Fed Employees Will Not See Retirement Cuts

March 24, 2003 (PLANSPONSOR.com) - Federal government employee and retiree benefits will not be cut in 2004, thanks to an alternate budget proposal from two Virginia Republicans.

Representatives Thomas Davis III and Jo Ann Davis reached an agreement with Representative Jim Nussle (R-Iowa) over how best to reduce federal retirement and health care costs in the fiscal 2004 budget. Under the terms of the deal, improvements are to be made to the federal procurement system and agency reorganization legislation, according to a Washington Post report.

The legislative rewording could lead to billions of dollars in savings for the government and taxpayers, instead of the House Budget Committee sponsored cuts to the federal retirement and health care programs.

Previously, the Nussle-chaired Budget Committee had proposed $1.1 billion in cuts next year from programs under the jurisdiction of the House Government Reform Committee, which Tom Davis chairs. Nussle’s plan would save the federal government roughly $40 billion over the next 10 years, through cutbacks in federal retirement and health care programs, the two big budget accounts overseen by Tom Davis’s committee.

Primarily, the savings were slated to come from entitlement, or mandatory spending, programs. But the new agreement would allow the Government Reform Committee to write legislation that “achieves significant savings in discretionary programs,” which are financed on a year-to-year basis.

Tom Davis and Jo Ann Davis, who chairs the House civil service and agency organization subcommittee, said in a joint statement that the $2.2 trillion House budget plan, approved by 215 to 212, would fully protect federal retirement benefits. “Achieving savings through procurement reform and agency reorganization makes a lot more sense than making drastic cuts in benefits to federal employees,” Tom Davis said. Davis further thanked Nussle “for agreeing to this compromise, which recognizes the need for fiscal restraint while simultaneously respecting what’s fair for federal employees and retirees.”

Both of the Davises had a vested interest in reaching another solution. Tom Davis’s constituency includes approximately 54,000 federal employees, and Jo Ann Davis represents about 36,000 civil service employees and retirees.