Congress Reaches Funding Agreement to Avoid Shutdown; Pay Freeze and Retirement Cuts Still in Limbo as Politicians Debate Payroll Tax Cut Extension

(National Federation of Federal Employees)

Federal workers can breathe a sigh of relief because Congress was able to reach a tentative agreement to fund the government. The outlines of the agreement are still murky, but sources suggest that the measure will fund three-quarters of federal agencies through September of next year.

“We are pleased to hear that the government will not be heading for a shutdown, but this political brinksmanship needs to stop,” said NFFE National President William R. Dougan. “It is wrong for Congress to hold 2.1 million hardworking federal employees hostage every time they see a political advantage in budget debates.”

Though federal employees dodged a bullet when Congress prevented a shutdown, there is still the matter of extending the payroll tax cut, a measure that has become a political lightning rod in the federal workforce community in recent weeks. Republicans in Congress have twice attempted to pay for the measure through cuts to federal works pay, benefits, and jobs, while Democrats have supported raising taxes on those with incomes over $1 million per year. The first proposal, introduced by Sen. Dean Heller (R-NV) would have extended the current two-year pay freeze by an additional three years and slashed 200,000 federal jobs. This measure was soundly defeated, however, just days after it was introduced on the Senate floor.

The second proposal, which passed the House earlier this week, also attempts to extend the pay freeze (this time by one year), but takes an extra leap by targeting federal retirement. The bill would increase the amount of federal workers contribute to their pension by 300% over 3 years, and change the annuity formula for new hires with less than five years experience. Both changes would start in 2013.

“While Republicans debate over how much to gut the federal workforce, millions of middle class Americans are being denied an extension of needed tax relief,” said Dougan in a statement following the bill’s introduction. “It is hard to understand how anyone could make pay and benefit cuts part of any plan to stimulate the economy. Slashing the pay and benefits of one group of middle class workers to extend a tax cut to another group of middle class workers is the definition of insanity.”

Adding:

“It’s time for Congress to ask for more from those who can most afford it, and  protect essential services for our veterans, our seniors, and all other Americans who expect better from their government.”