Federal employees will be required to contribute $15 billion toward the cost of extending federal unemployment insurance under a tentative agreement struck in Congress that would also maintain the 2010 payroll tax break, federal worker union officials said Wednesday.
The deal, which lawmakers have cautioned is still tentative, would require employees to contribute an additional eight tenths of one percent to their retirement funds. The money generated from that provision would cover roughly half of the $30 billion cost of extending long-term unemployment benefits.
“Here we have workers being asked to pay for something that they didn’t cause,” said John Gage, president of the American Federation of Government Workers. “This is simply wrong headed and we are calling on the leaders in Congress to change this course and find another way.”
Maryland is home to nearly 300,000 civilian federal employees — about 10 percent of the state's workforce.
Protecting federal employee compensation was a top goal of Rep. Chris Van Hollen, a Montgomery County Democrat, and Sen. Ben Cardin, both of whom were appointed to the conference committee that was tasked with working out an agreement on the payroll tax legislation.
Gage said the agreement reached Tuesday was worked out with congressional leaders, not the conference committee.
Momentum on the legislation picked up this week after Republicans reversed their position and agreed to extend the payroll tax break through the end of the year without paying for it. Many lawmakers were hoping to avoid an election year showdown on the issue similar to the one that took place at end of last year, when the break was extended through the end of this month.
But lawmakers still had to find a way to pay for the unemployment insurance extension and a provision to maintain reimbursement rates for doctors who treat patients on Medicare.
Union leaders said they intend to fight the proposal.
“It’s outrageous that government employees are being looked to again,” said Colleen M. Kelley, president of the National Treasury Employees Union. “Everyone else will see an increase and federal workers will take a cut.”
The cut is not as bad as is being proposed elsewhere in Washington. President Barack Obama’s proposed 2012 budget, unveiled Monday, calls for a 1.2 percent increase in federal employee retirement contributions over three years, for instance. The Obama administration has also proposed a 0.5 percent pay raise, ending a two-year pay freeze for the federal workforce.
Meanwhile, a landmark transportation funding bill on the floor of the House of Representatives this week also includes deeper cuts for federal workers than called for in the payroll tax deal.
Federal employee compensation has been particularly controversial in recent months as some Republicans have sought to limit the size of government in order to reduce spiraling deficits. Federal government workers earn 16 percent more than their counterparts in the private sector, according to a Congressional Budget Office report released in January.