Feds' $60B sacrifice might not be enough

Wednesday - 9/14/2011, 9:26pm EDT

Your Turn with Mike Causey

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By Jolie Lee
Federal News Radio

Federal employees have already made a "big sacrifice" with the two-year pay freeze, saving the government $60 billion over the next 10 years, said Jessica Klement, director of government affairs at the Federal Managers Association.

But the freeze might just be the beginning of cuts to federal employees' pay and benefits as the super committee finds ways to cut $1.5 trillion in the deficit over the next decade.

Klement outlined some of the proposals lawmakers are considering that will impact feds' pocketbooks:

  • Move from high-three to high-five annuity calculation

    Klement said she receives the most emails on this topic, but she also does not see this proposal as realistic of a threat as some others. First, the proposal is not part of any bill that has been introduced. Second, the amount saved is not as significant as other proposals.

  • Changes to defined benefits pension

    A bill introduced by Sen. Richard Burr (R-N.C.) would end the defined benefits pension portion for new hires starting in 2013. Under the plan, retirees' Thrift Savings Plan would not be affected.

    Another proposal, part of the FY2012 budget plan passed in the House, would increase retirement contributions from 0.8 percent to about 6 percent as part of a deficit reduction compromise. Klement said the change amounts to about a 5 percent pay cut.

  • Move to chained CPI to calculate cost-of-living

    The proposal, first recommended by the President's debt reduction commission, calls for a switch to a Chained Consumer Price Index to measure inflation. The Chained CPI operates under the assumption that consumers will buy lower cost alternatives in a down economy. The result will be a lower COLA for retirees that ignores rising costs in other areas, Klement said.

    "When was the last time your health insurance bill went down or your grocery bill or your gas bill?" she said.

President Obama will submit his recommendations to the super committee on Sept. 19. The committee's final recommendations are due Nov. 23. If the committee does not have recommendations or fails to agree on a plan, then automatic across-the-board spending cuts go into effect.

Mike also spoke with Steve Losey of the Federal Times about OPM's efforts to speed up its retirement claims processing operation.