Obama May Endorse Further Pay, Benefits Cuts
Reports today indicate that in his big deficit reduction speech tomorrow, President Obama will endorse some form of the recommendations of the deficit reduction commission he appointed last year.
If you remember, the commission, led by Erskine Bowles, former chief of staff for President Clinton and Alan Simpson, former Republican senator from Wyoming, backed freezing federal civilian pay at all agencies, including the Defense Department, for an additional year on top of the two-year pay freeze already in place. The panel also recommended reducing the government workforce by 10 percent, or 200,000 employees, by hiring two workers for every three who leave their jobs.
The fiscal commission proposed shifting the Federal Employees Health Benefits Program to a defined contribution plan that would offer participants a fixed subsidy or voucher to purchase coverage. And it backed a series of changes to retirement benefits:
- Basing benefits for new retirees under the Civil Service Retirement System and the Federal Employees Retirement System on the highest five years of earnings rather than three.
- Deferring all cost-of-living adjustments to age 62.
- Balancing agency and employee contributions to pension plans.
It'll be interesting to see if President Obama is willing to go beyond the current pay freeze to seek additional cuts in federal benefits. At the risk of reading the tea leaves too much, if he does go further, it might explain why he took the time to thank federal employees for their sacrifice and forbearance during the budget crisis yesterday.
(Hat tip: Federal Times)