Romney Plan Could Cut Some Federal Salaries by As Much as 30 to 40 Percent

GOP Presidential candidate Mitt Romney recently released his fiscal plan. Some of the cuts proposed would directly affect federal employees.

GOP Presidential candidate Mitt Romney recently released his fiscal plan for the direction in which he believes the federal government should go if he were to be elected. The proposals in the plan include some items which would directly affect federal employees if they were to be enacted.

The plan includes a number of proposals to cut federal spending. The suggestions include things such as repealing the new health care law, privatizing Amtrak, and reducing waste and fraud. But under the realm of cutting spending, there are three items that involve the federal workforce:

Align federal employee compensation with the private sector
This proposal states that federal compensation exceeds private sector pay by as much as 30-40% in some cases and must be corrected. The implication is that some federal jobs could see pay cuts along the same lines in the event this were to be enacted. It is estimated that this action would save $47 billion.

This suggestion comes on the heels of a report released late last week by the Bureau of Labor Statistics to the Federal Salary Council which said that on average, federal employees are paid 26.3% less than their private sector counterparts. So clearly, there are differing opinions as to how much federal employees are paid relative to the private sector depending on who you ask.

Repeal the Davis-Bacon Act

In line with the idea of reducing federal pay, this proposal states, “Davis-Bacon forces the government to pay above-market wages, insulating labor unions from competition and driving up project costs by approximately 10 percent.” The plan estimates that repealing this law would save $11 billion.

Reduce the federal workforce by 10% via attrition

This idea is nothing new as a number of cost saving proposals in recent months have suggested this, and Romney’s plan is no different. This proposal states, “Despite widespread layoffs in the private sector, President Obama has continued to grow the federal payrolls. The federal workforce can be reduced by 10 percent through a ‘1-for-2’ system of attrition, thereby reducing the number of federal employees while allowing the introduction of new talent into the federal service.” It is estimated that this action would save $4 billion.

Despite the cuts Romney’s plan proposes, it stresses that it would not cut into the Social Security or Medicare entitlement programs.

For Social Security, the plan says that this program can be put onto a sustainable path by doing the following:

  • Gradually raise the retirement age to reflect increases in longevity
  • Slow the growth in benefits for higher-income retirees

For Medicare, the plan says that tax hikes should not be part of the solute, nor should the benefits be cut for anyone currently in or soon to be in the program. It offers these suggestions:

  • Give future seniors a choice between traditional Medicare and many other healthcare plans offering at least the same benefits
  • Help seniors pay for the option they choose, with a level of support that ensures all can obtain the coverage they need; provide those with lower incomes with more generous assistance
  • Allow beneficiaries to keep the savings from less expensive options or choose to pay more for costlier plans
  • These reforms will encourage insurers to lower costs and compete on the quality of their offerings
  • Gradually raise the retirement age to reflect increases in longevity

Whether or not any of the ideas in Romney’s plan are likely to be enacted is anybody’s guess at this point. If Romney were to win the Presidential election, there obviously would be a greater likelihood of seeing some of the changes. We will of course keep you informed of any future developments that would impact the federal workforce.

About the Author

Ian Smith is one of the co-founders of He has over 20 years of combined experience in media and government services, having worked at two government contracting firms and an online news and web development company prior to his current role at FedSmith.