GOP Sequester Alternative Targets Federal Pay, Benefits

Senate bill would push back sequestration for one year in part by extending the pay freeze, increasing feds’ retirement contributions.

A Republican lawmaker will propose an alternative to sequestration Thursday, putting off the across-the-board spending cuts with a plan that targets federal employees’ pay and benefits.

Sen. Kelly Ayotte, R-N.H., drafted the bill -- the 2013 Sequester Replacement and Spending Reduction Act -- which includes provisions to extend the federal pay freeze through 2014 and increase current employees’ pension contributions by 2.3 percent over three years.

The bill ends the government’s Federal Employees Retirement System annuity supplement for anyone hired after Dec. 31, 2013. The supplement temporarily boosts benefits for qualified retirees who are not yet eligible for Social Security benefits. In 2011, about half of all FERS retirees qualified for the supplement.  

Ayotte would eliminate cost of living adjustments for members of Congress if the Congressional Budget Office determines there is a budget deficit.

The bill also would reform unemployment insurance for wealthy individuals and target overpayments to Medicare and Medicaid, the new Consumer Financial Protection Bureau’s budget and overlapping federal programs. In addition, it seeks to reduce funding for the 2010 Affordable Care Act.

The legislation stipulates that, without a 2013 budget, any bill voted on after April 15 must have a three-fifths majority in the House and Senate to become law.

Federal unions were quick to denounce the plan, saying the proposal was not serious.

“Here we go again,” National Federation of Federal Employees National President William R. Dougan said in a statement. “Rather than proposing a serious solution to sequestration, Senator Ayotte and her GOP colleagues have chosen to dust off well-worn attacks on federal employees that do nothing to fix the problem. Federal employees have already endured over two years of frozen pay and an increase in retirement contributions that will save the government $103 billion over the next decade. When is enough, enough?”

The legislation is similar to several attempts by lawmakers in both chambers to decrease the pay and benefits of federal employees in the name of deficit reduction. Most recently, the House voted to extend the current pay freeze for feds and lawmakers through the end of the year.

Some efforts, including requiring feds to contribute more to their pensions, are supported by many Republicans and Democrats. President Obama has called for increasing the amount feds put toward their retirement benefits.

Ayotte’s latest bill is different from the one she proposed earlier this month as a sequester alternative. That legislation, the 2013 Down Payment to Protect National Security Act, would cut the entire government workforce by 10 percent through attrition at an estimated savings of $85 billion over the next decade, replacing the sequester for one year. The bill would allow federal agencies to hire one person for every three employees who retire or leave their job. The hiring reduction likely would take place over the next four to five years, but the savings would be felt over the 10-year budget window.

Lawmakers have until March 1 to strike a deal to prevent about $85 billion in cuts to agencies governmentwide. 

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