Deficit panel sharpening its scissors on federal pay

By Joe Davidson
Tuesday, November 30, 2010; 10:51 PM

If federal employees feel like President Obama's plan to freeze their pay has Uncle Sam's foot on their necks, they should watch for other shoes to drop.

The next one could fall Friday, when the National Commission on Fiscal Responsibility and Reform releases its report, just days after Obama announced a two-year pay freeze for federal workers.

His plan did not placate deficit hawks and would not make much of a dent in the deficit, but it did manage to incense many government employees.

"In light of the growing number of critical challenges being shouldered by federal workers, the government cannot afford to make substantial reductions to the earned compensation of individuals who have dedicated their careers to public service," said Joseph A. Beaudoin, president of the National Active and Retired Federal Employees Association. "For that reason, we urge the president to reconsider this ill-conceived decision."

Obama's decision was relatively tame compared with the longer and stricter freeze proposed last month by the chairmen of the commission, Alan K. Simpson, a former Republican senator from Wyoming, and Erskine Bowles, who served as White House chief of staff in the Clinton administration.

Workforce cuts and financial hits for retirees also were on their agenda.

There's certainly no guarantee the full commission will adopt the chairmen's controversial recommendations, which have reportedly been modified to seek support. It takes 14 of 18 commission votes to approve a final report, and that's a high bar to clear. The panel originally planned to release the report Wednesday, but it now says it needs more time.

Yet the chairmen's recommendations, along with the Obama pay freeze and harsher Republican proposals, have created the most vulnerable environment in years for Frankie and Flo Fed. Fed-bashing isn't new, and certainly not all of the proposals are that. But the concerted, widespread effort to rein in the federal payroll has taken some by surprise.

"I'm very shocked. This hurts us a lot," Sylvia Ruiz, a Fairfax County resident who works for the Agriculture Department's export division, said after the president's announcement. "I'm hoping they might reconsider. . . . It sounds to me like they're trying to say that government workers aren't as good as other workers."

The president and his folks definitely aren't saying that. Neither have Simpson and Bowles. Nonetheless, Ruiz shouldn't get her hopes up. If there is some reconsideration, it's not likely to go her way.

The president wants to take back his earlier proposal to give her and 2 million other federal workers a 1.4 percent pay increase, a figure based on the cost of labor in the private sector. Rep. Michele Bachmann, a conservative Republican from Minnesota, introduced similar legislation in May, but it went nowhere. Obama would not halt their bonuses or the longevity-based "step" increases.

That apparently would not be the case under the original Simpson and Bowles plan. It would impose a three-year freeze on "federal salaries, bonuses, and other compensation," which would seem to include step increases.

"During the Great Recession, most private sector employees have seen their wages frozen, and some have even watched wages decline," the chairmen said in their proposal. "In contrast, federal workers have seen their wages increase due to automatic formulas in law that provide them with step-in-grade and cost-of-living-adjustments. For example, federal civilian employees received a 2.0 percent raise in 2010, a 3.9 percent raise in 2009, and a 3.5 percent raise in 2008."

They estimated their plan would save $42.3 billion over five years at non-defense offices and an additional $15.5 billion during the same period at Pentagon agencies. Obama's freeze would save $28 billion over five years. One Republican plan would go beyond a freeze and effectively cut federal employee income by forcing workers to take two weeks off without pay.

Some federal workplace recommendations by the commission chairmen track closely to other GOP proposals and set the stage for what federal union leaders probably could not have imagined in their worst nightmare not too long ago. Simpson and Bowles recommended cutting the federal workforce 10 percent by 2020, raising health insurance fees for federal civilian retirees and reducing their retirement income by basing it on the five highest years of federal service instead of the highest three.

"Most people live paycheck to paycheck," said Marian Merrit of Forestville, a business analyst in rural development at Agriculture. "My little old $25-per-paycheck" increase she expected with the proposed pay raise would have helped her pay some bills, she said. The 17-year USDA employee pointed to health insurance premiums that will rise an average of 7.2 percent for federal workers in January.

"At the first of the year," she said, "our salary doesn't match the increases." Staff writers Lisa Rein and Eric Yoder contributed to this column.

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