Congress Passes Payroll Tax Extension Legislation; NTEU Called for Rejection of Bill


2/17/12: Today Congress passed HR 3630 to extend the payroll tax holiday, provide for an extension of unemployment insurance and fix to doctor reimbursement rates in the Medicare program, by a vote of 293-132 in the House of Representatives and a vote of 60 to 36 in the Senate. The President has said he will sign the legislation.  HR 3630 paid for the unemployment insurance provisions, in part, by increasing contributions to the federal retirement program by 2.3% for new employees hired after December 31, 2012, who have less than five years creditable service.  NTEU opposed the legislation. 

NTEU National President Colleen Kelley today called on House members to reject the the bill, because it unfairly singles out federal employees to offset fully half the cost of the bill’s provision extending unemployment compensation benefits while there are no offsets for the payroll tax holiday extension. “Federal employees are in the second year of a two-year pay freeze that is contributing $60 billion to deficit reduction,” wrote Kelley in a letter to House members. “It is unconscionable to come back to them for a second $15 billion hit, while no other groups have been asked to sacrifice.”

Under the bill, “millionaires and billionaires continue to keep their tax cuts and the corporations that have shipped jobs overseas keep their tax loopholes,” Kelley wrote. “But the middle class federal employees who guard our borders, keep our food and water safe and protect our financial systems will get a 2.3 percent pay cut due to increases in pension contributions with no increase in benefits.” She added: “This is not shared sacrifice; it is targeting one group of middle class workers for an extremely disproportionate burden.”

While we strongly opposed the legislation, we were pleased that key members of Congress, including Minority Whip Steny Hoyer (MD), and members of the Conference Committee, Representatives Chris Van Hollen (MD) and Senator Ben Cardin (MD), worked with NTEU to assure that no increase would affect current employees.

More fights remain ahead.  When the House returns, it will again consider HR 3813, which makes significant other changes to the retirement system, including  increasing pension contributions for current federal employees by 0.5% for 2013, 2014, and 2015, then continue an increase of 1.5% permanently and, most egregiously, ending the FERS supplement effective December 31, 2012, for those not subject to mandatory retirement.  We expect that HR 3813 will be attached to HR 7, the transportation and infrastructure bill to pay for bridges and highways.   

The federal retirement system is not a “piggy bank” that Congress can turn to every time it is unable to come to an agreement on how to pay for programs and we will continue to fight such proposals. NTEU will not let up in our efforts to stop these proposals. To find out more, visit the national website at