Super committee failure helps feds in short term

None Chris Maddaloni/Newscom
Federal pay and benefits are being spared in the short term as a result of the super committee's failure to produce a deficit reduction plan.

The 12 lawmakers on the joint select congressional panel failed to broker a deal to cut federal spending. "After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee's deadline," said a statement from committee co-chairs Rep. Jeb Hensarling, R-Texas, and Sen. Patty Murray, D-Wash.

"Despite our inability to bridge the committee's significant differences, we end this process united in our belief that the nation's fiscal crisis must be addressed and that we cannot leave it for the next generation to solve," the statement continued. "We remain hopeful that Congress can build on this committee's work and can find a way to tackle this issue in a way that works for the American people and our economy."

The panel was considering several deficit reduction proposals that would have affected federal employees, including increasing workers' pension contribution rates, extending the civilian pay freeze and shrinking the government's workforce. The committee's failure to broker a deal means such proposals will go on the back burner and automatic governmentwide spending cuts will take effect beginning January 2013. That could result in federal layoffs or furloughs at many agencies.

"The federal workforce is a winner and loser in this," said Washington Post reporter Paul Kane during a Web chat Monday. "It's a short-term win, because one of the ways to enhance revenue that had been essentially agreed to was requiring federal workers to contribute more to their pension plan. So, for now, that won't happen. A short-term win," wrote Kane, who has covered the super committee extensively. "However, over the long term, the trigger means spending cuts to federal agencies, on top of the already agreed upon $900-plus billion from the Aug. 2 deal. This means fewer federal workers over the next decade. Long-term loss."

The automatic spending cuts, known as sequestration in legislative parlance, would offer some benefits to federal employees. For example, federal employees' pensions and health care are protected under sequestration, as is Social Security, most of Medicaid, some low-income programs and certain veterans' benefits. In addition, military pay is protected under sequestration, though it's not a guarantee. The law gives the president "authority to exempt any [military] personnel account from sequestration" but only if "savings are achieved through across-the-board reductions in the remainder of the Department of Defense budget," states a House Rules Committee analysis. Civilian pay is not protected under either scenario.

Any short-term benefits would become moot if a worker is fired or laid off as result of cuts stemming from sequestration. If that happened, then the government's contributions to retirement and health care would cease, for example.

Congress could try to reverse the automatic spending cuts -- the Defense Department would have to slash about $600 billion over the next 10 years -- but it won't be easy, particularly in light of the Obama administration's opposition to such a move.

As far as federal pay and benefits are concerned, lawmakers still could, and likely will, introduce more stand-alone legislation that affects government employees. While that approach would be more difficult than crafting proposals that would go into an overall deficit reduction plan offered by the super committee, there is bipartisan support for more sacrifice from federal workers. The administration has proposed raising the employee pension contribution rate by 1.2 percent over three years beginning in 2013 -- a rate of 0.4 percent each year during that time -- and Jack Lew, director of the Office of Management and Budget, has acknowledged publicly that he can't rule out more recommendations affecting federal pay or benefits.

Hensarling and Murray thanked congressional staff and their colleagues for their work on the committee. "Most importantly, we want to thank the American people for sharing thoughts and ideas and for providing support and good will as we worked to accomplish this difficult task," said the statement.

Democratic Rep. Chris Van Hollen of Maryland, a member of the super committee, released a statement expressing his disappointment in the panel's failure to reach an agreement.

"In the days ahead, I urge the public and the media to carefully review the facts and record about what prevented the Joint Committee from developing a sound and balanced plan," he said. "I look forward to that discussion. At this moment, however, I believe this is a sad day for the nation and an opportunity missed."

National Treasury Employees Union President Colleen Kelley said she is concerned about the impact of mandatory across-the-board cuts.

"As Congress considers its next steps, NTEU will continue to press for fair treatment for federal employees, adequate funding for federal agencies to protect critical public services, and an even-handed approach to deficit reduction that balances spending cuts with revenue increases," she said.

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