Trump’s budget calls for hits on federal employee retirement programs (in addition to staffing cuts)

Yesterday’s Washington Post offered some insights into the Trump Administration’s plans to reduce earnings for federal workers – both present and past. (Article links below.)

Perhaps only the heartlessness the president’s budget demonstrates for the poor, the hungry and the sick exceeds the billionaire’s absence of empathy for the federal employees who serve them… [it] would give to federal employees with one hand, while taking away with five others…Here we examine his proposed undermining of retirement programs for middle-class workers who make up the federal workforce…

“More subtly broached in budget documents is the administration’s mindset that feeds a growing narrative in Washington that says feds are overpaid and under-punished…” 

An overlooked fact is that many career professional feds – including me and my EPA colleagues – could have earned considerably greater salaries by working in the private sector for all those years (on the order of 30-50% each year). We stuck around because we believe in the mission, and because we were willing to trade less pay for jobs that make a difference in the world.

This choice means that lifetime earnings for federal workers – and the savings and pensions that accrue from those earnings – are considerably lower than they would have been if we career staffers had abandoned federal service.  Now Trump & Mulvaney want to reduce worker’s  lifetime earnings even more (by requiring higher retirement contributions), and further reduce the already tiny pension that most federal workers receive upon retirement. (The FERS system does not provide federal workers with pensions based on 50-80% of salary, like many state systems do – and like the older CSRS federal system did. Most pensions represent less than 25% of the employee’s highest earning year.)

Calling Trump’s budget “an egregious, unprecedented attack on federal employees and retirees,” National Active and Retired Federal Employees President Richard G. Thissen said “it breaks an implicit bargain by eroding the value of hard-earned pensions that were promised to federal employees in exchange for their service to this country. … This is nothing more than punishment for those who have served their country through federal service and a broken campaign promise to protect retirement security.”

Whether you think about federal workers are overpaid depends on the comparisons you make. The “Feds are overpaid view” relies on broad averages. A more nuanced view considers the kinds of jobs federal workers do, their level of education, and where they  live. (Most federal agencies are located in metro areas where the cost of living is higher than “average.”)

Compare two sets of documents with the same title, “Strengthening the Federal Workforce.” That has been the name of a narrative chapter in the “Analytical Perspectives” sections of presidential budgets for years, including under Trump and former president Barack Obama. While they included similar statistics regarding workforce demographics, the two presidents come to different conclusions about the workers.

Joseph Kile, a Congressional Budget Office (CBO) assistant director: “Overall, the federal government paid 17 percent more in total compensation,” including 47 percent higher benefit costs primarily because the pension plan.”…

Most striking is Obama’s defense of federal staffers against conservatives who argue the workforce generally is overpaid compared to the private sector.  Citing the work of federal doctors, firefighters, disaster workers and others, Obama’s budget said: “Federal jobs are concentrated in higher paying professions and are based in higher cost metropolitan areas. … Even in large firms, the percentage of highly educated workers is less than half that of the Federal sector and the rate of growth over the last decade is only about half as fast. …Federal workers … are more experienced, older, and live in higher cost metropolitan areas.” 

Note that even Obama’s budget wasn’t especially friendly to federal employees, despite its pushback against the conservative “Feds are overpaid” narrative.

Because of previous hits, including a three-year partial pay freeze and previous increases in workforce retirement contributions, Rep. Gerald Connolly (Va.), the top subcommittee Democrat, said over the last several years federal employees, who “have been demonized, demoralized, and asked to sacrifice more” than others, “incurred more than $182 billion in pay and benefit cuts, all in the name of deficit reduction.”

Going back to the Obama administration, feds have been “singled out,” said National Treasury Employees Union President Tony Reardon. They have “contributed more than $20 billion to deficit reduction through increased retirement contributions, and more than $182 billion overall from combined retirement, pay cuts, and unpaid furlough days in the past few years,” he added.

The “hearing” made no real attempt to bring in multiple views – an approach that is becoming status quo for the Trump Administration and GOP leadership,

The Republican organized hearing had four critics of the current pay system and one supporter, Jacqueline Simon, policy director of the American Federation of Government Employees. She also is a member of the Federal Salary Council, a government panel of union and outside experts that determined federal employees overall suffer a 34 percent pay disparity with private sector and local and state counterparts. Since 2010, she said, inflation adjusted federal pay has fallen by 6.5 percent. Simon rebutted the CBO, saying its “extremely misleading” study uses a model that could lump a federal correctional officer with a “mall cop.”

 Most of these proposals have been in the Republican playbook for years. With that party now in control of the White House and Congress, chances increase that some or all of them will become law, even as the probability is low that Trump’s entire budget will be enacted as proposed.

The stated rationale behind these cuts is better alignment with the private sector. But, as the Post notes:

Trump’s perspective ignores the various services provided to taxpayers by federal workers. It justifies proposed compensation reduction by saying that would be “consistent with the goal of reining in Federal government spending in many areas, as well as to bring Federal retirement benefits more in line with the private sector”….Aligning with the private sector means making federal employees worse off, instead of a policy encouraging businesses to make the private workforce better off.

The biggest losers from President Trump’s draconian cuts to federal employee pay and benefits will be the American people who count on dedicated federal employees to care for our veterans, maintain our national parks, and process Social Security checks each and every day,” said Connolly. “Cuts of this magnitude will make it impossible to recruit and retain the qualified workforce we need to meet our nation’s challenges.”

We’re all in the soup together,” said one [administration official], as they noted other shared “hard choices” in the budget. But the soup is deeper and has been brewing longer for federal employees.

Below are details on the proposed changes.

  • [The proposal] calls for a 1.9 percent pay raise in January for civilian workers and a 2.1 percent hike for the military.
  • Increase Federal Employee Retirement System (FERS) contributions from workers by 1 percentage point each year until they equal the government’s contribution. This would take five to six years and would result in increased out-of-pocket payments of about 6 percent over that period. Out-of-pocket payments by federal law enforcement officers would increase by the same amount, but would not equal the greater contributions from law enforcement agencies.
  • Base future retirement benefits on the average of the high five years of salary instead of the current high three. [Under both the FERS and CSRS retirement systems, those newly retiring have their benefits calculated on formulas that include their time of service and their three consecutive highest-paid years — most commonly, the last three years. Changing that to the highest five years, as Trump proposed, would reduce the initial amount of new retirees’ annuities by about 2 percent on average, according to a 2016 Congressional Budget Office analysis.
  • Eliminate cost of living adjustments (COLA) for current and future FERS employees
  • Cut the COLA for Civil Service Retirement System (CSRS) employees by 0.5 percent from what the formula would allowed
  • Eliminate supplement payments for FERS employees who retire beginning in 2018. The supplement approximates the value of Social Security benefits for those who retire before age 62.

 Trump’s budget shows feds little love despite pay hike

Trump’s budget calls for hits on federal employee retirement programs

 

 

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