Will Budget Deal Target Federal Pay and Benefits?

Feds might have to sacrifice again in the name of deficit reduction.

Simpson-Bowles is back.

The famous (or infamous?) 2010 bipartisan fiscal commission led by former Republican Sen. Alan Simpson from Wyoming and former White House Chief of Staff Erskine Bowles never really went away, but other deficit reduction proposals and super heroes did steal the commission’s limelight for a while. Remember the joint congressional super committee that was supposed to fix the budget problem last year? Well, that group failed and now the government is facing massive, across-the-board spending cuts starting in 2013 if Congress and the White House can’t agree on how to avoid or defer them.

Nobody wants sequestration to happen. So, what’s the alternative? The Obama administration and lawmakers now are hashing out how to avert the current budget crisis, known as the fiscal cliff, between now and Jan. 2, 2013. The smart money is on leaders cobbling together some version, or combination of, the deficit reduction recommendations outlined in the Simpson-Bowles report -- a Simpson-Bowles 2.0, if you will. And if that happens, there’s a decent chance a deal could contain provisions targeting federal pay and benefits.

Let’s recap some of the specific recommendations relating to feds:

Extended pay freeze: The panel recommended a three-year civilian pay freeze across government. The commission estimated the freeze would save $20.4 billion in 2015. The plan also freezes lawmakers’ pay. Obama and lawmakers extended the current two-year pay freeze at least until the end of March, when the continuing resolution expires. Obama wants to give feds a 0.5 percent pay bump when Congress passes a budget next year. But that assumes that one, Congress will pass a budget and two, lawmakers won’t vote to extend the current federal pay freeze.

Smaller government workforce: The Simpson-Bowles report recommends shrinking the government rolls by 10 percent by hiring two new workers for every three employees who leave service. The commission claims such a reduction would save $13.2 billion in 2015.

Increase employees’ health care contributions: The panel suggested adopting a voucher plan and slowing the growth of federal contributions to the Federal Employee Health Benefits Program.

Review military and civilian pension systems: Simpson-Bowles recommended creating a task force to look at changing the pension system for feds and eligible retired service members. One possibility the commission suggests is increasing the amount feds contribute to their pensions. It’s worth noting that Obama and several lawmakers also support making feds pay more for their defined retirement benefit.

The Simpson-Bowles recommendations have supporters and detractors. Federal employee unions have stated their opposition to any deficit reduction measure that cuts workers’ pay and benefits. Jacque Simon, public policy director at the American Federation of Government Employees, called the commission “loathsome” during a discussion on reforming the General Schedule system in Washington on Wednesday. Unions say federal workers have sacrificed enough, arguing the current federal pay freeze will end up saving more than $60 billion.

Obama has not endorsed the Simpson-Bowles plan. But he also left out the biggest federal employee unions from a discussion on spending and deficit reduction this week at the White House, according to a report in The Washington Post.

COLA for Vets

The Senate on Tuesday passed a bill providing a 1.7 percent cost-of-living adjustment for veterans and their survivors next year. The COLA affects vets’ disability benefits. About 4 million veterans and survivors will receive the compensation benefits in fiscal 2013.

An unnamed Republican senator put a hold on the traditionally noncontroversial bill, but the hold was released in time for passage Tuesday. Lawmakers had to act by Nov. 13 for the COLA increase to be included in January’s checks.

“I am so glad we were finally able to move forward with passage of this bill,” Sen. Patty Murray, D-Wash., said in a statement. Murray is chairwoman of the Senate Veterans’ Affairs Committee. “Caring for our nation’s veterans should never be a partisan issue.”

Federal retirees also will receive a 1.7 percent COLA boost next year.