If the U.S. government defaults on its debt, there could be ripple effects for fed workers.

If the U.S. government defaults on its debt, there could be ripple effects for fed workers. Feverpitched/Getty Images

Debt Ceiling Concerns, the New Postal Health Plan Rule, and More Reaction to the COVID Hazard Pay Setback

News updates and stories you may have missed.

The White House is advocating a 5.2% pay bump for feds in FY 2024. Unions and Democratic leaders in Congress are pushing for 8.7%. But ideas on how to move on reining in federal government spending—some possibly affecting employees on the pay front—are increasingly on radar. And not necessarily for the right reasons. 

This summer every family and every business in our country could suffer from one of the less savory effects of “divided government” on a linchpin of planet Earth’s largest economy, the U.S. government’s debt ceiling, with the White House and Senate in Democratic hands and the House sporting a Republican majority. There is sharp disagreement between these power centers over long-term budgetary matters—most pointedly, on how to shore up Social Security. And although the pension program’s trust funds is predicted to remain solvent into the next decade, some Republican lawmakers are insisting that Dems join them in effecting controversial longer-term fixes now, in the current session of Congress. If they don’t get the desired concessions enough Republicans might vote against raising the debt ceiling

Indeed, that would be a potential showstopper. Without a timely majority up vote on raising the debt limit, the U.S. government would for the first time ever default on scheduled debt instrument payments, bills for regular operations. Near-term that would possibly slow or reduce regular payments to contractors and employees. And, despite the hopes of feds and some of their leading unions and advocacy organizations, debt ceiling inaction could hit pay increases for next year and down the road. 

So, if the current congressional standoff advances to millimeters from the ceiling—or, like Willy Wonka’s elevator, blows through it—it won’t just inconvenience feds, it could crash whole markets and take the U.S. economy and much of the world’s with it into recession. 

There may be some hope for feds, though. Last month, Sen. Brian Schatz, D-Hawaii, and Rep. Derek Kilmer, D-Wash., reintroduced the Federal Employees Civil Relief Act (S. 640). The bill, first introduced in 2019 amid the 35-day partial government shutdown, protects federal workers and contractors from a variety of civil financial penalties during a lapse in appropriations or a breach of the debt ceiling.

More Feds Affected by the COVID-19 Hazard Pay Setback?

In February, a federal appeals court ruled in favor of the federal government’s rejection of hazard pay for feds in a major case, potentially affecting hundreds of thousands of feds. More recently, lawyers handling a related case confirmed that the court’s action in Adams et al vs. U.S. applied also to their feds. 

“On February 14, 2023, the U.S. Court of Appeals for the Federal Circuit affirmed the dismissal of Adams v. U.S., which was one of the later filed cases also seeking hazard pay on behalf of a group of federal employees,” the law firm of Kalijarvi, Chuzi, Newman & Fitch, P.C. said in a recent statement. “Even though Adams is a different case, the Court’s analysis applies similarly to our case, Braswell et al. v. United States. The Court determined that in all but a very limited number of potential scenarios, federal employees are not entitled to Hazardous Duty Pay or Environmental Differential Pay for exposure to COVID-19 during the pandemic.”

But, the attorneys in the case still hold out hope for succeeding in securing hazard pay in such conditions. 

“We disagree strongly with the court’s [decision],” they said. “We are evaluating our options moving forward and will update this status as appropriate.”

Interim Rule for the New Postal Health Benefit System 

The Office of Personnel Management has issued an interim final rule for the new Postal Service Health Benefits Program. The nascent scheme will be a new offering under the Federal Employees Health Benefits Program, as mandated under the Postal Service Reform Act of 2022 . Beginning in 2025, the new Postal Service Health Benefits Program will replace existing health benefit offerings for USPS employees, annuitants and eligible family. 

The rule governs implementation of the new program, permitting OPM to contract health insurance carriers for it. The aim is to continue cost-effective coverage for current employees while also integrating a Medicare element for Medicare-eligible annuitants. The public comment period, which will last for 60 days total, can be accessed at www.regulations.gov.    

Help us understand the situation better. Are you a federal employee, contractor or military member with information, concerns, etc. about how your agency is handling pay or benefits? Email us at nabse@govexec.com.