Further Federal Pay, Benefit Cuts Ignore Critical Importance of Shared Sacrifice


 1/25/12: NTEU National President Colleen Kelley today sharply criticized ongoing efforts in the House of Representatives seeking additional pay and benefit cuts from federal employees while shielding the wealthiest Americans from any deficit reduction sacrifice.

Those criticisms were contained in testimony submitted to the House Oversight and Government Reform Subcommittee on the Federal Workforce in advance of a hearing on the federal pension system.

“Freezing the pay and increasing the pension contributions for middle class federal workers across the country while continuing to protect the income and benefits of the most affluent members of our society defeats the purpose of the stimulus,” generated by a payroll tax holiday, said President Kelley.

The NTEU leader noted the $60 billion contribution to deficit reduction from federal workers over 10 years by freezing federal pay through this year, and said: “Before other groups have even contributed a dime to deficit reduction efforts, some in Congress have returned to attack the federal pension system and attempt to squeeze an additional $65 billion in cuts from this middle class group of taxpayers.”

She took aim at a House-passed measure in late December addressing a possible extension of the payroll tax holiday; it called for significant changes in federal retirement which would result in lower federal pensions. “Coupled with the two-year pay freeze, these changes in the federal pension system would result in real, permanent and meaningful declines in employee take-home pay and standards of living,” the NTEU leader said in her testimony.

Seeking to cut federal pension benefits clearly is a counterproductive move, Kelley said, noting that across the U.S., it is abundantly clear that the ability of Americans to retire with financial security is in crisis. One study shows that over half of retirees who plan on drawing down savings in 401(k) account over their life expectancy will run out of money.

Kelley’s testimony was strong in its support for the Federal Employees Retirement System (FERS), emphasizing that it is fully-funded, and financially sound with no unfunded liability.

FERS, which provides a modest defined benefit annuity averaging some $900 a month, “was carefully crafted to meet the objectives of federal employee compensation policy and to have a positive impact on the federal workforce, she said. “Changing the employee contribution without changing the benefits in a similar way is simply a tax on federal employees.”

Separately, the multi-organization Federal-Postal Coalition—NTEU is a member of this body —also offered critical testimony to the subcommittee.

On the House approach to extending the payroll tax holiday, the coalition said that cutting federal pensions to pay for that measure would mean that “while everyone else gets take-home pay increases with a tax holiday, federal employees get pay cuts.”

The coalition’s testimony added that the House bill “would substantially reduce the retirement income security provided by FERS and effectively provide a pay cut for already-underpaid federal employees who have experienced a pay freeze” now into its second year.

Actions such as these that hurt federal workers, President Kelley said, have a profound negative impact on the nation. “It serves no one to belittle the work of the federal workforce, and, ultimately, it is the public that loses when the federal government in unable to retain or recruit the best employees,” she said.