1. Federal/postal employees and retirees remain in the crosshairs of potential budget cuts that could be costly to pocketbooks. The Republican tax cut package unveiled on Wednesday will be financed, in part, by spending cuts made throughout the FY 2018 federal budget, including ones to federal workforce benefits. How big a hit federal/postal benefits may take is unknown right now, depending upon the final costs of the tax cut package and its relationship to overall federal spending.
The Trump Administration earlier this year had proposed a huge hit — approximately $160B in cuts to federal employee and retiree benefits in its FY 2018 budget proposal to Congress. The Trump budget proposed a suspension or reduction in COLAs, changing the high 3 formula to a high 5, and increases in employee/retiree contributions for retirement and health benefits and other disastrous changes
The financing of the tax cut package — how much is paid for by budget cuts and how much is added to the deficit — will be determined over the next several months in the House and then the Senate. Once that’s better known, Congress will work back from that to determine how and where to make the necessary cuts in the federal budget, including whether and how far to cut federal workforce benefits.
NAPS members and other federal employees and retirees lobbied the House Budget Committee earlier this summer, asking the Committee to refrain from making cuts in federal workforce benefits in the FY 2018 budget resolution. NAPS Headquarters appreciates all the calls and emails that NAPS members made to their lawmakers. We succeeded in reducing the size of the federal workforce cuts from the Trump budget’s $160B down to a $32B target approved by the House Budget Committee in its budget resolution. The House has not yet approved the final terms of the budget resolution. The size of spending cuts, including the size of federal workforce benefit cuts — could grow larger, though depending upon the final size and shape of the tax cut package. It’s doubtful that the cuts will be less than the $32B House Budget Committee target. If they remain at that level, the cuts most likely will require larger retirement contributions from future hires, not current employees and retirees Congress grandfathered current employees and retirees during two earlier rounds of increases in retirement contributions in 2013 and 2014, requiring only future hired employees to bear the costs through higher contributions for retirement benefits.
One more thing to keep in mind. For Congress, legislating these changes in the FY 2018 federal budget and the changes to the tax code will be handled under an unusual Congressional budget process called “reconciliation” that in the Senate requires only 51 votes (not 60) to defeat filibusters and bring the measure to a vote. If Senate Republicans hold together in support of a tax and budget package, the 51-vote requirement will assure easier passage of controversial budget and tax proposals — and make it harder for opponents to defeat them. However, Senate Republicans failed earlier this week on health care overhaul under the same rules and the 51-vote threshold.
NAPS HQ will continue to closely monitor budget developments on Capitol Hill and keep its members informed of important developments. We will alert you immediately if grassroots communication with Members of Congress is required. Please be ready!
2. House action on postal reform legislation (H.R. 756) has stalled, despite approval of the legislation by the House postal oversight committee earlier this spring.
Before the postal reform bill, H.R. 756, may proceed to the House floor, the House Ways & Means Committee must give its approval over the Medicare Integration provisions in the bill. The Energy and Commerce panel also must approve.
Tax reform discussions dominated the attention of Ways & Means Committee leaders over the summer, sidelining the postal bill. Committee sources have indicated that until it’s not likely that the committee will take up and consider the postal reform measure, including its Medicare integration provisions, until after a tax reform measure has cleared the House, a development that may not be reached until the end of the year.