The Senate will vote next week on a budget compromise that would spare federal agencies from across-the-board cuts, but could freeze hiring, reduce lump-sum payments for retirees and freeze within-grade seniority raises for 400,000 white-collar feds.
At a recent summit meeting, congressional leaders and the White House tentatively agreed on a budget plan to forestall across-the-board cuts mandated by the Gramm-Rudman-Hollings act. Those cuts are required if Congress and the White House can't come up with an alternative budget plan. Under the compromise, $1.7 billion in spending would have to be cut from federal personnel programs this year and in fiscal 1989.
The Senate Governmental Affairs Committee and the House Post Office-Civil Service Committee will decide how those cuts -- from their legislative turf -- are to be made. Since the House passed its version of the budget before the White House-congressional summit, the plan is to take whatever package the Senate approves. House and Senate staffers have been working on the Senate plan to make sure it is acceptable, because Congress wants the budget matter finished within two weeks.
The current plan gives the Governmental Affairs Committee until the close of business tomorrow to how those cuts will be made. Its blueprint will go to the Senate Budget Committee, which will make it part of the overall budget package due to go to the Senate floor next week.
The only thing that is relatively certain is that federal white-collar workers would get a 2 percent pay raise in January and another 2 percent in January 1989. Even that won't be a sure thing until the first check arrives.
Options being considered for cost-cutting include:
Allowing future federal retirees to take lump-sum payments that are equal to only half of the money -- typically 7 percent of their lifetime federal pay -- when they retire. Under present law, which the Reagan administration opposes, retirees can get lump-sum payments equal to the amount of money they put into the retirement fund. Typically that lump-sum payment is equal to about 18 months of salary.
Freeze within-grade pay raises that come due during the current fiscal year. Most federal white-collar workers now get regular step pay increases (in addition to any general increase) after they have been in grade long enough, and provided they get a rating of fully successful or better. Those increases are worth about 3 percent and during the next 12 months about 400,000 workers would qualify for them.
Both of these savings were proposed by the Reagan administration and would save, according to their estimates, $850 million a year.
But Congress can choose other ways to make the savings.
Things Congress could do include:
Imposing a government-wide freeze on hiring.
Reducing the cost-of-living adjustment raise of 4.2 percent that is due next month for federal retirees, military retirees and Social Security recipients.
Senate insiders say that an amendment will be introduced next week that would cut the COLA in half. If that happens, it is likely that Congress would exempt Social Security benefits from the cuts, leaving federal and military retirees with the reduced COLA.