By Walter L. Updegrave Reporter associate: Carla A. Fried

(MONEY Magazine) – Predictably in this election year, the 435 U.S. representatives and 100 senators have spent much of their time scrambling for political cover or trying to make light of their embarrassment over a phenomenal string of congressional fiascos. Rep. Patricia Schroeder (D-Colo.) facetiously asks audiences: ''Please don't tell my mother I am a politician. She thinks I am a prostitute.'' More seriously, in early April, House and Senate leaders vowed at least to reduce the cost to taxpayers of princely perks for all elected lawmakers, such as free prescription drugs and free physicals at Congress' Office of the Attending Physician. House Speaker Thomas Foley (D-Wash.) called these cutbacks and the pending appointment of a House administrator and an inspector general ''the most far-reaching internal reforms in the history of the Congress.'' But so far the proposed congressional reforms are more cosmetic than far- reaching. MONEY calculates, for example, that if each legislator paid one of the new fees endorsed by Foley -- $520 a year to use the Office of the Attending Physician -- the $278,200 generated would account for less than 15% of that well-staffed office's $2.2 million annual budget. All told, Foley's perk paring would save taxpayers less than $1 million -- or not even four- hundredths of a percent of Congress' annual spending. Similarly, legislators have vowed to trim their spending on themselves in 1993. But don't count on it. Lawmakers sliced 8% off their budget in 1987 too. By the end of that year, however, spending had actually risen 11%. It's no wonder that only 10% of Americans express a great deal of confidence in Congress, down from 28% in 1984, according to a Harris poll. A two-month MONEY investigation into the ways lawmakers spend taxpayers' dollars on themselves reveals, among other things, that our legislature is now the most expensive in the world. Congress' estimated $2.8 billion tab is more than 10 times the cost of the 346-member Canadian parliament. Or measured another way, U.S. taxpayers will spend an estimated $5.2 million per lawmaker this year. Other highlights: -- Over the past two decades, Congress' spending on itself has shot up 705% -- more than double the 280% rise in inflation as well as the 311% increase in the defense budget. While Congress may cost about $2.8 billion this year, back in 1970, taxpayers had to spend only $343 million to cover the U.S. Government's entire legislative branch -- which consists of the House, the Senate and support agencies like the Library of Congress and the General Accounting Office, Congress' investigative arm. -- Members of Congress, who now earn $129,500 each, rank among the top-paid 2% of all working Americans. Since 1980, the lawmakers' salaries have more than doubled, making them twice as highly paid as their counterparts in Canada and the British House of Commons. In addition, MONEY estimates that seven key perks that members of Congress enjoy effectively boost their individual compensation by another $38,702 a year (see the table at right). Many of these perks, including beneficent health coverage, are also extended to congressional staffers and other federal employees. The creme de la perk: an extraordinary pension plan that, for example, currently pays retired lawmakers as much as $155,040 a year. Says John Haley, a senior actuarial consultant at the Wyatt Co., an employee-benefits consulting firm: ''I can't think of a corporate pension plan anywhere near as generous.'' -- Thanks to tricky bookkeeping, Congress obscures millions of dollars it spends on itself annually. One example of this legislative legerdemain: Each year lawmakers purposely exclude their own salaries and benefits from Congress' budget, understating their spending by $87.3 million in 1992 alone. They can do this because they have turned their compensation into a permanent appropriation, a status usually reserved for nondiscretionary items like interest on the national debt. What's more, legislative leaders can take money that was earmarked for one congressional purpose and, without a floor vote, spend it on another. Last year, Speaker Foley used $313,175 of the $4 million budgeted for repairing the Capitol's steps to create a three-room suite with a fully equipped kitchen for the Democratic Policy and Steering Committee, which controls Democratic committee assignments. House Speaker Thomas Foley's spokesman Jeff Biggs says such budgetary transfers are ''common and essential in all branches of the government.'' How has Congress become so costly? In large part, the legislators' support staffs have swollen far beyond the number that even many lawmakers admit they need to do their jobs effectively. And representatives and senators have then showered themselves and staffers with cushy salaries and perks.

THE STAFF BLOAT In the 1950s, Congress served the nation's 162 million people with a staff of 5,373. Since then, while the population rose about 50%, the House's and Senate's direct employees nearly quadrupled to 20,362. And the total hits 38,696 (down 3% from the mid-'80s) when you count everyone else on the legislative payroll -- for example, the 2,242 workers in the office of the Architect of the Capitol (up 41% since 1970), which maintains buildings and grounds. That makes Capitol Hill a bigger employer than the governments of all but three cities: New York City, Los Angeles and Chicago. Today, the average representative spends roughly $480,000 to employ about 15 people, with a maximum allowance of $590,760 for 18 full-time personal staffers. Senators receive between $1.1 million and $1.9 million, depending on their state's population. Average staff size: 41. Some legislators, however, manage to get by without armies of staffers. For example, Rep. William Natcher (D-Ky.), with a staff of nine, spends only 40% of his allowance, according to Roll Call Report Syndicate, a Washington, D.C. news service. More staff hasn't helped Congress produce better legislation. Historically, | much of a staffer's work is devoted to furthering the boss' re-election efforts. But as the amount of money needed to mount an effective campaign has soared -- in 1990, the average House member raised $440,480 and the average senator $4.1 million -- incumbents have increasingly used staffers for political work. ''I'd say about 20% of a legislator's staff time now goes to official legislative business,'' says John Jackley, a former press aide to Rep. Ronald Coleman (D-Texas) and author of the recently published Hill Rat: Blowing the Lid off Congress (Regnery Gateway, $21.95). ''The other 80% goes to political purposes, mainly getting re-elected.'' The personal staff's campaign efforts are often blatant -- but perfectly proper under Congress' rules of ethics. One example: At least four people are now drawing congressional salaries while simultaneously working to re-elect Sen. Robert Packwood (R-Ore.) this fall. Packwood's chief of staff Elaine Franklin will get paid $86,000 this year by the Senate and draw another $25,000 from the senator's re-election committee for the 20 hours a week or so of campaign work she says she performs on her personal time. She adds that she will go off the Senate payroll in September. Although this practice is accepted, critics claim it's impossible to keep the two roles truly separate. ''The fact that people still on the congressional payroll can help their bosses get re-elected should be repugnant to voters,'' says Charles Lewis, director of the Center for Public Integrity in Washington, D.C.

PILING ON PAY AND PERKS The raises Congress pushed through in the last five days of the 1989 session ultimately boosted their salaries 45%, to $129,500. Moreover, six congressional leaders make as much as 28% more than rank and filers. Speaker Foley's salary is $166,200, while Senate Majority Leader George Mitchell (D- Maine) earns $143,800. Although the newly ratified 27th constitutional amendment, drafted in 1789 by founding father James Madison, prevents any future Congress from voting itself a mid-term raise, it won't necessarily keep the pay from climbing. That's because back in '89, legislators voted to link their salaries to annual increases in an index of private-sector wages. This year's congressional raise: 3.5%. Furthermore, the Madison amendment will have no effect on all the remarkable fringe benefits that Congress has voted for itself and its staffers. For example, members and staffers automatically qualify for comprehensive health coverage regardless of their medical history. Insurance premiums are reasonable -- about $1,030 a year for a family -- because taxpayers subsidize the remaining $3,100 or so. Coverage continues in retirement too. Some perks, like free parking on Capitol Hill and in lots adjacent to the terminals at Washington-area airports, make a legislator's life more comfortable. Others save lawmakers money. For example, they can book VIP lodging at four national parks at $66 to $194 a person per day, including a three-bedroom beachfront cottage on St. John, in the Virgin Islands. Those rates are sometimes 40% below what citizens pay for comparable park accommodations. The most frequently abused perk is franking, the legislators' right to send mail and newsletters postage-free to constituents. The average representative will mail out about $180,000 worth of postage-free letters and brochures this year -- some $30,000 more than the average senator will spend on mailings to voters throughout an entire state. The total bill -- an estimated $80 million to $90 million for fiscal 1992 -- would cover roughly half a billion pieces of mail, or more than the number of catalogues L.L. Bean, Spiegel and Eddie Bauer will send out this year combined. (For a list of the 12 most notorious mailers, see the box on page 134.) Congressional members insist they need the free mail to keep their constituents abreast of legislative developments. But critics dismiss that excuse, noting that politicians typically flood mailboxes in election years. According to the House Administration Committee, representatives, on average, spent about 70% more on franked mail in the past six election years than in the off years.

THOSE PLENTIFUL PENSIONS The juiciest Capitol Hill perks are congressional pensions, which provide double to triple the benefits offered by most private employers. Today, some former lawmakers' annual pensions are twice as high as their pre-retirement congressional pay. (For details on Sen. Robert Dole's multiple government pensions, see Editor's Notes on page 7.) The 1989 pay raise law also boosted the average lifetime pension of House members who retire after 1992 from $1.1 million to $1.5 million and that of senators from $1.7 million to $2 million. According to estimates by the National Taxpayers Union, based on current pay, 4% annual inflation and normal actuarial assumptions, Rep. Patricia Schroeder would get the highest projected lifetime benefit of $3.6 million in the House, while Sen. Trent Lott (R-Miss.) would top the Senate's list with $3.9 million, assuming both retired this year. If they serve longer, they would get even more. In all, an estimated 300 or so members will each collect lifetime pension benefits of $1 million or more, while roughly 90 will pull down at least $2 million. ''Congress has become a pension millionaires' club,'' says David Keating, executive director of the National Taxpayers Union. Among the pensions' noteworthy provisions: -- Lawmakers and staffers who began working for the federal government after 1983 can retire with a full pension at age 50 after 20 years of service. -- Although most companies calculate pensions by multiplying an employee's years of service by the average of his or her five highest-paid years times 1.5%, members of Congress have their tenure multiplied by the average of their highest three years' salary, boosting their pensions by giving more weight to their peak years. This figure is then multiplied by as much as 2.5%. -- Congressional pensions automatically rise to match the annual increases in the consumer price index for members and staffers employed by the government before 1984. For others, the automatic increases begin at age 62. Few major companies offer such a guarantee. Like many corporate employees, lawmakers can invest as much as 10% of their salary in tax-deferred savings plans (1992 maximum contribution: $8,728). The taxpayers put in the matching funds of up to $6,475 a year. As if the pensions and savings plans aren't enough, some House members will qualify for a special golden parachute if they retire this year. The reason: An amendment buried in a 1979 law allows members who took the oath of office before 1980 to keep any leftover campaign money for their personal use when they retire. In 1989, Congress limited this goodie, saying that lawmakers could take the money remaining in November 1989 only if they left before 1993. Thanks to the law, at least 30 of the 81 legislators who announced their retirements or were defeated in this year's primaries can pocket a total of $9 million of unused campaign funds -- including $660,682 by 58-year-old Larry Hopkins (R-Ky.) alone -- according to Public Citizen, an advocacy group. Most of the 30 say they will donate the money to charity, other candidates or political parties (though they can change their minds, of course). But not 78- year-old Walter Jones (D-N.C.). The 26-year House veteran says he plans to use his $297,227 to augment his $71,268 annual pension.

WHAT REFORMS ARE NEEDED MONEY's interviews with legislators, scholars and citizen advocates suggested that voters should press their congressional candidates to support these four steps to increase efficiency while simultaneously cutting costs by almost $1 billion a year: -- Eliminate unnecessary staff and committees. House Minority Leader Robert Michel (R-Ill.) contends that the House could operate better with half of its present 186 committees and subcommittees. Other legislators believe staff levels could be slashed by a third to a half. Says Rep. Andrew Jacobs (D- Ind.), who uses only 10 staffers, rather than the typical 15 to 20: ''Legislators would be forced actually to know something about the issues that they're voting on and not rely so much on their staff.'' -- Hire a Big Six accounting firm annually to audit Congress' books using the same standards that apply in the private sector. One major goal: to abolish the labyrinth that passes for bookkeeping on Capitol Hill. -- Eliminate every perk that is not necessary for lawmakers to do their jobs. In February, Rep. James Nussle (R-Iowa) sponsored a bill to close the House and Senate barber shops and require legislators to pay the going rate for airport parking, medical care and other free or subsidized services. Not surprisingly, the bill is bogged down in six committees. Another suggestion: Pare back the legislative branch's retirement plans to make them comparable to private pensions. Savings: some $100 million a year. -- And stamp out the frank except to answer constituents' letters or queries. Potential savings: $100 million to $150 million per two-year session. Better yet, the number of staffers now employed chiefly to draft copy for mass missives, assemble mailing lists and stuff envelopes could be sharply reduced while those that stayed on could be given legitimate legislative work -- which is what taxpayers ought to be paying Congress to do.


Your taxes pay some staffers essentially to make lawmakers' lives more comfortable. Here are six such jobs, with salaries. In some cases, only one chamber agreed to give MONEY details.

VIDEO PRODUCER (about $44,000): Eighty-nine producers, technicians and assistants provide coverage of hearings ^ and debates and prepare news releases for legislators to send to broadcast shows back home.

CHAUFFEUR ($40,667): Three drivers shuttle House leaders around Washington. Annual cost of the drivers and the 14-vehicle House fleet: about $172,000. The Senate declined to discuss drivers.

UPHOLSTERER ($35,640): The four House upholsterers, who fix up furniture in members' offices and meeting rooms, cost taxpayers $138,000 annually. The Senate again declined to answer questions.

SENIOR HAIRSTYLIST ($32,917): Twenty-six barbers, beauticians, manicurists and shampooers cut and coif hair at cut-rate prices in the four House and Senate beauty and barber shops.

GARAGE ATTENDANT ($31,984): About 80 attendants work at the Capitol's garages and parking lots, which are free to legislators but off limits to the general public.

FOLDING OPERATOR ($30,346): A staff of 12 so-called folders in the Senate operate machines that prepare mass postage-free mailings to lawmakers' constituents. The House declined to discuss its folders.




CHART: NOT AVAILABLE CREDIT: Source: Office of Management and Budget CAPTION: THE HIGH COST OF RUNNING CONGRESS The cost of operating the U.S. Congress plus its 38,696-person support staff has zoomed from $343 million in fiscal 1970 to an estimated $2.8 billion for 1992 -- an astounding 705% rise, more than double the 311% in crease in defense spending over the same period. This chart shows the money spent in 1970, 1980 and 1992 by the House of Represen tatives, the Senate and related agencies such as the General Ac counting Office. The agencies, which are all funded by Congress, posted the greatest spending in creases -- 776%, vs. 629% for the House and Senate combined.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: HOW CONGRESS PERKS UP ITS PAY Members of Congress officially earn $129,500 a year, up a mu nificent 45% from $89,500 in 1989. But according to MONEY's calculations, the typical lawmaker actually collects $168,202, if you count seven key taxpayer-paid perks that are the equiva lent of extra pay. (We excluded such perks as subsidized meals because their use varies so much among legislators that it's im possible to assign specific values to them.) It's worth noting that since some of the big bennies are directly linked to salary, their cost has been outpacing inflation. Example: Between 1980 and 1992, taxpayers' share of the average lawmaker's an nual pension costs nearly doubled from roughly $12,000 to $23,764, thereby rising slightly faster than the rate of inflation.

CHART: NOT AVAILABLE CREDIT: Source: National Taxpayers Union CAPTION: THE 12 MOST NOTORIOUS MAILERS Postage-free mailings to constituents, a 217-year-old privilege known as franking, is among the most prized and abused perks on Capitol Hill. And Americans pay dearly for it: $80 million to $90 million this year alone. Although lawmakers have given themselves lavish individual franking allowances, some man age to exceed them. This table lists the 12 House members who used 100% or more of their franking allowances last year. How can they surpass the maximum? Simple. They are able to trans fer as much as $25,000 from other accounts. Representatives tend to mail more than senators, especially in election years.