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Shows & Panels
Shutdown Warning: Don't Shoot Self In Foot
Wednesday - 3/2/2011, 4:00am EST
During a refresher course on an Army rifle range some years ago, our instructor initially told us to ignore the target downrange. First things first, and the target was not the first thing. Before loading our M1rifles, he first encouraged us not to point at weapon at our brothers-in-arms. Nor to shoot ourselves in the foot.
Were that smooth-talking sergeant in charge of the government today, he would probably give the same don't-shoot-self-in-foot advice to career civil servants.
With federal workers facing a possible shutdown, that is advice worth repeating. While many people, especially those who are aware of what the government does, agree a shutdown is a costly example of congressional stupidity, they still happen from time to time. The last two (1995-96) lasted a total of 20 days for some feds. The irony is that the shutdowns probably didn't save a nickel and may have actually added costs to government services. Federal workers who were furloughed got paid even though they were on what amounted to enforced vacations.
Whether the shutdown comes this weekend, or in two weeks or a month (or never) many federal workers are understandably upset at being used as pawns in a political game of chicken. The repeated failure of Congress (under Republican or Democratic control) to approve budgets sets the stage for shutdown politics. Most, especially veterans of the most recent shutdown, appear to be taking it in stride. But the strident anti-government rhetoric (from much of the media and from many politicians) has had an impact on some civil servants.
Two readers said that although they had planned to work another four to five years, the pay freeze and now the threat of a shutdown have convinced them to pull the plug early even though, as one pointed out "in so doing I will reduce my lifetime federal civil service annuity, eliminate the chance to continue contributing to the Thrift Savings Plan and will probably have to get a job on the outside. I just feel like I have to make a statement if only to myself." T.A.
A few have contacted us saying that if there is a shutdown they are going to reduce, or cancel, their payroll contributions to the Thrift Savings Plan. For example:
"If my pay is reduced via furlough, I will make up the difference by reducing my TSP contribution in the exact amount. No sense in continuing to send money to the people who contributed to the economic meltdown but who seem to share very little of the pain." L.P.
We ran that comment by an expert on the TSP who responded. He said:
"It's almost too much to unravel. First furlough and non-pay are two different things. Employees furloughed in 95/96 were paid.
"Next, the G-fund is government debt securities. The government promises to pay you with interest tomorrow for the ability to use the funds you invest today to pay for government activities. If you don't give them your money in exchange for their earnings, someone else will. The U.S. Government has NEVER been unable to raise funds through debt issuance.
"The 'money' does not sit in an account...it is spent for government activities... Whenever a TSP participant wants his principle/interest back, the G-fund securities are reduced by the amount the participant wants to borrow or withdraw.
"If this individual discontinues contributions he/she will miss out on any matching contributions or tax breaks he/she would normally receive."
To which L.P. replied "...to the extent the government cannot get money internally (example +TSP) it will have to borrow on the open market. So, to the extent it would have to issue debt and pay a much higher rate than what I am getting."
Watch that foot.
At 10 a.m. today on our Your Turn with Mike Causey radio show Federal Times editor Steve Watkins and senior reporter Sean Reilly will give us an update on the pending federal shutdown, the status of efforts to avert it and the impact on feds, contractors and agency operations if it happens.
The American Federation of Government Employees is sponsoring informational picket lines today at Social Security offices in Alabama, California, Connecticut, Maryland, New York, Virginia and a dozen other states. They will be joined by the Alliance for Retired Americans and the National Committee to Preserve Social Security/Medicare. AFGE's Witold Skwierczynski will talk about what a shutdown could mean to Social Security beneficiaries.