With the US national debt nearing $14 trillion, federal spending has been at the forefront of the news recently. Politicians campaigned on spending and debt in the 2010 elections. On November 10, the co-chairs of the National Commission on Fiscal Responsibility and Reform released a draft report outlining ways to cut the federal deficit. We outlined some of the initial items contained in the report in a previous article.
The commission leaders also released another document that highlights some ways for the government to save money that will be of interest and have a potential financial impact on many of our readers. Dubbed “$200 billion in Illustrative Savings,” the document outlined some specific examples of spending cuts and their projected savings. Some of the points likely to be of most interest to our readers are highlighted below:
- Freeze federal salaries, bonuses, and other compensation at non-defense agencies for 3 years
Savings by 2015 – $15.1 billion
This line item is perhaps of most interest to federal employees. The rationale is described as such:
“During the Great Recession, most private sector employees have seen their wages frozen, and some even watched wages decline. In contrast, federal workers have seen their wages increase due to automatic formulas in law that provide them with step-in=grade and cost-of-living-adjustments.”
The chart below from the report illustrates potential cumulative future annual savings from this particular proposal.
- Freeze federal salaries, bonuses, and other compensation for the civilian workforce at the Department of Defense for three years
Savings by 2015 – $5.3 billion
The aforementioned proposal suggested something similar for all federal employees, but this one explicitly calls out DoD employees. The rationale is basically the same as the other proposal, that being that while private sector employees have taken a hit in the recent recession, statistics suggest that federal employees saw their salaries go up with annual pay increases.
- Cut the federal workforce by 10 percent (2-for-3 replacement rate)
Savings by 2015 – $13.2 billion
“The government’s civilian, nonmilitary work force peaked in the late 1960s at about 2.3 million. In the 1990s it began to drop, reaching a low of 1.778 million in 2000. Recently, however, the size of the federal workforce has climbed back over 2 million Full-Time Equivalents (FTE). This proposal would cut the federal workforce by 200,000 by 2020.”
In other words, the commission believes the government is over-staffed and can run effectively on 200,000 less employees than it currently does based on historical levels.
- Eliminate 250,000 non-defense service and staff augment contractors
Savings by 2015 – $18.4 billion
The report states that in the 1990s, the total size of the federal workforce was reduced by 402,000 full-time employees and at the same time the number of contractor jobs increased only slightly which resulted in “considerable savings for taxpayers.”
- Cut federal travel budget
Savings by 2015 – $0.4 billion
The report states that since 2001, government agencies have been increasing their spending on travel related expenditures. It suggests relying more on web and video teleconferencing will help to reduce unnecessary costs.
- Establish Veterans Administration (VA) health co-pays
Savings by 2015 – $0.7 billion
Under this proposal, veterans who do not have “service-connected disabilities and whose income is below a VA-defined threshold” would see their out of pocket costs rise.
- Trim the Federal Vehicle Budget
Savings by 2015 – $0.3 billion
The report notes that the number of government operated vehicles is increasing as is their operating costs. The proposal would require a 20% reduction for all agency vehicle budgets except for DoD and USPS.
- Slow the growth of foreign aid
Savings by 2015 – $4.6 billion
Some readers commented that they felt that the commission shouldn’t be going after the salaries of federal employees in their proposed cuts, but instead should cut off unnecessary foreign aid to other countries. Apparently the commission thought of this idea as well – the proposal claims it would remove 10% from this line item from the President’s budget.
- Reduce wasteful spending at the Department of Justice
Savings by 2015 – $1.6 billion
This proposal states that reducing funding for grants would be one way to cut into the DOJ’s budget.
- Eliminate funding for commercial spaceflight
Savings by 2015 – $1.2 billion
This proposal suggests that it may not be the appropriate role of the federal government to pursue commercial spaceflight.
- Eliminate the Overseas Private Investment Corporation
Savings by 2015 – $0.1 billion
This option would eliminate new activity by the Overseas Private Investment Corporation, although its previous activities would remain funded.
- Cut funding for the Corporation for Public Broadcasting
Savings by 2015 – $0.5 billion
NPR has been in the public spotlight recently when it fired Juan Williams for a comment he made on the O’Reilly factor. Perhaps this proposal is building on the controversy gleaned from that situation when it suggests removing all funding for the Corporation for Public Broadcasting.
- Freeze non-combat military pay at 2011 levels for three years
Savings by 2015 – $9.2 billion
This proposal states that regular military pay “is expected to grow by $9.2 billion from 2011 to 2015.” A freeze at 2011 levels would purportedly save $9.2 billion in compensation and retirement expenditures.
- Double Secretary Gates’ cuts to defense contracting
Savings by 2015 – $5.4 billion
This proposal would reduce the number of contractors for DoD by roughly 4%.
- Reduce procurement by 15 percent
Savings by 2015 – $20 billion
This proposal states that a 15% cut in procurement spending would reduce 2015 procurement by $20 billion. The report contains some specific suggestions for items that might be cut from the DoD’s procurement spending.
These are just a few of the specific proposals from the summary report that, if enacted, would likely be of most impact and interest to the federal workforce. Keep in mind that these proposals are a long way from becoming reality. They are, however, a starting point for future discussions. With the crushing debt load facing our country, it is likely that Congress and the current or a future administration will decide action to cut the debt is necessary. We will keep our readers advised of the changes that may occur in the political arena that will impact the federal workforce or federal retirees.