Managing costs government style-the budget deal

2013

Those of us who spent our careers in corporate America managing employee benefits know what cutting and managing costs really is. This ain’t it.

Here are a couple of the significant changes in the recent budget deal in Washington. Chances are pretty good you are funding 100% of your retirement not to mention health care in retirement, especially before age 65. At best you may get a company match in a 401k. And cost of living; virtually non-existent in corporate pension plans – if you can even find one of those. Not so if you work for the government.

WSJ 12-11-13 Hard to believe, but federal employees currently receive both a pension and a 401(k)-style plan with a taxpayer matching contribution. Most Americans in the private economy get one or the other if they get anything at all. Federal workers also contribute a mere 0.8% of their annual pay to their pension, which is unheard of even in major corporations. The deal increases that by 1.3-percentage points for new federal hires.

Military retirees under age 62 will see their cost-of-living increases reduced to the annual increase in the consumer price index minus 1%. The military brass requested this as a way to help them adjust to the decline in overall military spending. As many experts have written on these pages, the military’s exploding pension and health-care costs need to be restrained to be able to keep a trained and well-equipped active force.

We have a two-year budget deal and no mention of tackling the major fiscal issues facing our Nation. No doubt there will be a lot of patting on the back at this marvelous show of Democrats and Republicans working together. No tax increases for the Republicans and no action to deal with the reality of Medicaid, Medicare and Social Security for the Democrats

Don’t you wish members of Congress were running America’s corporations?