GOP budget plan extends federal pay freeze, changes retirement benefits

Tuesday - 3/20/2012, 12:00pm EDT

This story was updated at 11:00 a.m. Tuesday to include specifics of the proposed retirement contribution changes.

The Republican budget plan for fiscal 2013 calls for extending the federal pay freeze through 2015, increasing federal retirement contributions and cutting the federal workforce by 10 percent.

The plan, released today by Rep. Paul Ryan (R-Wis.), the House Budget Committee chairman, is a response to President Obama's 2013 budget proposal released Feb. 13. The proposals are for the new budget year, beginning Oct. 1.

"Federal employees deserve to be compensated equitably for their important work, but their pay levels, pay increases and fringe benefits should be reformed to better align with those of their private-sector counterparts," according to Ryan's budget proposal.

The GOP plan would reduce the federal workforce by 10 percent over the next three years through a "gradual, sensible attrition policy." The Obama administration has added 147,000 new federal workers, the proposal said.

The budget proposal also would ask federal employees to make a "more equitable contribution to their retirement plans," according to the plan. In a press conference today, Ryan said, "We think that federal workers should have to pay half of their pensions themselves instead of having the private sector, taxpayers, pay for all of it." Currently, employees in the Federal Employee Retirement System pay 0.8 percent of their salaries toward pensions while the agency contributes 11.7 percent.

These proposals combined would save approximately $368 billion over 10 years, the proposal said.

White House says plan not balanced

In a statement, White House Communications Director Dan Pfeiffer said the Ryan plan "once again fails the test of balance, fairness, and shared responsibility."

The House budget would pay for tax breaks for the wealthy and corporations, such as oil companies, by "undermining Medicare and the very things we need to grow our economy and the middle class — things like education, basic research, and new sources of energy," Pfeiffer said.

The GOP plan echoes last year's proposal from Ryan — also called the Path to Prosperity — that included a federal pay freeze through 2015, a 10 percent workforce cut and increasing feds' pension contributions.

In comparison, the President's budget proposal ended the federal pay freeze and included a 0.5 percent pay raise for civilian feds, but the administration proposal also increased retirement contributions by 1.2 percent, phased in over three years.

The calls for changing federal retirement benefits are not new. Under the payroll tax cut deal signed last month, federal employees hired after this year would have to contribute 2.3 percent more for their pensions. A proposal in the House would increase current feds' retirement contribution by 1.5 percent and change the annuity from the high-three to a high-five formula.

Federal unions blasted the proposal. John Gage, the president of the American Federation of Government Employees, said in a statement, "It is fundamentally wrong for federal employees to be required, yet again, to serve as the Automated Teller Machine for the nation. Enough is enough."

The National Treasury Employees Union said the plan would drive federal employees out of public service. "A sharply lowered federal workforce can lead only to a substantial increase in the use of unaccountable private contractors and a much higher cost of providing services," said Colleen Kelley, NTEU president, in a statement.

Defense spending

The Budget Control Act of 2011 would set in motion $1.2 trillion in automatic, across-the-board cuts over the next decade starting in 2013, with half of the cuts to defense spending. That would mean on top of the $487 billion in planned cuts to defense spending over 10 years, the Pentagon would have to absorb an additional $500 billion in cuts.

The GOP plan "rejects proposals to make thoughtless, across-the-board cuts" in defense spending. Ryan's proposal would provide $554 billion for national defense spending, "consistent with America's military goals and strategies."

The White House also said it does not support sequestration and wants Congress to come up with deficit reductions needed to avoid the automatic cuts.

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