House set to OK bill to change overtime pay law

The Republican-led House is poised to approve a bill that would give private sector workers the option of choosing paid time off instead of cash wages for working overtime.

The measure would allow employees who work more than 40 hours a week to save up their earned time off for use weeks or months later. GOP lawmakers say they want to give busy working parents at private firms the same flexibility that public sector workers have to take time off to spend with their children or care for aging parents.

Democrats and worker advocacy groups say it opens the door for employers to pressure workers not to take overtime pay. And they warn there is no guarantee workers would be able to take the extra time off when they want.

The bill is expected to pass Wednesday but has little chance in the Democratic-controlled Senate. President Barack Obama has threatened a veto, saying the bill would not prevent employers from slashing overtime hours and doesn't offer enough protection for workers who may not want to receive compensatory time off in lieu of overtime pay.

The measure is part of a broader Republican agenda aimed at expanding the party's political appeal by offering conservative ideas to help average Americans on issues like economic growth and job creation.

"It puts parents over politics," said House Majority Leader Eric Cantor, R-Va. He said the bill "makes sense" to help working moms and dads and gives them more flexibility with their hours at work to take care of family needs.

The plan would change the Fair Labor Standards Act of 1938, which requires covered employees to receive time-and-a-half pay for every hour over 40 within a work week. The proposal would allow workers to bank up to 160 hours of comp time per year that could be used to take time off for any reason.

Current law only allows private sector workers to swap comp time for overtime pay within a single pay period. The time can't be saved up for use later in the year.

The Republican bill would let employees decide to cash out their stored comp time at any point and forbids employers from coercing workers to take comp time instead of cash.

But Maryland Rep. Steny Hoyer, No. 2 Democrat in the House, said it's not fair to compare the legislation to similar flexibility that is offered to public sector employees because there are "a lot more protections" for public sector employees.

Opponents say the reason public sector workers were given the option to take time off instead of overtime pay in 1985 was to save cash-strapped governments money. They say that's why business groups are lobbying in favor of the bill, not to protect workers.

Critics also say the bill lets employers decide whether to grant a specific request to use comp time, so workers have no guarantee of when they could use the time. Even if workers can collect their unused time as cash at the end of the year, opponents argue that essentially gives employers an interest-free loan from employees.

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Obama's move to change Social Security inflation rate riles supporters on left

President Obama seemed to be coaxing Republicans back to the negotiating table by offering to change the inflation adjustment in Social Security and other government programs -- but his offer also has had the unwanted side effect of riling many of his supporters on the left.

The group Campaign for America's Future said it collected two million signatures from people opposed to such changes to entitlement programs and delivered the petition to the White House on Tuesday.

Roger Hickey, the group's co-director, calls Obama's move "really bad policy and bad politically for the Democratic Party. So we are sending a message that Democrats had better not vote for this," he told Fox News.

What the president proposed is to shift the inflation adjustment for federal programs from a broad measure of the Consumer Price Index to a more narrow one called the "chained CPI," which Hickey dismisses.

"This is a camouflage operation designed to easily -- they think it's going to be easy -- to cut government expenditures across the board and they hope people won't notice," Hickey said.

Supporters of such a change, however, say the chained CPI is based on a simple premise, that people change their purchases depending on prices.

"When the cost of one good goes up by a lot, we shift into another good," said Maya MacGuineas of the Committee for a Responsible Federal Budget. "If apples become more expensive, we'll buy a couple more bananas. So the chained CPI is a more accurate measure of inflation."

The change would only reduce future increases in benefits by .25 percent a year, according to the non partisan Congressional Budget Office. But over 10 years, it would lower the deficit by $339 billion.

That's because the change in the CPI wouldn't just be for Social Security, but for all federal programs adjusted for inflation, including federal pensions and tax brackets.

"This is a government-wide chain CPI," Doug Holtz Eakin, a former director of the Congressional Budget Office, said. "And as a result, that is how you get the tax increases, that's how you get the Social Security impacts, but you also get the other pension impacts."

A chained CPI would increase taxes by pushing people into higher tax brackets sooner than the current measure of inflation would.

The Obama administration says the money it saves in Social Security will be kept within the program, to help sustain it when it starts to run short of money in the early 2030s.

But liberal groups question the necessity.

"It's almost like taking a whack out of Social Security as a way of symbolizing our ability to do something," Hickey said.

And in the eyes of deficit hawks, entitlement reform still would have a long way to go.

"This is $340 billion over 10 years," Holtz Eakin said of the money raised by the switch to the chained CPI. "We'll spend $10 trillion on Social Security, $8 trillion on Medicare, $6 trillion on Medicaid. So we are not in the ballpark of the kinds of changes we need to really fix these programs."

With with social security, "the trustees tell us every year the program is unsustainable," MacGuineas said. "You need to make changes now so that we can phase them in gradually."

And less painfully, because small changes made now can make a big difference two or three decades from now.

The CPI shift would save $127 billion in Social Security. By law, the program can only pay out what it takes in. And in 2033, it will have to reduce benefits an estimated 25 percent across the board -- a potentially crushing blow for the poor.

The system's actuaries say even the change in the CPI will move that date back by only two years.

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