Mandatory Savings: Cut agriculture subsidies and modernize military and civil service retirement systems, while reforming student loan programs and putting the Pension Benefit Guarantee Corporation on a sustainable path.
1.10.3 Impose a three-year pay freeze on federal workers and Defense Department civilians. Out of duty and patriotism, hardworking federal employees provide a great service to this country. But in a time of budget shortfalls, all levels of government must trim back. In the recent recession, millions of private sector and state and municipal employees had their wages frozen or cut back, and millions more lost their jobs altogether. In contrast, federal workers’ wages increase annually due to automatic formulas in law, providing them with cost-of-living-adjustments totaling more than five percent in the last two years. This proposal would institute a three-year government-wide freeze on federal pay at every government agency, including the Department of Defense civilian workforce. This proposal will save $20.4 billion in 2015.
1.10.4 Reduce the size of the federal workforce through attrition. The federal government currently employs about two million people, and extends federal staffing through thousands more contractors. Washington needs to learn to do more with less, using fewer resources to accomplish existing goals without risking a decline in essential government services. Over time, the Commission recommends cutting the government workforce – including civilian defense – by 10 percent, or by 200,000. As part of the transition to a smaller, more efficient workforce, this would mean hiring only two new workers for every three who leave service. This proposal will save $13.2 billion in 2015
1.10.5 Reduce federal travel, printing, and vehicle budgets. Despite advances in technology, federal travel costs have ballooned in recent years, growing 56 percent between 2001 and 2006 alone. Government fleets, meanwhile, have grown by 20,000 over the last four years. Printing costs are still higher than necessary despite technological advancement. We propose prohibiting each agency from spending more than 80 percent of its FY 2010 travel budget and requiring them to do more through teleconferencing and telecommuting. We also recommend a 20 percent reduction in the nearly $4 billion annual federal vehicle budget, excluding the Department of Defense and the Postal Service. Additionally, we recommend allowing certain documents to be released in electronic-only form, and capping total government printing expenditures. This proposal will save $1.1 billion in 2015.
1.10.6 Sell excess federal real property. The federal government is the largest real property owner in the country, with an inventory of more than 1.2 million buildings, structures, and land parcels. Holding this unneeded property carries maintenance costs and forgoes the opportunity to sell potentially valuable property. We propose directing the GSA to loosen agency restrictions associated with selling unused buildings and land. This proposal will save at least $100 million in 2015.
3.3.13 Pilot premium support through FEHB Program.
(Saves $2 billion in 2015, $18 billion through 2020)
The Commission recommends transforming the Federal Employees Health Benefits (FEHB) program into a defined contribution premium support plan that offers federal employees a fixed subsidy that grows by no more than GDP plus 1 percent each year. For federal retirees, this subsidy could be used to pay a portion of the Medicare premium. In addition to saving money, this has the added benefit of providing real-world experience with premium support.
RECOMMENDATION 4.1: REVIEW AND REFORM FEDERAL WORKFORCE RETIREMENT PROGRAMS. Create a federal workforce entitlement task force to re-evaluate civil service and military health and retirement programs and recommend savings of $70 billion over ten years.
Military and civilian pensions are both out of line with pension benefits available to the average worker in the private sector, and in some cases, out of line with each other across different categories of federal employment. The Commission recommends a federal workforce entitlement review to analyze civil service and military retirement programs in order to 1) Make program rules more consistent across similar programs, and 2) Bring both systems more in line with standard practices from the private sector. The review will have a ten-year savings target of $70 billion; recommendations of the task force would receive fast track consideration in Congress. Examples of program design reforms that the task force should consider include:
Use the highest five years of earnings to calculate civil service pension benefits for new retirees (CSRS and FERS), rather than the highest three years prescribed under current law, to bring the benefit calculation in line with the private sector standard. (Saves $500 million in 2015, $5 billion through 2020)
Defer Cost of Living Adjustment (COLA) for retirees in the current system until age 62, including for civilian and military retirees who retire well before a conventional retirement age. In place of annual increases, provide a one-time catch-up adjustment at age 62 to increase the benefit to the amount that would have been payable had full COLAs been in effect. (Saves $5 billion in 2015, $17 billion through 2020)
Adjust the ratio of employer/employee contributions to federal employee pension plans to equalize contributions.
(Saves $4 billion in 2015, $51 billion through 2020)
RECOMMENDATION 4.10: GIVE POST OFFICE GREATER MANAGEMENT AUTONOMY
The Postal Service has run multi-billion dollar losses since 2007, and in 2010 maintained an operating deficit of $8.5 billion, even after receiving a $4 billion bailout from Congress the previous year. With the dramatic expansion of electronic mail, the volume of traditional air-mailed items will continue to fall, only worsening these enormous budget shortfalls and requiring even more federal funding in the future. To put the Postal Service on a path toward long-term solvency, the Commission recommends reversing restrictions that prevent the Postal Service from taking steps to survive – such as shifting to five-day delivery and gradually closing down post offices no longer able to sustain a positive cash-flow.
