"Honest Solutions" (and a COLA Cut)

By on April 8, 2011 in Current Events with 120 Comments

Earlier this week, the House Budget Committee, led by Rep. Paul Ryan (R-WI) released a budget proposal that would make roughly $6.2 trillion in spending cuts from the federal budget over the next decade. Apparently, that was just a warm up.

The Republican Study Committee released its own budget proposal today that would make $9.1 trillion in cuts over the next ten years. Dubbed “Honest Solutions,” it boasts being able to balance the federal budget by 2020, whereas the Ryan budget would take until 2040.

The proposal tackles many areas such as ObamaCare, welfare, Medicare, and earmarks (to name a few). And, as with the previous budget proposal, this one has some items in it that are likely to be of particular interest to federal employees since, if enacted, they could potentially affect current and former federal employees.

Here are some of the budget’s proposals and their descriptions:

Sell Five Percent of Federal Lands and Assets

The federal government owns $2.8 trillion in federal land, mineral rights, buildings and equipment, and inventory.

A 1997 Department of the Interior Report identified approximately 3.3 million acres of land suitable for disposal. Unfortunately, these lands remain in federal control today. This budget calls for the sale of five percent of the federal assets currently held by the federal government, with total ten‐year savings of $140 billion. Under a philosophy that calls for the government to become bigger and bigger—and encroach on more and more state, local, and individual responsibilities—government ownership of all of these assets might be useful. But under a budget that proposes a more limited government, many of these assets can be turned over to states, local governments, the private or non‐profit sectors, and individuals.

Transfer the Tennessee Valley Authority’s (TVA) Electric Utility Functions

The TVA currently exists as a federal corporation operating as one of the largest electric utilities in the country in competition with private electric providers. Continued operation of TVA’s electric utility functions will require substantial capital investments in the future. The cost of electricity sold by TVA includes federal subsidies, which operate as a hidden tax on all citizens and encourage over‐utilization contrary to conservation policies. This budget would sell TVA’s electric utility functions and associated assets and liabilities to a non‐federal owner and operator. TVA would retain its hydropower assets and liabilities because they serve other functions such as flood control and recreation. This would result in a savings of $3.6 billion over ten years.

Reduce the Federal Workforce By 15 Percent

Fueled by $1.1 trillion in stimulus spending and an 84 percent increase in non‐defense, discretionary spending, the federal government has grown unchecked by 20 percent since 2008. This budget calls for a reduction in the federal workforce through attrition.

Base Federal Pension Cost of Living Adjustments on an Accurate Inflation Measurement

Federal retirees currently receive inflation protection for their federal pensions based on the CPI‐W (the consumer price index for urban wage earners and clerical workers) instead of the CPI‐U (the consumer price index for urban consumers). The CPI‐W, according to most analysts, overstates the actual level of inflation in the economy, at a higher cost to taxpayers. This budget would more accurately measure inflation for federal retirees by basing it on the CPI‐U, resulting in a savings of $300 million in FY 2012 and $24 billion over ten years.

Defer Cost of Living Adjustments for Early­ Retirees Until Age 62

Currently, federal employees retiring prior to age 62 are eligible for cost‐of‐living adjustments (COLA). This existing policy provides COLAs well before a conventional retirement age. The RSC budget prevents early retirees from receiving COLAs until they reach age 62. This would result in a savings of $17 billion over ten years. This is based on the National Commission on Fiscal Responsibility and Reform’s recommendation to put limits on this program.

You can read the full budget proposal here (PDF).

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About the Author

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce. Ian also has a background in web development and does the technical work for the FedSmith.com web site and its sibling sites.

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