WASHINGTON -- Saying it would cost too much at a time of government downsizing, President Clinton vetoed a measure yesterday that would have permitted more than 1 million longtime federal employees to seek more lucrative retirement benefits.
The provision would have allowed federal employees enrolled in a conventional pension plan to shift into a newer system similar to a 401(k) program, in which the government contributes to employees' investments in stocks and bonds.
The president said his veto of the measure would save taxpayers $854 million over five years.
It was, Clinton complained, a "hastily conceived, undebated TC provision" that had been subject to no formal discussion in Congress.
The proposal had been tacked onto a Treasury appropriations bill by Sen. Ted Stevens, an Alaska Republican who chairs the Senate Appropriations Committee, during final negotiations on the bill by a House-Senate conference.
Because the returns on the newer retirement program depend on how aggressive an investment approach is selected by the employee, and then on how well those investments perform, it is impossible to determine exactly how more much money employees would earn under the new plan.
Overall, however, the stock and bond markets have performed significantly better than the returns on traditional pension plans.
It's unclear how deeply federal employees feel about the issue.
Jacqueline Simon, an economist for the union representing the largest number of federal employees, said the Stevens provision was not a major priority for her union.
The federal work force includes nearly 1.9 million people, about 127,000 of whom work in Maryland.
"It shouldn't be characterized as a major blow for federal workers," said Simon, of the American Federation of Government Employees.
"If somebody gave us a billion dollars over five years, we would rather see it used to fund a pay raise."
The president announced his line-item veto yesterday while he was in Buenos Aires, Argentina, during a weeklong swing through Latin America.
His decision caught some lawmakers off-guard, as it occurred during this week's congressional recess.
Some who represent geographic areas with many federal workers said they regretted the veto, which can be overridden only by a two-thirds majority in both houses of Congress.
"It's disappointing, because [federal employees] should be able to decide what's best for them," said Elena Temple, a spokeswoman for Rep. Albert R. Wynn, a Democrat whose Prince George's County district includes about 72,000 federal employees.
In a statement, Rep. Steny H. Hoyer, a Democrat who represents Southern Maryland, said he also disagreed with the veto and would work to ensure that a similar retirement package is offered to all federal employees.
Federal workers who have been hired since 1984 are already enrolled in the newer investment plan.
At the time, all employees were offered the opportunity to join the program, which also enables workers to receive Social Security benefits when they retire.
But most federal employees -- nearly 1.3 million people -- are still enrolled in the older, conventional pension program.
And some of them, said John Raffetto, a spokesman for Stevens, would like the opportunity again to seek greater returns through a plan linked to potentially lucrative stocks and bond investments.
Budget analysts for the Clinton administration and the Congress differ on how much the program would ultimately have cost in taxpayer dollars.
Clinton said yesterday that federal agencies would have to divert discretionary dollars to pay for the higher retirement benefits -- money that could have been spent for raises or other initiatives.
While the shift was scheduled to cost only $8 million in fiscal year 1998, its cost would have climbed to $221 million annually by fiscal year 2002, according to White House estimates.
Simon, the federal union economist, suggested that only a modest portion of the more than 1 million employees enrolled in the older pension plan would want to switch to the new one anyway.
Pub Date: 10/17/97