This time last year, some federal workers were concerned about an all-but- nonexistent proposal that would have reduced their retirement benefits slightly: The long-feared (never approved) formula change that would base annuities on the employees highest five years (rather than the current high-three) years of service.
Workers — both long-time employees and newcomers — were worried about major changes in pay and benefits that were being worked up by congressional groups, a blue-ribbon panel endorsed by the White House, a bipartisan congressional group headed by Vice President Joe Biden and a budget plan from Rep. Paul Ryan (R-Wis.) who was later the GOP VP candidate.
What happened, in short, is nothing. None of the proposed or recommended changes happened. The high-three to high-five switch never came up, although it was the one change most feds seemed to fear.
What did happen was bad enough. The White House did impose a two-year (2011-2012) pay freeze. That has been extended at least through March 31 of next year.
But the big threats — slightly smaller pension payments, higher health care costs, changes in retirees’ cost-of-living calculation — never saw the light of day. Nothing happened.
Now, feds who are worried are focused on a new set of threats: Sequestration, the fiscal cliff, gridlock in Congress that could — worst- case scenario — cost some people their jobs and mean furloughs for others. There is even the possibility that the pay freeze will be extended another year or two. If that happens, some retirement-eligible feds say they will pull the plug. Get out and enjoy themselves. Or get another job — if the economy improves to the point where they can find one.
The automatic 8 percent to 10 percent cuts (with some exemptions for Defense and the VA) could begin in January. The Congressional Budget Office’s if-it-happens assessment is grim
But Congress and the White House could “fix” the problem. Both sides have said they are willing to compromise and reach a bipartisan agreement even as they take pot shots at each other. Or history could repeat itself.
Something similar happened in the 1980s. Automatic cuts were triggered. It was, according to some, the end of civilization as we know it. Red flags went up all over the place. Unions warned their members. Contractor groups braced for the worst. The trade media (including yours truly) went on high alert. It was horrible and wonderful at the same time. Except…
Congress and the White House (finally) showed some sense. After doing nothing, except causing the problem, they stepped in and did something. They decided that the Defense Department (remember the Cold War?) was too important to take the hits. Then the VA, followed by the IRS. And on it went until, within a short time, there were few places left that weren’t deemed essential in some form. The fall from that fiscal cliff, at least then, wasn’t very far.
So what’s going to happen this time? If you’ve been around awhile, your guess is as good as, or better, than most. Sound off!
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