Some lawmakers trying to restore a tax break for the nation's largest private pension fund have part of their own retirement money riding on the outcome.
Six sponsors of the legislation or their spouses are among the 2 million members of the $200 billion Teachers Insurance Annuity Association-College Retirement Equity Fund, best known as TIAA-CREF.TIAA-CREF lost its 79-year-old tax exemption in the recently enacted Balanced Budget Act. Eliminating the tax break will bring an estimated $1.2 billion to the Treasury over the next 10 years.
It also means TIAA-CREF will have a bigger tax bill to pay before it can hand out benefits. One estimate is that future pensions may be reduced by 5 percent, meaning that someone who was to receive $12,000 a year will wind up with $11,400.
In September, Sen. Daniel Patrick Moynihan, D-N.Y., introduced legislation to restore the tax break for TIAA-CREF. The bill has two co-sponsors in the Senate and 53 sponsors in the House.
"Why make the lives of librarians and assistant professors and teachers in community colleges harder?" Moynihan said. "There is no reason to tax this."
A former Harvard University professor, Moynihan currently receives $1,074 a month from the plan.
It's a situation that troubles congressional watchdogs.
"Generally, lawmakers should not propose legislation that would personally benefit them," said Charles Lewis, director of the Center for Public Integrity. "That gives the impression of self-dealing, better known as feathering your nest."
"It's obviously not something the senator even thought of," said Moynihan's chief of staff, Tony Bullock. "How this bill affects him personally is not the issue."
One of the House co-sponsors, Rep. Rosa DeLauro, D-Conn., has between $100,000 and $200,000 in two TIAA-CREF accounts with her husband, Democratic pollster Stan-ley Greenberg.
"We should not tax a teacher's pension," DeLauro said. "This is not a bill that is specific to me."
"If you want to carry this to its conclusion, no one who owns stock should vote for a capital-gains tax cut and no one who owns a home should vote on the home mortgage deduction," she said.
Another co-sponsor, Rep. Barney Frank, D-Mass., said he would take his name off the bill to avoid any ethical questions. Frank's account has $15,000 to $50,000 in it.
Repeal of the tax provision was championed by Rep. Bill Archer, R-Texas, chairman of the House Ways and Means Committee, who called it unwarranted and a gift from his Democratic predecessors to a favored constituency.