My Two Cents

Congress and reform

Chris Farrell Mar 9, 2009

Congress is complaining that the Obama Administration is asking too much of it. Fiscal stimulus. Bank rescue. Healthcare reform. Retirement security.

I’m not sympathetic. But I have a solution. Incentives matter.

First, a bit of background. Toward the end of 2006, American RadioWorks producer Sasha Aslanian did a one-hour public radio documentary called Imperial Washington. It was right after the November 2006 election when the voters spoke. They were sick of scandal. They put Democrats back in charge of Capitol Hill after twelve years of Republican rule. Pollsters said voters had had it with crooked lobbyists like Jack Abramoff. He’s the Republican operator who bribed public officials and ripped off Indian tribes. Then there were the Republican congressmen convicted of corruption — Duke Cunningham and Robert Ney.

There was genuine hope for reform with the new Congress. But we wondered how much will Capitol Hill really change? How much can it change?

We looked at how power and money combine to make Washington an Imperial City, where the corridors of power are dominated by insiders intimate with palace rules. One of our questions was whether the privileges and perks members of Congress enjoy go to their heads–and whether that sense of entitlement is an obstacle to change–and the answer is yes, power and privelege is an impediment..

Capitol Hill is like a small city all its own in Washington D.C.–sort of like America’s Vatican. Senators and Representatives and their staff have their own subway. They never have to leave their office complex to get a haircut … or go to the bank … or visit their kids in day care. Members even have their own elevators.

Congress gets automatic pay raises, while most Americans have watched their wages stagnate after adjusting for inflation. But there’s more than automatic pay raises. Members also enjoy a good health care plan and a gold-plated pension. Retired Members even get cost of living adjustments to their pensions, a benefit fewer than one in ten private sector pensions offer. “You run into a situation where they become so insulated, so isolated that they fail to make public policy that is truly in the interest of tax payers, said Pete Sepp of the National Taxpayer’s Union, a conservative watchdog group that tracks government spending.

So, here’s my idea: Take away the pension plan and healthcare plan of every member of Congress. If they want to save for their retirement they can open up an IRA. After all, about half the workforce doesn’t have access to an employer sponsored pension plan at work. They can also buy their health insurance in the open market. Of course, that means they’ll have trouble paying for insurance not just because it’s expensive but they will then face of being denied insurance because of a pre-existing condition. And their pay should be frozen.

This isn’t to be punitive. It’s so that Congress can identify with their constituents, what they’re going through, the risks they face, the dangers of financial fragility.

Incentives matter. My guess is that we’d have reform quick.

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