Obama budget without ‘chained CPI’ would protect federal retirement benefits


BRENDAN SMIALOWSKI/AFP/Getty Images – Members of the American Federation of Government Employees (AFGE) gather outside the Department of Labor to protest the sequester on March 20, 2013, in Washington, D.C.
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White House officials last week said President Obama will not propose a controversial cut to federal retirement benefits as part of his 2015 budget plan, despite offering the reduction last year.

The so-called “chained CPI” would amount to a less-generous annual rate of increase for Social Security payments and federal-employee retirement annuities, reducing growth by about 0.3 percentage points each year.

Obama’s 2014 budget plan called for applying the inflation index as part of a deficit-reduction package that would have also raised taxes, but Republicans rejected the proposal. 

The National Active and Retired Federal Employees Association has created an online tool to help federal employees gauge how much they would lose under a “chained CPI” formula. The measure would trim benefits by a combined $1,500 after five years for federal employees hired before the mid-1980s — those taking part in the Civil Service Retirement System.

Democratic lawmakers, federal-employee unions and veterans groups have strongly opposed the chained-CPI. Many of them signed on to a letter last week from Rep. Allyson Schwartz urging Obama to avoid using the alternative inflation index.

“Switching to a chained CPI would be devastating for seniors, veterans, federal retirees, disabled individuals and others,” the letter said.

Obama has indicated he is willing to consider the benefit cut again, even though it will not be part of his own proposal, according to a recent Wonkblog article

Already, the president accepted a measure that requires federal workers who were hired after 2013 to pay an additional 1.3 percent toward their retirement benefits. He signed that provision into law as part of the budget deal Congress passed in December.

MORE: Budget deal protects current feds, but new workers will pay more toward retirement

Federal-employee unions have lashed out against the cut. The American Federation of Government Employees has said repealing the measure will be one of its top legislative priorities this year.

“Congress has created a second-class and third-class retirement system in which new federal employees earn less than their peers for no other reason than the date they were hired,” AFGE national president J. David Cox said in a statement last week. “This is an outrageous assault on living standards for the next generation of federal employees, and AFGE will fight this with everything we’ve got.”

Follow Josh Hicks on TwitterFacebook or Google+. Connect by e-mail at  josh.hicks@washpost.comVisit The Federal Eye, The Fed Page and Post Politics for more federal news. E-mail federalworker@washpost.com with news tips and other suggestions.

Josh Hicks covers the federal government and anchors the Federal Eye blog. He reported for newspapers in the Detroit and Seattle suburbs before joining the Post as a contributor to Glenn Kessler’s Fact Checker blog in 2011.
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