August 4, 2010
Ann Kirkpatrick is part of a rarefied group. With an annual salary of $174,000, she earns more than 97 percent of American workers. She’s also got a generous guaranteed pension, great health benefits, including on-site care, lots of free travel and an expense account that could make a corporate titan drool. She thinks it’s time that she took a pay cut.
Congresswoman Kirkpatrick, a Democrat from Arizona, recently sponsored legislation to cut Congressional pay because she doesn’t think legislators should live like kings when the rest of the country is suffering. If she’s successful, it would be the first time legislators have cut their own pay since the Great Depression.
“I think we should lead by example,” Kirkpatrick said. “As Congress considers where to make budget cuts to get our fiscal house in order, members need to do the right thing and start with their own pay.”
Even if Kirkpatrick is successful—a long shot—it would take more than a 5 percent pay cut to scale back the regal lifestyle of America’s elected representatives. While taxpayer unrest has caused legislators to lose some perks over the last few years, like free haircuts and subsidized meals in the legislative dining rooms, the litany of extras that legislative leaders enjoy are taking an increasing amount of cash out of taxpayer pockets even as the federal deficit balloons to previously unimagined levels, said Pete Sepp, executive vice president of the National Taxpayers Union in Washington, D.C. As the economy was crashing and companies were cutting back, appropriations for the legislature soared 17 percent over the past two years to $4.66 billion, according to NTU.
Worse, the full cost of legislative perquisites is impossible to estimate, says Paul Singer, associate editor and investigative reporter at Roll Call, a newspaper that’s covered the capital since 1955. That’s because legislative travel to foreign lands—like those “fact finding” trips to Italy—are so badly accounted for that Singer found a $30 million gap between the amounts legislators claimed to have spent when compared to what the U.S. Treasury said it paid for the same trips. Singer recently received a copy of a report done by the Congressional Research Service that underscored how sketchy disclosure requirements are for travel expenses.
When members of Congress fly on military jets, which is often, the cost is not recorded at all. Fly on Air Force One or one of the military’s many Gulfstream four jets and the cost is listed as a footnote — “military air transport” — on expense disclosure forms, as if it were free.
To be sure, a job in Congress requires some expenses that others don’t have. You need to have two homes, for example—one in your home district and one in Washington, D.C., where you work. And there are plenty of urban legends about the perks legislative leaders receive—including the fallacious notion that after as little as one term legislators receive a full salary as a pension for life. (Congressional pensions were scaled back in 1984, but even then, you’d only be guaranteed 12.5 percent of your pay after a single term.) Still the facts are starling enough. Here’s the true story of what we provide our elected representatives and how that compares to the real world.
Pay: Members of Congress set their own, not unlike some state assemblies. While legislators were paid nothing more than a $6 “per diem” allowance back when the country was founded, the rank and file members now receive a tidy $174,000 salary, which is automatically adjusted each year based on changes in the employment cost index. The automatic pay increase was nixed in 2010, partly as a response to the uproar when Social Security payments were held stagnant.
If you’re a House or Senate leader, you get more. The Speaker of the House gets $223,500, while both minority and majority leaders in the House and Senate take home $193,400.
To put that in perspective, the U.S. Census Bureau reports that just 5.1 million Americans earn more than $150,000 annually out of the nation’s 240.1 million workers. That means members of Congress earn more than 97 percent of the country.
Pensions: Back in 1984—the end of another great recession—furor over legislative pensions ushered in reform. Legislative exemptions from contributing to the Social Security system were eliminated and over-the-top pensions that would pay 50 percent of your highest salary after 20 years of service were replaced with a less-generous pension, plus Social Security.
Now, if you retire at age 55 with 30 years in Congress, you’ll get just 44 percent of your pay—roughly $76,560—versus 71.3 percent ($124,062) of pay under the old formula. Of course, now legislators also get Social Security payments, which can add another $20,000 or $30,000 annually to their retirement income, so they still come out ahead of the game.|
Congressional pensions also are adjusted for inflation. In private industry, where just one in every five workers has access to a traditional pension, payments are about half as generous as legislator’s pensions and retirees rarely get annual boosts to account for the rising cost of living, said Marcia Wagner, a benefits lawyer with Wagner Law Group in Boston.
More pensions: In addition to the traditional pension, members of Congress participate in the government’s Thrift Savings Plan. If legislators don’t want to save any of their own money, the government will still set aside 1 percent of their pay—that’s $1,740 annually—into the Thrift plan. If members do decide to contribute, Uncle Sam will match another 5 percent of pay for a total contribution from taxpayers amounting to 6 percent of total income, or $10,440. The closest thing that private industry has to the Thrift Savings Plan is your 401(k). Most commonly, companies match worker contributions at a 50 percent rate up to 6 percent of pay, said David Wray, president of the Profit Sharing/401(k) Council of America. So, if you earned $100,000 and contributed $6,000, your employer would kick in $3,000. That’s half as generous as the thrift plan.
Health care: While about 15 percent of the population is without health insurance, members of Congress are all covered. Their plan is similar to the subsidized plans offered by big companies. In this case, the government pays about 70 percent of the cost of coverage, while legislators pick up the remaining 30 percent. In addition, they have access to dental insurance, vision care, health savings accounts, life and long-term care insurance—that’s similar to the cacophony of lucrative benefits offered by the best American companies.
Perks: There’s free parking, both at the office and at Washington, D.C.-area airports. You get a cheap membership to the house gym, subsidized daycare and access to legislative dining rooms that were once subsidized to the tune of $2 million annually, but are now supposed to be operating at cost, says Sepp. You also can see the legislature’s “attending physician” for a nominal annual cost and get lots of cool little benefits when you retire—like the ability to buy your office furnishings, send mail for free and have a neat little memorial published in the Congressional Record when you die. They even get a special tax deduction of $3,000 to write off living expenses when away from their congressional districts or home states. And like most other executive fringe benefits, the bulk of the perks provided to members of Congress are tax free.
Travel: But the legislative perk to trump all others is travel, says Singer. Not only do you get to fly between D.C. and your home district on taxpayers through the “members representational allowance,” there are lots of ways you can globe-trot on somebody else’s dime. Join a committee, for example, and you can participate in fact-finding trips all over the globe.
Last year’s Congressional junket to talk about climate change in Copenhagen cost taxpayers $550,000, which included so-called “per diem” allowances for hotels and meals that worked out to $2,200 per person, per day. Technically, legislators are supposed to return any per diem payments that they don’t need to spend, but a recent Wall Street Journal investigation found that rarely happens. One legislator quoted by the WSJ said he’d hesitate to travel so much if he thought he couldn’t just pocket the taxpayer money.
Members say their trips are all about business and fact finding, but they usually take their spouses, Singer says. And it’s tough to figure out just how much members are spending and whether American taxpayers are getting their money’s worth. That’s because international travel comes out of what Singer calls a “bottomless mystery account” operated by the Treasury. Money doesn’t have to be appropriated to finance the travel; military flights aren’t counted as expenses; nor are the expenses incurred at the other end, where legislators become “guests” of U.S. Embassies that set up transportation, meeting rooms and, sometimes, sightseeing, in these foreign lands, Singer says. Itineraries for the trips are not published.
Meanwhile, expenses that come out of Congressional “member representational allowances,” have become increasingly obtuse, he gripes. These allowances, which average $4.2 million for Senators and $1.52 million for members of the House, are supposed to pay staff salaries, legislative travel and to furnish field offices, among other things.
In the past, if you wanted to know if money was being misspent, you could refer to massive written ledgers that provided such vivid detail, you’d be able to determine the make and model of the television bought for a field office, said Singer. But when the legislature put the spending records online last year, supposedly to improve “transparency,” they replaced the detail with bland notations such as “office equipment, under $25,000,” Singer said. Now that the data is searchable, the information is so generalized that it’s virtually meaningless, he says.
Coincidence? Singer doesn’t think so. “Welcome to your Congress,” he says.