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If ever there was a major legislative issue whose progress has been hamstrung by election-year politics, it's retirement policy in the 106th Congress.
Three key committees together have sat through more than 70 hearings and crafted numerous bills on Social Security, Medicare, pension reform, and long-term care. Many more hearings were held in other committees. The word "retirement" was probably heard more in this Congress than in any previous one.
Yet on the eve of adjournment, only two significant pieces of retirement legislation are all Congress has to show for this effort. One is the abolition of the Social Security earnings limit for beneficiaries age 65 to 69. The passage of this law means benefits won't be cut if recipients' earnings exceed a specific dollar amount.
The other is the creation of a $125 million "family-caregiver program." This has been folded into the renewal of the Older Americans Act, a 35-year-old bundle of federal funding that pays for, among other things, meals and employment programs for seniors and pension counseling for retirees and pre-retirees.
HOT POTATO. But what about the really big issues? Social Security reform is a hot potato in the elections and so is off the agenda for the 106th Congress. Issues such as pension policy and long-term care are entangled in the huge tax bill, whose future remains in doubt.
Pension policy especially has taken up a lot of this Congress' time. A bipartisan team of House and Senate members has even agreed on pension reforms that would let you increase your tax-deferred contributions to IRAs, 401(k)s, and other retirement plans. The reforms would also require employers to provide more information about possible cuts in benefits if they change their policies.
"We've made tremendous progress," says James Delaplane, vice-president of the American Benefits Council, an organization of large employers. "This has been a session of positive developments and momentum, in contrast to other sessions."
The House has actually passed the pension package three times as part of bigger bills -- twice with "yes" votes from more than 400 of the 435 members. The Senate has considered it twice. The pension provisions even reached the White House in August, 1999, but died because they were part of a Republican tax-cut bill that President Clinton refused to sign. Now, they're part of the catch-all tax bill under dispute as Congress and the White House skirmish over the budget and other end-of-session issues.
HERE COMES THE FLOOD. The tax bill also contains proposals that would allow you to deduct the entire cost of premiums for long-term care insurance and a new tax deduction for people who provide long-term care in their home for a family member. The maximum care-giving deduction would start at $3,000 per year in 2001 and would rise to $10,000 in 2008.
The tax bill's fate of the tax bill could be determined by any of a number of nonretirement issues it contains or by the total cost to the Treasury. But it could also be held back by the arguments of critics who contend that the pension and long-term-care provisions are too heavily weighted toward high-income taxpayers.
For example, the Center for Budget & Policy Priorities, a nonpartisan research organization based in Washington, D.C., says raising the ceiling for tax-deferred contributions to IRAs and 401(k)s would help only the wealthy, since a mere 5% of those eligible are making the maximum tax-deferred contributions to their accounts. They also argue that the 77% of Americans in the 15% tax bracket would receive little or no benefit from a deduction for long-term care insurance because they probably wouldn't be able to afford it.
So in these final days of the 106th Congress, the Older Americans Act -- which the President has said he will sign any day now -- remains the primary achievement in retirement policy. Senator Mike DeWine (R-Ohio), chair of the subcommittee that worked on the bill, calls it "a key step toward preparing for the demographic tidal wave of the aging baby boomers." He could be right.
Although they're relatively modest, the act's changes in such areas as care-giving, computer technology, and pension counseling may actually point to future policy directions, as a new Congress grapples with how best to serve baby boomers and their aging parents.
Programs contained in the new version of the act are:
Family care-giving: A $125 million program to provide information, training, counseling, respite care, and other services to family members who are caring for an older relative in their own home.
Pension counseling: An expansion of the pension-counseling projects, which now cover only 15 states, into a permanent, nationwide network. These projects, started in 1992, offer Web sites and hotlines to provide information and technical assistance on pension rights and can help employees figure out if their companies are mismanaging their benefits.
Pension-rights hotline: Creation of a "one-stop" federal hotline for information and referrals on all types of pensions and retirement problems and programs. Currently, most federally supported pension counseling is for people with private employers -- few resources exist to assist those who are self-employed or who depend on local or state government, the military, or other nonprivate systems for their retirement benefits.
Computer training for seniors: This project to help older Americans learn how to use computers and navigate the Internet has two purposes: to increase their skills for employment and to help them find information about retirement benefits and programs.
"Financial-exploitation" study: A federal inquiry the limits of which are yet to be defined. It could include an analysis of such problems as caregivers who misuse the money of the patients who hire them and home-repair scams that target the elderly.
The Older Americans Act helps many people who are already retired, and some of its new initiatives will also help baby boomers and their families. But if you want to see something more than this -- such as Social Security or pension reform -- come out of the next Congress, now is a perfect moment to do something specific about it. If you don't know where your elected representatives stand on these issues, find out soon. Then when you go the polls on Nov. 7, you can make retirement policy one of the factors on which you base your votes.
Hoffman writes Your Retirement twice a month, only for BW Online. An excerpt from her book, The Retirement Catch-Up Guide, appeared in the July 17, 2000, issue of Business Week Edited by Patricia O'Connell
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Copyright 2000, Bloomberg L.P.
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