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On the Chopping Block: Federal Worker Pensions


By Stephen Lendman - Posted on 20 May 2011

On The Chopping Block: Federal Worker Pensions - by Stephen Lendman

Bipartisan support endorses ending vital social benefits incrementally, principally Social Security, Medicare, Medicaid, healthcare for those who can't afford it, and public pensions.

Notably, deep Medicare cuts were made. Much more is planned, including slashing Medicaid. Now federal pensions are being targeted. Civilian federal employees receive benefits under the Federal Employees Retirement System (FERS), consisting of three components:

-- a FERS annuity defined benefit plan;

-- mandatory Social Security participation; however most Civil Service Retirement System (CSRS) employees aren't part of Social Security unless they qualify separately from additional private sector employment; and

-- the Thrift Savings Plan (TSP), a 401(k) type defined contribution plan.

On March 19, Senators Tom Coburn (R. OK) and Richard Burr (R. NC) introduced S. 644: Public-Private Employee Retirement Parity Act to prohibit federal annuities for employees hired after 2012. In other words, beginning January 1, 2013, they want defined pensions for newly hired federal workers ended, eventually eliminating unfunded ones altogether.

Although the other two FERS components are maintained, S. 644 is another step toward halting all federal obligations to working Americans to provide more funds for imperial wars, corporate handouts, and greater tax benefits for America's super-rich. But don't expect Congress, Obama, or major media reports to explain.

Coburn justified S. 644, claiming federal workers earn over 20% more than private sector ones. In fact, according to a National Institute on Retirement Security (NIRS) study titled, "Out of Balance? Comparing Public and Private Sector Compensation Over 20 Years:"

Wages and benefits for public workers are lower than for private sector ones with comparable earnings determinants, such as education and work experience. Moreover, the pay gap widened over the last 15 years. Other studies agree, saying public workers can earn more by using their skills in private sector jobs.

As a result, the National Federation of Federal Employees (NFFE) called S. 644 unfair. For example, a federal employee earning on average $50,000 in his or her three highest earning years, with 30 years of service, gets a $15,000 annual pension, hardly a generous amount.

NFFE also said FERS pensions are less than under the Civil Service Retirement System (CSRS), the one FERS replaced in 1986 for new hires.

Coburn and Burr claim defined benefit federal pensions are going broke. Last September, in fact, the Congressional Research Service (CRS) denied insolvency problems, saying FERS and CSRS (for eligible employees) will be able to meet their obligations "in perpetuity." Moreover, CRS expects their assets to grow for decades, reaching $15.3 trillion in 2080, far exceeding outlays.

Nonetheless, congressional Republicans, known as "You Cutters," plan other slash and burn efforts to:

-- cut federal pay;

-- freeze hiring;

-- end early retirement benefits;

-- eliminate the time the American Federation of Government Employees (AFGE) has to defend federal employee rights; and

-- calculate pensions based on the highest five (instead of 3) working years, among other proposed draconian anti-worker measures, including stealing pension funds by borrowing them to fund government operations.

On May 16, Washington Post writer Zachary Goldfarb headlined, "Treasury to tap pensions to help fund government," saying:

Federal retirement funds will be tapped to help fund government operations after the $14.3 trillion debt ceiling was reached as Congress keeps wrangling over raising it. In fact, "the Obama administration has shown growing interest in altering (pension) programs to curb the debt in the long run (by) raising the amount that federal employees contribute to their pensions."

Both parties agree on social spending cuts overall, disagreeing largely on timing ahead of the 2012 election, besides posturing for political advantage. In fact, Obama already committed to cut trillions of dollars over the next decade, mainly essential entitlements, education, healthcare for working households, and aid for America's poor. In addition, federal workers pay was frozen last November for two years. Moreover, as explained at the time, cuts from his April 8 budget deal included:

-- $3.5 billion from Children's Health Insurance Program (CHIP) funding;

-- $2.2 billion from nonprofit health insurance cooperatives;

-- $600 million from community healthcare centers;

-- $1 billion from HIV/AIDS, tuberculosis, and other disease prevention programs;

-- $1.6 billion from EPA's clean/safe drinking water and other projects;

-- $950 million from community development grants;

-- $504 million from nutrition aid for poor Women, Infants, and Children (WIC);

-- $500 million from education programs;

-- $390 million from home heating subsidies to the poor, as well as $2.5 billion for the Low Income Energy Assistance Program (LIHEAP) announced in February;

-- $350 million from labor programs, including grants for community service jobs for seniors;

-- other social service cuts;

-- $786 million from FEMA first-responder funding;

-- $407 million from energy efficiency and renewable energy programs;

-- $260 million from National Institutes of Health (NIH) medical research;

-- $127 million from the National Park Service; and

-- billions less for public infrastructure and transportation spending, while increasing war appropriations by multiples more, including for conquering and controlling Libya.

Moreover, Obama agreed to more draconian FY 2012 cuts and corporate tax breaks as part of a deal to raise the debt ceiling. It's still being debated at least until August 2 while Congress loots federal pensions to keep government operations running.

Overall, bipartisan support endorses ending safety net protections, especially healthcare for retirees and working households, Social Security, and public pensions, forcing Americans to pay more and get less if anything at all.

Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net. Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.

http://www.progressiveradionetwork.com/the-progressive-news-hour/.

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