Congress appears close to reaching a deal to extend the 2 percent payroll tax holiday – after House Republicans made an important concession: The tax cut would not have to be paid for with reductions in federal spending.
But there’s a hitch. Budget negotiators insisted that postal workers and federal employees pay more for their retirement benefits to fund another portion of the bill – the one that extends unemployment benefits. The current proposal increases employee contributions by 1.5 percent over three years.
“No one else is being asked to pay more – certainly not the banks or corporations,” said APWU Legislative Director Myke Reid.
Union President Cliff Guffey also condemned the move. “Congressional Republicans scream whenever there is a hint of raising taxes on the richest 1 percent,” he said, “but when it comes to taking away income from postal and federal employees, they’re all for it.”
“I encourage union members to contact their senators and representatives and tell them this is a raw deal,” the union president said. “Ask them to stop Congress from balancing the budget on the backs of public servants.” Call the House switchboard at 202-225-3121 and the Senate switchboard at 202-224-3121.
In a related matter, the Republican-controlled House Oversight and Government Reform Committee voted on Feb. 7 to approve legislation (H.R. 3813) that also targets postal and federal employees.
H.R. 3813 would increase the amount postal and federal employees contribute to their retirement by 1.5 percent, with the increase phased in over three years, beginning in 2013.
In addition, employees with less than five years of service would face an increase of 3.2 percent. The bill also would reduce pensions for employees with less than five years of service by calculating annuities based on the average of employees’ high-five salary years instead of their high-three years, which is the current method. In addition, their pensions would be calculated at a lower rate of 0.7 percent per year, down from 1 percent.
The measure also would eliminate the supplemental annuity provision, which augments benefits for employees who retire before they are eligible for Social Security benefits at age 62.