In a fact sheet released this morning, the White House said the proposed benefit cuts will go toward $250 billion in cuts to mandatory programs affecting government operations. (Mandel Ngan / AFP via Getty Images)
President Obama is proposing to cut $42.5 billion from federal civilian employees' and military service members' retirement programs as part of a $3 trillion deficit reduction program.
The White House released a report Monday morning that said federal employees' contributions to their retirement programs would increase by 1.2 percent, or 0.4 percent per year over three years beginning in 2013. But the White House is not calling for switching to a high-five system for setting employees' pensions, or lowering cost-of-living adjustments for pensions, as the administration was reportedly considering earlier this summer.
The administration is also proposing eliminating the Federal Employees Retirement System annuity supplement, but only for new employees. That supplement goes to FERS retirees who are not yet eligible for Social Security benefits, and is equal to what they would have received for their federal service if they were eligible.
The savings from those two proposals — estimated to be $21 billion over 10 years — would be put toward unfunded liabilities of the federal retirement plans.
In a press conference in the White House's Rose Garden, President Obama called the changes to federal retirement plans "modest."
The deficit reduction plan "achieves these savings in a way that is fair — by asking everybody to do their part so that no one has to bear too much of the burden on their own," Obama said.
But the American Federation of Government Employees blasted Obama's plan as a "$21 billion tax increase on federal employees, [and] a stunning violation of the president's promise not to raise taxes on families earning under $250,000." AFGE said the proposal is especially unfair since it comes on the heels of a two-year freeze to the government's pay scales.
"This is a double whammy for federal employees, who are facing the same economic hardships as most other Americans," AFGE National President John Gage said. "Enough is enough."
The White House also proposes overhauling the six-decade-old General Schedule system, which was created for a work force of clerks and other lower-graded employees doing routine tasks, that didn't require specialized skills. It offers no details for what to replace the current personnel system with, but instead calls for a new commission to define those.
The administration said civil service changes are needed because many federal employees feel the GS system can't deal with poor performers or reward innovation, and efforts to reform it have failed.
"To manage the complex work agencies perform today in order to meet the needs of the American people, federal managers and employees need a modernized personnel system that reflects the reality of the 21st century — where agencies offer compensation reflecting competing markets for employees, facilitate career development mobility across agencies with the private sector, address poor performers consistently and fairly, develop staff, and motivate better performance using the best evidence-based public and private sector practices," the White House said.
In a fact sheet released this morning, the White House said those benefit cuts will go toward $250 billion in cuts to mandatory programs affecting government operations. The White House also wants to cut $33 billion from agriculture subsides, payments and programs; $4.1 billion by disposing of unused government assets; $92.2 billion by "restructuring government operations and reducing government liabilities"; and $77.6 billion by improving federal program management and reducing waste and abuse.