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VOL. 127 | NO. 36 | Wednesday, February 22, 2012

Congress Targets Federal Workers for Savings

JIM ABRAMS | Associated Press

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WASHINGTON (AP) – Federal workers have become the go-to targets as Congress, and the White House, search for ways to lower the deficit, pay for tax cuts and put off looming reductions to defense spending.

Last week they took a $15 billion hit in retirement benefits as part of legislation to extend through the end of the year the payroll tax cut for 160 million Americans and federal unemployment benefits.

Their advocates are crying foul, saying two consecutive years of seeing their pay frozen means the nation's 2 million civil servants already have contributed more than $60 billion to reducing government costs. Republicans, led by their aggressive House freshman class, say federal employees, with their generally secure jobs and benefits, can do more. They have proposed several bills to make that happen.

The White House also is asking federal employees to pitch in more for their retirement plans.

Under the bill passed Friday, about half of the $30 billion cost of extending unemployment benefits will be made up by requiring newly hired federal workers to pay an additional 2.3 percent of their salaries for their pensions. Currently they pay 0.8 percent.

Combined with other bills House Republicans have proposed to further limit federal wages and benefits, the total cost to civil servants could be $134 billion over the next decade, said House Democratic Whip Steny Hoyer of Maryland.

"The ongoing efforts to target federal workers will substantially undermine our ability to recruit and retain the quality of people we need," said Hoyer, whose district encompassing some of the Washington suburbs is home to thousands of government employees.

Proposals on the table could affect civil servant numbers as well as their wages and benefits. A group of Senate Republicans has proposed extending the federal tax freeze for two more years and reducing the size of the government workforce by 5 percent as one way to help avoid automatic Defense Department budget cuts passed by Congress last summer and due to take effect in 2013.

In the House, House Armed Services Committee chairman Howard "Buck" McKeon, R-Calif., has proposed putting off automatic defense and non-defense cuts by reducing the federal workforce by 10 percent over a decade. He would do that by hiring only one new federal worker for every three that retires.

"It does it with as little pain as possible," McKeon said at a hearing last week.

Unions representing federal workers obviously disagree.

"It is unreasonable to turn to this dedicated workforce yet again while shielding those who are not paying their share," said Colleen M. Kelley, president of the National Treasury Employees Union.

"I don't know how cutting our retirement puts anybody back to work," said John Gage, president of the American Federation of Government Employees. "What are we, an ATM machine?"

Republicans in December proposed an even more ambitious plan to pay for part of the payroll tax and jobless benefit bill by freezing government workers' pay a third consecutive year and reducing pension benefits in addition to raising their retirement plan contributions.

The Senate wouldn't go along, but in the more recent round of negotiations the House GOP again asked for all federal workers to pay more for their retirements. Democrats objected, and in the end they settled for higher contributions only from newly hired employees.

But that's not the end of it. Earlier this month, the House passed separate legislation, offered by freshman GOP Rep. Sean Duffy of Wisconsin, to keep the pay freeze in effect for a third year in 2013 and also deny members of Congress a salary hike. Democrats complained but, not wanting to be seen as supporting a pay raise for themselves, 72 voted for the bill and it passed 309-117.

The House is also considering a bill that would require federal workers and members of Congress to contribute a total of 1.5 percent more to their pensions over three years and readjust how annuities are calculated for new hires. That bill, estimated to save more than $40 billion, also eliminates a Social Security supplemental income program for those eligible to retire before age 62.

The NTEU, the largest independent union of federal workers, says the increased pension contribution would boost the annual payment for a worker earning $50,000 a year from $400 to $1,150.

In introducing the bill, freshman Rep. Dennis Ross, R-Fla., said people are "rightfully outraged by the pension benefits guaranteed to a bloated federal workforce."

Ross wants to see savings from his bill go to deficit reduction, but the current plan is to use it to help pay for a $260 billion bill to finance highway construction and transit programs over the next five years.

Freshman Rep. Martha Roby, R-Ala., has also introduced a bill to stop what she called a gimmick to dodge the pay freeze. Her bill would suspend through the end of this year within-grade step increases, wherein many employees can get raises of 2 percent or 3 percent every one to three years upon the recommendation of their bosses. These increases, not covered in the pay freeze, cost about $1 billion a year, Roby said.

Republicans are not alone in trying to tap the federal workforce for savings. The White House, in its budget proposal for 2013, is calling for a 1.2 percent increase in federal employee contributions to their pension plans. That would reduce the government's share by $27 billion over the next decade.

But the White House also favors giving federal workers a 0.5 percent pay raise in 2013. "A permanent pay freeze is neither sustainable nor desirable," it said.

An AP-CNBC poll taken in November 2010 found that many agree that the federal workforce is too big and can be a source of savings. Some 62 percent said they favored reducing the number of federal workers as a means of shrinking the federal deficit, and 59 percent supported a federal wage freeze.

Republicans base many of their arguments on a recently published report by the Congressional Budget Office that found that the average federal worker earns about 2 percent more than a comparable private sector worker, and that, when pension and health benefits are factored in, federal compensation is 16 percent greater. Federal unions say the report overstates the advantages of federal workers.

The CBO reported wide variances depending on worker education levels. Federal civilian workers with no more than a high school education earned about 21 percent more, and their benefits were 72 percent higher, than their private-sector counterparts. But federal workers with a professional degree or doctorate earned about 23 percent less.

The government spends about $200 billion a year to compensate the 2.3 million federal civilian employees, including about $80 billion for civilian personnel working in the Defense Department.

The CBO noted that the size of the federal workforce has remained at about 2 million over the past 30 years, and that its share of the total U.S. workforce has declined, from 2.3 percent in 1980 to 1.7 percent in 2010.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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