Budget includes proposals that would harm middle-class Americans
WASHINGTON – President Obama’s fiscal 2014 budget marks a shameful abandonment of his campaign promise to protect the middle class and needy from tax increases or harmful benefit cuts, the head of the largest federal employee union said today.
“Instead of holding to its promise to protect the middle class and the working poor, the administration seems determined to contribute to a worsening of living standards for federal workers, disabled veterans, and the elderly,” American Federation of Government Employees National President J. David Cox Sr. said.
The budget includes proposals that would cut federal retirement benefits, cut Federal Employee Health Benefits, cut Social Security benefits, and cut federal jobs. The budget also proposes to end the three year pay freeze with a 1% adjustment, an amount so low that it banks $18 billion in savings over ten years for the government to spend elsewhere.
The administration’s budget hits federal retirement benefits in three ways: denying pay adjustments, so the salaries on which retirement benefits are based are lower, increasing by 1.2% the amount of salary that employees hired prior to 2013 would pay for their benefit, and reducing the annual cost-of-living increase in Social Security and annuities by using an inferior measure of inflation.
These proposals are unjustified and deviate completely from the standards set by large private employers. About 98% of private employers that provide traditional pensions charge their employees nothing for this benefit; the administration just keeps charging more and more each year. The 1.2% contribution increase in the budget would be a permanent cut, even though it is presented as part of a fix to a temporary “problem.”
Regarding the proposed change to the chained CPI, Cox said, “This is no ‘technical fix.’ It is a benefit cut on some of the most vulnerable citizens in our country – the elderly who built this nation’s prosperity, disabled veterans who sacrificed their health and bodily integrity to this nation’s security, and federal retirees who labored under an agreement that their retirement benefits would be adjusted to maintain their living standards in old age.”
According to an analysis by the Center for Economic and Policy Research, using chained CPI for indexing income tax brackets would mean raising taxes 14.5 percent for those earning between $10,000 and $20,000 a year. Sixty-nine percent of the tax increases resulting from chained CPI-indexing would come from households earning less than $100,000, the Center said.
Switching to chained CPI will hit others equally hard. Federal retirees, whose average pensions under the Federal Employees Retirement System (FERS) are just $13,000, will suffer substantial declines in living standards under chained CPI. 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.
Federal Employee Health Benefits Program (FEHBP) Cuts
The administration’s budget also calls for $8.4 billion in cuts to the government’s financial support for federal employees’ health insurance. The changes sought by the administration would penalize the ill by charging them higher premiums, penalize families with more than two members by charging them higher premiums, and penalize those in high health care cost regions by charging them higher premiums.
“Adding FEHBP cuts to the pay freeze, furloughs, and retirement and Social Security cuts just defies comprehension. The President actually says in his budget that federal employees “deserve our respect and gratitude.” I would describe this package of cuts as evidence of disrespect and ingratitude, and I know that’s how all of our members feel as well,” Cox said.
The budget also proposes an overhaul to the poultry inspection process that would leave one federal inspector responsible for examining up to 175 birds per minute – or three birds every second – as they whiz down the inspection line. AFGE, along with food safety and consumer watchdog groups, has been urging the administration to withdraw this rule change since it was first proposed in January 2012.
While the poultry slaughter inspection program does need to be modernized, AFGE is concerned that this proposal could have adverse impacts on both food safety and worker safety, Cox said.
“This proposal isn’t about food safety. Speeding up processing times is all about generating more profit for the chicken slaughter industry by moving chickens from the farm to your kitchen table as quickly as possible – regardless of the potential health consequences,” Cox said.
The American Federation of Government Employees (AFGE) is the largest federal employee union, representing 670,000 workers in the federal government and the government of the District of Columbia.
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