There may be little sympathy for federal workers among the general public, where pensions with set benefits have become scarce and U.S. unemployment hovers at 8.3 percent. Studies of government salaries show benefits outpace the private sector. BY KRISTIN JENSEN
BY KRISTIN JENSEN | BLOOMBERG NEWS
WASHINGTON — Congress is considering ways to cut U.S. federal workers’ pay, benefits and possibly their jobs even as a record number are borrowing against pensions.
Concern over the situation almost derailed a deal to extend the payroll tax cut last week as several lawmakers objected to a provision that would have required federal workers to contribute more to their pensions. Negotiators ultimately agreed to target newly hired federal workers.
There’s more ahead, as moves to hold down government salaries mirror tightening at the state and local levels. Congress is considering extending a two-year federal pay freeze for another year, through 2013. Bills designed to reduce the federal workforce continue to be introduced. And another measure is pending that includes across-the-board requirements for more contributions to pensions.
“We are witnessing an unprecedented assault on public employees and federal employees in particular,” said Rep. Gerald Connolly, (D) whose suburban Virginia district has one of the nation’s largest concentrations of government workers. “I am mortally offended on their behalf that they continue to be singled out for every sacrifice.”
Lawmakers in Maryland, home to more than 300,000 federal workers, have also joined the fight. Sen. Ben Cardin, (D) and Rep. Chris Van Hollen, (D) whose district includes the Washington suburb of Bethesda, helped kill the initial pension provision in the payroll tax deal.
“We still strongly oppose the provision that raises $15 billion to help offset the cost of this package from future workers,” the two lawmakers said in a statement last week.
President Obama called both Van Hollen and Cardin last Wednesday to press them to agree to a deal. Cardin said Obama assured him that federal employees’ salaries and benefits wouldn’t become a routine target.
“The president was pretty strong on his commitment to helping us make sure that doesn’t happen,” Cardin told reporters.
All told, there are about 4 million federal employees, according to Census data gathered by the National Treasury Employees Union. California, Virginia, Maryland and Texas have the highest numbers of workers; more than 80 percent are outside the Washington metropolitan area.
Federal figures show those employees and federal retirees may be in distress, even as the Federal Reserve Bank of New York says household indebtedness among the general population is declining. One in five participants in the federal thrift savings retirement plan, or a record 893,200 people, have loans against their accounts, according to the Federal Retirement Thrift Investment Board.
That shouldn’t be a surprise, said Julie Tagen, legislative director of the 300,000-member National Active and Retired Federal Employees Association in suburban Alexandria, Va. Most federal workers make $25,000 to $75,000 a year and are coping with a pay freeze, she said.
“Everyone forgets that federal employees have the same struggles that everyone else has, and they’re middle-class,” Tagen said. “There’s a lot of hardship out there.”
State workers have been squeezed for years as local officials struggle with budget shortfalls and underfunded pensions. Thirty-three states have assets of less than 80 percent of what they need to pay out the benefits already promised to their workers, according to an annual study of pensions by Bloomberg Rankings.
While the federal government is also weighed down by deficits, what bothers Connolly about the current battles is that there is no obvious connection between the pieces of legislation, such as a payroll tax cut, and the money being sought to fund them. That’s different than a highway bill that assesses gas taxes on drivers using the roads.
“What is the nexus?” Connolly said. “Republicans are afraid or unwilling to ask anybody else to make any kind of sacrifice.”
Federal employees aren’t helped by reports such as a recent one from the Congressional Budget Office that found federal workers’ salaries top those in the private sector. Republican presidential candidates, including former Massachusetts Gov. Mitt Romney, point to the disparity while campaigning.
“People who are government servants, public servants, should not be paid more than the taxpayers who are paying for it,” Romney said during a Jan. 8 candidate debate.
There may be little sympathy for federal workers among the general public, where pensions with set benefits have become scarce and U.S. unemployment hovers at 8.3 percent. Studies of government salaries show benefits outpace the private sector.
