Issue Briefs

Study committee: It has become virtually impossible to remove most federal employees. Image: elisank79/

Following are key sections of a new proposal in which the House Republican Study Committee again recommends reducing federal employment protections and benefits. While the group—a caucus of conservatives—refers to the document as a “budget,” it plays no formal role in the congressional budget process. However, it does indicate positions favored by the large majority of House Republicans.

Reforms to the Removal Process for Federal Employees

It has become virtually impossible to remove most federal employees. A review by the GAO found that the dismissal process is estimated to take 170 to 370 days. According to the Heritage Foundation, of 2.1 million federal employees, only 11,046 (0.5 percent) were fired in 2017. This system is so absurd that the courts have actually ruled that federal employees have a property right to continued employment. Even worse, under the Trump administration, we witnessed “another level of resistance to the new president that is less visible and potentially more troublesome to the administration: a growing wave of opposition from the federal workers charged with implementing any new president’s agenda.” The biggest losers in this system are hardworking taxpayers who are forced to subsidize the bloated salaries of unqualified and unelected bureaucrats working to force a liberal agenda on a country that does not want it. The RSC Budget therefore supports several commonsense proposals to improve the removal of federal employees:

• The MERIT Act, sponsored by Rep. Barry Loudermilk (R-GA), which would shorten the timeframe necessary to remove a bad employee to 30 days, limit the retirement compensation awarded to a federal employee removed for committing a felony in abuse of their official duties, rein in unnecessary appeals, and grant managers authority to recoup bonuses paid to employees who were later found to have committed certain workplace violations.

• Congress should require the mandatory removal of federal employees that commit crimes.

• The Anti-Deficiency Reform and Enforcement Act, sponsored by former Rep. Paul Mitchell (R-MI), which would expand grounds for removing employees under the Anti-Deficiency Act to include misusing an official vehicle or aircraft for personal travel.

• Congress should prohibit federal employees from using paid time off for exercising union duties and end the practice of the federal government serving as the dues collector for the unions. Former Rep. Jody Hice (R-GA) has sponsored two bills that would be steps in the right direction and are supported by the RSC Budget. The Official Time Reform Act and the Official Time Reporting Act would ban federal employees from lobbying while on official time and require OPM to report to Congress on all agency personnel conducting union duties at work, respectively.

• The HERCULES Act, sponsored by RSC Chairman Kevin Hern (R-OK), which would limit adverse employment action appeals. The HERCULES Act would limit outside appeals to formal disciplinary actions, such as removal or demotion, and not compensation decisions. It would also limit the venue for outside appeals to one office in response to disciplinary action.

• The RSC Budget also supports RSC Chairman Kevin Hern’s (R-OK) Union Accountability Act, which would rescind a Biden executive order expanding federal government related labor union powers and make it harder to fire workers for misconduct.

Reforms to Employee Pay

The federal government’s current compensation framework largely ignores the more efficient compensation approach used in the private sector. Federal government employees receive an average of 17 percent more in total compensation, when benefits are included, than their counterparts in the private sector. This is an additional $36.55 billion burden borne by American taxpayers. The RSC Budget supports the following compensation reforms: • Reform federal worker paid leave policies to match the value of benefits paid by the private sector. This reform alone would save taxpayers more than $75 billion over 10 years.

• Automatic raises for federal employees should be eliminated. Pay increases for federal employees should be merit-based. This would save taxpayers $57 billion over 10 years.

• Congress should require that agencies only award bonuses when employees meet the standard for “exceeds fully successful.” Exceeds Fully Successful, according to the OPM guidance is “reserved for the individuals who are delivering measurable outcomes for the American public in a way that is measurably beyond the standard set for fully successful.

• Congress should impose reasonable limits on the size of bonuses that can be awarded and the number of senior employees who can receive an award. More than $1 billion in bonuses for federal employees were paid by the taxpayers in 2016. This included $1.7 million in bonuses to IRS employees who were sanctioned by the agency for misconduct. The RSC Budget would require disclosure of all bonuses for federal employees and require reports to Congress on all large cash bonuses.

• Congress should repeal current law restrictions that prohibit basing bonus decisions on the relative performance of an employee compared to their peers.

• Congress should reform the federal pay scale to attract and reward high skilled, highly productive federal workers, and stop overpaying less qualified employees.

Reform Federal Employee Pension Plans

Federal employees hired since 1984 are entitled to a two-part retirement program, including the Federal Employee Retirement System (FERS) defined benefit plan and a 401k-style plan with up to a 5 percent government matching contribution. This budget recommends a number of commonsense reforms to bring federal employee retirement costs in line with the private sector. This includes: requiring new federal workers to be enrolled in the defined contribution TSP system rather than the defined benefit FERS pension system – which would give workers needed control over their retirement savings, ensure solvency for federal pensions and save taxpayers more than $235 billion over 10 years;466 computing a retiree’s benefit based on their highest five, and not three, years of earnings; increasing the share of employee contributions to FERS over time; reducing or eliminating the COLA for FERS and the Civil Service Retirement System (CSRS); eliminating the Special Retirement Supplement (SRS), which provides additional benefits for retirees younger than 62 but who had a long federal work history; and reforming the interest rate provided by the G Fund in the Thrift Savings Plan (TSP) to more accurately reflect the yield on a short-term T-bill rate.

While the Middle-Class Tax Relief and Job Creation Act of 2012 required new federal employees to contribute more towards their retirement, no changes were made for current federal employees.

This proposal would equalize the treatment for all federal workers.

Federal Employee Health Care

The Federal Employee Health Benefits Program (FEHBP) provides health insurance coverage for federal employees and their dependents. The portion of these costs covered by the taxpayer does not change with the higher-priced coverage options. As such, federal employees have the incentive to choose the more expensive plans on the taxpayer’s dime.

The RSC Budget would transition to a premium support system for the FEHBP. The government would offer a standard federal contribution towards the purchase of health insurance and employees would be responsible for paying the rest. This option would encourage employees to purchase plans with the appropriate amount of coverage that fits their needs. The government should also reduce its contributions to federal workers’ premiums to align with the private sector more closely.

The RSC Budget would also eliminate FEHB retirement benefits for new hires. As noted by the Heritage Foundation, federal employees are able to participate in the FEHB plan even after retirement while having large parts of the cost subsidized by taxpayers. This is a benefit unavailable to virtually all private sector workers.

Use a More Accurate Measure of Inflation, Government Wide

The RSC Budget would adopt a different measure of inflation across all government programs with the exception of Social Security and Medicare (see respective Medicare and Social Security sections). Many federal programs rely on different measures of inflation to determine benefit levels.

This is typically done using changes in the Consumer Price Index for All Urban Consumers (CPI-U) or the Consumer Price Index for All Urban Wage Earners and Clerical Workers (CPI-W). Both measures track the changes in prices of goods and services. However, these measures do not consider when a cheaper and more innovative product is available that causes consumers to change their spending habits. This would be like assuming households spend their money in the same proportions on the same goods and services they did a century ago. To account for real-world changes in product preferences, the BLS has published a more accurate measure of inflation since 2002 called the Chained Consumer Price Index (chained CPI or C-CPI-U). This budget proposes using the more accurate measure for inflation, chained CPI.

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