Architect of the Capitol

House GOP Doubles Down on $300B in Federal Workforce, Pay Cuts

Proposal to reduce the rate of return on the TSP's government securities fund also resurfaces.

House Republicans doubled down on their plan to reduce the nation’s debt on the backs of federal employees, reissuing proposals in their fiscal 2017 budget plan that would dramatically cut the size of the federal workforce, as well as its pay and benefits.

In a report on the fiscal 2017 blueprint approved by the House Budget Committee last week, lawmakers brought back virtually every provision that federal employee advocates and most Democratic lawmakers opposed in the previous iteration. Absent from the report -- which the committee approved in a 20-16 vote -- were specific savings estimates, though lawmakers speculated in their fiscal 2016 measure the savings from federal workforce cuts would amount to more than $280 billion over 10 years.

Overall, the latest plan would slash non-Defense, discretionary spending at agencies by $887 billion below sequester levels through fiscal 2026. The Republican budget would call on agencies to meet those reductions in part by cutting their payrolls.

Agencies would reduce their non-national security employees by 10 percent through attrition; as Republican budgets have for years demanded, agencies would fill just one out of every three vacancies created by employees leaving federal service.

The Republican blueprint would require federal employees to contribute an equal amount to their pensions as do their agencies, effectively resulting in a pay cut of between 2 percent and 5 percent. Citing the National Commission on Fiscal Responsibility, or the Bowles-Simpson report, the committee recommended phasing out the defined benefit portion of feds’ retirement package altogether. Shifting to only a defined contribution system would bring federal workers in line with “the vast majority of private sector employees,” the lawmakers said, and give them “more control over their own retirement security.”

The plan would also phase out the Federal Employees Retirement System annuity supplement, designed to boost the Social Security benefit for young retirees. Taken together, the committee estimated last year the pension reforms would save $127 billion over 10 years.

Republicans also backed reducing the rate of return on the Thrift Savings Plan’s most secure offering, the government securities (G) fund. The G Fund currently offers interest based on a riskier, long-term security, according to the report, and decreasing it would better align the G Fund “with an appropriate risk profile.” The committee said in its fiscal 2016 budget the change would save $32 billion.

The budget framework would also make changes to the Federal Employees Health Benefits Program, including tying the government’s share of premiums for retirees to inflation rather than the average cost of plans. It also proposes tying retirees’ health benefits to length of service. The initiatives would save $21.7 billion and $1.2 billion, respectively, according to last year’s committee estimates.

U.S. Postal Service employees would have to contribute more toward their health and life insurance premiums under the Republican plan. The committee said that and other USPS reforms would save $10 billion over the next 10 years.

While all of those reforms were included in the House Republicans’ original fiscal 2016 budget, the specific instructions were stripped from the compromise conference report agreed to with their Senate counterparts. The proposals again have an uncertain future, with the plan facing unanimous opposition from Democrats and from many conservatives who say the measure does not reduce federal spending sufficiently. Two Republicans joined all Democrats in opposing the document in committee.

The dramatic cuts to agency spending would not take place in fiscal 2017 even if the measure were agreed to, as the 2015 Bipartisan Budget Act boosted funding for fiscal 2017 above caps set by the 2011 Budget Control Act.

J. David Cox, president of the American Federation of Government Employees, said the Republican budget was unbalanced and makes cuts “on the backs of the working people who keep this country strong.”

“Imposing additional cuts to their compensation and jobs won’t make America stronger,” Cox said. “We need to start investing in our public servants so they have the resources they need to continue serving the American people.”