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Federal Eye
Posted at 03:16 PM ET, 02/15/2012

Payroll tax deal may include federal pension changes


House Speaker John Boehner (R-Ohio) and other congressional leaders are working on plans to extend the payroll tax cut. (Andrew Harrer - BLOOMBERG)
Updated 3:16 p.m. ET

Federal employees will probably be forced to pay more for their pensions as part of a plan to extend payroll tax cuts and unemployment benefits through the end of the year.

Congressional negotiators continued working on a deal Wednesday to extend the payroll tax holiday, unemployment benefits and Medicare payment rates for doctors and a plan to trim more than $50 billion in federal spending to pay down the deficit.

As part of the negotiations, Democrats were forced to choose late Tuesday between extending a pay freeze for federal employees by one more year or forcing workers to pay more for their pensions. A senior Democratic aide told The Washington Post that Democrats preferred the pension option, in part because President Obama proposed a similar plan in his budget request.

Obama on Monday proposed increasing the contribution of federal employees to their retirement program by 0.4 percent each year over three years, a plan that would save about $27 billion in the next decade.

Though exact details on the congressional pension proposal were not immediately available, American Federation of Government Employees President John Gage told reporters Wednesday that employees might have to pay .8 percent more almost immediately to help offset the costs of the payroll tax deal.

“Cutting our retirements doesn’t put an American back to work, not one,” Gage said. “I really reject this schizophrenia that we lost revenue from jobs, and so we’ll cut the deficit more, which will cost us more jobs.”

Extending the payroll tax cut and unemployment benefits cannot “be done on the backs of other middle class federal workers who are struggling to get by just like everyone else,” National Federation of Federal Employees President William R. Dougan warned Wednesday.

“There is something seriously wrong in our country when Congress doesn’t blink an eye at dipping into the pockets of middle class VA nurses and border patrol agents, but threatens to shut down the government when asked to raise taxes for millionaires and billionaires,” Dougan added.

Full-time, non-seasonal federal employee on average earned about $76,600 annually in fiscal 2010, according to the most recent data compiled by the Office of Personnel Management.

Further details on the plan were expected later Wednesday, but congressional aides stressed that plans for some kind of pension change would be part of whatever emerges in the coming days. In addition to the payroll tax cut extension, House lawmakers are set to consider a massive transportation and energy bill in the coming days that also includes provisions requiring feds to pay more for their retirements.

Staff writers Paul Kane and Eric Yoder contributed to this report.

Follow Ed O’Keefe on Twitter: @edatpost

Further reading:

Congressional negotiators reach tentative deal on payroll tax, unemployment benefits

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For more, visit PostPolitics and The Fed Page.

By  |  03:16 PM ET, 02/15/2012

Categories:  Congress, Workplace Issues

 
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