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Golden Years to Bring Golden Pension Payout of $5.6 Million to Bush, $3.2 Million to Cheney, Taxpayer Group Finds
For Immediate Release January 16, 2009
Pete Sepp, (703) 683-5700
(Alexandria, VA) -- As Barack Obama takes office amid promises to bring change to Washington, one thing remains the same: a generous retirement package for ex-Presidents, including a pension that could eventually total $5.6 million for outgoing Chief Executive George W. Bush. The estimates were calculated by the nonpartisan National Taxpayers Union (NTU), a 362,000-member taxpayer group that has a long history of accurate Congressional and Presidential pension calculations.
NTU Vice President for Policy and Communications Pete Sepp observed, "What started as a modest system to help Harry Truman answer his mail has become a millionaires' club for ex-Presidents, and taxpayers are the ones covering the dues. The 50-year-old benefit structure Congress provided should be adjusted to reflect the reality of modern politics and economics."
NTU calculates that George W. Bush will draw a Presidential pension that will start at $196,700 per year, and would add up to $5.56 million over his lifetime, should he live to be 83.5 years old, the age predicted by actuarial tables for a male born in his year. All former Presidents receive a pension for life immediately upon leaving office, linked to the current salary of Cabinet Members (which often rises).
Dick Cheney's service as a Representative and Vice President (presiding officer of the Senate) would count toward a pension under Congressional rules, which are more generous than those that apply to most other federal employees. His service in other various Executive Branch posts is calculated under a different formula. All told, Cheney's career in government entitles him to an estimated pension equivalent to $132,451 per year (which is regularly adjusted for the cost of living). According to his predicted life expectancy (84.4), Cheney could accumulate an inflation-compensated lifetime retirement benefit of $3.24 million.
The calculations do not include Cheney's savings, if any, in the tax-deferred federal Thrift Savings Plan (TSP), which is similar to a private-sector 401(k) plan. Though most federal employees can take advantage of this benefit, only those enrolled in the newer of the two pension plans covering the bulk of federal workers can receive a generous "employer match" from the government for TSP contributions they make. NTU assumed that Cheney did not qualify for the government match, meaning that he would only be allowed to contribute up to 9 percent of his own salary to the TSP.
Bush's potential lifetime payout would, according to NTU's analysis, be second only to Bill Clinton's $6.97 million projected lifetime benefit. Although Clinton's life expectancy is nearly the same as Bush's, Clinton has had an eight-year "head start" during which he has collected roughly $1.4 million. Based on their estimated life expectancies, George H.W. Bush and Jimmy Carter could be in line for $4.20 million and $5.38 million, respectively. Owing to their long federal service, high salaries, and other factors, both Cheney and his predecessor, Al Gore, can likewise enjoy large pensions.
In 2001, NTU estimated that Gore's initial pension would equal $94,810. With cost of living adjustments, his 2009 benefit would have risen to $120,378.
Under the Former Presidents Act of 1958 and subsequent revisions or interpretations, ex-Chief Executives also receive staff, travel, mail, and office expense reimbursements that ranged from $518,300 (Carter) to $1.16 million (Clinton) apiece for Fiscal Year 2008. Although the General Services Administration (GSA) oversees these funds, only a few basic restrictions on their use apply. Secret Service protection costs are not reported, but are rumored to run into the high millions.
According to the GSA, George W. Bush's permanent office space in Dallas, TX will carry an annual leasing cost of nearly $312,000. Compared to Fiscal Year 2008 rent allocations for other ex-Presidents, this amount would be nearly twice that paid for George H.W. Bush's office space ($175,000), but still lower than Bill Clinton's $516,000 rental tab (Carter came in lowest at $102,000).
An August 2008 report from the Congressional Research Service noted that the idea of providing pensions to former Presidents first surfaced in Congress in 1912, but did not gain traction until the 1950s. Even in the year the Former Presidents Act passed, 1958, seven Members of the House Post Office and Civil Service Committee (which had jurisdiction over such legislation) opposed the bill's "unprecedented vagueness" and warned of its "wide and dangerous loopholes." Several attempts have been made in Congress to curtail Presidential retirement benefits, the last one being a five-year limit on office allowances that was enacted in 1993. The limit was repealed in 1997.
NTU has called for reforms in both the Congressional and Presidential retirement systems, such as substituting a 401(k)-style plan for the pension benefit, setting time limits on office expenses, establishing a minimum retirement age for former Presidents, or scaling back the Congressional pension benefit formula to that offered to most other federal employees.
Congressional pensions are typically two to three times more generous than those in the private sector and even more generous than pensions for most federal workers. Plus, the Congressional benefit is protected from inflation with Cost of Living Adjustments (COLAs), a feature that less than one in 10 private plans offer. Also, Members of Congress enjoy a much lower retirement age with full benefits than private sector employees and Social Security beneficiaries. The Members paid up to 8 percent of their salaries into the Civil Service Retirement System (CSRS), in which Cheney could have participated. But this covers just a small portion of the benefits (about 20 percent).
NTU computes the pension benefit estimates based on public records concerning length of federal service, age at the time of retirement, life expectancy based on standard mortality tables used by the life insurance industry, and COLAs estimated at 4 percent a year (3.5 percent for ex-Presidents), similar to estimates used by federal actuaries. It is possible, though unlikely, that Dick Cheney has declined coverage in the Congressional retirement system since participation is voluntary.
"Lawmakers who passed the Former Presidents Act could not have foreseen the millions of dollars that former Chief Executives can make in private life, or the millions that taxpayers continue to shell out every year for ex-Presidents," Sepp concluded. "It's up to today's public officials to reform this tax-funded system, and respect the hard-working people who are struggling to pay their own bills as well as the government's bills."
NTU is a nonprofit, nonpartisan citizen organization founded in 1969 to work for lower taxes, smaller government, and more accountability from elected officials at all levels. Note: For more information, visit www.ntu.org.