The 'Fiscal Cliff' and the Federal Workforce

By on December 18, 2012 in Current Events, Retirement with 48 Comments

Some of the latest news in the “fiscal cliff” debates taking place in Washington have made mention of the federal workforce. What exactly are they and what do they mean for federal employees?

Social Security

The first item is indirectly related in that it covers Social Security. Many federal workers are nearing retirement, so they have or will be eligible to collect Social Security soon.

President Obama floated the idea of using a “chained CPI” amidst bargaining with Republicans recently.

According to an article by Ed O’Keefe in the Washington Post, the chained Consumer Price Index impacts Social Security in that it equates to paying out less in benefits over time.

Says O’Keefe, “Imagine, for example, a person born in 1935 who retired to full benefits at age 65 in 2000. People in that position had an average initial monthly benefit of $1,435, or $17,220 a year, according to the Social Security Administration. Under the cost-of-living-adjustment formula and 2012 inflation, that benefit would be up to $1,986 a month in 2013, or $23,832 a year. But if payouts were adjusted using chained CPI, the sum would be around $1,880 a month, or $22,560 a year — a cut of more than 5 percent and more as the years go by.”

The National Active and Retired Federal Employees Association was quick to pounce on the chained CPI proposal. In a letter to Congress, NARFE National President Joseph A. Beaudoin denounced the idea, saying it would be too great a hit to retirees’ income.

“In 30 years, when many current beneficiaries will still be alive, retirement income from these sources will be 9.2 percent lower.  For example, the average 65-year-old retiree, receiving about $15,000 in Social Security benefits after earning an average income of about $43,000, would need to have saved an additional $28,000 to account for the lost future income,” said Beaudoin.

Pension Cuts

According to a recent AP story, President Obama proposed $600 billion in cuts over a decade in the negotiations from sources “including $350 billion from federal health care programs and $250 billion from other cuts to domestic programs like farm subsidies and the pension program for federal workers, and through sales of used federal property.”

This statement is vague, so while it’s not clear what these pension cuts mentioned are, one can make assumptions based on past proposals. Specifically, the 2013 budget proposal from the White House released earlier this year proposed increasing the contribution federal employees make towards retirement by 1.2% over three years beginning in 2013, so it’s quite likely this could be the pension changes referenced in the AP story.

Job Cuts

If the “fiscal cliff” were to end up taking place, the possibility of job cuts exists in both the private and public sectors.

Some reports have put the number of federal workforce jobs that would potentially be in jeopardy at around 277,000. That number includes 48,000 within DoD and the other 229,000 are from non-defense agencies.

Is any of this a certainty? At this point, no; it’s too soon to tell what cuts or changes federal employees can expect, if any. Congress is still negotiating and may reach an agreement. If and until that happens, it’s best to wait and see how the situation unfolds.

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

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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  1. govtsuxs says:

    lay off all the govt workers at VA claims office that takes years to process one claim to add a wife and step children to a members file. And my god ,, my heart bleeds for the veterans losing limbs from a war we need to end, they get discharge, have no income but there retirement check, and VA takes years to process there claims for their earned benifits before making payments…but the govt is broke and there is a reason for there madness…its on purpose….Its sad, isnt there something the taxpayers can do to over ride these politicans…legally…There stealing from us, its becoming like a communist country…we work, they take…..

  2. Rainy098 says:

    I would like to hear comments from the DOD employees on the proposed job cuts.

    The article above indicates DOD cuts can be as many as 48,000. Since DOD is quite large, I would like to know what percentage equates to 48,000.

  3. Hav. Mir says:

    Sancrab… why not find like minded misanthropes and move to …say Texas… and sesceed from the Union.

  4. MSGP says:

    You can’t change what we were promised for the past 30 plus years of work.  We had a goal and now the Gov wants to give us the old shaft!!!.  My wife and I have always worked hard towards being able to retire at 62, if we were told 30 years ago we could have made changes to save more for our retirement.  We earned every cent that  we will receive at 62 and the Gov needs to HONOR what we earned!!!

  5. Against_the_tide says:

    As a tax payer, I hope the Fiscal Cliff happens.  We (the US) has been pushing our debt down the road.  I grew up hearing that my generation would pay it off.  Now, we are passing it onto the next generation.  We are paying for federal programs that both benefit and hurt us.  It is like paying for a Filet Mignon by weight, but then having to cut off half due to the fat.  Everyone has benefited from the over spending.  Now, we should all tighten our belts to pay it back.

    As a federal employee, I resent the stigma that people assume of the position.  I do not deny that there is dead weight.  But, I challenge you to find a big corporation that does not have dead weight.  Bureaucracy and dead weight are not just in the government.  I was raised with good morals and beliefs.  One should “earn” their pay.  I work hard to contribute to my organization.  I feel guilty on days where I am waiting on others to get me information.  Given a choice between twiddling my thumbs and burning the rubber off my shoes, I would choose the latter.  I am proud to be a federal employee.  When asked, “What do you do for a living?”  I respond two fold – “I teach disciples for my Lord and Savior”, and “I work for you.”  The second almost always causes grimace.  As a federal employee, I work for you (the tax payer).  And, I strive to give you your money’s worth.

    • miramar3 says:

      Well… hold on there… I was an SES… and I’d say there is a 1:1 ratio of dead weight doing nothing or something useless to useful employee doing something worthwhile. All fed employees ought to be on merit pay and hiring/firing ought to far easier. Give SES’ers direct firing/hiring authority and allow us to buy affordable executive risk insurance. Also… create a “panel” to zero-base each cabinet department- start with DoD… to determine actual myr required loading… see if we can rescind some statutes that require useless reporting or work mandated by Congress. If we could get rid if useless employees and needless work we cut drive down costs and pass the “savings” on to the taxpayer. Oh… we should also look at contracted myrs too.

  6. Dave says:

    Congress does not care whether we go off the fisca cliff or not.  They are secure in their government seats (at least for the time being, until the next election), their retirement and medical is assured, and most of them will get richer off their congressional experience once voted out of office.  There is no downside or consequences facing any of them, so why should they compromise.  If we run the ship of state into the rocks, some “carpet baggerr” private business sector folks will make millions off of the salvage operations.  It’s a no win situation who isn’t already a millionaire.

    • miramar3 says:

      Dave.. you are on to something there… but remember the 535 on the Hill can do something that would land the likes of thee and me in the pokey… they can legally trade on insider information. Its why no matter how much a corrupt Republican spends on his own campaign… he knows Wall Street is easy pickings to get his ROI.

  7. canada bound says:

    worked all my life
    all my money went back to uncle sam and now nothing to show for it
    everyone who is on the dole was smart
    i gave to that dole in taxes and deductions for something not worth a you know what
    wasted all gave all all to go under the bus when old and wore out
    sorry for the rant-i just cant sleep and broken promises are just too much
    i hear in 3 years canada will let you be a citizen there and they take care of their elderly, sick and workers
    not totally too late to try

  8. miramar3 says:

    Well… we did it to ourselves. We thought Obama would watch our flanks… but heck he led the Tanned Cryer and the Chinless Wonder right up and over us. What the heck… Obama knows what the GOP knows… no one gives a tinkers damn about old people, vets and particularly feds. I was an SES under that nitwit Dubya… and the last crop of GS-14s and GS-15s were the least capable I’d seen in 35 years. Poor salaries, FERS and the general disdain of career feds by just about everyone has created an inept and mediocre fed workforce. The use of CCPI is just another reductionin benefits. You get what you pay for.

    • Gus and us says:

      forget about Gus and all of us under the bus

    • bbf says:

      I NEVER thought Obama would watch our flanks…I read an article by Larry Pinkney in 2007 ..and it was one of the few articles published which told the truth about Obama:

      FROM http://www.theBlackCommentator.com:

      This is a man who has enjoyed the fruits of America at the
      blood and expense of Black Americans and others, but who has
      paid virtually no dues.

      This is a man whose father had also enjoyed the fruits of
      university schooling in America but subsequently returned to his
      native Kenya.

      This is a man, who also like his father before him, neither
      served in a branch of the US military nor in any organization in
      America opposed to US military adventurism.

      This is a man who as a deeply corporate military industrial
      complex US Presidential candidate, has called for
      “unilateral” US military actions in other nations. [And why
      not? After-all, his father, himself, or his wife and
      children were not and will not be the ones killing and being
      killed.]

      This is a man who, in Chicago, pretended to support the human
      rights of the Palestinian people but who is now known to be a
      huge supporter of the apartheid Zionists and their powerful and
      insidious political lobby in America.

      This is a man who dares opportunistically to feign admiration
      for the late Dr. Martin Luther King, Jr., but does not share the
      collective memory, pain and deep concerns of Black America,
      other people of color, or even of numerous white Americans for
      that matter – in the ongoing struggle for equality and justice
      in this nation.

      This is a man who has de facto contempt for the past supreme
      sacrifices made by thousands of activists from so-called
      “militant” organizations such the Organization of Afro-American
      Unity (OAAU), the Student National Coordinating Committee
      (SNCC), the Black Panther Party (BPP), Students For A Democratic
      Society (SDS), the American Indian Movement (AIM), the
      Revolutionary Action Movement (RAM), etc.

      This is a man who is silent about the need for reparations for
      Black American descendants of slaves and the genocide of the
      indigenous so-called “Indian” peoples on this continent. He is
      the consummate opportunist who, in reality, cares nothing about
      the horrors inflicted upon Black, Brown, and Red peoples in this
      nation, and has repeatedly signaled that he plans to inflict
      even more “unilateral” military horrors upon various nations and
      peoples of the world.

      This man, Barack Obama, is but a more articulate, younger, and
      shinier version of the current and infamous US Supreme Court
      Justice Clarence Thomas, adorning himself dangerously and
      abundantly in superficiality and double-speak.

       

  9. Passwordone says:

    Let’s save some money by lowering congressional salaries to the federal minimum wage. Except they would still be overpaid.

  10. under the bus says:

    throwing us under the bus for wall street bankers yet again-that is disgusting and nobody seems to even care

    • miramar3 says:

      Remember with your check book and at the ballot box.
      At least Republicans told you they where going to screw you. Obama and the Democrats lied to us.

      Makes me think that creepy MOC GOPper wasn’t that far off when he yelled at Obama, “YOU LIE.” He does …he did.

    • $15300432 says:

      $130,000 a year is being thrown under the bus?? The taxpayers would love to be under that bus

      • miramar3 says:

        Mere peanuts… $130k a yr in DC gets you a dump in Prince William Co and a 4 hr commute. Feds get paid peanuts…

      • Sandcrab says:

        i wish I made $130,000 a year.  It’s all around Washington way that makes that kind of money.

        • miramar3 says:

          Well… perhaps you are not worth $130k. Some of us have law degrees and a PhD from KSG in Public Policy and 20 plus years of experience at the Executive level in the private sector…and some of us retired as SES 5’s with salaries and Presidential bonus totalling in excess of $170,000. Then some of us retired and joined corporate boards and lobbying firms making in excess of $400k …and that just barely gets you enough income to afford a 6000 sqft house in Mt Vernon on

          the Potomac… barely but it helps if your wife is an MD.

          On the other hand if you are some uneducated, mediocre yahoo… perhaps $10.00/ he mixing paint at Lowes is right up there at your challenge level and no… YOU will never, not in your wildest dreams earn $130k …which is DC is peanuts.

        • $15300432 says:

          Its the Federal AVG so they are all over the country 1/2 make more and 1/2 make less

    • miramar3 says:

      Gus… please…don’t agree with me….gives me neasuea….

  11. CancerFromIRS says:

    I hope there will be big cuts to the IRS – nepotism has destroyed the agency – they are completely out of control in their abuses of power.  Taxpayers shouldn’t be supporting these crimes.   MSPB also needs to be eliminated, a completely useless agency which does nothing but promote these abuses and cause more damage to the victims.  The failure to address the nepotism is resulting in  violations of employees’ constitutional right to due process, and it will only get worse in this economy.  As taxpayers it is shocking that nothing is done about these legal violations by an agency charged with enforcing the law.    

    • Smart says:

       Just pay your taxes and you won’t have these problems…and seek professional advice on your other issues.

      • $15300432 says:

        Why no one in the obama administration does

          • $15300432 says:

            as Fedsmith stated a month ago barak’s staff owes over $5M in back taxes, 20 have never filed

          • miramar3 says:

            It is not unusual for high income earners and investors to have disputes with the IRS that result in the IRS reporting said individuals as being “delinquent. ” In fact, the original article noting WH tax issues appeared in Politico and not Fedsmith and the amount “owed” by high ranking West Wingers is less than $900,000 and less than that owed by equivalent GW Bush staffers. Quoting from the original Politco article, “… the White House actually has a much lower tax delinquency rate than many of the agencies and Congress.”

            It never ceases to amaze me the extent of lying on the part of Obama haters.

          • fedup says:

            Hmmm so you are now condoning Obama’s administration being delinquent on their taxes?

          • miramar3 says:

            Sure you bet I do.  I’ll go along with ANYTHING President Obama and OUR guys do … ANYTHING.  Nothing they can EVER do will be as bad as what Reagan, Bush(es) and the rest of the GOP criminals have done and will do. 

          • fedup says:

            Somehow not surprising.  I am guessing you have a welfare check to go cash.

          • miramar3 says:

            “… the White House actually has a much lower tax delinquency rate than many of the agencies and Congress.”

            Quote above is from the original Politico article snagged by Fedsmith. Also amount owed is less than $900,000 spread across many West Wing Executive staffers. It is not at all unusual for high income, high wealth folks to have ongoing disputes with the IRS… the IRS shows “delinquent ” any taxpayer with whom they have a dispute. Many disputes end up in federal tax court and far more of them are resolved out of court and delinquencies discharged.

          • bbf says:

            Interesting old article from the LATIMES….

            http://latimesblogs.latimes.co

            Now, back taxes have been a problem for the Obama-Biden administration. You may recall early on that Tom Daschle
            was the president’s top pick to run the Health and Human Services
            Department. But it turned out the former Democratic senator, who was
            un-elected from South Dakota in 2004, owed something like $120,000 to
            the IRS for things from his subsequent benefactor that he just forgot to
            pay taxes on. You know how that is. $120G’s here or there. So he
            dropped out.

            And then we learned this guy Timothy Geithner owed
            something like $42,000 in back taxes and penalties to the IRS, which is
            one of the agencies that he’d be in charge of as secretary of the
            Treasury. The fine fellow who’s supposed to know about handling everyone
            else’s money. In the end this was excused by Washington’s bipartisan
            CYA culture as one of those inadvertent accidental oversights that
            somehow never seem to happen on the side of paying too much taxes.

            And under Geithner’s expert guidance the U.S. economy has been, well, wow! Just look at it.

            Privacy laws prevent release of individual tax delinquents’ names. But we do know that
            as of the end of 2009, 41 people inside Obama’s very own White House
            owe the government they’re allegedly running a total of $831,055 in back
            taxes. That would cover a lot of special chocolate desserts in the
            White House Mess.

            In the House of Representatives, 421 people owe a total $6,524,892.
            In the Senate, 217 owe $2,774,836. In the IRS’ parent department,
            Treasury, 1,204 owe $7,670,814. At the Labor Department, where Secretary
            Hilda Solis’ husband had some back-tax problems before
            her confirmation, 463 owe $7,481,463. Eighty-one workers for the
            Federal Reserve System’s board of governors owe $1,076,733.

            Over at the Justice Department, which is so busy enforcing other laws
            and suing Arizona, 1,971 employees still owe $14,350,152 in overdue
            taxes.

      • Sandcrab says:

        Hey Smart, you must be one of those “LOW INFORMATION VOTERS” that Rush Limbaugh talked about yesterday on his show.  Didn’t you hear that they upped the IRS auditors by over a thousand new employees?  They are out to get people like you and me and all of us.  They won’t be happy until we are all bled dry and broke living on the little bread crumbs they give us.  And we will have to stand in long lines just to get those crumbs.  They collect our taxes so Obama can go on those stupid vacations and golf trips instead of working to improve these United States.  It cost us tax payers million each time just so he can take a vacation every month.  I wish I could take a vacation just once a year.  Bubba, you are going to pay more taxes this year then you ever had to befroe because of this Obamacare.  We all will be in the poor house after this crap kicks in.  But don’t worry, the world is going to end some time today and we aren’t going to be here.

    • Soonershooter says:

      good luck, unless congress goes along with your ideas.  i only see big govt and hard times in the coming years…

  12. Recent Retiree says:

    Any idea what “$350 billion from federal health care programs” means?  I retired when I did after carefully calculating that I could afford it – if they start messing with the health care benefit I might find that was a big mistake.

    • The Master says:

      That may refer to Medicare and Medicaid. Those are the programs that need reforms and the Republicans wanted to clean up.

      • miramar3 says:

        Yeah… let’s let poor kids starve by gutting SNAP and kick old ladies out of LTC Medicaid capitation nursing homes. What the heck… let’s be like Somalia…. pirates… arrrrahhh….matie.

        • $15300432 says:

          Must be a lot of poor Barak has added over 30 MILLION to the roles

          • Marky9267 says:

            I never would have thought that I would live to see the day I’d get betrayed by the guy I campaigned for and lost friends over supporting him. I argued that Obama would never put cutting earned Social Security and retirement benefits on the chopping block in a vain effort to compromise with the losing party over a so-called fiscal cliff. Where is Pelosi, Boxer and all of these big time liberals who have vowed not to allow cuts to Social Security? I tell you where they are the sam place as Obama in the pockets of corporate America.  Is it too late to change my vote to Romney? At least I wouldn’t have been lied to. And Time has the unmitigated gall to name Obama as Person of the Year! What a joke! 

          • Sandcrab says:

            Marky9267, you bought the whole package, hook line and sinker.  They told us on FOX what to expect and how bad it would be while the other news medias didn’t say a thing while kissing Obama’s half black butt.  I’m not for cutting something that people deserve, it’s those that never worked, live in the projects getting paid for having babies, watching their big screen TVs and not doing nothing but complain about how life is tough.  Pelosi, Reid and all the rest are a bunch of liars.  It’s like a package deal, vote for one idiot and you get the rest for free.  They all were born with a Silver Spoon in their mouths and don’t know or care about the real world out there.  Her lame ass statement “YOU HAVE TO SIGN THE BILL TO FIND OUT WHAT IS IN IT.” is a stupid statement that will live forever in my brain showing that stupid people shouldn’t have the right to vote.  Anyone who voted on that without reading it should be thrown out on their asses. And Harry Reid should be held up for treason.  Nothing that the other side passes goes past Reid.  To me that is treason.  Let the Senate vote on everything because that was why we put them there.  The Liberal News Media never tells you that any bills passed by the Republicians are just sitting in Reid’s trash can do they?

          • miramar3 says:

            Marky… BHO…and his inner circle were only playing rope-a-dope with the Tanned Cryer and chinless Mrs McConnel. Its fun to watch all the Ted Nugent fans come out from under the slimy rocks when you dump on the President. Not to worry… your COLA is safe. The President will ask Leader Reid to put a Bill in for a floor vote to CUT taxes on folks under $250k AGI with a few provisions to help the 99%’ers ….and it won’t mention anything about “chained CPI.” Obama has a JD from Harvard… the tanned Cryer was president of
            his HOA in Ohio. Like a Porsche leaving Ford Taurus at the starting line.

        • Sandcrab says:

          When I was growing up, I learned that you don’t get anything for free.  And it is the parents responsablilty to feed their own children, not the government.  It’s your kids so take care of them or put them up for adoption.  I never got a free meal at school so why should they.  Now they are getting free breakfast, free lunch and in some cases free dinners.  WHERE WILL IT STOP?  As for old folks homes, let them pay their own way until their money runs out like my father n law is doing now.  They drain his bank account dry with their over inflated charges then they sell his home, his car and every thing to pay for his stay in a nursing home.  It’s like Dracula draining all the life blood out of them.  So in his case, where is all that free money you guys are talking about?  We don’t see any of it. 

          • miramar3 says:

            It’ll stop when you and Ted Nugent leave the Country and leave the rest of civilized society alone.

          • Sandcrab says:

            Hey miramar, I didn’t start this free lunch crap.  you move to Texas and see how hard working people live.   As for a civilized society, this last election showed how un-civilized this country really is.  Gullible fools to believe anything that came out of his mouth.  Most people lie out of one side of their mouths then tell the truth out of the other, but this fool told lies out of both sides of his mouth.  And so many people bought it.  No one really knows where in the hell this guy comes from.  And some computer generated birth certificate just don’t cut it.  A man from nowhere backed by people like George Seros and that mouthy Rev. Wright all want to bring down this country.  The more people that believe their lies, the easier it will be to take over this country.  It has already started with the war against religion but it’s okay for Muslims to be out in the open while putting all others in the closet.  That is not what this country was founded on.  I don’t know why I’m wasting my time with brain washed people that have their heads in the sand and just don’t want to see the truth.  Maybe after next tax season with all those extra charges you and the rest of us will have to pay for and the lack of the so called Obama Care, one day you will look back and say, I should have opened my eyes, but now it’s too late.  Oh yeah, look around at the inflation and the prices of things going up because no one wants to be charged extra for Obama Care, so miramar you will be paying more for everything now.  How does that make you feel?  Got that nice warm fuzzy feeling yet?  Hope and Changie thing?  God Bless America!  God Bless our Troops!

          • miramar3 says:

            I sense a room temperature IQ…

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