Government Pensions Under Fire Once Again

Liberal supporters circle the wagons. 

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The Fiscal Times
December 4, 2013

The heat is on unions again because of what many believe are overly generous benefits to government workers – especially as compared to those of private-sector workers. In Detroit, unions are up in arms over the new threat to city workers’ pensions in light of a federal judge’s decision that Detroit can move forward with the largest municipal bankruptcy proceeding in history – a threat to pensions that could reverberate throughout the country.

Now the potential budget deal between House Republican Paul Ryan and Senate Democrat Patty Murray – who are racing to meet a Dec. 13 deadline – proposes requiring federal workers to pay substantially more for their retirement benefits. The proposal has made the chairwoman of the Senate Appropriations Committee, Barbara Mikulski (D-MD), furious. 

Related: Enter New Budget Deal, Exit Loathsome Sequester

On Wednesday Mikulski sought to head off the proposal as part of the emerging budget deal to cancel the sequester for at least two years.

As The Fiscal Times reported on Tuesday, Senate and House negotiators are considering a way to save $5 billion to $10 billion in fiscal 2014 by increasing federal employees’ contributions to their pension fund. That is one of a handful of measures and fees being considered to offset $45 billion of additional spending in the coming year above the current spending caps.

“Each and every day, federal employees stand up for America, but they are worried about their jobs and futures,” Mikulski said in a letter on Wednesday to the Republican and Democratic budget negotiators. “Their pay has been frozen for three years. Many were furloughed this year because of sequester. During the shutdown, they were told to stay home, and their paychecks were late.”

“Now, they are deeply troubled by proposals to require them to pay considerably more for their retirement,” Mikulski added. “To turn around and take 5.5 percent more out of their pockets to pay for the same retirement benefits is a cruel bait-and-switch for their compensation.”

Mikulski is a major champion of the federal workforce. Maryland is home to the headquarters of 20 major federal agencies, from the Social Security Administration to the Food and Drug Administration. More than 300,000 federal employees and retirees live and work in Maryland.

Related: Murray and Ryan Race the Clock for New Budget Deal 

Senate Budget Committee Chairwoman Patty Murray (D-WA) and House Budget Committee Chairman Paul Ryan (R-WI) are closing in on a deal to avoid another government shutdown in January by canceling a second round of across-the-board cuts under the sequester and providing at least $45 billion of new funding for defense and domestic government agencies and programs. Overall, the deal would call for a little more than $1 trillion of defense and domestic spending in the coming year and a slightly higher amount the next year. That would well exceed the $967 billion level favored by Ryan and the House Republicans for fiscal 2014.

Meanwhile, with the unemployment rate stubbornly holding at just above 7 percent, congressional Republicans said yesterday they're prepared to allow emergency unemployment benefits to lapse on Dec. 31, immediately cutting off more than a million beneficiaries, according to The Washington Post.

“I don’t see much appetite from our side for an extension of benefits,” said Rep. Tom Cole (R-OK), a member of the House-Senate budget conference committee responsible for negotiating a year-end budget agreement.

Democrats haven’t pressed to extend the supplemental unemployment benefits either. However, the issue might become  a negotiating point if a budget deal is struck soon and presented to House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV) , according to The Post.

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Washington Editor and D.C. Bureau Chief Eric Pianin is a veteran journalist who has covered the federal government, congressional budget and tax issues, and national politics. He spent over 25 years at The Washington Post.