Friday, December 6, 2013

AFGE Week in Review: Dec 6, 2013 - Budget Conferees Consider Tax Hike on Federal Employees

Dec. 6, 2013
  • Budget Conferees Consider Tax Hike on Federal Employees
  • Pro-Federal Employee Lawmakers Criticize Tax Hike on Feds
  • Proposed Sequester Fix: Count Fiscal Cliff Savings toward Sequestration
  • Bill Introduced to Cancel DoD Sequestration by Cutting Federal Employees' Benefits
  • New Report Debunks Myth That Raising Corporate Taxes Hurts Jobs
  • OMB Raises Contractor Compensation Cap, Again
  • AFGE Calls for Review of Safety Procedures at All Federal Agencies
  • AFGE Won CSOSA Election
Budget Conferees Consider Tax Hike on Federal Employees: Even though corporations' offshore tax abuse costs the U.S. Treasury $90 billion a year, House and Senate conferees are not looking at closing these corporate loopholes but instead considering requiring federal employees to contribute 1.2% more into their pensions as part of a broader budget deal. AFGE has learned that the 1.2% increase phased in over three years is indeed on the table as conferees scramble to meet the Dec. 13 deadline. Conferees are reportedly not trying to do a grand bargain; they are only trying to find enough money to lift sequestration for two years. Tax hikes on the wealthy and cuts to social safety net programs are reportedly off the table.

"That makes it all the more infuriating that even in a small deal such as this, federal employees' retirement contributions are still on the table," said AFGE Legislative Director Beth Moten.

As conferees could announce the deal as early as next week, AFGE has been urgently reaching out to lawmakers to demand that middle-class workers not be scapegoated for the financial mess created by Wall S

Pro-Federal Employee Lawmakers Criticize Tax Hike on Feds: A bi-partisan group of lawmakers this week spoke out against a proposed cut in take-home pay being considered by budget conferees led by House Budget Committee Chairman Paul Ryan and his Senate counterpart Patty Murray. Sen. Barbara Mikulski of Maryland, Rep. Chris Van Hollen of Maryland, Rep. Steny Hoyer of Maryland, and Rep. Frank Wolf of Virginia voiced their strong opposition to a proposed 1.2% increase in federal employees' contribution into their pensions.

"Hardworking federal employees have already had to weather a government shutdown and have made a substantial sacrifice over the last several years to help bring down the deficit," Van Hollen said. "This is no time to ask them to shoulder even more of the burden, especially when [some of us] refuse to close a single corporate tax loophole as part of that effort."

"The only working people that have paid a price so far in trying to bring down the deficit have been federal workers.... It is inappropriate to further look to the pockets of federal employees at this point in time," Hoyer said.

Proposed Sequester Fix: Count Fiscal Cliff Savings toward Sequestration: The fiscal cliff savings of $737 billion should be counted toward the $1.2 trillion sequester cuts. This will leave $463 billion of sequester cuts, which will be more manageable and help lessen the negative impact on the economy, said leading think-tank Center for American Progress (CAP). Congress passed the 2011 Budget Control Act to reduce the deficit by more than $2 trillion over 10 years. Half of the savings came from spending caps that froze discretionary spending for 10 years. The other half was supposed to come from a budget deal developed by the so-called super committee. But the super committee failed to reach an agreement, and so sequestration kicked in. A year later, Congress faced a fiscal cliff crisis and struck a deal by letting some of the Bush tax cuts expire. This yielded $737 billion in deficit reduction over 10 years. CAP argued that these fiscal cliff savings should be counted toward sequestration, which will reduce the amount of sequester cuts from $109 a year to $42 billion, or $21 billion for the Defense Department.

"All Congress needs to do is amend the Budget Control Act to include the debt reduction from the fiscal cliff deal in the sequestration calculation," CAP said in its new analysis, noting that the benefits of this new calculation are even greater on the non-defense discretionary budget such as education, scientific research, and infrastructure, which is hardest hit by the non-defense sequester.

Bill Introduced to Cancel DoD Sequestration by Cutting Federal Employees' Benefits: A bill has been introduced to cancel sequestration cuts at the Defense Department in 2014 and 2015 at the expense of federal employees, seniors, and retirees. The Provide for the Common Defense Act, introduced by Reps. Jim Bridenstine of Oklahoman and Doug Lamborn of Colorado, would, among other things:

  • require federal employees to pay 1.2% more into their pension funds over the course of three years;
  • eliminate the Federal Employee Retirement System Annuity Supplement for new employees;
  • cut Social Security benefits for seniors, federal employees, the disabled, and veterans by changing the way cost-of-living adjustments are calculated (chained CPI);
  • increase the Medicare Part B deductible for new enrollees by $100 over five years;
  • increase premiums for higher-income Medicare Parts B and D participants. 
Federal employees have been an easy target for House lawmakers for years. Besides the three-year pay freeze, new hires are now required to pay more into their pensions. Furloughs and the 16-day government shutdown have hurt employees and their families financially. Federal employees have been forced to give up well over $113 billion while the wealthy and corporations haven't been asked to pay their fair share. If chained CPI is adopted, not only federal but all retirees, veterans, and the disabled will see a large chunk of their benefits and pensions cut. Federal retirees' average pensions under the Federal Employees Retirement System (FERS) are just $13,000. The average Social Security recipient, who at age 65 receives just $15,000 per year, will suffer cuts of $650 a year by age 75 and $1,130 a year by the time she or he turns 85.

New Report Debunks Myth That Raising Corporate Taxes Hurts Jobs: A new report released this week by the Center for Effective Government debunks the myth that raising corporate tax rates to pay for critical government services will hurt economic growth. According to the report "The Corporate Tax Cut Debate: Lower Taxes on Corporate Profits Not Linked to Job Creation, the 30 corporations that paid the highest effective rates on their profits between 2008 and 2010 added 200,000 jobs to the U.S. economy during the past five years, while the 30 corporations with the lowest tax rates shed more than 50,000 jobs during the same period. On average, U.S. corporations pay just 12.6 percent of their profits in federal income taxes. Many companies avoid paying taxes on their profits by shifting the profits to foreign tax havens, where they are not taxed until brought home. Corporations have been waiting for their next tax holiday. This sort of offshore tax abuse by corporations costs the U.S. Treasury an estimated $90 billion a year. Instead of taxing the very corporations that are destroying good jobs, Congress has targeted federal employees for years of painful financial sacrifices.

"By stopping just one year of corporate tax haven abuse, the government could have prevented nearly all three years of the federal pay freeze," AFGE National President J. David Cox Sr. said. "Congress needs to close these tax loopholes that have allowed corporations to avoid paying hundreds of billions of dollars in taxes. America's workers are expected to pay their taxes in full and on time, and we should demand nothing less from the companies doing business in this country."

OMB Raises Contractor Compensation Cap, Again: AFGE National President J. David Cox Sr. this week expressed his outrage at the news that the cap on annual compensation paid to contractor employees using taxpayer dollars has been increased to an astounding $952,000. The new limit announced by the Office of Management and Budget reflects a one-year increase of nearly $190,000 and a four-year increase of 55%. The compensation cap has nearly quadrupled since the mid-1990s.

"Christmas has come early for federal contractor employees, yet the government's own employees are looking at stockings full of coal," Cox said.

OMB announced the new compensation cap on the same day President Obama delivered a speech decrying income inequality. Yet true inequality is taking place in federal agencies and offices across the country, where federal employees who have had their pay frozen for three years work beside contractors who are reaping excessive pay increases at the taxpayer's expense.

AFGE Calls for Review of Safety Procedures at All Federal Agencies: AFGE is calling on federal agencies to review their operational procedures to ensure the safety and security of all federal employees following recent deaths of a postal worker, a TSA officer, and two correctional officers.

"Federal employees are on the front lines in delivering services to the American people, and oftentimes that puts them in harm's way," said AFGE National President J. David Cox Sr. "The recent shooting death of U.S. Postal Service letter carrier Tyson Barnette is another tragic reminder that federal employees are literally putting their lives on the line each and every day they go to work."

AFGE Won CSOSA Election: AFGE Dec. 5 won an election to represent more employees at the Court Services and Offender Supervision Agency in Washington, D.C. The 55 to 1 vote added the 80 employees working at five different units to AFGE Local 727, which has already represented other workers at the agency.

This Week in Labor History: Dec. 5, 1955 - Ending a 20-year split, the two largest labor federations in the U.S. merge to form the AFL-CIO, with a membership estimated at 15 million.

This Week's Tweet: Nearly 50 Russian diplomats have been charged with scamming the Medicaid system: ~@slate

Inside Government: Tune in now to AFGE's "Inside Government" as the union's members share their stories working on the front lines in the Department of Veterans Affairs. The show, which originally aired on Friday, Dec. 6, is now available on demand.
  • AFGE VA Local 903 Chief Steward Donald White, who works at the Harry S. Truman Memorial Veterans Hospital in Columbia, Mo., discussed the fight for equality for all employees and the union's response to mandatory overtime in the VA.
  • Geddes Scott, executive vice president of AFGE VA Local 1988, then addressed the personal connection VA caregivers feel toward their patients and efforts to organize and mobilize members at the local level.
  • Lastly, Vietnam Veterans of America Policy and Government Affairs Executive Director Rick Weidman detailed mental health concerns for veterans returning home from combat and legislation designed to assist veterans in need.
Listen LIVE on Fridays at 10 a.m. ET on 1500 AM WFED in the D.C. area or online at For more information, please visit

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American Federation of Government Employees, AFL-CIO 80 F Street, N.W., Washington, D.C. 20001 | Tel. (202) 737-8700 | Fax (202)

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