the ability for the parties to
resolve non-compensation issues. For example, consultation has precluded a fair pay
differential between Postmasters and craft employees. Ironically, a differential is
stipulated in Title 39, but it is not quantified. Therefore, consultation is the
only present method of attempting to enact a fair differential. Regrettably, Postal
Headquarters has not been responsive to Postmaster requests for fairness. As
Postmasters know full well, periodic postal employee COLAs, as guaranteed under their
contract, erodes the Postmaster differential over the course of time.
Status
NAPUS is already working with our allies in
Congress to craft a bill to enact an objective and fair process for determining Postmaster
compensation.
 What to do:
Over the next few weeks, NAPUS will be finalizing its legislative
strategy.
Issue # 2
THE FUTURE OF THE U.S. POSTAL SERVICE
Postmaster job security relies upon a financially
robust U.S. Postal Service. Ever since 1971, the Postal Service has been
self-sufficient. The Postal Service does not rely on the U.S. Congress or American
taxpayers to finance its operations. Unfortunately, enemies of the Postal Service
continue to proclaim the lie that the Postal Service relies on public funds. In fact, the
Postal Service depends solely on postal rate payers to fund the infrastructure that
makes universal six day mail service possible at affordable uniform rates.
Universal service and uniform rates are
the hallmarks of the U.S.P.S. Urban residences, center-city business districts, suburban
bedroom communities, and rural farm territories are all guaranteed the same
nondiscriminatory affordable high quality postal services. None of our for profit
competitors, whether parcel mega giant UPS, expedited delivery goliath FDX, foreigh postal
entrants, or small intra-city entrepreneurs can provide the same high level of service
that we can. The American public has awarded the U.S.P.S. stellar performance
ratings. High quality postal services will be jeopardized if Congress does not
permit the Postal Service to adapt to the changing communications market.
NAPUS Positions on the Future of the Postal Service
Postmasters support
legislation that would guarantee a vibrant and successful Postal Service, because such
legislation protects universal service at uniform rates. For this reason, we will
continue to work with the Chairman McHugh and allies of the Postal Service
Postmasters oppose legislation,
including amendments, that would undermine the financial viability of the Postal Service.
This includes the arbitrary expansion of the PRC's authority. Such an
expansion would grant for profit competitors an unfair advantage in pricing or
product development, and would cost the mailing public millions of dollars.
Postmasters opppose
anti-postal legislation that circumvents the committees with jurisdiction over the Postal
Service, including legislation to restrict its foreign mail operations, the use of the
government-wide broadcasting spectrum, or participating on the Internet.
Postmasters oppose H.R.
198, legislation to bar the U.S.P.S. from offering patron-desired postal services, and any
other measures that would restrict the Postal Services's ability to offer the American
public affordable and needed postal products.
Postmasters oppose
H.R.2589, legislataion to privatize the Postal Service, and any other measure that would
undermine the Postal Service's public service mission.
Background:
Postmasters are essential to meeting service
goals, from the management of high volume delivery units to the direction of small rural
retail stations. We provide residental patrons and business customers with quality
postal products and services that are unavailable anywhere else in the world. Unlike
for profit postal competitors, we do not force partons to pay a surcharge for residential
or rural deliveries or delay service until it is financially sustainable. Fair and
equitable postal services come at a steep price for the U.S.P.S. Therefore,
the ever-present Post Office needs to evolve and develop new and innovative postal
products and services to survive. Postmaster employment is tied to the survival of the
USPS.
The Postal Service has made extraordinary financial and delivery performance gains over
the past five years. It has also accrued modest surpluses over that time period.
Nonetheless, an October 1999 General Accounting Office (GAO) study concluded that the
Postal Service will face a decline in its core business over the next decade. This
decline, attributable to the maturation of the Internet and growth of on-line bill
payments, could place as much as $17 billion in postal revenue at risk. For this reason,
postal evolution is an absolute necessity. The Postal Service must be able to raise its
revenue in order to sustain full-time post offices and universal postal services
throughout the nation.
Legislation has been introduced during the 106th Congress that could have a crucial impact
on the future of the Postal Service, meaning the future of Postmaster jobs. The bill that
has garnered the most attention is H.R. 22, the Postal Modernization Act. H.R. 22,
introduced by Postal Subcommittee Chairman John McHugh, was approved by the Postal
Subcommittee last year, and is pending before the House Committee on Government Reform.
The bill has earned the wrath of UPS, the last major unregulated monopoly in this nation,
and its allies since it grants the Postal Service indispensable price flexibility and
enables the Postal Service to respond more efficiently to the mailing community. It is
important to note that without the existence of the U.S. Postal Service as an affordable
alternative to UPS, the mailing public would be held captive to UPS’ predatory
pricing practices.
The essential elements of H.R. 22 include the protection of universal service at uniform
rates and equipping the Postal Service with the requisite tools to survive. For example,
the Postal Service would be able to offer negotiated service agreements with the mailing
community, which would enable the Postal Service to offer reduced rates for mailers
meeting certain standards. In addition, the measure splits the operations of the Postal
Service into two components. Postal Services would continue within the auspices of the
U.S. Post Service. Non-postal services and products would be divested and assigned to a
new postal corporation. In addition, the Postal Rate Commission would be granted enhanced
authority over certain postal products and services.
Representative Henry Waxman, ranking Democrat on the Government Reform Committee,
introduced his own postal reform measure in mid-1999. H.R. 2535, the Postal Enhancement
Act would expand the authority of the Postal Rate Commission (PRC) and redefine what
constitutes a postal product. Representative Steve LaTourette, a member of the Postal
Subcommittee, has indicated that he may offer an amendment to H.R. 22 when the bill is
considered by the full Government Reform panel. It is reported that Representative
LaTourette’s contribution to postal reform would include a major expansion of the
PRC’s authority over postal products and services and limit the types of postal
products that the Postal Service could offer the public.
Representative Duncan Hunter introduced H.R. 198, the Postal Service Core Business Act,
which would restrict postal products and services, and Representative Philip Crane
introduced H.R. 2589, legislation to privatize the Postal Service.
While NAPUS has traditionally focused on the committees with direct jurisdiction over the
Postal Service, the Appropriations Committee and the Commerce Committee have emerged as
new battlegrounds for legislation affecting the Postal Service. Anti-postal members of the
Appropriations Committee have attempted to cripple the Postal Service’s foreign mail
operations. Most recently, anti-postal forces have used the Commerce Committee in an
attempt to restrict the Postal Service’s communications and law enforcement
capabilities by restricting its use of the government airwaves. Since our enemies have had
little success with their cause before the committees that have expertise on postal
matters, they have tried to shift the venue on postal issues to committees that have
little or no knowledge of postal issues.
Status
H.R. 22 is pending before the House Committee on Government Reform and
we expect the Committee to attempt to report the bill to the House floor when Committee
Chairman Dan Burton of Indiana and Postal Subcommittee Chairman John McHugh have the votes
to move the bill. A companion bill to H.R. 22 has not been introduced in the Senate.
H.R. 198 and H.R. 2535 are pending before the House Postal
Subcommittee.
Early in 2000, we anticipate that the Postal Subcommittee
will conduct hearings on foreign mail issues and the Senate Subcommittee on International
Security, Proliferation, and Federal Service will hold a hearing on the Postal Service and
E-Commerce.
Although it’s premature, we expect that
anti-postal forces will continue to turn to the Appropriations Committee and the Commerce
Committee to cripple the Postal Service.
WHAT TO
DO:
Postmasters should contact their Members of Congress and urge them to oppose any attempt
to cripple the Postal Service or hinder its ability to modernize. Furthermore, Postmasters
should educate their Members of Congress of the public service provided by the Postal
Service and this service relies on the revenue needs of the Postal Service.
Issue # 3
Federal Retirement and the Fiscal Year
2001 Budget
Postmaster retirement security is based upon the
soundness of the two major federal retirement systems -- the Civil Service Retirement
System (CSRS), and the Federal Employees Retirement System (FERS). Tampering with our
retirement cannot be tolerated. Nonetheless, over the past two decades Congress and
successive Administrations have looked to our retirement program as a cash- cow to help
reduce the federal deficit, expand the federal surplus, finance increased government
spending, or pay for tax cuts. Fortunately, Postmasters and our allies, including the
National Association of Retired Federal Employees, have succeeded in fighting off most of
the attacks against our annuities.
NAPUS' Position:
Postmasters oppose all efforts to reduce
earned retirement benefits, including changes to our COLAs, modification to our retirement
formula, or reducing the Thrift Savings Plan (TSP) government matching-formula.
Postmasters support the proposal in the
President's FY 2001 Budget to repeal the retirement tax imposed on postal and federal
workers in 1999.
Background:
On February 7, President Clinton unveiled his Fiscal Year 2001 Budget proposal, the last
budget submission of his two-term administration. While the NAPUS Government
Relations is still reviewing the budget document, NAPUS applauds the Administration's
proposal to repeal the unfair retirement tax levied against postal and federal employees
in 1999. Furthermore, a cursory review of the FY’ 01 Presidential Budget does not
yield any proposals that would adversely impact Postmaster retirement benefits.
Nonetheless, we should be aware that the protracted congressional budget process, which
may last through the summer, contains many land mines.
Over the past few years, the Congressional Budget Office (CBO) has suggested that the
federal retirement system could be cut to help improve the federal government’s
financial position. CBO recommendations could be adopted as part of a broad budget
agreement.
Defer retiree cost-of-living-adjustments (COLAs) until a retiree
reaches 62 years of age. This would slash federal retiree benefits by $9 billion over the
next 10 years.
Penalize CSRS annuitants with a diet-COLA, reducing the
adjustment by 1 percent. This proposal would cost each CSRS annuitant approximately $1,600
over a five-year period.
Limit COLAs to the first $680 of the monthly pension and grant
one-half of the COLA for the remaining annuity. This proposal would cut federal pensions
by $19.4 billion over the next decade.
Change the annuity formula from using the high-3 to using the high-5. This
modification would cost the average CSRS annuitant $450 per year and the average FERS
annuitant $140 per year.
Reduce the Thrift Savings Plan (TSP) government match from a
dollar-for-dollar match on the first 5 percent of salary to a 50-cent to the dollar match.
This proposal would cost federal beneficiaries $10.6 billion over the next 10 years.
Clearly, such changes would violate the contract between Postmasters and the federal
government. Furthermore, the General Accounting Office calculated that COLA delays and
reductions that were implemented between the years 1985 and 1994 have already had the
effect of reducing COLAs to about 80 percent of inflation. This means that federal and
postal retirement benefits have already lost ground to inflation.
Historically, the Congressional budget process is where Postmaster retirement benefits are
most vulnerable to attack. The President’s budget submission to Congress was
basically dead on arrival. Congress is presently crafting its own budget proposal,
although there may be some similarities to President Clinton’s financial plan.
Congressional budget actions include three phases the Congressional Budget Resolution,
passage of thirteen appropriations bills, and the enactment of a Reconciliation Bill.
While the passage of the appropriations bills are an absolute necessity, the Budget
Resolution is purely a political document, outlining its own budget priorities. In fact,
the Budget Resolution is not signed into law by the President. The reconciliation bill is
only used when Congress elects to enact changes in the law which result in spending cuts
or tax modifications. The budget process is completed with the signing into law of the
appropriations bills and the reconciliation bill.
Status:
Fiscal Year 2001 Budget Timetable
February 7 President Clinton submitted FY’ 01
budget to Congress
April 15 Deadline for
approval of
Congressional Budget Resolution
June 30 Completion of
Appropriations Bills
July
Congressional Approval of
Appropriations Bills
September Reconciliation Bill (if necessary)
What To Do:
Postmasters should contact their Members of Congress to
protect the federal retirement system from unfair attacks.
Issue # 4
Postmaster Health Security and the FEHBP
Postmasters depend on the Federal Employees Health Benefits
Program (FEHBP) to provide comprehensive health protection for themselves and their
families. Currently, more than 8.6 million employees, retirees, and dependents participate
in the FEHBP, making it the largest employer- sponsored group health insurance program in
the world. It has become clear that the FEHBP, which may be carried into retirement, is
one of our most valuable benefits.
NAPUS' Position:
Background:
Past Administrations and particular Members of
Congress have sought to restrict health coverage or enact legislation to increase the
enrollee’s share of the FEHBP premium. Recently, some Members of Congress, and at
least one Presidential candidate has hailed the FEHBP as a model to be emulated by the
entire nation. Nevertheless, FEHBP premiums have increased, impacting beneficiaries, the
federal government, and the Postal Service. For all these reasons, Postmasters must be
legislatively alert. We must be aware of legislative attempts that may purposely or
inadvertently harm the FEHBP or increase Postmasters’ health care costs.
A recurring proposal floated that has been suggested by a number of Members of Congress
would limit the government contribution to a fixed-dollar amount (i.e., a voucher) and
indexed to the general inflation rate. Presently, the employer-share is based upon the
weighted-average increase of all FEHBP plans. This method accounts for medical inflation,
while the proposal does not. The Congressional Budget Office projects that FEHBP premiums
will increase at twice the rate of inflation, which means that the adoption of the voucher
proposal would increase the average FEHBP participant’s share of the premium to 40
percent by 2004. The premium shift would continue to increase over time. This proposal
would hit particularly hard postmaster annuitants who currently pay approximately 28
percent of the total premium and would increase their share of the premium per year in
2004. (Active Postmaster’s share of the premium is decided as part of the
consultation process, but adoption of this proposal would undoubtedly affect the premium.)
Another proposal which has support among a significant number of Members of Congress is a
plan to burden the FEHBP with Medical Savings Accounts (MSAs). An MSA is a financial tool
that would permit a limited number of FEHBP participants to shield health care expenses
from taxes. Only non-retired participants who enroll in a high-deductible, low-benefit
health plan would be able to set up an FEHBP MSA. It is important to note that postal
employees are entitled to contribute to a Flexible Spending Account which permits health
care expenditures to be made on a pretax basis. Unlike the MSAs being considered by
Congress, the Postal FSA is not contingent upon enrollment in a high-deductible health
plan.
Last year, the Senate passed H.R. 2990, the Patients’ Bill of Rights, which includes
section 503 which authorizes the FEHBP to create an MSA option. Enactment of this
provision would increase Postmaster health costs since young and healthy FEHBP
participants would be attracted to the high- deductible MSA option, leaving behind
Postmasters and retirees in the comprehensive health plans that adequately provide for our
health care needs. This phenomenon, adverse selection, will result in higher premiums for
NAPUS members. In addition, the CBO estimated that adoption of MSAs would cost the
government money which must be offset by a reduction in another health care or retirement
benefit.
WHAT TO
DO:
Postmasters should urge their Members of Congress to oppose
an FEHBP voucher plan or fixed- dollar contribution plan, should it be proposed.
Postmasters should contact their Members of Congress to oppose section 530 of H.R. 2990.
Issue # 5
Retirement Equity
Over the past twenty years, Postmasters have been
unfairly penalized for participating in the federal employee retirement systems. The
Government Pension Offset (GPO) and the Windfall Elimination Provision (WEP) unfairly
reduce the benefits that are entitled to certain federal and postal annuitants. Generally,
a federal annuity is fully taxable, while only a limited number of Social Security
beneficiaries have their Social Security benefit partially taxed . Furthermore, the 1997
Budget Agreement imposed a discriminatory retirement tax all federal and postal employees.
NAPUS' POSITION:
Postmasters support H.R. 860, H.R.
1217 and S. 717, legislation to alleviate the impact of the GPO and WEP, and request that
Members of Congress co-sponsor the bills.
Postmasters support H.R. 372, legislation to reduce the unfair
tax impact on public pensions.
Postmasters support H.R. 2631 and S. 1472, legislation to eliminate the
unfair federal and postal employee tax, and request that Members of Congress cosponsor the
bills.
Background:
The GPO was enacted as part of the 1977 Social Security Act
Amendments and treated government pensions as if they were Social Security benefits. The
provision reduces or eliminates the Social Security survivor benefits to which a federal
retiree would have been entitled had the individual not been eligible for a civil service
annuity. The Social Security benefit is reduced by an amount equal to two-thirds of the
annuitant’s CSRS benefit. Representative William Jefferson of Louisiana introduced
H.R. 1217 and Senator Barbara Mikulski of Maryland submitted S. 717, bills that help to
alleviate the impact of the GPO. The bills would eliminate the offset for annuitants whose
combined pension and Social Security benefit is $1,200 per month or less. The two-thirds
offset would apply to the amount more than $1,200. H.R. 1217 is before the House Ways and
Means Committee and S. 717 is pending before the Senate Finance Committee.
The WEP dates back to the Social Security Act reforms adopted in 1983. The provision
altered the formula for calculating Social Security benefits for CSRS annuitants who also
worked in a job covered under Social Security. The change affected CSRS retirees who
became eligible for their annuity after 1985. The impact of the WEP could reduce Social
Security benefits by more than 50 percent. Representative Barney Frank of Massachusetts
introduced H.R. 860 which would exempt CSRS annuitants whose combined Social Security and
CSRS annuities are less than $2,000 per month. The bill would phase-out the annuity
protection as the combined income approaches $3,000 per month.
Except for a very small tax-free portion, federal retirement benefits are fully taxable.
Social Security benefits are taxed differently. For example, Social Security benefits are
not taxed unless the modified adjusted gross income plus one-half of the Social Security
benefit exceeds $32,000 for a couple or $25,000 for an individual. If these amounts are
exceeded, then up to 50 percent of the Social Security benefit is taxed. Nevertheless,
even the wealthiest retirees can be confident that at least 15 percent of their Social
Security will be tax-free. Representative Bruce Vento of Minnesota introduced H.R. 372
which would provide federal retirees a tax exemption equal to the maximum Social Security
benefit. This exemption would be subject to certain income limits.
The 1997 Budget Agreement imposed a phased-in temporary increase in employee contribution
toward CSRS and FERS retirement. The tax, when fully implemented, amounts to a 0.5
percentage point increase. The levy began on January 1, 1999 with a 0.25 percentage point
increase. On January 1, 2000, the assessment increased by another 0.15 percentage point,
and the final 0.10 percentage point will be realized on January 1, 2001. On January 1,
2002, the increase is scheduled to be stricken and the
contribution rate will revert back to its pre-1999 level. It is important to note that the
tax was used for deficit reduction, not to strengthen the federal retirement systems. In
addition, Postmasters and Members of Congress should know that postal employee
retirement benefits do not cost American taxpayers any money since such benefits are fully
funded by the Postal Service. The White House, as part of its Fiscal Year
2001 Budget, proposed to repeal this tax. Additionally, Representative Tom Davis of
Virginia and Constance Morella of Maryland introduced H.R. 2631 and Senator Paul Sarbanes
of Maryland introduced S. 1472, legislation to eliminate the tax.
STATUS:
H.R. 860 and H.R. 1217 are pending
before the House Ways and means Committee, and S. 717 is pending before the Senate Finance
Committee.
H.R. 372 is pending before the House Ways and Means Committee.
H.R. 2631 is pending before the House Committee on Government Reform and S.
1472 is pending before the Senate Committee on Governmental Affairs.
What to do:
Postmasters should contact their Representatives to
cosponsor H.R. 372, H.R. 860, H.R. 1217, and H.R. 2631; Postmasters should also urge their
Senators to cosponsor S. 717 and S. 1472.
PRESS RELEASE
March 7,2000
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