Taxpayer's Tab: Presidential Pension Reform Could Save $3 Million

This week’s edition of The Taxpayer’s Tab highlights NTU Foundation’s latest research on legislation that would set new limits on former Presidents’ benefits, require new cell phone security measures, and establish a new medical student loan repayment program.

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Most Expensive

The Bill: H.R. 1707, Access to Frontline Health Care Act of 2015

Cost Per Year: $106 million ($530 million over five years)

According to some economists, one of the biggest challenges facing the U.S. medical industry over the next several years will not be a lack of healthcare jobs, but rather finding enough professionals to fill them. The economy as a whole is experiencing a demographic shift that, as the population ages, is leading to slow growth in the working-age population. As the country recovers from the effects of the recent recession, more jobs will eventually become available, but the relative lack of available and qualified workers to fill those jobs could have a particularly acute impact in the field of health care.

The Department of Health and Human Services currently recognizes about 6,100 primary care Health Professional Shortage Areas (HPSA) across the country, defined as those where there are 3,500 people or more per physician. Meanwhile, demand for health professionals is unlikely to slow down as the so-called Affordable Care Act extends subsidized coverage options to some 30-34 million additional Americans.

While demand for doctors remains high, the cost of medical school continues to grow and presents a major obstacle to those who are otherwise qualified to pursue careers as health professionals. According to the Association of American Medical Colleges, over 84 percent of medical graduates last year left school with debt, which averaged $176,348. Including premed school loans, 79 percent of med students owed at least $100,000 and 10 percent owed a staggering $300,000 or more. At current Federal Direct loan rates, a hypothetical med student with $180,000 in debt can expect to incur $148,000 in interest over 3 years of residency and 10 years of post-residency.

To counteract some of those financial disincentives, Representative David Loebsack (D-IA) introduced the Access to Frontline Health Care Act of 2015, which would establish a medical student loan repayment program for health professionals that agree to work full-time for two years in an HPSA. Prospective doctors would need to apply to the program through the Department of Health and Human Services, and loan repayments would be made according to terms agreed upon in a contract between the doctor and the Department.

The Department of Health currently administers a number of related health workforce development programs, which received just over $1.05 billion in funding for FY 2015. NTUF estimates that HR 1707 would require additional federal spending of $106 million per year based on versions introduced in previous sessions of Congress.

Least Expensive

The Bill: H.R. 1777, the Presidential Allowance Modernization Act

Savings Per Year: $3 million (one-year estimate)

In last week’s edition of The Taxpayer’s Tab, we featured legislation that would eliminate the automatic annual cost-of-living adjustments (COLA) for Congressional salaries. It’s no secret that many Members of Congress are very wealthy from their careers outside of Washington, and on top of their private wealth, Members also earn base salaries nearly three times as high as the average American household’s once they get to D.C.

However, legislators on Capitol Hill aren’t the only ones entitled to substantial pay once they’ve been elected. At the other end of Pennsylvania Avenue, the President receives an official salary of $400,000 on top of numerous retirement benefits once they leave office. These include:

• A pension equal to Executive Cabinet Secretaries’ salaries, currently $201,700;

• Lifetime Secret Service protection for former Presidents and their families;

• Transition expenses for reconciling administrative overlap between administrations;

• Up to $1 million per year in travel expenses (and $500,000 for former First Ladies); and

• Office space (including rent, supplies, and staff) anywhere in the country.

Last year, NTUF conducted an in-depth analysis of the benefits provided to living former Presidents, which cost about $3.6 million in 2014 alone. The most expensive taxpayer-funded benefit was office rent, including $450,000 for Bill Clinton’s New York City facilities and $440,000 for George W. Bush’s office in Dallas.

Prior to 1958, former Presidents didn’t receive any retirement benefits at all, as most entered office very wealthy and generally didn’t need them. However, Congress authorized funding for them that year via the Former Presidents Act in order to “maintain the dignity” of the office after witnessing Harry Truman (who came from a relatively poor background) struggle to keep up with the demands of post-political life. However, most modern Presidents don’t face such financial difficulties, and are often able to take advantage of their heightened visibility by cashing in on speaking engagements, media appearances, and other private pursuits.

To reconcile that reality with existing laws, Representatives Jason Chaffetz (R-UT) and Elijah Cummings (D-MD) introduced the Presidential Allowance Modernization Act, which would cap former Presidents’ pensions at $200,000 per year and reduce other monetary benefits by $1 for every dollar above $400,000 that they earn outside of that. “History shows that former presidents do very well financially after they leave office. In fact, all living former presidents are millionaires, making it very unlikely that they depend upon their tax-payer funded allowances to make ends meet,” the Congressmen said in a press release.

Based on versions of the bill scored in previous sessions of Congress, NTUF expects the legislation would reduce federal spending by about $3 million in the first year.

Wildcard

The Bill: S. 1076/H.R. 2024, the Smartphone Theft Prevention Act

Cost Per Year: No Cost – Regulatory

According to the latest figures from Consumer Reports, there were over 3.1 million smartphone thefts in 2013, which is almost double the 1.6 million reported stolen in 2012. That data also shows that 34 percent of smartphone owners did not take any steps, like setting a screen lock or backing up their phone’s data online, to secure their devices. Many of these people prefer convenient access to their devices and discount the risk of losing their phone or tablet. Research from Creighton University suggests Americans spend nearly $580 million per year replacing lost or stolen smartphones and $4.8 billion on insurance through their cell phone providers.

In an attempt to mitigate some of those losses, lawmakers in Washington, D.C. have reintroduced legislation that would require cell phone manufacturers to include a “kill switch” in their phones’ software, allowing users to remotely wipe all of the phone’s data should it be stolen or lost. The Smartphone Theft Prevention Act of 2015 was sponsored by Senator Amy Klobuchar (D-MN) and Representative Jose Serrano (D-NY) in their respective chambers, and is identical to versions that were put forth in the previous session of Congress.

Congressman Serrano’s office cited the success of local initiatives in his own district in New York City, where cell phone-related robberies dropped by 16 percent after the State Attorney General’s office launched a campaign to urge manufacturers to include the kill switch feature on all phones. The AG said “[the Smartphone Theft Prevention Act] will take us one step closer to ensuring that no more families are victimized by this crime wave.”

Because the bill imposes an unfunded regulatory mandate, it is not expected to impact federal spending.