Already rattled by the Trump administration’s efforts to slash its bloated ranks, the US government employee workforce is about to be hit with a new source of agitation, as House Republicans are proposing to cut benefits and increase premiums associated with federal employee pensions. As is typically the case where the timing of potentially controversial news is concerned, the announcement of the proposed cost-cutting moves came on Friday night, via House Oversight Committee and Government Reform Committee Chairman James Comer.
House Republicans are working to identify at least $2 trillion in spending cuts to put a dent in the price of extending the broad tax cuts instituted by 2017’s Tax Cuts and Jobs Act (TCJA), which is slated to expire on Dec. 31. Comer said the proposed changes to federal employee pensions would yield more than $50 billion in reduced net federal spending. Engaging in the usual DC budgetary obfuscation, Comer’s statement doesn’t assign that number to a time period — knowing naive citizens and journalists will assume it’s a recurring annual benefit. However, from another document circulating on Capitol Hill, we conclude he’s talking about savings over a 10-year period.
The most substantial of the proposed changes would increase pension premiums that longer-tenured employees pay into the Federal Employee Retirement System (FERS). Today, those premiums, which are automatically deducted from salary payments, vary by the year in which an employee entered federal service:
- 2012 and earlier: 0.8%
- 2013: 3.1%
- 2014 and after: 4.4%
The Oversight Committee proposal does away with that distinction, seeking to charge all employees in the FERS system a uniform 4.4%, raising $30.7 billion in revenue over the next 10 years. A little under half of federal employees are paying less than 4.4% today, according to FEDweek. The rate hike is projected to boost revenue by $30.7 billion over 10 years.
Another proposal takes aim at one of those rich government benefits that are virtually unheard-of in the private sector. Believe it or not, long-serving federal employees who retire with a full pension before Social Security age currently receive a supplemental payment on top of that calculated pension. The “FERS Annuity Supplement” is supposed to approximate their age-62 Social Security income attributable to their federal employment. The head-scratchingly lavish goal: Saving early retirees from having to make do with less total money than they’ll eventually rake in at age 62 — even though they’re receiving a full federal pension in the interim. Oversight Committee Republicans want to kill the supplement — except for federal employees in jobs subject to mandatory early retirement, such as federal cops and firefighters. (God forbid we apply austerity measures to these “heroes” retiring at 57 on a hefty, inflation-adjusted federal pension.) Projected savings from this move: $10.1 billion over 10 years.
A third move would change how pension payments are calculated in both FERS and the Civil Service Retirement System (CSRS), the latter of which generally covers some employees hired before Jan. 1. 1984. Today’s formula keys off the average of a given employee’s highest three years of earnings; the committee wants to change that to the highest five years, projecting $4.75 billion in savings in 10 years.
In a non-pension move, the House GOP proposal also has a provision requiring a “comprehensive audit” of employee dependents currently enrolled in Federal Employees Health Benefits (FEHB) plans. By dis-enrolling ineligible relatives, it’s hoped the audit will save $1.5 billion over 10 years.
The Oversight Committee will have a full markup meeting to consider, debate and potentially amend these and other cost-cutting proposals at 10am on Wednesday. Once finalized, they’ll be added to President Trump’s promised “big, beautiful bill” that Republicans hope to pass by summertime.
In the meantime, here comes another round of leftist wailing and gnashing of teeth...
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