Retirement cuts, parking fees on list of savings options

A new Congressional Budget Office report lists tens of billions of dollars in potential federal spending cuts that could affect government workers, from closing military bases to cutting federal retirement benefits to charging employees higher rates for parking.

Seven options described in the report would reduce federal retirement benefits.

CBO's annual "Budget Options" report, released this month, doesn't endorse the proposals, but "is intended to inform policymakers about options for the federal budget," CBO Director Dan Crippen wrote in the report, which outlines 250 ways to cut spending or increase revenues. "Those options could be used to offset the cost of new initiatives, maintain budgetary discipline, reorder priorities or accomplish other goals."

The retirement benefit reductions listed in the report would save the government $79.3 billion over 10 years. However, "the main argument against cutting any retirement benefit is that such an action hurts both retirees and the government's ability to recruit a quality workforce," CBO said.

Ideas include limiting or deferring cost-of-living increases for retirees; changing the formula for determining federal pensions from an average of the employee's three highest-earning years to the employee's five highest-earning years; reducing the government's matching contributions for the Thrift Savings Plan; and making permanent a temporary increase in employee contributions toward their pensions.

The temporary increase in employee contributions began in January 1999 and is scheduled to end in 2002. Extending the increase beyond 2002 would save the government about $1 billion a year through 2010, CBO estimated. The Clinton administration proposed ending the increase in 2001 in its latest budget proposal.

Other cost-saving measures outlined by CBO include:

• Reduce the number of political appointees. Capping the number of appointees at 2,000 would save $900 million in salaries over 10 years. But political appointees help establish the President's control over the bureaucracy, CBO noted.
• Adopt a voucher plan for the Federal Employees Health Benefits Program. The government could pay the first $2,100 of FEHBP premiums, rather than 72 percent of premiums under current law. The government would save more than $13 billion over 10 years, but workers could end up paying more than 40 percent of premiums by 2005.
• Close military bases. Two additional rounds of base closures in 2003 and 2005 would save the government $4.7 billion through 2010, according to Defense Department estimates. But some analysts argue that military cuts have gone far enough, CBO noted.
• Charge federal employees for parking. The 200,000 parking spaces owned and leased by the federal government could net Uncle Sam $1.1 billion in parking fees over 10 years, CBO estimated. But many private-sector employers offer free parking, and charging for parking would reduce federal employees' compensation.