Budget Deal Spares Feds’ Pay and Benefits

The two-year budget agreement unveiled Monday night spares federal employees’ pay and benefits, raises the debt limit and provides some relief from sequestration.

Congressional leaders and the White House rolled out a proposed budget deal for fiscal years 2016 and 2017 that does not contain any provisions targeting the pay or benefits of the federal workforce. Previous budget agreements have not been so favorable for feds: For instance, the 2013 deal increased the amount new government hires must contribute to their pensions.

“We hope our leaders in Washington are learning, finally, that they cannot balance the budget on the backs of federal workers and retirees,” said National Active and Retired Federal Employees Association President Richard Thissen. The National Treasury Employees Union said it was “relieved” that the budget deal addressed funding “without requiring the federal workforce to make additional sacrifices.”

The 2015 Bipartisan Budget Act also would prevent many retirees, including those covered under the Civil Service Retirement System, from absorbing a 52 percent increase in Medicare Part B premiums, made worse by the lack of a 2016 cost-of-living adjustment. Under the current law, those retirees not “held harmless” would pay $54 more in Part B premiums per month next year than they do now. The budget agreement would extend the “hold harmless” provision of the Social Security Act in 2016 to those affected by the increase, so that they will pay $123.70 per month (including a surcharge) next year. If there is no COLA for 2017, the same provision would apply again that year, protecting those not “held harmless” from a significant monthly premium jump.

Those retirees who are held harmless will continue to pay $104.90 per month in 2016. Under the hold harmless provision of the Social Security Act, the dollar increase in Medicare Part B premiums is limited to the dollar increase in an individual’s Social Security benefit.

“While I believe this is a good compromise for the 2016 premiums, Congress and the administration must fix this situation once and for all,” Thissen said. “Millions of individuals should not have to live with this type of financial uncertainly just because their Medicare premiums do not come from Social Security.” CSRS retirees who stayed in that retirement system after 1983 did not pay into Social Security under that system. People who started working for the federal government in 1984 are covered under the Federal Employees Retirement System, which includes Social Security.

The budget agreement would provide relief from sequestration for the next two years by increasing defense and non-defense spending by a total of $80 billion. But the bill also extends the 10-year governmentwide automatic budget cuts, which first took effect in 2013, until 2025. “The sequester relief is paid for over 10 years by a mix of spending reforms, stronger tax compliance measures for large partnerships like hedge funds and private equity firms, and other measures,” wrote Jason Furman, chairman of the Council of Economic Advisers, in a blog post on the Office of Management and Budget website.

The deal raises the debt ceiling through mid-March 2017, which would avert a default. The Treasury Department has said Congress has to lift or suspend the $18.1 trillion debt limit by Nov. 3, or the government will default on some of the obligations it has already incurred.

There’s still the matter of funding agencies to avoid a government shutdown before the end of the year. The current continuing resolution expires on Dec. 11; Congress will have to pass another bill  -- likely an omnibus spending package -- before that date to avoid a government shutdown. The budget agreement, which congressional leaders hope to push through as early as this week, makes that task easier.

“I look forward to getting to work immediately with our counterparts in the Senate to ensure the appropriations process is complete ahead of the Dec. 11 deadlines, so that we can avoid any more delays or ‘shutdown showdowns’ that have caused unnecessary damage to important federal programs – including our national defense,” said House Appropriations Committee Chairman Hal Rogers, R-Ky.