Budget Focus Shifts to Pay, Retirement Proposalsv for Federal Workers

Published: March 27, 2018
More in: Fedweek

With Congress finally having set agency budgets for the current fiscal year — after bringing the government to the brink of a shutdown numerous times and over that brink twice — its focus now shifts to the budget for the fiscal year starting in October, and the administration’s proposals regarding federal pay and benefits.
The wrap-up budget measure reflected increases in funding from a February agreement and results in notable boosts in funding—some of which could translate into higher employment levels—at agencies including the IRS, Census Bureau, EEOC and Customs and Border Protection.
Also included was language that could slow or even block reorganization plans at numerous agencies by requiring additional review first and/or by limiting the funds available to carry them out.
It also rejected a proposal to close nearly two dozen small agencies or subcomponents of larger agencies.
It meanwhile continues several long-standing policy provisions including: a ban on starting new “Circular A-76” contracting out studies; requirements that FEHB plans generally must cover prescription contraceptives but that they generally must not cover abortions; and a ban on “lifestyle” and other training that is not related to an employee’s official duties.
The measure does not approve the administration’s proposal to boost the maximum buyout payment government-wide from the standard $25,000 to the $40,000 allowed at the Defense Department.
That will be among the issues to be decided in the new budget cycle, along with repeats of prior White House proposals to require FERS employees to pay more toward retirement; repeal the “special retirement supplement” for future FERS retirees; base annuities of future retirees under both FERS and CSRS on a high-five salary figure rather than high-three; reduce inflation protection of all future retirement payments; and more.
The new budget cycle also will be the opportunity for Congress to take a position on federal pay. In recent years it has avoided the issue, allowing the White House’s recommended raises of around 1-2 percent to take effect by default. For 2019, the White House has recommended no raise, potentially forcing Congress to formally take a position for the first time in years. Some Democrats have proposed 3 percent and unlike in prior years there is no risk in forcing a vote that might result in a raise lower than the default figure.
Also on the plate for Congress are administration proposals for lengthening by one year each the waiting periods for GS within-grade raises; creating a $1 billion central fund to reward top performers and to recruit and retain for high-demand jobs; combining annual and sick leave into one form of leave called paid time off; and varying the government’s contributions toward FEHB according to a plan’s quality ratings.

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Lawmakers release $1.3 trillion budget bill

9:49 p.m. ET

Win McNamee
On Wednesday, congressional negotiators finalized a $1.3 trillion budget bill that must be passed by both the House and Senate by midnight Friday in order to avoid a government shutdown.
The 2,232-page bill was released in the evening, and House Speaker Paul Ryan (R-Wis.) said that “no bill of this size is perfect. But this legislation addresses important priorities and makes us stronger at home and abroad.” The bill increases military and domestic spending but does not give President Trump all of the money he wants to build a southern border wall or address the protection of Deferred Action for Childhood Arrivals (DACA) recipients. It also allows for the U.S. Centers for Disease Control and Prevention to conduct research on gun violence, but not advocacy. Catherine Garcia

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President Trump’s Budget Would Add $7.2 Trillion in Federal Deficits Over 10 Years


By Andrew Taylor / AP February 12, 2018
(WASHINGTON) — President Donald Trump unveiled a $4.4 trillion budget for next year that heralds an era of $1 trillion-plus federal deficits and — unlike the plan he released last year — never comes close to promising a balanced ledger even after 10 years.
The growing deficits reflect, in part, the impact of last year’s tax overhaul, which is projected to cause federal tax revenue to plummet. And Monday’s budget submission does not yet reflect last week’s two-year bipartisan $300 billion pact that wholly rejects Trump’s plans to slash domestic agencies.
Tax revenue would plummet by $3.7 trillion over the 2018-27 decade, the budget projects.
The spending spree, along with last year’s tax cuts, has the deficit moving sharply higher with Republicans in control of Washington. Trump’s plan sees a 2019 deficit of $984 billion, though $1.2 trillion is more plausible after last week’s budget pact and $90 billion worth of disaster aid is tacked on. That’s more than double the 2019 deficit the administration promised last year.

All told, the new budget sees accumulating deficits of $7.2 trillion over the coming decade; Trump’s plan last year projected a 10-year shortfall of $3.2 trillion.
The 2019 budget was originally designed to double down on last year’s proposals to slash foreign aid, the Environmental Protection Agency, home heating assistance and other nondefense programs funded by Congress each year.
“A lot of presidents’ budgets are ignored. But I would expect this one to be completely irrelevant and totally ignored,” said Jason Furman, a top economic adviser to President Barack Obama. “In fact, Congress passed a law last week that basically undid the budget before it was even submitted.”
In a preview of Monday’s release, the White House on Sunday focused on Trump’s $1.5 trillion plan for the nation’s crumbling infrastructure. He also is asking for a $13 billion increase over two years for opioid prevention, treatment and long-term recovery. A request for $23 billion for border security, including $18 billion for a wall along the U.S.-Mexico border and money for more detention beds for detained immigrants, is part of the budget, too.

Trump would again spare Social Security retirement benefits and Medicare as he promised during the 2016 campaign. And while his plan would reprise last year’s attempt to scuttle the “Obamacare” health law and sharply cut back the Medicaid program for the elderly, poor and disabled, Trump’s allies on Capitol Hill have signaled there’s no interest in tackling hot-button health issues during an election year.
The budget also endorses a plan by Sens. Lindsey Graham, R-S.C., and Bill Cassidy, R-La., to replace the Obama-era health law with $1.6 trillion in subsidies to states over the coming decade.
The plan also reprises proposals from last year’s Trump budget to curb crop insurance costs, cut student loan subsidies, reduce pension benefits for federal workers and cut food stamps, among other proposals.

Mick Mulvaney, the former tea party congressman who runs the White House budget office, said Sunday that Trump’s new budget, if implemented, would tame the deficit over time.
“The budget does bend the trajectory down, it does move us back towards balance. It does get us away from trillion-dollar deficits,” Mulvaney said on “Fox News Sunday.”
“Just because this deal was signed does not mean the future is written in stone. We do have a chance still to change the trajectory. And that is what the budget will show tomorrow,” he said.
Last year, Trump’s budget projected a slight surplus after a decade, but critics said it relied on an enormous accounting gimmick — double counting a 10-year, $2 trillion surge in revenues from the economic benefits of “tax reform.” Now that tax reform has passed, the math trick can’t be used, and the Trump plan doesn’t come close to balancing.

Trump plan also promises 3 percent growth, continuing low inflation, and low interest yields on U.S. Treasury bills despite a flood of new borrowing, underestimates the mounting cost of financing the government’s $20 trillion-plus debt. Many economists are likely to find the prospects for such a rosy scenario implausible.
The White House is putting focus this year on Trump’s long-overdue plan to boost spending on the nation’s crumbling infrastructure. The plan would put up $200 billion in federal money over the next 10 years to leverage $1.5 trillion in infrastructure spending, relying on state and local governments and the private sector to contribute the bulk of the funding.
Critics contend the infrastructure plan will fail to reach its goals without more federal support. Proposals to streamline the permitting process as a way to reduce the cost of projects have already generated opposition from environmental groups.

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White House budget chief: ‘No way’ that US defaults on debt

By Julia Manchester – 06/02/17 09:12 PM EDT 64

© Greg Nash
White House budget chief Mick Mulvaney insisted Friday that the U.S. would not default on its debt as Congress gears up this summer to debate raising the debt ceiling.

“If the debt ceiling is not raised, you have some difficulties. There’s no question,” Mulvaney said in an interview with The New York Times.

“There is absolutely no way that the U.S. will ever default on its debt. We are not going to do that,” he added.

Mulvaney’s comments come as the White House and Congress prepare for a fight over passing a debt ceiling bill. The Trump administration has pushed for the debt ceiling to be raised before lawmakers leave town for the August recess.

Treasury Secretary Steve Mnuchin told lawmakers last week he preferred a “clean” spending limit increase, meaning nothing would be attached to the bill. But Mulvaney said he would like to see the increase combined with other reforms or spending cuts.

President Trump’s National Economic Council Director Gary Cohn on Friday also said that spending reforms could be needed to pass a debt ceiling bill through Congress.

“Every Treasury secretary would love to have a clean debt ceiling, I understand that. I think in a perfect world you’d love to have a clean debt ceiling. But if we need to get things attached to get it through, we’ll attach things,” he said on CNBC.

House Republicans could pass a debt ceiling resolution without Democrats, if the conservative House Freedom Caucus is on board. However Senate Republicans will likely need votes from Democrats, who have argued for a clean bill.

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