Trump’s plan, released Tuesday, leaves federal employees livid, despite its 1.9 percent pay raise. Even the usually staid Federal Managers Association called the budget “a significant setback and slap in the face.” Association President Renee Johnson welcomed the pay increase, but said it “pales in comparison and is outweighed by the damaging cuts to benefits.”
Federal employee organizations are fighting the retirement provisions on Capitol Hill, where adoption of Trump’s budget as proposed is doubtful. But Congress passed federal employee retirement hits before, so approval of his plot to do so next year is not far-fetched.
As The Washington Post first reported, the Trump budget vigorously targets federal retirement. More subtly broached in budget documents is the administration’s mindset that feeds a growing narrative in Washington that says feds are overpaid and under-punished.
Compare two sets of documents with the same title, “Strengthening the Federal Workforce.”
That has been the name of a narrative chapter in the “Analytical Perspectives” sections of presidential budgets for years, including under Trump and former president Barack Obama. While they included similar statistics regarding workforce demographics, the two presidents come to different conclusions about the workers.
Obama was generous in his praise of federal employees, even as he partially froze their pay for three years. Trump offers little praise, even as he recommends a pay raise that is higher than several recent increases. He also proposed a six-week paid parental leave program that would be available to feds and others.
Most striking is Obama’s defense of federal staffers against conservatives who argue the workforce generally is overpaid compared to the private sector.
Citing the work of federal doctors, firefighters, disaster workers and others, Obama’s budget said: “Federal jobs are concentrated in higher paying professions and are based in higher cost metropolitan areas. … Even in large firms, the percentage of highly educated workers is less than half that of the Federal sector and the rate of growth over the last decade is only about half as fast. …Federal workers … are more experienced, older, and live in higher cost metropolitan areas.”
In contrast, Trump’s perspective ignores the various services provided to taxpayers by federal workers. It justifies proposed compensation reduction by saying that would be “consistent with the goal of reining in Federal government spending in many areas, as well as to bring Federal retirement benefits more in line with the private sector.”
Aligning with the private sector means making federal employees worse off, instead of a policy encouraging businesses to make the private workforce better off. Trump’s plan includes:
- An increase in out-of-pocket employee contributions to the Federal Employees Retirement System (FERS) of 1 percentage point each year for five to six years. Most employees would pay about 6 percent more over that period
- A decrease in retirement benefits by basing them on the average of the high five years of salary instead of the high three as is the current practice
- Pension reductions by stopping cost of living adjustments (COLA) for current and future FERS retirees
- Reduction of the Civil Service Retirement System (CSRS) COLA for current and future retirees by 0.5 percent from what the formula otherwise would allow
- Elimination of supplement payments for FERS covered staffers who retire in 2018 and after. The supplement approximates the value of Social Security benefits for those who retire before age 62.
Required contributions by FERS employees already have been increased twice in recent years, although both times only for those hired after a later date. The result is that those hired before 2013 pay 0.8 percent of salary into the system, those hired in 2013 pay 3.1 percent and those hired after that year pay 4.4 percent.
The budget also includes two often-raised proposals that would apply only to future retirees, one involving the way benefits are calculated for all new annuitants, the other involving a supplement paid only to some.
Under both the FERS and CSRS retirement systems, those newly retiring have their benefits calculated on formulas that include their time of service and their three consecutive highest-paid years — most commonly, the last three years. Changing that to the highest five years, as Trump proposed, would reduce the initial amount of new retirees’ annuities by about 2 percent on average, according to a 2016 Congressional Budget Office analysis.
The other proposal targets the “special retirement supplement,” a benefit paid only to those who retire under FERS before age 62. That benefit stops at that age, when they become eligible to collect Social Security.
The CBO said that most FERS retirees never receive the supplement because most don’t retire that early. Those most likely to be affected by ending the supplement are law-enforcement officers, firefighters and air traffic controllers who are under special retirement rules allowing them to retire earlier than most federal employees. For them, the “period of reduced income could exceed 10 years,” CBO added.
Calling Trump’s budget “an egregious, unprecedented attack on federal employees and retirees,” National Active and Retired Federal Employees President Richard G. Thissen said “it breaks an implicit bargain by eroding the value of hard-earned pensions that were promised to federal employees in exchange for their service to this country. … This is nothing more than punishment for those who have served their country through federal service and a broken campaign promise to protect retirement security.”
Eric Yoder contributed to this report.