Pick your poison, federal employees: Would you rather leave the fate of your pay and benefits up to 12 lawmakers, or to a little-known process called sequestration that dates back to the mid-1980s?
It's a crapshoot, really, under the debt-ceiling deal signed into law by President Obama last week and the complicated budget rules outlined in the 1985 Gramm-Rudman-Hollings Balanced Budget Act. Federal pay, benefits, and jobs are at risk under either scenario during the second phase of the debt-ceiling negotiations.
Most observers agree that government employees will have to sacrifice beyond the current two-year pay freeze, either in the form of increased pension contributions, an extended pay freeze, a hiring freeze, or some other cut to salaries and benefits -- and those sacrifices could very well come out of the congressional super committee, which is tasked with devising a deficit-reduction plan. If lawmakers fail to enact legislation that achieves $1.2 trillion in savings, it will trigger automatic spending cuts across government, which means federal workers' jobs and pay could be on the line.
The 2011 Budget Control Act would save at least $2.1 trillion between 2012 and 2021 through a series of caps on discretionary spending worth about $1 trillion and a comprehensive deficit-reduction package devised by a joint congressional committee of 12 lawmakers. Automatic, across-the-board spending cuts totaling as much as $1.2 trillion beginning in 2013 will be triggered if the committee cannot agree on a deficit-reduction plan and Congress does not approve legislation by November 23. Those cuts would be spread evenly from fiscal 2013 through 2021, and would be divided equally among defense and nondefense spending. The automatic triggering of spending cuts is known as sequestration, a process outlined in the 1985 Gramm-Rudman-Hollings Balanced Budget Act.
Under the super committee framework, everything -- as lawmakers are so fond of saying -- is on the table. If the super committee cannot agree on a deficit-reduction plan and/or Congress doesn't approve it, then automatic spending cuts across government could take effect in January 2013. Sequestration offers some protection to federal benefits, but it also could result in layoffs or furloughs at some agencies. For example, federal employees' pensions and health care are both protected under sequestration, but if a worker is fired as a result of cuts stemming from sequestration, then the government's contributions to retirement and health care would cease. Social Security, Medicare, most of Medicaid, some low-income programs, and certain veterans' benefits also are exempt from sequestration.
In addition, military pay is protected under sequestration but it's not a guarantee. The law gives the president "authority to exempt any [military] personnel account from sequestration" but only if "savings are achieved through across-the-board reductions in the remainder of the Department of Defense budget," states a House Rules Committee analysis. Civilian pay is not protected under either scenario.
"While the recently appointed super committee will reportedly have everything on the table, including items of great interest to the federal workforce, sequestration is not an ideal option for federal employees as deep, broad cuts to agencies' budgets could result in furloughs or even reductions in force," said National Treasury Employees Union President Colleen Kelley.
"This debt deal does nothing to get the 14 million unemployed Americans back to work," said American Federation of Government Employees President John Gage. "This is a bad deal for everyone, whether the outcome is decided by this so-called super committee or the sequestration default option. Either way, there will be oppressive and arbitrary cuts that will hurt the economy and make it harder for out-of-work Americans to get back on their feet."
Automatic spending cuts would adversely affect government contractors as well. "Under this scenario government contractors providing goods and services across a wide spectrum could face even steeper cuts than anticipated," said a briefing paper from the law firm Patton Boggs.
Most observers believe the super committee will agree to a plan that makes $1.2 trillion in cuts, avoiding sequestration. But that plan likely will include provisions that require federal employees to contribute more to their pensions and/or their health care, especially since those issues have been at the forefront of ongoing deficit reduction discussions. During debt ceiling negotiations, the White House and lawmakers considered making workers contribute more to their retirement plans as part of a deal to avoid a government default. The House-passed version of the fiscal 2012 budget resolution included a recommendation that would require federal employees to pay for half the defined benefit they receive with their pensions at retirement. Most employees currently contribute 0.8 percent of their salaries and agencies pay 11.7 percent, with agencies' contribution set to increase to 11.9 percent in October.
There are several other stand-alone proposals already on the table that would reduce federal employees' pay and benefits. For example, Sen. Tom Coburn, R-Okla., has unveiled a $9 trillion deficit reduction plan that would extend the current civilian pay freeze, reduce leave benefits and trim the workforce in an effort to cut government spending. The proposal builds on a number of fiscal commission recommendations introduced late last year.
This week congressional leaders announced the 12 members of the super committee, which includes Rep. Chris Van Hollen, D-Md. Many federal employees live and work in Van Hollen's district in the Maryland suburbs outside Washington. During a recent visit to the Census Bureau, Sen. Ben Cardin, D-Md., told federal employees that he and his fellow congressional Maryland Democrats, including Van Hollen, would fight for federal employees and work to protect them from further pay and benefits pain.
Other members of the committee are: Sen. Max Baucus, D-Mont.; Rep. Xavier Becerra, D-Calif.; Rep. David Camp, R-Mich.; Rep. Jim Clyburn, D-S.C.; Rep. Jeb Hensarling, R-Texas; Sen. John Kerry, D-Mass.; Sen. Jon Kyl, R-Ariz.; Sen. Patty Murray, D-Wash.; Sen. Rob Portman, R-Ohio; Sen. Pat Toomey, R-Pa.; and Rep. Fred Upton, R-Mich.