Are federal workers the debt deal's biggest losers?

Aug 01, 2011

Congressional leaders sealed a deal for raising the federal debt ceiling, but that deal might not look so sweet for everyone. Federal Diary columnist Joe Davidson and Post reporter Eric Yoder chatted about how the debt deal bodes for federal employees.


Joe Davidson, Federal Diary columnist, signing on.

Hello again, everyone. This is staff writer Eric Yoder. We're still parsing what all this means to federal employees but we'll share what we know at this point.

How does the debt deal affect federal employees and retirees?

The deal does not specifically mention federal employee pay, benefits, jobs or any other aspect of federal employment. What it does is order two specific rounds of cuts, starting with caps on discretionary spending for the next 10 years, begining in the fiscal year that starts October 1. That certainly could translate into downward pressure on employment levels, especially as the accumulated impact of the ceilings is felt over time.

The second stage is creation of this super committee (the Congressional Joint Select Committee on Deficit Reduction) which is supposed to find up to $1.5 trillion in savings. In that process, certainly benefits--particularly retirement and health insurance--could be on the table. If that committee can't reach an agreement, or if it does and it;'s not enacted into law, a second set of cuts in agency spending would kick in, with only some programs shielded. Again, that would be pressure on employment levels as programs are cut.

Mr. Davidson, I'm a federal employee and quite frankly I'm tired of being the political strawman to be knocked over. The private sector would take longer than my team and I do and cost a minimum of twice what my team and I cost (for the contractors their usual works out to about twice my team and I's annual salary per project!). Yet I am obviously overpaid and don't do work. Who are the champions of the federal workforce? Who is the voice making the case for Federal employees and the quality work that we do?

Several people and organizations make the case for federal employees, but their voices don't always carry the day. Certainly federal unions speak up, so do some members of Congress. John Berry, the OPM director, is a big cheerleader for federal workers, though what he can advocate is limited by administration policy. 

If they didn't settle this mess were we going to get paid on Fri? I believe the chances were/are slim. Problem is most of the voting public believe Feds are a bunch of overpaid file clerks. They dont reaize the hunk Special Agents, agents, and guys and girls in the labs they see on NCIS, NCIS LA, Covert Affairs, and White Collar are Feds. If you dont vote then who cares about your opinion. It is an image problem and I blame the Federal employee unions, The Prez, and the cabinet secretaries. I have 25 years of govt servitude this week as personnel security specialist granting security clearance in DOD. my job requires the ability to read and analyze credit bureau reports, Chap 7,11,12, and 13 bankruptcies, i also have to keep updated on the current counterintel posture of US regarding over 200 countries along with an understanding of DSM IV and criminal law. That is just a small sample of the knowledge I need to do my job along with putting up with knuckleheads for bosses and diet raises when the economy is flying high. If I screw up it could cost the country billions and lives. I dont want a thank you just some respect from punks on the left and right who think Feds are a bunch of screw ups!

You will get paid. This question shows the frustration of federal workers.

Is USDA targeted for cuts? If so, are particular agency budgets specified?

There are no specific cuts targeted at any specific agencies. What the bill would do is set a series of spending caps that would have to be translated, through the congressional budget sytem, into dollar amounts available to individual agencies. So it's certainly possible that some agencies could come out in better shape than others.

Does the deal include a "high five" provision and if so when is it likely to be implemented?

Again, there's no specific language. One would certainly think that would be on the table for the new committee, but it's not due to report until Thansksgiving, and assuming it can reach an agreement, the deadline for House and Senate votes is Dec. 23. So it's hard to see how it could happen any earlier than calendar year 2012. But that assumes it will be in there at all, and no one has said anything about effective dates, even as this idea has been debated since the debt commission report late last year.

I am a Federal employee with over 33 years (CSRS) of service. I am expecting a Within Grade Increase in October of this year. May I expect to receive it?

I think you can expect to get it. You also can expect within grade increases to continue to be under the microscope, so don't be surpised if there are some changes in the future.

Is there anything in the first and second stages of the final debt ceiling deal that affects pension contributions or formulas for pension beneifts?  Federal workers are already taking a hit because of the recent stock market losses due to the debt ceiling debate itself and the pay freeze this year and next year. If there are increases required in pension contributions by Federal workers, will there be some kind of phase-in, offset or exemption for workers already at retirement age. This would be to stave off mass retirements occuring all at once. Also, is there likely to be an extension of this year's 2 percent payroll tax cut (which offsets the loss of this year's pay freeze) at a later point? I thought that Obama was proposing an extension of the 2 percent payroll tax cut (and extending it to employers also). Thank you.

The answer to this is basically the same as the answer to the high 5 question.

One twist with this one is that it's possible there would be a two-tier increase, with employees hired after some point paying a larger percentage of salary than employees already on board. Phasing in any increase for current employees has been discussed--possibly over three years.

Not sure Congress wants to stave off mass retirements, though. It might see a retirement wave as a convenient way to downsize the government (accompanied by hiring restrictions).

I've been given a tentative job offer with the federal government, pending completion of my background investigation, which has been underway for several weeks. I'm wondering if the budget deal (or lack thereof) will cut funding for new positions that agencies have been hiring for recently, thus possibly ending my chances at this job?

Budget cuts will affect agencies, but so far no details are available. I'd like to be more reassuring.

How may this affect those federal employees on the "old Plan", the defined benefit plan based on high-3 which I still have and am able to retire at any time?

If they go to high-5 it almost certainly would apply under both the old (CSRS) and newer (FERS) systems. Again, the effective date is the big question--if, and that's still an if, high-5 is approved-- and no one has the answer to that.

Where do things stand? Will this idea ever die? If I'm understanding this correctly, it's akin to a 5% pay cut, which is devastating to my family and something we had not budgeted for. Any chance it would just be grandfathered in for new employees?

As I said earlier, probably not grandfathered completely, but possibly a lesser impact on current employees than on those hired after a certain date.

This would create a two-tier system, but that's common in the private sector and the federal government already signaled willingness to have a two-tier arrangement years ago when FERS was created.

How will federal retirees be impacted?

Again, nothing definit, but with the fairly widespread agreement earlier on going to a less generous inflation adjustment, one would think that would have a good chance of being part of any package created by the new committee. It would affect Social Security, federal retirement, military retirement and so on--probably resulting in future COLAs about a quarter to a half percentage point smaller than under current law.

I know the details have not been worked out, but are we (federal employees) going to be the big losers in all this?

I do think feds get hit twice.  For example, if an agency cuts back on services because of budget cuts, then feds, just like everyone else who use those services, suffer. But in addition, the federal employees at that agency may also suffer furlougs or cuts in overtime, so they get hit twice.

Has the pay freeze been extended? Will it affect grade/step increases?

Extending the pay freeze could be on the table for the new committee, as would be denying within grade raises, which many Republicans see as a loophole in the pay freeze.

Will federal employess receive a pay cut in the debt deal?

A pay cut would be surprising, but an extended pay freeze, including a freeze on within grade raises, would not be.

What is the total bill to the US tax payer for retired federal employees? Money, benefits, cost to administer these benefits?

I don't have that number at hand, but you could get a good idea by researching in the annual federal budget proposal at

Are there any cuts to fed pay or benefits in this first step of the debt deal? Or are they still on the table for this Super Congress for step two?

It's for the Super Congress. Like that term.

A big question that doesn't seem to be getting notice is just who would be on that committee. The party leaders of both chambers would get to name 3 each. Those will be 12 very in-demand members of Congress over the coming months.

I, too, am tired of seeing the federal worker being blamed for the federal deficit and other federal budget woes. Easy target. Really, though, how much money do they think they can save by continuing to squeeze the federal workforce? How does the federal workforce expense compare % wise to big dept budgets like defense, and the cost of entitlements, etc..

A number of Republican lawmakers seem to believe that federal workers are overpaid compared to their private sector counterparts. They also believe in a smaller government, which means fewer employees. So some of what you see coming from Congress would be there whether or not there was a debt crisis.

If this bill does not pass soon, what do we do Wednesday morning?

Good point. The bill hasn't passed yet and might not come up in the House until tomorrow. If it doesn't pass by the end of the day tomorrow, show up for work unless your agency has told you not to.

Can Federal employee unions continue to lobby the "super committee" to try and mitigate any potential damage to federal employee benefits? If so, have you heard that the unions are planning to do so?

The federal unions probably could lobby the super committee and I would expect them to, but it's too early to be certain when the committee hasn't even been named.

Given the disparity between what I am earning and what I should be earning, if pay freezes are extended much longer than the current schedule (I didn't get a raise with my experience-based grade jump this year), I will definitely be looking for other work. My (expanding) family can't afford this any more. It makes me sad because I love that the work I do serves the public, but my family comes first.

You're probably not alone in feeling this way, but the state of the economy and the private sector limits choices.

Since one congress cannot bind the next - why even bother to go out the ten years this shows? Is this to make the numbers sound larger even if they have no basis in reality?

That's a good point. History has shown that one Congress can revise or ignore what a previous Congress has done. Also, these savings are built against a baseline of assumptions about what would have been spent in prior years under current policy. But of course current policy never stays unchanged. That's just how budgeting works, at least in the government.

Joe, How will this deal affect federal workers immeidately? Are there any departments that may be immeidately downsizing?

We have no information about immediate hits on federal employees. The debt deal itself does not directly affect feds, but the budget cuts, of course, could affect them as agencies decide how to get by on less money.

I'm signing off. Got to get back to reporting on how all this may affect federal employees.

Thanks for participating.


Joe Davidson, Federal Diary

Understanding that you don't have a crystal ball (do you?) that works any better than any others out there...what do you think the odds are that benefits to existing retirees and employees will be cut, vs.other actions like early outs, RIFS. etc.? Do you have a sense of what congressional priorities might be as our workforce, pay, and benefits are whacked?

I think you can get a feel for the potential targets by reading the answers above. Early retirement offers certainly could be made available if agencies need to cut staff--some already have done so this year. Buyouts are possible, but less so. Lots of Republicans don't like them, considering them to be a payment for something the employee would have done anyway. Also, in the 90s, there were cases of mismanagement--paying a buyout to someone who just received a retention payment, for example. The Hill has a long memory for things like that.

Reading these questions, one thing keeps popping into my head: Welcome to the private sector! Those of us who work in the private sector have been through what *may* come to federal employees: Layoffs, pay freezes, reductions in benefits. The only consolation I can give to public sector employees get used to it.

Cold comfort, but a good point.

I was once a Federal worker before I married and relocated. So I am not biased when I ask why should we feel sorry for the Federal workers. They are the luckiest workers in the U.S. They suffer no layoffs (never again have to hit the pavement looking for a job, as other workers), and have darn pretty good benefits, while other workers for the private sector are losing...

Another similar point of view as the above.

What does this deal mean for the chances of a shut down show down over the 2012 budget? Did they get enough settled in this fight, or will there be another fight this fall or winter.

Well, the 2012 pie is going to be smaller than people were hoping/expecting. What does that suggest to you?

My office has been interviewing candidates the last two weeks. Yet there's not enough work to keep everyone busy. Why bring more people into this mess of uncertainty?

Possibly they're trying to get their bench strength built up before the end of the current fiscal year (Sept. 30) on the expectation that some sort of percentage cut is on the horizon. Anyone else have a thought on this?

Hello! Wondering how the future looks for someone who planned to make a career as a fed bureaucrat. Will my salary continue to shrink indefinitely as they chip away at my FERS pension, health benefits, TSP match and eliminate cost of living increases? The FERS pension is not huge but it provides some incentive to stick w/ the fed govt -- can I count on actually getting it in 15 years? The apparent assumption that fed employees are expendable leeches is pretty demoralizing.

This is a commonly stated point of view.

To address the specifics, changing the TSP contribution has not been on the table but again, when that committee gets going you'd have to think almost anything is possible. Same goes for the FEHB program.

Due to a combination of techinical issues with our chat system and a tight deadline, Eric had to sign off.  Thanks for all the great questions! 

In This Chat
Joe Davidson
Joe Davidson is the Federal Diary columnist at The Washington Post. For 13 years he was a Washington and foreign correspondent with The Wall Street Journal. Before joining The Post, he was editor of FOCUS, the magazine of the Joint Center for Political and Economic Studies. As the Federal Diary columnist, Joe covers a variety of issues related to federal employees and the federal workplace, a core area of coverage for The Post. Before writing the column, he was an assistant city editor.
Eric Yoder
Eric Yoder is an an award-winning writer and covers the federal government for the Washington Post. Yoder is co-author of "One Minute Mysteries: 65 Short Mysteries You Solve with Science!" and "One Minute Mysteries: 65 Short Mysteries You Solve with Math!"
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