Federal Times Blogs
One way or another, it looks like a major congressional battle is headed our way over the U.S. Postal Service’s long-sought goal of ending most six-day mail delivery. One possible flash point is the postal overhaul bill (H.R. 2309) sponsored by Reps. Darrell Issa, R-Calif., and Dennis Ross, R-Fla., which would allow postal officials to begin moving to five-day delivery within six months of the legislation’s being signed into law.
The House’s Republican leadership had hoped to bring the Issa measure to the floor this month; earlier this week, the National Association of Letter Carriers said its “most urgent goal is to prevent this devastating bill from ever becoming law” and announced that it was setting up a toll-free number for members to contact individual lawmakers in opposition.
With mail volume in steady decline, curtailing six-day delivery is at the top of the Postal Service’s cost-cutting agenda. The projected savings are close to $3 billion per year. But the NALC, whose members obviously have a lot to lose, says that step would “destroy” 200,000 jobs. In today’s fractured Congress, this is one of those rare issues that can bring lawmakers together across party lines, raising questions about whether the Issa/Ross bill can pass. A slim bipartisan majority of 222 House members have signed on to a non-binding resolution sponsored by Rep. Sam Graves, R-Mo., urging the Postal Service to stick with the status quo.
And late Wednesday, a Ross spokesman confirmed an online report by The Hill newspaper that chances of action on the bill this month are now slim. “It appears, although we have the votes, leadership does not intend for postal reform to come to the floor before [the] August recess,” the spokesman, Fred Piccolo, told FedLine in an email.
But there’s another front in this fight. Even though the Postal Service receives no tax dollars for operating expenses, it still has to abide by the wishes of congressional appropriators. And both the House and Senate versions of the fiscal 2013 financial services and general government spending bills would require continuation of six-day delivery.
Six-day delivery “is one of the most important services provided by the federal government to its citizens,” the Senate Appropriations Committee wrote in an explanatory report accompanying its version of the bill. “Especially in rural and small-town America, this critical postal service is the linchpin that serves to bind the nation together.”
The Senate bill would also put new restrictions on the Postal Service’s freedom to close mail processing plants, raising alarms from the Coalition for a 21st Century Postal Service, a mailers’ group. Although individual members have different views on the potential benefits of cutting mail service, “we are united in our conviction that the Postal Service must reduce its operational capacity,” the coalition said in a letter to top members of the appropriations committees this week. “Bringing in additional issues can only generate additional uncertainty and potential delay in the passage of reform legislation that is so critical to returning the Postal Service to financial stability.”
[This story has been updated]
Key congressional negotiators have just signed off on a conference report to extend the payroll tax cut and unemployment insurance, and there’s an unexpected surprise in there. New members of Congress would no longer get a cushy pension, and would instead get the same annuity as rank-and-file federal employees, according to Ali Ahmad, who is a spokesman for Rep. Darrell Issa, R-Calif.
Feds under the Federal Employees Retirement System have their pension calculated at either 1 percent or 1.1 percent, depending on their age. But lawmakers under FERS have their pension calculated at 1.7 percent. That, when combined with their much higher salaries, means lawmakers’ pensions are often more than twice those enjoyed by everyday feds.
Rep. Dennis Ross, R-Fla., who is one of Issa’s deputies, has been pushing to eliminate Congress’ pension perk for some time now. If it passes, this would amount to a big win for him.
The deal also would make new federal employees pay 3.1 percent toward their pensions, instead of the current 0.8 percent. And that element isn’t just upsetting federal unions. Rep. Steny Hoyer, D-Md., called the deal “unacceptable” and said he will vote against it. “We must stop targeting these hardworking men and women while not asking others to contribute their fair share,” Hoyer said.
UPDATE: Ross is from Florida, not California.
A bill that would increase the amount federal employees pay toward their pensions and steeply cut the pensions of future federal employees is continuing to work its way through the House. The House Rules Committee is scheduled to consider HR 3813, the Securing Annuities for Federal Employees Act, at a 5 p.m. meeting today, where it could be amended.
The committee’s approval is the final step before it heads to the House floor. Fred Piccolo, the chief of staff for bill sponsor Rep. Dennis Ross, R-Fla., said it’s unclear when debate on the bill will begin, but said it could happen sometime this week.
But that’s where things get dicey. Last week House Republican leaders rolled the SAFE Act into HR 7, a massive surface transportation bill, to cover that bill’s costs. But House Democrats are united against the bill, and the GOP is facing revolts from conservatives and moderates alike.
Ross is not at all happy his pension bill was attached to the transportation bill, which he plans to vote against. Piccolo said Ross feels any cuts to federal retirement should go to deficit reduction and that it’s wrong to use those cuts to pay for other spending priorities. (That may be the one thing Ross and federal unions agree on.)
So House Republican leaders this morning broke the transportation bill back up into its component pieces, which they hope to pass separately and then later recombine. But that still doesn’t resolve rebellious Republican’s problems with the transportation bill, and HR 7 remains in serious trouble.
However, the SAFE Act may have a better chance of getting passed now that it isn’t lashed to that sinking ship of a transportation bill. Stay tuned.
The House Oversight and Government Reform Committee is scheduled to vote tomorrow on a bill that would cut future federal employees’ pensions, and increase the amount current and future feds put toward their retirement.
HR 3813, the Securing Annuities for Federal Employees Act, would raise contributions for current Federal Employees Retirement System and Civil Service Retirement System employees by 0.5 percentage points per year for three years, beginning in 2013. This would make FERS employees contribute 2.3 percent of each paycheck toward their pensions, and require an 8.5 percent contribution from CSRS employees. It would also eliminate the FERS supplemental payment that federal retirees who are not yet eligible for Social Security receive, except for employees facing mandatory retirement, such as air traffic controllers.
The bill would also crease a category of “secure annuity employees” — new employees hired beginning in 2013 with less than five years of previous federal service — who would receive much reduced pensions and contribute much more. By our calculations, it would cut future “secure annuity” feds’ pensions by anywhere from 30 percent to 40 percent, and require them to contribute five times as much toward their pension plans.
Rep. Dennis Ross, R-Fla., the bill’s sponsor, said federal pensions are expensive and unsustainable, and are rapidly disappearing from the private sector.
You can read more about the bill here, and more about Ross’ further plans for federal retirements here. Needless to say, federal employee unions and retiree groups are up in arms against this bill. The National Treasury Employees Union, for example, is holding a teleconference this afternoon to denounce Ross’ bill. Stay tuned.
Rep. Dennis Ross, R-Fla., has scheduled a hearing for next Wednesday on federal pensions, and feds aren’t going to like what he’s got in store. Ross, the chairman of the House Oversight and Government Reform subcommittee on the federal workforce, is going to look at how to move “the entire federal workforce, Congress included, to a more realistic and cost-effective defined contribution pension system as opposed to the bankrupting defined benefit plan.”
What would that mean? No more FERS pensions, for one, though it remains to be seen whether it would scratch pensions only for future employees or include some current employees.
Rep. Darrell Issa, R-Calif., who is chairman of the full oversight committee, proposed just such a plan last October. Issa’s office last year said his proposed 401(k)-like defined contribution plan would operate alongside the similar Thrift Savings Plan, which is also a defined contribution plan. So, under Issa’s plan, you’d essentially have two 401(k)s.
In a statement set to formally go out on Monday, Ross said:
The American people are also, rightfully, outraged by the pension benefits guaranteed to a bloated federal workforce, paid for through an ever-increasing tax burden on the American worker. Too many hard-working Americans watched their pensions evaporate because of unsustainable promises. [...] As Congress looks for ways to cut costs, pension reform that ensures a positive return to the worker while delivering cost savings to the taxpayer should be job one.
It’s worth noting that while federal pensions are deeply underfunded by some $673 billion, that is entirely due to the poor design of the now-closed Civil Service Retirement System, and the far less-generous Federal Employees Retirement System was designed to always stay fully funded (although most of the funding for the FERS pension comes from the government).
But Ross also wants to bring Congress’ lavish retirement benefits back in line with those enjoyed by rank-and-file feds. (If you wanna get mad, take a look at this chart.) Ross and I had an exchange via Twitter this afternoon in which he said “time to make Congressional pensions like everyone else’s” and added the hashtag “#nomoreperks.” When I asked if that meant he thought a FERS lawmaker, for example, should get his pension calculated at 1.1 percent instead of the current 1.7 percent, Ross replied, “absolutely.”
That’s the first time I know of that Ross has called for equalizing federal and congressional pensions. And it looks like he will fulfill a promise he made to ABC News last November, to consider the multiple bills that would whittle down congressional pensions. But feds’ pensions may get caught in the crossfire.
So, how big a deal is the U.S. Postal Service’s freeze on closings of post offices and mail processing plants?
Less than you might think, perhaps.
No doubt, today’s abruptly announced moratorium was made under mounting political pressure from Capitol Hill Democrats. “Cave-in” was how Reps. Darrell Issa, R-Calif., and Dennis Ross, R-Fla., described it in a news release.
But the long-term consequences for the Postal Service’s downsizing plans won’t necessarily be that pronounced. Last week, for example, a USPS spokeswoman told Federal Times that processing plant closings would start in April at the earliest. The five-month freeze would push that timeframe back only until May. As American Postal Workers Union President Cliff Guffey stressed on the union’s web site, the freeze “is a temporary reprieve.”
And by getting in the way of the Postal Service’s cost-cutting agenda, members of Congress have put themselves on the line with an implied promise to come up with a better alternative. Or, to quote from a letter signed by 20 senators last week: “We believe it is very important to give Congress the opportunity to reform the Postal Service in a way that protects universal service while ensuring its financial viability for decades to come.”
But to state the obvious (a favorite pastime here in the nation’s capital), lawmakers have already had that opportunity and thus far failed to deliver. Don’t be too hard on them: Fixing an organization that’s losing almost $100 million per week would tax the savviest turnaround artist.
For the APWU and other postal unions, the answer is to let the Postal Service tap into as much as $75 billion in purported pension fund overpayments. Even when you discount the fact that the Government Accountability Office recently dismissed the idea that any erroneous overpayments occurred, a refund is not in the cards as long as Republicans control the House, which they will for at least another year. Short of some miraculously lucrative new business lines or Americans’ mass rediscovery of the continuing relevance of snail mail, it’s hard to imagine postal revenues rebounding any time soon.
Lawmakers may have thus put themselves in a box. If they can’t find out a way by May, they could have to concede that the Postal Service’s route—however distasteful for thousands of communities and USPS employees—is basically the only one they have.
It’s looking increasingly likely that a deficit reduction deal is going to hit future feds particularly hard, as we reported last week. Rep. Dennis Ross, R-Fla., today confirmed that not only are lawmakers seriously considering raising the amount federal employees contribute toward their pensions, but the increase would be a lot higher for new employees than for current employees.
Ross told me that he’s not personally involved in the negotiations and couldn’t say how big the increases might be. (Unions have been told that current employees’ contributions — to both the Federal Employees Retirement System and the Civil Service Retirement System — would go up by either 0.4 or 0.5 percentage points per year for three years once the pay freeze ends, and that future employees’ FERS contributions would be either 5.5 percent or 6 percent. FERS contributions are now 0.8 percent.)
“For those existing employees, it will not be as significant as what it will be for new employees,” Ross said. “There’s no question that that’s going to be considered. To what extent, I don’t know.”
Ross said the deficit reduction deal may also require federal employees to pay more toward their health insurance.
But just how deep will the cuts to federal employees’ pay and benefits go? “I think that’s probably some of the fine print that’s going to be decided after an overall deal is made, as to the amount of [spending] cuts,” Ross said. “We’ll probably know more, maybe before the weekend.”
Although negotiations now appear in disarray, Ross is confident that lawmakers and the White House will find some way to cut the deficit and raise the debt ceiling. “There’ll be a deal struck,” Ross said. “It’s just a matter of when.”
If Congress can’t raise the debt ceiling, says Rep. Dennis Ross, R-Fla., it’s all good. We’ll just shut down the Education, Labor, and Commerce departments. Maybe a few others, too, and turn their duties over to the states. Here’s the chairman of the House federal workforce subcommittee in a July 9 op-ed:
The federal government takes in about $175 billion per month in tax revenues. … We spend about $30 billion per month on debt interest. Without raising the debt ceiling, we can still service our debt. That leaves the government $145 billion per month, without borrowing. Tax revenue currently covers 67 percent of federal expenses. Social Security, Medicare, Medicaid, debt interest and social safety net programs consume 60 percent of our budget — i.e. they are fully covered with existing revenue.
Granted, the departments of Education, Labor, Commerce and other bureaucracies that have enjoyed double-digit budget increases the past 10 years will have to shut down. But this is where our differences truly materialize. I believe that states such as Florida can educate our kids, ensure a safe workplace, promote our products and are closest to the people. [emphasis added]
Ross also calls for implementing many of the Simpson-Bowles deficit reduction proposals, including switching the Federal Employees Health Benefits Program to a premium support system as a pilot test for doing the same to Medicare:
The bipartisan commission suggests capping discretionary spending to pre-2008 levels, cuts to both nondefense and defense discretionary spending (yes, the Department of Defense is overflowing in wasteful spending), cutting the federal workforce by 10 percent or more, and eliminating all congressional earmarks. Regardless of whether a Democrat or Republican uttered these suggestions, these are good ideas.
Ross opens his column by comparing Republicans and Democrats’ relationship to the uneasy partnership between Clint Eastwood and Eli Wallach in The Good, the Bad and the Ugly: “Even if they don’t trust each other, [they] need to work together to solve our looming debt-and-entitlement budget crisis. (Of course, in that movie Blondie and Tuco spent nearly three hours trying to kill each other while hunting buried Confederate gold, so that may not bode well for deficit negotiations.)
But Ross’ analogy raises another question. If Republicans and Democrats are the Good and the Ugly … who would that make the Bad?
Roll Call this morning published a column from Rep. Dennis Ross, R-Fla., who is pushing for significant reductions to the federal workforce — and calling out federal employee unions:
While White House officials have paid lip service to the commission recommendations [to cut the federal workforce by 10 percent], they remain beholden to public employee unions, vehemently opposed to modernization and rightsizing of the workforce, whose members and unions finance and mobilize on behalf of the president and Congressional Democrats.
[...] The fact is the federal payroll, and the legacy costs, must be rightsized. Public sector union leadership can recognize this and assist us, or they can continue their knee-jerk opposition to the modern workforce. We hope they choose the latter.
What do you think? Is Ross right, and are unions standing in the way of much-needed changes to the federal workplace? Or do you think unions aren’t the problem, and Ross is simply playing politics by taking a swipe at them? Sound off below.
The FAA’s recent scandals involving multiple air traffic controllers sleeping on the job could “give some momentum” to the effort to overhaul federal civil service rules and make it easier to punish poor performers, according to Rep. John Duncan, R-Tenn.
The Knoxville News Sentinel yesterday quoted Duncan as saying that the repeated gaffes underscore that federal personnel policies make it tough for managers to fire poor performers, and must be changed. “There are too many protections for most federal workers,” Duncan reportedly said. “It’s too hard to get rid of lazy, incompetent people.”
Rep. Dennis Ross., R-Fla., is chairman of the House subcommittee that oversees the federal workforce and has made it a priority to strengthen managers’ ability to discipline poor performers.
The News Sentinel also quotes AFGE National President John Gage as saying it’s a myth that federal employees can’t be disciplined or fired. 11,668 federal employees were fired in fiscal 2010 — mostly for misconduct, but some for poor performance.
But at a time when federal employees’ salaries, benefits and in some cases, their jobs are under attack, it doesn’t bode well that slacking air traffic controllers are currently the public face of feds. Conan O’Brien even joked this week about the controller caught watching a DVD on duty: “When asked why he was watching a movie, the air traffic controller said, ‘I just couldn’t sleep.’”