November 08, 2012
Tim Kauffman
[email protected]

AFGE Vows to Fight Cuts to Entitlement Programs, Federal Services

WASHINGTON – The American Federation of Government Employees strongly opposes any legislative action that reduces Social Security or Medicare benefits, reduces federal jobs or lowers the living standards of the middle-class men and women who comprise the federal workforce.

As corporate and Wall Street interests line up in groups such as the Campaign to Fix the Debt and Speaker of the House John Boehner talks about finding “common ground,” it is crucial to understand that the “Grand Bargain” these people have in mind is a very bad bargain for federal employees, AFGE National President J. David Cox Sr. said.

The corporate CEOs, Wall Street billionaires, and their House Republican supporters have the same goal they have been pursuing for years: Cutting Social Security benefits, voucherizing Medicare, and waging war on federal employees and the services they provide to the American public.

While House Republicans and the corporate Campaign to Fix the Debt claim they are softening their previous stance of opposing all revenue increases, it is clear that they are merely repackaging the Romney tax plan in ways that shift taxes away from the wealthiest 2% and on to the middle class, Cox said.

“The American people rejected this tax plan on Election Day,” Cox said. “They said ‘No’ to eliminating the mortgage interest deduction and having to pay income taxes on the value of employer-sponsored health insurance. They said ‘Yes’ to tax fairness, including plans to restore Clinton-era tax rates to high earners, unearned income and corporate profits.”

The pretense of post-election conciliation is nothing more than an attempt to revive the widely repudiated recommendations of Morgan Stanley Director Erskine Bowles and former Republican Sen. Alan Simpson, along with many of the worst elements of Rep. Paul Ryan’s infamous budget. Their so-called “Grand Bargain” would be an unmitigated disaster for all middle-class and working class Americans, including the men and women who make up the federal workforce. Their plan:

  • Cuts Social Security benefits by raising the retirement age, changing the benefit formula, and reducing cost of living adjustments (COLAs) by using an inferior measure of inflation.

  • Voucherizes Medicare, adjusting it by the Consumer Price Index (CPI) rather than the rise in health care costs. This saves the government money solely by shifting health care costs to seniors who, inevitably, will not be able to afford the care they need.

  • Adds three years to the two-year federal employee pay freeze, for a total of five years with no raise. In the meantime, the price of everything else goes up: health care premiums, rent, child care, gas and electricity.

  • Voucherizes the Federal Employees Health Benefits Program (FEHBP), adjusting it by the CPI rather than the rate of premium increases, so that they pay far more for already unaffordable health care.

  • Cuts 10% of jobs in every federal agency. Such reductions would force VA nursing assistants to take care of 30% more veterans with 30% less support and would throw 200,000 more Americans out of work.

  • Slashes retirement benefits by charging workers more and reducing the amount they receive. Benefits would be cut by between a third and a half, leading to old age poverty for people who worked and faithfully contributed to a fully-funded system for 30 years.

  • Imposes massive and arbitrary job cuts at the Department of Defense, but leaves the much larger and costlier private contractor workforce untouched.

Lost in all the hype about the “fiscal cliff” is the reality that the larger than usual deficits were caused only by the collapse of the housing bubble, not because of excessive spending on federal employees or Social Security. And net interest on the debt, which is the only relevant “cost” of the national debt, is just over 1% of GDP and about 6% of federal outlays, a level that prevailed in the 1950s, 1960s, and 1970s without causing any economic harm. In the long term, Medicare and all health care costs must be contained. But shifting costs onto workers and retirees is not cost containment; it is just economic cruelty.

It’s time to generate savings from the hundreds of billions of dollars spent annually on service contracts. In the Department of Defense alone, service contracting has more than doubled in the past 10 years, while civilian personnel costs have held steady. Moreover, in many instances, work performed by contractors can be insourced for significant savings. The Army generated savings of between 16% and 30% from insourcing, reducing its reliance on service contractors by billions of dollars in a matter of months – all by substituting reliable and efficient government employees for service contractors. The Project on Government Oversight estimates that, on average, service contractors cost twice as much as federal employees.

Additional savings can be had from slashing inflated taxpayer-subsidized compensation to service contractors. As reported recently by OMB Watch and other public interest groups, estimates obtained from senior DoD personnel indicate that capping allowable reimbursement of compensation at $200,000 per contractor employee in all agencies would result in savings of at least $5 billion a year – almost 10 percent of the entire $55 billion reduction in 2013 required by the Budget Control Act.

There has never been any rationale whatsoever for cutting federal jobs, federal programs or the modest salaries and benefits received by federal employees. Bureau of Labor Statistics data show unambiguously that federal salaries lag those paid in state and local government and the private sector for jobs similar to those performed by federal employees. Federal pension programs are fully-funded, and federal employees already are required to pay far more for their benefit than private-sector workers with similar types of plans. The Federal Employees Health Benefits Program may cost too much, but only because the Office of Personnel Management refuses to drive a hard bargain with the private insurers who really run the program.

“No cuts to Social Security, Medicare or federal employee jobs or compensation are justified now or in the future, and no amount of deception, misrepresentation or hyperbole regarding the budget can change that fact,” Cox said.


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