Election Results 2012: What are the Implications for Federal Employees?

Since the 2010 elections, billions of dollars have been spent on winning national elections in 2012. Before the election yesterday, the White House was occupied by a Democrat, the Democrats controlled the Senate and the Republicans controlled the House. Americans were divided by race, gender, class, religion and geography (in no particular order).

After the election, the broad line-up is still the same with Democrats controlling the White House and the Senate and the Republicans in control of the House and the divisions appear to be as intact as they were before the votes were counted. As noted by the National Journal, “Thanks in part to his own small-bore and brutish campaign, victory guarantees the president nothing more than the headache of building consensus in a gridlocked capital on behalf of a polarized public.” That is a pessimistic observation but probably a short, accurate analysis.

So, while the power struggle remains unchanged in many respects, the problems facing the country, and argued ad nauseum during election campaigns, are still with us. There was little chance of an agreement before the elections held this week as very few wanted to take controversial action without knowing what the political structure would look like in 2013.

What the election has changed is that elected leaders may try to come to some type of agreement because of the pressure created by political and economic necessity. The national debt is still too big and growing rapidly, entitlement programs are growing fast and the government will not have the money to pay out expected benefits without some changes, unemployment is still very high and the “fiscal cliff” is still looming largely over Congress and the White House.

With many of the same players still in place and the power structure largely unchanged, will political gridlock continue? No one knows, of course, but the pressure to reach some agreement will now build quickly on all parties as the alternatives may be worse than most possible solutions.

Some federal employees will see the election results as a relief and there is some basis for that feeling.  There is a possibility of a 0.5% average pay raise as early as April 2013. And, if Republicans had taken over control of the Senate and the White House, the federal government would likely have seen a relatively quick reduction in staffing and, perhaps, a reduction in employee benefits. (See Will Federal Employees Get a Pay Raise in 2013?)

But the election has not changed the underlying financial problems that need to be resolved. One of the first items looming on the political agenda that will have a large impact on the federal community is sequestration. Significant budget cuts for federal agencies totaling about $110 billion starting in January are set to take effect unless a political deal is reached. If a deal is not reached, there will be large furloughs and disruption throughout the government. If a deal is reached, chances are any agreement will involve some change in federal government staffing and spending and, possibly, changes to future benefits for federal employees. (See How Can You Plan for a Secure Retirement With These Issues Threatening Your Future?)

Earlier this year, President Obama signed a bill increasing the contribution rate for new federal employees hired after December from 0.8% of each paycheck to 3.1%. He has also proposed as part of a deficit-reduction plan eliminating a supplemental payment to retirees covered under the Federal Employees Retirement System who are not yet eligible for Social Security. (See Two Significant Changes to FERS) Keep in mind that Congressman Paul Ryan (R-WI) sponsored a House-passed bill to increase the basic FERS employee contribution rate from 0.8% of salary to 5.8% over five years. The Senate has not approved that bill and may not ever do so. On the other hand, a provision like this that would decrease future government costs could end up being part of a larger deal to cut spending, even if federal employees do see a small salary increase in 2013.

Proposals such as modifying retirement annuities based on a “high five” instead of a “high three” calculation were supported by the Federal Deficit Commission and may be revived as part of any negotiation on cutting costs. (See High Five vs. High Three: Is There a Difference In Your Retirement Annuity?; also see Commission Proposes “High-Three” to “High-Five” for Retirement, Pay Freeze and Changes to FEHB for Federal Employees)

There may also be a change in the Federal Employees Health Benefit Program.  Under one proposal, federal employees would receive a fixed subsidy to cover their health insurance premiums. The subsidy would be limited so that it would not grow any faster than the gross domestic product, plus one percentage point, each year. As described by financial planner Carol Schmidlin: ” Participants would cover the remaining premium cost if their plans cost more than the subsidies provide.  FEHB premiums have increased an average by 7.5% since 2003.  During that same period, our Gross Domestic Product (GDP) has increased on average of 3.9%.  Do you see a problem here?” (See How Congressional Budget Cuts May Cut Into Your Retirement Income)

A long time phrase popular in American English is “The more things change, the more they stay the same.” Perhaps that applies to the current state of the federal workforce.

The election could have yielded results with relatively quick cuts in federal spending, federal benefits and staffing in agencies that were fairly predictable. To that extent, some will read the election results as providing a sense of relief. What will happen in coming weeks and months for the current federal workforce and future federal retirees is likely to contain at least some bad news but, on the bright side, some will conclude that “it could have been worse.”

We will, of course, provide our readers with information on events that may impact the federal community as they unfold. Without a doubt, 2013 should be an interesting year.

 

© 2016 Ralph R. Smith. All rights reserved. This article may not be reproduced without express written consent from Ralph R. Smith.

About the Author

Ralph Smith has several decades of experience working with federal human resources issues. He has written extensively on a full range of human resources topics in books and newsletters and is a co-founder of two companies and several newsletters on federal human resources.

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  1. YesterDay4 says:

    ” I TOLD YOU SO …”.  So YOU have coming: high 5, larger contribution to FERS retirement, NO raises / COLAs, a taregt painted on your back, increadably poor management, LIES, in-action / stalling on bullying, threats, policy of following the rules still depends on who you are, the policy of hiring the least qualified (depends on the priveliged group) … and more … 
    They have not yet mentioned changing (taking back) YOUR a/l accumulation, YOUR s/l accumulation, taking (another) loan from YOUR TSP.
    Time to go … …

  2. fedsupporter says:

    Get over it!! You and those like you lost!! Stop whining!! Go get a job or a  hobby or something!! Do something constructive.  Change starts with you!! LOL!!!!!!

  3. redauburn says:

    Raise or no raise it does not matter.  A raise may just put you in a higher bracket so then your check actually goes down.  It will anyway now that healthcare has went up again and food has skyrocketed. 

  4. Isthatreallynewsworthy says:

    I agree with Fedsuporter that there was a negative spin in this Article.   It wasn’t lost on me that the author found it “accurate” agreeing with the National Journal, that the Obama campaign ran a “small-bore and brutish” campaign.  

    The question raised in the heading never got answered – in the haste to have something to say.

  5. Isthatreallynewsworthy says:

    Election Results 2012: What are the Implications for Federal Employees?    If the Article addressed that question, I missed it.    

    I disagree with the Author’s having slipped in his opinion mirroring that of the National Journal that it is  “accurate” that the Obama campaign was a ” small-bore and brutish campaign”.

  6. steve5656546346 says:

    The implications are this:  the government will run out of money, and we will be in trouble.

  7. fedsupporter says:

    We are WAY better off (standoffs or not) with our current president than if we had the alternative.  Negative spin in this article aside, our president has integrity.  Way to go America!!!!!

    • fiscalcliffwithnocommonsense says:

      Integrity?    ever heard of Benghazi.   

      • grannybunny says:

        Sure, we’ve all heard of Benghazi, ad nauseum, from people seeking to politicize a tragedy.  It will be a genuine relief when all investigations are completed and any weaknesses/errors that contributed to the event can be addressed and remedied.

        • wmponce says:

          No, not politicized.  This president failed to act even though he knew that the Lybia situation was on the brink of security collapse.  And he LIED, and LIED, and LIED, and LIED.  Because he was not man enough to make a decision and not man enough to put the blame where it belonged, HIMSELF!

          He lied, 4 Americans died.

          • grannybunny says:

            Despite the efforts of numerous people to politicize the issue, the investigations are still ongoing, and no findings or conclusions have been made.  One of the trade-offs with trying to keep the public informed as fully and quickly as possible is that not all of the information that comes in turns out to be accurate, so conflicting facts emerge.  It will be a relief, though, when everything that can be known is, so we can all know exactly what happened, and — hopefully — constructive steps can be taken to lessen the chance of a reoccurence.  Security from terrorism is a zero-defect process, since you have to be as perfect as possible, while the perpetrators only have to be right — or lucky — once.

          • lectrician says:

            When Bush lied, how many died?

        • rickaroo says:

          When the investigations are finished, Obama will have the blood of those four people on his hands.  Then, tell me, and the family of those fallen members what a great President he is.

          • grannybunny says:

            With your crystal ball, you need to run for President, since — apparently — you foresaw and understand the attacks far more clearly than the entire intelligence community.

          • guestwo says:

            You mean the intelligence community that missed 60,000 Iraquis invading Kuwait or the intelligence community that missed 120,000 soviet paratroopers going into Afghanistan? Or the community that missed 9/11?  With people like you know wonder are  allies are shaking their heads and are  adversaries are laughing at  us!!! 
            P.S.  In case you don’t know adversaries means enemies-like Al Quaeda.

          • grannybunny says:

            So I guess you’re saying that the blood of all those who died on 911 are on Bush’s hands, too?

          • guestwo says:

            Granybunny  you are missing the point.  Sniffing too much glue on those envelopes?  I will make it simple for you.  You said “you foresaw and understand the attacks far more clearly than the entire intelligence community.”  The intelligence community missed all those troops moving into foreign countries.  Yet you seem to think they are infallible.  They are not.  Again, they missed all those clues. 

            Different on Benghazi.   More proof on Owebama covering-up and outright lying.   IED blew a hole in consulate.  Atttempt to assassinate British ambassador.  A second  assault on consulate.  But then Owebama states it was a video’s fault.  This attempt to cover-up what really happened, plus Owebama lying; failing to acknowledge terrorists is not enopugh proof that Owebama lied then you have a bigger problem than I thought.   The difference is that this time Owebama was on notice.  LTC Woods  and others in the administration warned Owebama and he refused to do anything.  So Barack Benghazi is incompetent, a liar, and refuses to admit what really happened. 

          • grannybunny says:

            I decidedly do not think the intelligence community is infallible; neither is the President, nor you and certainly not I.  However, as you may know, while the people in the Consulate were actually under attack, and in a desperate, last-minute, effort to save their own lives, they issued a statement distancing themselves from the video, a statement almost immediately criticized as some type of Administration “apology” by cynical political partisans.  Obviously, the victims themselves thought the video played some role in the attack.  Furthermore, soon after the attack, a terrorist organization claimed credit for it and expressly mentioned the video.  It’s not only possible — but probable — that the attack was preplanned (and not a spontaneous demonstration), but that the video also further incensed the perpetrators and formed part of their motivation.  No one yet knows for sure, and we may never know with any type of reasonable certainty.  These aren’t simple black-and-white issues.  One thing I do know for sure is that the Ambassador’s father asked that this issue not be politicized, and it is utterly shameful that people do not respect his wishes and continue to attempt to do so.  

          • guestwo says:

            Stop licking envelopes.  The statement came from a worker in Cairo, not Benghazi.  Now i know you have a problem.  Doesn’t know the difference between Cairo(in Egypt)  and Benghazi (Libya).  While I may not be infallible I am also not arrogant and would not miss over half of the daily briefings from the CIA.  The video further incensed the terrorists.  What a ridiculous statement.  Yeah, without the video they would only have used RPG’s and not mortars.  And we may never know with any degree of reasonable cdrtainty.  Again you are so willing to ignore the obvious.   IED blew a hole in consulate. Attempt to assassinate British ambassador. A second assault on consulate.  Red Cross w/drew because it was too dangerous and so did the Brits.  It is well known that LTC Woods and others complained about security.  I just love how you make up excuses for Barack Benghazi.  Sorry but the issue is not political but is deadly. “utterly shameful that people do not respect his wishes and continue to attempt to do so. “  I apologize for exercising my First Amendment rights.    As for not being black and white you are dead wrong!!!

          • Carol Carpenter says:

             Honestly, Rickaroo and others who agree with you, everyone knows that to step foot in the crazy Middle East is to be at big risk for injury and death. The people who serve there know that! It’s amazing that there are not more casualties to Americans despite the security we provide. This is just another (lame) excuse to blame Obama and politicize this matter. He just won the election; your blather did not work!

      • AKFed says:

        Ever hear of the House GOP cutting the State Dept security funding?

    • rickaroo says:

      Integrity?  Please don’t make me laugh…that’s hilarious.  If all of you Union loving, Socialist leaning, left leaning nuts think Obama has your back, you’ve got another thing coming.  When the big RIF comes, you newer civil servants will be out there in the unemployment lines like the rest of the Obama supporters.

    • YesterDay4 says:

      Integeraty ??? ever heard of “fast and furious” ??

    • Guest7474 says:

      Prove your statements with examples.  Provide examples of his “integrity.” 

  8. ViennaGuy says:

    In my opinion, it doesn’t really matter who has control of the White House or Congress; the federal workforce is going to take it on the chin within the next five to seven years.  Let’s face facts: spending is unsustainable, Congress and the White House lack the political will to make wholesale cuts to expensive programs, and the federal workforce is a convenient target(both politically and otherwise) for budget cutters.  Raising taxes won’t solve the federal budget problems because taxes cannot be raised enough to cover the deficit on an ongoing basis; even if the government confiscated 100% of the net worth of the members of the Forbes 400 richest people(which would be a one-time thing!), it would just barely cover one year’s deficit spending.  Then what would they do for the next year?  Where would they get the money?

    Face it, folks, we’re in the crosshairs.  The politicians aren’t saying it, but we’re in the crosshairs.

    • LikeBuffaloWingsALittleTooMuch says:

      I think there’s a good chance you’re right, but I can imagine a few alternative scenarios as well:  

      #1: If our economy significantly picks up, then even at current tax rates, we get both more revenue (same % of a larger number of dollars), and reduced expenses (unemployment, welfare, and bogus disability).  

      #2: Wrapping up the war in Afghanistan should significantly help our yearly military costs.

      #3: (Less likely) we find a way to control healthcare spending.  However, I think this is unlikely to happen until after other painful cuts.  So I don’t think this scenario actually precludes painful cuts in federal salaries / benefits.

  9. Soonershooter says:

    I fully expect to be a RIF from DoD within the next 2-4 years…..

    • LikeBuffaloWingsALittleTooMuch says:

      As much as that would be a bummer, I don’t really have a problem with that.  I don’t think we have either the money or the reason to be the world’s police force.  I think it would be a great idea to scale back our military ambitions.  And once we do that, we simply don’t need to many people.

      • Soonershooter says:

        A lot of tough decisions need to be made soon, not sure if QDR is due in 2013 or 2014, but it needs to be well thought out and a reflection of our foreign policy and military budget….we need to get this right.  
        Specific to my situation, the House and the many defense lobbyist will fight reductions if they go to far for them.

        • LikeBuffaloWingsALittleTooMuch says:

          When the QDR is developed, does is take foreign/military policy as a fixed, starting detail?

          It’s one thing is the generals and admirals say “Okay, the politicians have decided our mission will be X and Y.  So how much will it cost to get there?”

          It would be quite another thing for there to be back-and-forth where Congress and the DoD go back and forth while working on the QDR, so that foreign policy can be affected by the fiscal ramifications of various foreign policy options.

          I hope for the latter, but I don’t know how this part aspect of government works.

      • GMDenver says:

        I agree that defense needs to be reassessed and some pullback worldwide is in order.  But if you think the military is the fiscal problem, you should bone up
        on your financial history of the government programs.  First, in 1960 approximately 1 of every 3
        dollars of federal spending went towards welfare programs (and I’m counting
        entitlements here).  Today, it’s slightly
        more than 2 of every 3 dollars spent.  From
        1965, the dawn of the “Great Society,” when welfare programs took off, through
        2008, defense spending increased a mere 42%; other non-social government
        operations/programs increased 76%; and social welfare increased 500%!—all in
        inflation adjusted dollars.  During this
        same time, GDP grew 150%.  Does unsustainable
        seem come to mind here?  Remember,
        defense is the only enumerated power of the federal gov’t according to the Constitution.  Moreover, defense has gone from being 50% of
        the federal budget in 1960 (no wars) to 20% these days (and it was 90% at the
        end of WW2).  Today, we borrow 43 cents
        of every federal dollar spent.  If that
        doesn’t say we’re in decline, then nothing will.

        On the revenue
        side, I’m sure you’ve heard the stat that as of 2010, 47% of the
        population pay no federal income taxes, despite receiving all the
        benefits paid for with other people’s taxes (roads, defense,
        safe water/air, etc.); the top 1% of earners pay nearly 40% of all individual
        income taxes while the top 10% pay nearly 70%.  The bottom half pay only
        2%.  So are you prepared to say how much more the so-called wealthy should
        pay?  And these are only federal rates.  When you toss in state income tax and other
        taxes, it’s considerably more skewed.  In
        fact, it starts approaching the point of diminishing returns.  As a country, we have exceeded our tax
        capacity, currently at 25% of GDP, when in reality it should be 20% (people
        begin to lose incentive to make the next dollar).  Gov’t spending is currently at 25% of GDP,
        which by all accounts is already crowding out the only wealth-building sector
        in this country, private enterprise.  And
        if you really thing a vibrant economy is going to pull us out this decline,
        consider this.  Demographics show that baby
        boomers–the largest cohort in this society–is passed its purchasing heyday
        (no longer a viable consumer to spur an economic recovery).  Moreover, our European trading partners are
        so debt-ridden and overspent, they can’t buy our products like they used
        to.  I think you should re-think the
        merits behind your enthusiasm for this election and the future of this country.
              

        • skisok says:

          But the top 1% also make 38% of the income and receive many more services than the bottom 99%.  Let’s not leave that out.

          • GMDenver says:

            I think it’s more like 24% of the income (source: http://thinkprogress.org/econo…, a liberal website).  Since you cite no source and throw out a number that seems to have little credibility, I rather doubt the top 1% are taking a disproportionate share of gov’t provided services, as you claim.  By common reason, they could afford many of these services with their own resources.  Do you have particular stats and citations?  Sure, they use the common services, such as roads and food inspectors, but they don’t use a lot of the personal services used disproportionately by the the lower 50%, such as welfare benefits, public schools, housing, and so on. 

          • The Master says:

            I never though of public school as being in the same category as welfare and housing assistance.

        • LikeBuffaloWingsALittleTooMuch says:

          Thanks, that was very informative.

        • The Master says:

          You are not taking into accoun that SS and Medicare are paid for by specific taxes and not with the general fund. when you strip that out, Defense does make up about 40% of general fund expenditures. We also spend more of defense than the next 17 countries combined. I am not complaining, just stating some facts. As a veteran, I know the need for a strong and efficient military that is well trained and supplied. Maybe if we had a tax just for defense, as we do for SS and medicare, it would be different and people wouldn’t mind.  Welfare payments are down to about half of what they were 10 years ago, so we only have the other half to go.

          • GMDenver says:

            You are conflating two separate issues: expenditure and funding source.  While it is true that SS and Medicare have a separate taxing/revenue stream, you are deluding yourself immensely if you think that that revenue is sufficient to fund these programs.  In fact, since Congress made the decision under Johnson in ’63 to commingle SS and general fund monies, nothing could be further from the truth!  In fact, it is highly likely that Congress will have to raise general revenue taxes (along w/SS taxes) to fund future SS benefits–no matter how much they’re curtailed–as well as pay down the debt incurred to fund SS payments for the last 40 years.  The simple fact is no insurance company would ever sell/implement insurance programs like these two because they are simply non-sustainable.  Since this discussion and election are/were in part about the future of government spending, and the fact that these social programs are not self-supporting, they are part of the problem and hence discussion.  

            As to the point about military spending, while I’ve already conceded that an evaluation needs to be done and spending smart cuts made, your statement about spending more than the next 17 countries combined boarders on subtifuge.  When we have treaties and other commitments to protect ours and other’s interest, as well as protecting our economy upon which so many rely, we have to spend lots more.  Relative to history, however, we are spending less as a percentage of GDP since ascending to super-power status after WW2.  Basically, the price of freedom is high, but since we are seeing freedom give way to increasing Euro-socialism and government welfare, perhaps the relative cost of defense will become cheaper in the future.      

        • DeskSlave says:

          As of 2010, the top 1% of households (the upper class) owned 35.4% of all privately held wealth, and the next 19% (the managerial, professional, and small business stratum) had 53.5%, which means that just 20% of the people owned a remarkable 89%, leaving only 11% of the wealth for the bottom 80% (wage and salary workers)

          So, the top 20% of Americans should be paying 90% of the taxes, since their slice of the pie is so large (or because America has been so kind to them, they should repay that kindness).

          http://www2.ucsc.edu/whorulesa

          • DeskSlave says:

            Since I am a government worker who dedicated her life to serve our country I should not pay ANY taxes.

          • GMDenver says:

            You are bringing wealth (net worth) into the discussion, which I hadn’t.  I only brought up earnings; the two may not be necessarily linked (e.g., someone who wins the lottery and spends it foolishly, like most, has income but little wealth; conversely, someone who sits on appreciated property may have great wealth but little income).  Nevertheless, you seem to be against success, or you at least want to penalize it.  You also sound like Obama: “…you didn’t build it….”  I’m not so sure America has been so kind to these people–what has America done for them that they didn’t do for themselves or is not available to others?  These folks, many of them entrepreneurs, have had success  using their skill, abilities and making sacrifices along the way to accumulate wealth–probably a good number of them even borrowed money when they were dirt poor and turned it into gold through blood, sweat and tears.  That’s what drives people to improve and innovate, without which we’d have a second-class economy/society just like Greece.  These so called wealthy are indeed sharing their wealth in many ways.  You just choose to ignore it.  Again they pay a disproportionate share of the taxes, donate more than the average to humanitarian cuases, have higher marginal income tax RATES than others, employ and provide a living to many of the others, spend money so that others can work, etc., and so on.  Do you begrudge Bill Gates and Steve Jobs their fortunes?  Their innovatins have helped many.  They’ve earned it and the right to do with it as they wish without the government confiscating most of it (does the Soviet Union sound familiar here?).  Wealth of individuals like these are what raises the overall standard of living in this country and for everyone else who may not be quite as talented or lack the desire to get ahead.  Finally, I leave you with this: if you tax it, you will discourage it; if you subsidize it, you will encourage it.  In other words, if you raise the taxes too high, people will take their skills and wealth elsewhere (just as many US corporations did, as well as many of the wealthy that used to live in MD but left after that gov’t imposed a wealth tax a few years ago).  Likewise, when you subsidize the less affluent through wealth transfer and other handouts, you will continue to encourage dependency.  It’s called human nature.  History is replete with examples of both!

      • guestwo says:

        You’re right. Lithuania and Lichtenstein will pick up the slack. “I don’t think we have either the money or the reason to be the world’s police force.” Obviously you have no idea how much 9/11 cost and how much it continues to cost. If you think being the world’s police force costs wait untiil you see what happens when no one is.

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