A petition on Whitehouse.gov calls for restricting Congressional pay to $75,000 a year has garnered more than 6,000 signatures in a mere 5 days. It has until Jan. 24 to reach the required 25,000 signatures for the White House’s review.
During the first half of the day on Dec. 29, the number of signatures on the petition had grown by over one thousand, and looks poised to continue growing quickly. It calls not just for pay restrictions, but requires that the purpose of these restrictions be to help pay down the national debt. Members of Congress would be subject to this reduced pay for three years. It would also require that all members of Congress who do not support such a measure be made known so that the public can make an informed decision as to whether they get re-elected.
A similar petition, started on Dec. 3 and reaching the 25,000 mark on Dec. 27, calls for the pay and benefits of the president and Congress to be restricted until they pass a solution to the fiscal cliff; and not just another stopgap measure, which is all they’ve been passing regarding budgets and the debt ceiling for the last two years.
Many Americans feel that Congress has been asking them to make a lot of sacrifices to help rein in government spending; sacrifices that many won’t have to make themselves. Indeed, Congress has made calls to raise the retirement age for Social Security eligibility. They do pay into Social Security, contrary to a lot of popular belief, so they can easily say that this is a sacrifice they’re making. The difference, however, is that members of Congress are not nearly as likely to have to rely on Social Security for their retirement as rank-and-file American workers, particularly those of the Boomer generation.
Members of Congress tend to have investment portfolios and other sources of income that the average American doesn’t have. Average American income was $45,000 to $50,0000 in September of 2012, and cost of living in the U.S. ranges anywhere from $31,080 in places like rural Nebraska, to nearly $65,000 per year in major cities like Boston. While incomes also vary from rural to major metropolitan areas, it basically comes down to the fact that the average American family does not have enough disposable income for a good savings account, let alone a nice investment or retirement portfolio. With the financial crisis of 2008 wiping out many American’s 401(k)s and other investment accounts, which many have only just begun to try and rebuild, the prospect of a comfortable retirement is even dimmer.
As of June 2012, the average American also has a net worth of somewhere around $77,000 (net worth is defined as assets, including all cash, minus liabilities, such as mortgages and credit card debt).
Compare this to Congressional salaries, which start at $174,000 per year. This gives members of Congress an advantage when it comes to saving and investing that the average American doesn’t have. When looking at an analysis done by the Washington Post, at least half of all 535 members of Congress have a net worth of over $800,000, accrued in various ways.
Do Congressional salaries play a part in this? Maybe. Assume that they only live on their salaries, and that they live in somewhat upscale (but not necessarily “rich” neighborhoods). They still have significantly more disposable income than the average American, enabling them to invest more money more quickly, and increase their net worth.
Thus, by their salaries alone, they have avenues open to them that the average American does not when it comes to saving and retirement. Many of them can choose to retire even with their pensions at much, much less than the 80% of their highest 3 years of pay, and still be very comfortable.
If the base pay of all 535 members of Congress is $174,000, the government pays out $93,090,000 every year. Reducing their pay by $99,000 would save $52,965,000 per year. Maintaining this cut for a period of three years would bring in a savings of $158,895,000.
Of course, those numbers don’t include the higher pay of some members due to their position within the legislative branch, or the pay of the president, vice president, and the cabinet. If all pay, including benefits, was restricted to a net amount of $75,000 the savings would be higher.
This is small change compared to what needs to happen, however. Perhaps it’s not the actual amount of money that would be saved over three years that’s such a driver for petitions like this; likely it is a symbolic request from the American people that says, if they need to sacrifice to help with government spending (such as accepting cuts to Medicare and changes to Social Security), Congress should have to make a real sacrifice as well.
[If you’d like to sign the petition, click here.]