Ironically, about a fifth of federal employees would not benefit from the payroll tax “holiday” because they are under the Civil Service Retirement System. Because that system does not include Social Security, these employees do not pay that tax but rather pay all their contributions into the federal retirement fund. So they would get a double whammy: They would see no tax reduction as others would, yet they would pay for others to benefit from the tax cut.
“I really am sick of federal employees becoming an all-purpose package that Republicans take off the shelf” anytime they want to find a source of money, said Del. Eleanor Holmes Norton (D-D.C.). “Federal workers, for sure, are willing to make their contribution,” she added, noting they already have.
The two-year freeze that ends next December is taking $60 billion, over 10 years, out of the pockets of federal workers. The federal workforce will sacrifice more than that as trillions of dollars in agency budget reductions over the next decade inevitably result in staff reductions and pr obably other personnel-related cutbacks in areas such as training.
“Federal employees are already experiencing the effects of a two-year pay freeze,” said Rep. Steny H. Hoyer (D-Md.), a vocal supporter of federal workers, “and it is not appropriate to call on them once again to sacrifice while not asking everyone else to contribute their fair share.”
Republicans don’t see it that way.
“The American taxpayer cannot afford federal retirement and wage costs, long term,” said Rep. Dennis A. Ross (R-Fla.), chairman of the House subcommittee on the federal workforce. “It isn’t ideology, it is reality.”
The reality is the Republican plan would take money away from federal workers rather than increasing spending power in the economy, which is the purpose of the tax holiday.
In addition to extending the freeze, the GOP plan, similar to an Obama administration proposal, would increase employee pension contributions — by 1.5 percent over three years, starting in 2013. Also like the plan advanced by the White House, the Republican proposal would kill a special retirement supplement that is paid in lieu of Social Security for those in the Federal Employee Retirement System. This would apply to those who retire before age 62, except for the relatively few workers with a mandatory retirement age such as law enforcement officers. The change would affect FERS employees retiring in 2013 or later.
Another major point in the Republican plan is the creation of another retirement program for federal workers through the proposed Securing Annuities for Federal Employees Act of 2011. This program would apply to employees hired in 2013 or later who do not have at least five years of prior federal service.