Federal Employees News Digest

House passes resolution calling for $32 billion cut to fed benefits

On Oct. 5, the House of Representatives passed a budget resolution that effectively orders $32 billion in cuts to federal retirement benefits.

Congressional Resolution 71, which carried by a vote of 219 to 206, contains reconciliation instructions demanding the billions in cuts be made over a 10-year time frame, specifically to spending that is managed by the House Committee on Oversight and Government Reform, known as OGR.

“What the resolution does, is that it gives instructions to the oversight and government reform committee, OGR, asking them to find that $32 billion in savings,” Jessica Klement, NARFE’s legislative director, told FEND. “OGR can find that money to cut, nominally under any mandatory spending under its jurisdiction.”

But the only substantial mandatory spending that falls under OGR are retirement benefits for feds and postal employees.

“So, in practice the only place OGR can go for that is federal employee retirement programs,” Klement clarified. “If this resolution is agreed to by the Senate, those cuts are going to be used to pay for tax reform,” Klement said. “It doesn’t make sense—you are taxing middle-class federal employees, to provide tax cuts to other middle-class Americans. We are calling this a ‘retirement tax.’”

“This budget resolution was touted as setting the stage for tax changes that will provide a break to hard-working, middle class Americans,” Richard G. Thissen, NARFE’s president, said in a statement. “In reality, it sets the stage for broken promises, lower paychecks, and less retirement and health security for hard-working, middle class public servants.”

“The House passed a budget resolution that targets the hard-earned retirement and health benefits of federal and postal workers and retirees for at least $32 billion in cuts,” Thissen continued. “The policies required to meet that target range from bad to worse – from imposing a retirement tax on these workers by raising payroll contributions toward retirement without any benefit increase, to dramatically reducing the value of federal pensions for those nearing, or even in, retirement.”

Senate would have to concur to have effect

“These cuts would break promises to employees and retirees who have based career and retirement planning on long-standing, promised benefit calculations. Federal retirement benefits were earned through years of hard work – they are not gifts to rescind,” Thissen said.

“The Senate hasn’t passed this bill yet,” Klement noted. “They will take it up. But they will probably have problems with passage, since the Senate can afford to lose two votes.”

“So, if the Senate passes its budget resolution, then the two parts of Congress would have to pass it and it would have to go into a conference—and from there, the differences would have to be negotiated, agreed to, and put into a concurrent budget resolution,” Klement said. “If these cuts are in a concurrent budget resolution—one that both the House and Senate agree to—then it is all but certain that federal employees and retirees would be paying for the so-called ‘tax-reform.’”

“Now, there is some possibility that the concurrent budget resolution will not contain these cuts, these instructions,” Klement told FEND. “How this plays out remains to be seen.”

Major federal employee unions—including the American Federation of Government Employees and the National Treasury Employees Union—are also committed to defeating any legislative move toward the massive cuts.

“NTEU is fighting to block these harmful proposals, but we need every member to get involved before it’s too late,” the union said on its “action center” blog. “We ask every member to call their lawmakers immediately to urge them to protect federal employee take-home pay and benefits.”

“Fighting this will be our top priority—at least through the next couple months,” Klement said.

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