About that Warren Buffett E-Mail

by Matt Zagaja on December 30, 2011

I have now received an e-mail that purports to be a proposal from Warren Buffett to reform Congress. I spent some time this morning penning a response so I figured I'd share it here in case anyone else gets it. First the original e-mail:

Winds of Change.... Warren Buffet is asking each addressee to forward this email to a minimum of twenty people on their address list; in turn ask each of those to do likewise. In three days, most people in The United States of America will have the message. This is one idea that really should be passed around. _*Congressional Reform Act of 2011*_ 1. No Tenure / No Pension. A Congressman/woman collects a salary while in office and receives no pay when they're out of office. 2. Congress (past, present & future) participates in Social Security. All funds in the Congressional retirement fund move to the Social Security system immediately. All future funds flow into the Social Security system, and Congress participates with the American people. It may not be used for any other purpose. 3. Congress can purchase their own retirement plan, just as all Americans do. 4. Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI or 3%. 5. Congress loses their current health care system and participates in the same health care system as the American people. 6. Congress must equally abide by all laws they impose on the American people. 7. All contracts with past and present Congressmen/women are void effective 1/1/12. The American people did not make this contract with Congressmen/women. Congressmen/women made all these contracts for themselves. Serving in Congress is an honor, not a career. The Founding Fathers envisioned citizen legislators, so ours should serve their term(s), then go home and back to work. If each person contacts a minimum of twenty people then it will only take three days for most people (in the U.S.) to receive the message. Don't you think it's time? THIS IS HOW YOU FIX CONGRESS! If you agree with the above, pass it on. If not, just delete. You are one of my 20+ - Please keep it going, and thanks.

Then my response:

I think that the original author (clearly not Warren Buffet) did not do their homework before writing this. In some cases the points are rather ambiguous and others refer to make changes that already exist. My comments correspond to the bullet points above.
  1. Members of congress do not have any sort of tenure privileges the way a teacher or college professor does. Some are in Congress a long time but that is merely because their constituents re-elect them. In regards to the salary/pension issue, some legislatures operate that way (see New Hampshire). I think its a bad idea because without a source of income from serving the members are then forced to find outside income. This means they must either be retired, independently wealthy, or have an outside source of revenue. This means we'll have more of the 1% in Congress or greater conflicts of interest due to outside influence.

2 + 3. Members of Congress do presently participate in the social security system. Wikipedia informs us a little more here:

The Social Security Amendments of 1983 required all Members of Congress to participate in Social Security beginning January 1, 1984. As Social Security and CSRS benefits sometimes overlapped, Congress called for the development of a new federal employee retirement program to complement Social Security. This new plan was enacted as the Federal Employees' Retirement Act of 1986. This act created the FERS program, under which new Members of Congress are currently covered.

So the Congressional Pension is merely a supplement to Social Security income. Members of Congress are of course free to decline to participate or to buy any other retirement plan available on the open market. However they do not get a 401k and would have to setup a traditional or Roth IRA.

  1. Congressional pay normally raises by cost of living which has recently been less than 3% and Congress has voted not to give itself raises in current years (see http://thehill.com/homenews/news/97971-obama-signs-law-blocking-congress-pay-raise). Again I'd view this as poor policy because millionaires like Nancy Pelosi do not suffer when the pay raises are eliminated but members of congress without money are impacted since they must absorb the inflation. For a story that does a great job of describing the impact of freezing salaries for public officials you should read this New York Times articles on judges leaving the New York Bench.

  2. Members of Congress participate in the same healthcare system as other federal employees (see http://www.factcheck.org/2009/08/health-care-for-members-of-congress/)

  3. This is already the case.

  4. This is the dumbest thing I have ever read. It's not really clear what he is saying here but it is terrible policy to break contracts because then people will no longer trust the contracts you make in the future. This was best understood by Alexander Hamilton when, at the founding of the country, he worked to have the United States assume and pay back its Revolutionary War debts (see http://www.usnews.com/opinion/articles/2008/09/18/past-present-alexander-hamilton-and-the-start-of-the-national-debt)

Finally there is the issue of a citizen legislature. I think its important to note that majority of our founders were professional politicians. They were made-up of lawyers, wealthy businesspeople, doctors, and scientists. Many interest groups are concerned that term-limits and other limitations that make legislatures less stable cause a loss of institutional knowledge and prevent legislators from developing expertise both at their jobs generally and in certain issue areas.

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