The Republican Study Committee released Wednesday their annual budget proposal for fiscal year 2019 entitled “A Framework for Unified Conservatism” which has similar elements affecting federal pay and benefits as other recent proposals.
SPECIAL REPORT: Understanding the Financial Impact of Proposed Benefits Changes for Federal Employees and Retirees
RELATED: OPM Provides Details on Proposed Changes to Federal Retirement, Benefits, and Pay
According to the RSC, the budget proposal includes input from members of Congress, Congressional Committees, conservative think tanks and the executive branch to produce more than 300 specific policy reforms and spending cuts. The Republican Study Committee is a caucus of more than 150 conservative members of the Republican Party in the House of Representatives.
“Curbing spending is the only way to control our deficits and ballooning debt. Without resolute action now, we run the risk of an unstoppable debt spiral and ultimately a sovereign debt crisis. History warns us that countries that bankrupt themselves aren’t around very long,” said Budget and Spending Task Force Chairman Tom McClintock (R-CA). “The RSC budget points the way back to solvency and prosperity, but every day we delay, our choices become harder. One thing is clear: inaction is not an option.”
Below are some of the highlights from the RSC budget document that are likely of interest to federal employees and retirees.
Reduce the Annual Across-the-Board Adjustment for Federal Civilian Employees Pay
Federal bureaucrats have enormous power over the lives of everyday Americans and also get paid more on average than the people they are supposed to serve. According to CBO, “Overall, the federal government paid 17 percent more in total compensation than it would have if average compensation had been comparable with that in the private sector, after accounting for certain observable characteristics of workers.”
Unlike most Americans, federal workers receive an automatic pay increase every year under the Federal Employees Pay Comparability Act of 1990. If the president determines that a national emergency exists, he can limit the size of the increase. President Obama signed legislation blocking pay increases in 2011, 2012, and 2013. However, with the national debt increasing above $21 trillion, and projected to skyrocket to almost $34 trillion over the next decade, a fiscal state of emergency exists. Beginning in FY 2019, the annual across-the-board increase for federal workers should be reduced by half a percentage point below the expected automatic increases.
Limit Bonuses to Federal Employees
There should be reasonable limits on the size of bonuses that can be awarded and the number of senior employees who can receive an award. More than $1 billion in bonuses for federal employees were paid by the taxpayers in 2016. Making the situation worse, these were not disclosed publicly. H.R. 5290, the Federal Employee Bonus Disclosure Act, introduced by Rep. Mark Sanford, would require disclosure of all bonuses for federal employees. Additionally, this bill would require reports to Congress on all large cash bonuses.
Reform Federal Employee Pension Plans
Federal employees hired since 1984 are entitled to a two-part retirement program, including the Federal Retirement System (FERS) defined benefit plan and a 401k-style plan with up to a 5 percent government matching contribution. Under FERS, federal workers hired before 2013 contribute only 0.8 percent of their pay, while the taxpayers contribute 11.7 percent of employees’ salaries. A 2017 CBO report found that, on average, federal civilian employees receive 47 percent more in benefits than the comparable average private-sector employee.
This budget would make several reforms to the federal employee retirement system. First, instead of basing the amount of a retiree’s benefit on the highest three years of earnings, the benefit would be calculated from the highest five-year period. The share of employee contributions to FERS should be increased over time, to more closely align with the private sector. The cost of living adjustment (COLA) for FERS and CSRS should be reduced or eliminated. The Special Retirement Supplement (SRS), which provides additional benefits for retirees younger than 62 but who had a long federal work history, would be eliminated. The interest rate provided by the G Fund in the Thrift Savings Plan (TSP) should be reformed to more accurately reflect the yield on a short term T-bill rate.
Additionally, all federal employees would be required to contribute more towards their retirement. The Middle Class Tax Relief and Job Creation Act of 2012 required new federal employees to contribute more towards their retirement. No changes were made for current federal employees. This proposal would equalize the treatment for all federal workers.
Adopt Premium Support for Federal Employee Health Care
The Federal Employee Health Benefits Program (FEHB) provides health insurance coverage for federal employees and their dependents. Participants choose from a range of plans and pay for about 30 percent of premiums, with the federal government covering the remaining 70 percent. Because this ratio does not change with the higher-priced coverage options, federal employees have the incentive to choose the more expensive plans on the taxpayer’s dime.
This budget would transition to a premium support system for the FEHB. The government would offer a standard federal contribution towards the purchase of health insurance and employees would be responsible for paying the rest. This option would encourage employees to purchase plans with the appropriate amount of coverage that fits their needs.
Reorganize the Executive Branch
President Trump has charged the Director of the Office of Management and Budget (OMB) to propose a plan to “reorganize governmental functions and eliminate unnecessary agencies, components of agencies, and agency programs.” As a part of developing this plan, each agency will develop a proposal to reorganize itself, including considering duplication, activities that may be non-essential, federalism, cost-benefit analysis, efficiency and effectiveness, and customer service. The public has also been invited to submit proposals for consideration.395 According to OMB, “the Administration will also work with key stakeholders, including Congress, to develop proposals and ultimately implementation.”
Once the administration proposes its reorganization plan, the Congress should evaluate and consider the plan in an expedited fashion.
Eliminate Unneeded Executive Branch Positions Using the Holman Rule
At the beginning of the 115th Congress, the House of Representatives adopted a rules package that reinstated a provision known as the Holman Rule on a temporary basis. The Holman Rule allows amendments to appropriations bill in the House to reduce amounts of money covered by the bill, reduce the number of federal employees, and reduce the compensation or salary of federal employees.
If used correctly, the Holman Rule could be a powerful tool for conservatives in the House of Representatives to work with the Trump administration to reshape the federal bureaucracy so that it is more accountable and responsive to the American people.
The president and federal agencies should work cooperatively with the House to identify executive branch positions that are unneeded and the appropriations bills considered by the House should include Holman provisions to restrict, limit, and eliminate these positions.
Reduce the Size of the Federal Workforce through Attrition
The federal bureaucracy has grown too big and too powerful. The Trump administration has already taken actions to require agencies to develop a long-term workforce reduction plan and a plan to maximize employee performance. Because the Constitution provides that “Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments” and that “no money may be drawn from the Treasury but in consequence of appropriations made by law”, it is necessary and appropriate that Congress play a significant role in reforming the federal bureaucracy.
This budget would build on the administration’s proposal and reduce the size of the federal workforce by limiting new hires to one employee for every three who leaves the workforce. The president would have flexibility to adjust federal employment in case of a national emergency.
Prohibit Federal Employees from Conducting Union Business on Official Time
In 2012, taxpayers paid federal workers over $157 million not to do their jobs. Instead, workers were doing union work during their official time.400 Ending the federal government’s sanction of union activity at federal expense, as proposed by Representative Jody Hice’s Federal Employee Accountability Act, will make the federal workforce more effective and efficient.
Prohibit Automatic Collection of Union Dues for Federal Employee Unions
Currently, the federal government acts as the dues collector for unionized federal workers by deducting union dues from an employee’s paycheck and then remitting dues to the union. If a worker wants to join a union, then the union should collect its dues from the worker, not force the taxpayers to do it. This budget recommends prohibiting the automatic deduction of union dues for federal workers.
The full text of the RSC budget can be download here. ( 176-page PDF)