The Trump administration’s budget would
slash federal pensions for current and future federal retirees by thousands of
dollars a year.
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The Trump budget pays for hundreds of billions of dollars in tax cuts in part by targeting the pensions of federal workers, including IBEW members working at Army Corps of Engineers-run power plants, the National Park Service and the U.S. Mint among others.
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The budget proposal, released May 23, cuts billions of dollars -- almost entirely from safety net programs for the most vulnerable, including cuts to Social Security disability and a 50-percent cut to Medicaid-- while the wealthiest Americans get a near trillion dollar handout.
Although the exact amount Trump and his family would receive is unknown -- he has not released his tax returns-- estimates based on a leaked and incomplete return from 2005 show the Trump family would save tens of millions of dollars a year because of a drop in the corporate tax rate and potentially hundreds of millions of dollars after the repeal of the inheritance tax.
Meanwhile, the IBEW’s thousands of federal retirees will watch the value of the pensions they already earned shrink each month and current workers will work the same hours for less.
“It is an assault on federal workforce and it is very unfortunate, but it is a continuing theme with Republicans, not just Trump. This is just the most egregious I’ve seen yet,” said Government Employees Department Director Paul O’Connor.
O’Connor said he wished the president knew the IBEW’s federal workers and the importance of the work they did.
“He should remember who our federal workers are: the men and women who keep the Mississippi a superhighway of economic growth; the men and women who build the Navy that keeps our country safe; the printers and designers who inform our citizens about what their government is doing in their name,” O’Connor said. “These people deserve his humble respect, not the back of his hand.”
The president’s proposal has several sections that affect federal workers. The 1.9 percent raise for civilian federal workers is immediately undercut by an increase in worker contributions to retirement plans and a reduction in benefits.
There are two federal pension programs, the defined-benefit Federal Employee Retirement System and the defined-contribution Civil Service Retirement System.
The largest changes are made to FERS. First, the proposal increases worker contributions to the pension plan by 1 percent a year for six years.
Randy Erwin, president of the National Federation of Federal Employees, told the Washington Post the average federal worker would see a $5,000 a year reduction in take-home pay at the end of the six-year period.
Then, the value of an individual pension will be based on the average of the final five years’ salary instead of the current three. For nearly every employee of the federal government, that average salary will be lower.
The president also wants to eliminate cost of living adjustments for current and future retirees, reducing the value of current and future pension payments.
Defined benefit plans –if they exist at all-- have been under attack in private industry for decades, and defenders of the president’s proposal say the cuts bring the federal system in line with what most Americans already face. But even the defined-contribution CSRS is facing a 0.5 percent COLA reduction under the plan.
Trump also eliminates a supplemental payment made in the first years after retirement for those who leave work at 62. Filing to receive Social Security payments before age 65 incurs a lifetime reduced benefit, a penalty that most people would like to avoid but often cannot afford.
The cuts to benefits come on top of the president’s plan to reduce the federal workforce by freezing hiring and eliminating at least 19 small agencies including the Corporation for National and Community Service and the Chemical Safety Board.
The president of the National Treasury Employees Union, Tony Reardon, told the Washington Post that federal employees have already given back “more than $20 billion to deficit reduction through increased retirement contributions, and more than $182 billion overall from combined retirement, pay cuts, and unpaid furlough days in the past few years.”
While retirement benefits go down, independent, non-partisan tax policy experts say the budget’s tax cuts would explode the debt. The conservative-leaning Tax Foundation reported that the Trump budget would increase the debt by $6 trillion over 10 years.
“More work. Less Help. Lower pay. Shaky retirement. More debt,” said International President Lonnie R. Stephenson. “Whether you are conservative or progressive, this country needs a functioning government employing quality people committed to excellence. This will not reform federal government. It will cripple it.”