House Budget Blueprint Proposes Attrition Cuts for Federal Workforce

By on March 12, 2013 in Current Events, Pay & Benefits with 97 Comments

House Budget Committee Chairman Paul Ryan (R-WI) has released the Committee’s 2014 budget blueprint for the federal government. As in past House budget proposals, there are some proposed measures that would affect the federal workforce.

One key proposal in the budget is the reform of civil service pensions. This proposal calls for federal employees and members of Congress to pay more towards their retirement plans, but doesn’t say how much. Presumably, the amount would mirror past proposals which have been anywhere from 2.3% to 5%.

This line item reads:

In keeping with a recommendation by the National Commission on Fiscal Responsibility, this option calls for federal employees—including members of Congress and staff—to make greater contributions toward their own retirement. The federal workforce is composed of some of the best educated and most dedicated people in America. This workforce is integral to a well-functioning government. However, taxpayers must also receive an excellent value for their dollars. The Congressional Budget Office recently estimated that, on average, federal employees make 16 percent more in total compensation than their private-sector counterparts. This reform would begin to rectify that imbalance. It would save an estimated $132 billion over ten years.

Slowing the growth of the federal workforce through attrition
Another item in the budget proposes to bring federal employees’ pay more in line with that of the private sector and also slow the growth of the federal workforce through a 10% cut via attrition.

From the budget proposal:

The federal government has added over 100,000 new employees since the President took office. To pay for the public sector’s growth, Washington must immediately tax the private sector or else borrow and impose taxes later to pay down the debt.

The federal government’s responsibilities require a strong federal workforce. Federal workers deserve to be compensated equitably for their important work, but their pay levels, pay increases, and fringe benefits should be reformed to better align with those of their private-sector counterparts.

Compensation for federal employees continues to outpace pay for their private-sector counterparts. The non-partisan CBO recently released a study saying that federal workers are, on average, compensated 16 percent higher than comparable private-sector employees. Immune from the effects of the recession, federal employees have received regular salary bumps regardless of productivity or economic realities.

The reforms called for in this budget aim to slow the federal government’s unsustainable growth, and reflect the growing frustration of workers across the country at the privileged rules enjoyed by government employees. It reduces the public-sector bureaucracy, not through layoffs, but via a gradual, sensible attrition policy. By 2015, this reform would result in a 10 percent reduction in the federal workforce and save $49 billion over ten years.

The budget proposal also tackles Medicare:

Medicare
Beginning in 2024, for those workers born in 1959 or later, Medicare would offer them a choice of private plans competing alongside the traditional fee-for-service option on a new Medicare Exchange. Medicare would provide a premium-support payment either to pay for or to offset the premium of the plan chosen by the senior.

The Medicare Exchange would provide seniors a competitive marketplace in which they could choose a plan the same way members of Congress and federal employees do. Every plan, including the traditional fee-for-service option, would participate in an annual bidding process to determine the federal contribution seniors would receive to purchase coverage. Health-care plans would compete for the right to serve Medicare beneficiaries.

The benchmark plan would be either the second-least-expensive private plan or fee-for-service Medicare, whichever cost less. If a senior chose a more expensive plan than the benchmark, he or she would pay the difference between the subsidy and the monthly premium. And if a senior chose a plan less expensive than the benchmark, he or she would receive a rebate for the difference. Medicare would offer higher payments depending on the patient’s health history and the cost of living. And it would require private plans to cover at least the actuarial equivalent of the benefit package offered by the fee-for-service option.

Instead of pegging the growth rate to a predetermined formula, Medicare would increase premium subsidies according to a competitive-bidding process. As a backup, the per-capita cost once the program has begun could not exceed nominal GDP growth plus 0.5 percent. The President has proposed to empower the Independent Payment Advisory Board to hold Medicare growth to the same rate. Unlike IPAB, this proposal would use competition—not bureaucratic fiat—to control costs.

This is the House proposal. The White House is expected to provide its proposal for a budget in the next few days. The final result, assuming the Senate does pass a budget for 2014, will most likely be an amalgamation of the House version as modified in the remainder of the legislative process.

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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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