Your share of the $143.5B benefits cuts

Just about everything Washington does involves billions of dollars here and trillions of dollars there. For many of us, these are mind-blowing numbers too big to seem real, and too complicated to check.

For example, the White House is proposing a “reform” of the federal civilian retirement system. Workers would pay more for benefits but get less in retirement because they would lose all inflation protection. The savings to taxpayers, reformers said, would be $143.5 billion over the next 10 years.

Put another way, that’s how much money would disappear from workers take-home pay and the future benefits — in the form of inflation protection — that retirees would not get.

So just how much is $143.5 billion? Here’s one example which may help you come to grips with all those dollar signs.

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John Grobe is an expert in federal benefits. His firm, Federal Career Experts, provides retirement training for government agencies. He framed the value of the proposed $143.5 billion in cost-savings this way:

“What if you heard that all of the money in three of the TSP’s funds was going to be taken from the funds by the government over the next 10 years and would not be replaced?” he wrote. “You would be shocked and outraged that your employer, the U.S. government, was going to so brazenly pick your pocket.”

So what’s the connection?

As of Dec. 31, Grobe said, the F fund (bonds) was worth $28.3 billion, the balance of the I fund (international stocks) was $47.2 billion and the balance of the S fund (small cap stocks) was $67.6 billion. “So what?” you ask. The what is that the total value of those three funds at the end of last year was $143.1 billion. Do you see the connection?

The value of those three funds on Dec. 31 mirrors the savings to government and loss to you from the proposed retirement reforms.

The good news is there is no link between the TSP and the proposed changes in the Federal Employees Retirement System which Congress may or may not OK. But Grobe’s idea of comparing them makes it a little easier for math-challenged types like me to comprehend.

His article, “The Cost of the Proposed Benefits Cuts,” appeared May 14 in FedSmith and is a must read for folks following the federal civil service scene.

Nearly Useless Factoid

By Amelia Brust

The Earth’s hydrological cycle is considered a closed system because water is neither created nor destroyed on a large scale. That means the water which was on Earth 100,000 years ago is the same water that exists today.