The Hill recently reported that the transition team for incoming president Donald Trump is planning “dramatic” cuts to federal spending over the course of the next several years.
According to The Hill, the proposed spending cuts align closely with the 2017 budget blueprint adopted by the Republican Study Committee and would potentially reduce federal spending by up to $8.6 trillion over the next 10 years.
So what are some of these spending cuts being discussed and how would they impact the federal workforce?
FedSmith has reviewed the Republican Study Committee’s (RSC) budget blueprint and found a number of proposals specifically aimed at federal employees and their benefits.
What follows is a summary of these proposals from the RSC budget document. Keep in mind that none of these are final, and as the article in The Hill noted, the Trump administration’s full budget is not expected until around next April, plus budget offices at various federal agencies that would be impacted by the spending cuts will have an opportunity to weigh in and appeal for changes prior to releasing the full budget, so many of these proposals can and will likely change. However, they do represent a paradigm shift going forward in the general approach to running the government that is much different than what federal employees have experienced over the last 8 years.
Holding Federal Employees Accountable
The RSC budget blueprint said that agency leadership currently has limited options to hold federal workers accountable, something that needs to change. Federal agencies should have the ability to fire Senior Executive Service employees for serious violations or place them on unpaid leave while they are under investigation, a concept based on Representative Mike Kelly’s (R-PA), the Government Employee Accountability Act (H.R. 722).
Limiting Bonuses for Federal Employees
According to the RSC budget blueprint, 68 percent of Senior Executive Service workers received bonuses at an average of $10,560 per employee. There should be reasonable limits on the size of bonuses that can be awarded and the number of senior employees who can receive an award.
Reform Federal Employee Pension Plans
The RSC budget blueprint states:
Federal employees hired since 1984 are entitled to a two-part retirement program, including the Federal Retirement System (FERS) defined benefit plan and a 401k-style plan with up to a 5 percent government matching contribution. Under FERS, federal workers contribute only 0.8 percent of their pay, while the taxpayers contribute 11.7 percent of employees’ salaries. A CBO report found that, on average, federal civilian employees receive 48 percent more in benefits than the average private-sector employee with similar characteristics.
Bearing this in mind, it would make two changes: First, instead of basing the amount of a retiree’s benefit on the highest three years of earnings, the benefit would be calculated from the highest five-year period.
Second, all federal employees would be required to contribute more towards their retirement. The Middle Class Tax Relief and Job Creation Act of 2012 required new federal employees to contribute more towards their retirement. No changes were made for current federal employees.
Reduce The Annual Across-The-Board Adjustment For Federal Civilian Employees’ Pay
Beginning in FY 2017, the annual across-the-board increase for federal workers should be reduced by half a percentage point below the expected automatic increases.
Adopt Premium Support for FEHB
Currently under the Federal Employee Health Benefits program (FEHB) plan participants choose from a range of plans and pay for about 30 percent of premiums, with the federal government covering the remaining 70 percent. Because this ratio does not change with the higher-priced coverage options, federal employees have the incentive to choose the more expensive plans on the government’s dime.
The RSC budget would transition to a premium support system for the FEHB in which the government would offer a standard federal contribution towards the purchase of health insurance and employees would be responsible for paying the rest. This option is designed to encourage employees to purchase plans with the appropriate amount of coverage that fits their needs.
Reduce the Size of the Federal Workforce Through Attrition
By limiting new hires to one federal employee for every three that leaves, the overall size of the federal workforce would be cut, however, the president would have flexibility to adjust federal employment in case of a national emergency.
Limit Agency Spending on Conferences
The RSC budget points to some examples of excessive spending on “lavish” conferences for federal workers that have taken place in the past, such as GSA’s conference in Las Vegas a few years ago that made headlines. The budget suggests, “While it can be important for federal workers to attend certain events and conferences, the waste, fraud, and abuse must stop. Spending limits should be put in place for conferences, and the heads of federal agencies should be required to personally approve the most expensive conferences.”
No specifics were mentioned, however, for what reasonable spending limits on conferences might be.
Unions and Official Time
The Federal Employee Accountability Act (H.R. 1658) would ensure that no federal government employee could use official time to engage in collective bargaining, or participate in arbitration on behalf of a union against their employer. The budget encourages adoption of this legislation.
Also, the RSC budget notes that currently the federal government deducts union dues from unionized federal employees’ paychecks and then remitting those dues to the union. The budget recommends prohibiting this automatic deduction of union dues.
Abolish the IRS
The RSC budget makes note of the IRS targeting scandal which took aim at conservative groups as well as leaving millions of taxpayers’ personal data vulnerable in a data breach as evidence that the agency is failing in its mission. It suggests doing away with it altogether. It suggests this instead
Tax collection and enforcement activities would be moved to a new, smaller, and more accountable department at the Treasury. Applicants to the new department would need to undergo a rigorous evaluation of their work performance before being hired to positions of trust, and would be subject to discipline and termination if they failed to honor that trust.
Keeping It In Perspective
These types of proposals represent a different approach to running the federal government, at least for the near future. However, for federal employees who are ready to quit their jobs and move to a deserted island, bear in mind these are initial proposals and many changes can and likely will happen before anything is finalized.
Additionally, most significant changes will require Congressional approval. Getting a law passed by Congress is not easy, and few proposals emerge from Congress without changes, if they emerge at all.
Proposals such as these have been put forth repeatedly for years, and many have yet to be enacted (hence their recurring advocacy).
FedSmith.com author John Grobe wrote an article several years ago with some advice for nervous federal employees. He noted that he’s been hearing about these types of benefit cuts for much of his federal career and ultimately advised federal employees, “Don’t panic, don’t lose sleep, and be confident that if changes come, there will be ample time to react and make decisions on what you will do.”