Proposal to increase employee pension contributions draws fire

By Billy House

May 19, 2011

Inspired by the desire to reduce the federal deficit, proposals to increase payroll reductions on workers who contribute to the federal pension system are getting serious attention in deficit-reduction talks between lawmakers and the White House.

But, as a direct result, there is an intensifying public debate about over how much sacrifice should be demanded of federal employees as negotiators try to address the nation's $14.3 trillion debt.

The congressional participants in the bipartisan budget and debt-ceiling negotiations with the administration aren't talking openly about their thinking on the issue, but House Republicans clearly entered into those talks toting the idea that federal workers should have to pay an extra 5 percent of their salaries to the government.

Word that an idea may be gaining traction is not being well-received by some lawmakers -- particularly those who represent area districts with tens of thousands of federal workers -- who say it would represent a demoralizing, disproportionate hit on civil servants.

And federal employee unions warn that the government may be facing a "brain drain" if federal workers are, unfairly in their view, targeted for cuts.

Rep. Gerry Connolly, D-Va., suggests this is just the latest offshoot in an array of partisan anti-union, Republican activities. Federal workers are located throughout the country, but the debate particularly hits home for Connolly, whose Northern Virginia district is home to tens of thousands of federal employees, "Given the behavior of prominent Republican politicians in Wisconsin, Ohio, Florida, and in the Congress, we have every reason not to trust their motivation when they say, 'We're just looking for savings'," complained Connolly on Wednesday.

"No, you're not. You're actually looking to break the back of the public workers, public employees, and the organizations that represent them. That's really your agenda," said Connolly.

However, the deficit-reduction talks are not being conducted by one political party, but by a working group of Senate and House Republicans and Democrats and the Obama administration, chaired by Vice President Joe Biden.

The roster includes another area lawmaker, Rep. Chris Van Hollen, D-Md., the top Democrat on the House Budget Committee.

And while such a plan was certainly pushed by Republicans in their budget proposal, the idea was promoted by President Obama's bipartisan fiscal commission.

But before all that, the moderate Democratic think tank Third Way raised the notion in a paper. It offered that about 80 percent federal employees enjoy one of the most generous retirement plans in the country.

But it explained that because of a quirk in the 1986 law creating Federal Employment Retirement System, "contributions into the system are skewed dramatically against the taxpayer. In short, the paper spelled out that for every $1 contributed into the system, taxpayers pay about $14."

The authors asserted that federal taxpayers contribute 12.7 percent of payroll to retirement accounts as compared to a 5.3 percent match in the private sector, and that "if employers and employees contributed equally to the fund as is often the case in the private sector, taxpayers would save $114 billion over 10 years and $271 billion over 20 years-without affecting federal pension benefit payouts."

House Republicans, apparently latching on to the proposal for matching employer-employee contributions, have moved to push in budget talks requirements to provide 6 percent of their salary to the FERS system, which translates into about a 5 percent pay cut.

Van Hollen has declined to talk about whether the idea has gained traction in the discussions of Obama's bipartisan working group. He did emphasize Wednesday that he has made it clear in other contexts concerning the fiscal 2012 budget that he opposes such a House Republican budget plan.

He reiterated that such a move would, in effect, amount to a salary cut of about 5 percent for workers like those who helped hunt down Osama bin Laden.

Van Hollen also said that another shortcoming is that such a proposal looks at only one piece of the compensation packaged received by federal workers-not taking into account for instance, he says, that many are not paid as high as they would be doing the same jobs in the private sector.

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By Billy House

May 19, 2011

http://www.govexec.com/pay-benefits/2011/05/proposal-to-increase-employee-pension-contributions-draws-fire/33993/