2025 RSC Budget Would Make It Easier to Fire Federal Employees and Enact Pay Cuts

The 2025 Republican Study Committee budget proposal would make various reforms to federal employee pay and benefits.

The Republican Study Committee (RSC) has released its 2025 budget proposal. It contains various proposed reforms that would directly impact federal employees.

The current national debt is now over $34 trillion and rising quickly. The 2025 RSC budget is an attempt to draw attention to this enormous problem and address it. A press release says that the RSC budget balances in 7 years, cuts spending by $16.7 trillion over 10 years, and reduces taxes on Americans by $5.3 trillion over 10 years.

RSC Chairman Kevin Hern (R-OK) said, “Our budget is proof that it’s possible to balance the budget, it’s possible to operate in the black. The federal debt is daunting, but it’s not hopeless. Conservative policies work together across the whole of government to lower spending, lower taxes, decrease the size and scope of the federal government, and spur economic growth.”

2025 RSC Budget Proposals Impacting Federal Employees

Making It Easier to Fire Federal Employees

The RSC budget proposal says that it has become “virtually impossible” to fire federal employees. It notes that the Government Accountability Office reported that the process to remove a federal employee is estimated to take 170 to 370 days and cites the Heritage Foundation which said that only 0.5% of the total federal workforce was fired in 2017.

Consequently, the RSC budget proposes the following:

  • Passing the MERIT Act, sponsored by Rep. Barry Loudermilk (R-GA), which would shorten the timeframe necessary to remove a bad employee to 30 days, limit the retirement compensation awarded to a federal employee removed for committing a felony in abuse of his or her official duties, rein in unnecessary appeals, and grant managers authority to recoup bonuses paid to employees who were later found to have committed certain workplace violations.
  • Congress should require the mandatory removal of federal employees who commit crimes.
  • Pass the Anti-Deficiency Reform and Enforcement Act, sponsored by former Rep. Paul Mitchell (R-MI), which would expand grounds for removing employees under the Anti-Deficiency Act to include misusing an official vehicle or aircraft for personal travel.
  • Congress should prohibit federal employees from using paid time off for exercising union duties and end the practice of the federal government serving as the dues collector for the unions. Former Rep. Jody Hice (R-GA) has sponsored two bills in support of this effort, the Official Time Reform Act and the Official Time Reporting Act. These bills would ban federal employees from lobbying while on official time and require OPM to report to Congress on all agency personnel conducting union duties at work, respectively.
  • The HERCULES Act, sponsored by RSC Chairman Kevin Hern (R-OK), would limit adverse employment action appeals. The HERCULES Act would limit outside appeals to formal disciplinary actions, such as removal or demotion, and not compensation decisions. It would also limit the venue for outside appeals to one office in response to disciplinary action.
  • The RSC Budget also supports RSC Chairman Kevin Hern’s (R-OK) Union Accountability Act, which would rescind a Biden executive order expanding federal government-related labor union powers and make it harder to fire workers for misconduct.

Reforms to Federal Employee Pay

The RSC budget says that federal employees are overpaid relative to private sector employees and proposes making pay for federal employees more equal to their private sector counterparts.

As evidence for this claim, the budget cites a report from the Congressional Budget Office which found that federal employees earn 17% more on average in total compensation, including benefits, than private sector workers. The RSC budget says that this is “an additional $36.55 billion burden borne by American taxpayers.”

Consequently, the RSC budget proposes the following compensation reforms for federal employees:

  • Paid leave policies should match the value of benefits paid by the private sector. It is estimated this would save taxpayers $75 billion over 10 years.
  • Eliminate automatic pay raises for federal employees and instead make pay increases merit-based. This most likely refers to within-grade step increases rather than the annual pay raise. The budget proposal estimates this would save taxpayers $57 billion over 10 years.
  • Congress should require that agencies only award bonuses to federal employees when they meet the standard for “exceeds fully successful.” According to OPM guidance, this rating is “reserved for the individuals delivering measurable outcomes for the American public in a way that is measurably beyond the standard set for fully successful.”
  • Congress should impose reasonable limits on the size of bonuses that can be awarded and the number of senior employees who can receive an award. The budget proposal would require disclosure of all bonuses for federal employees and require reports to Congress on all large cash bonuses.
  • Congress should repeal current law restrictions that prohibit basing bonus decisions on the relative performance of an employee compared to his or her peers.
  • Congress should reform the federal pay scale to attract and reward highly skilled, highly productive federal workers and stop overpaying less qualified employees.

Pension Reforms

Newly hired federal employees would be enrolled in the Thrift Savings Plan instead of the Federal Employees Retirement System (FERS) pension system. This would give these federal employees more control over their retirement savings and save taxpayers an estimated $235 billion over 10 years.

Other reforms include:

  • Retiree benefits would be modified to be computed based on the highest five years of earnings rather than high-three years
  • The share of employee contributions to FERS would be increased over time
  • The COLA for FERS and the Civil Service Retirement System (CSRS) would be reduced or eliminated
  • The Special Retirement Supplement (SRS) would be eliminated
  • The G Fund interest rate would be reformed to more accurately reflect the yield on a short-term T-bill rate

Federal Employees Health Benefits Program (FEHB)

Government support for FEHB would transition to a standard federal contribution towards the purchase of health insurance, and federal employees would be responsible for paying the rest.

The RSC budget states that this would encourage federal employees to purchase plans with the appropriate coverage that fits their needs. As things stand now, the portion of costs covered by taxpayers does not change with higher-priced coverage options, so federal employees have an incentive to choose more expensive plans with taxpayers paying the extra costs for the more expensive plans.

FEHB retirement benefits would be eliminated for new hires. This is a benefit unavailable to most private-sector workers.


The RSC budget also proposes putting spending limits in place for federal employee conferences. It also says that agency heads should be required to personally approve the most expensive conferences.

About the Author

Ian Smith is one of the co-founders of FedSmith.com. 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.