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Federal Employees News Digest : April 15, 2013
Phil Piemonte, Managing Editor E-mail: email@example.com What's Inside44 April 15, 2013 • Vol. 62, No. 37 Proposed change to COLA-setting formula draws fire The White House has released its bud- get---and in it are some $35 billion in additional cuts to federal employees retire- ment benefits. The reaction from feder- al employee groups has been swift, and is expected to sharpen as feds study the details of the president's proposal and react to the most punishing parts of the plan. But one known quantity that has already drawn swift condemnation from several quarters is a proposal to cut cost-of-living adjustments for Social Security and federal retirement benefits by altering the formula used to calculate those annual COLAs . While most of the general public is focused on the proposal's effects on Social Security retirement benefits, the same COLA reductions would apply to retired federal employees and military retirees, and recipients of federal veterans and disability benefits. Chained CPI Currently, the federal government rais- es these benefits in line with a consumer price index---the CPI-W---that is tied to the annual change in the price of a basket of consumer items, as they affect the gen- eral working population. The new proposed index---"chained CPI"---would take into account "substi- tutions" and related changes in the pur- chasing choices consumers make. "The chained CPI assumes that people can and will substitute one thing for another, among things that they buy," Monique Morrissey, an economist with the Economic Policy Institute, told FEND. "If the price of chicken breast goes up, but the price of a whole chicken does not rise so much---well, you can buy the whole chicken and cut it up yourself." But Morrissey immediately cited a key part of her organization's opposition to the change. "For example, if transportation costs go up and housing costs go down, some people might move close to the city [to adjust the cost]---but not everyone can," she noted. "The methodology is limited ... and the index is so flawed in other ways, it does not represent the specific price pressures faced by seniors and other beneficiaries hit by this proposal---and, really, it would exacerbate the existing problem: The index is adjusted too low, not too high, for the people who would be affected here." "In other words, even if most econo- mists would not quibble with chain- ing the index, as a concept, here we would be fixing the wrong problem and not fixing the much larger problem," Morrissey said. "The current index for Social Security and other [federal ben- efits] is focused on working-age adults--- not the senior population. The general population spends a lot less on health care than seniors, and health care is a Retrospective If you find it impossible to attribute any good traits or motives to poli- ticians you disagree with (or loathe), you may want to skip this one. It is not about sexual exploits, wars or break-ins and cover-ups. This is about presidential track records as they pertain to one subject. You. On a recent radio show aimed at fed- eral employees, the host asked several of us long-time federal beat reporters to write down the name of the "best" president for federal workers. This wasn't about the president's political program, world events, sexual she- nanigans or anything else. It was the "best" president for federal workers. All three of us wrote the same name: Richard Nixon. Did the three of us vote for him? I seriously doubt it. Did we consider him the "best" or even one of the best presidents ever? I doubt it. But to that narrow question, he was the winner. (A good argument could be made that Bill Clinton rates a "best" rating too. The year 2009 was a winner for federal workers, as Congress INSIGHT BY MIKE CAUSEY continued on page 2 For more news...see Federal Daily at www.FederalDaily.com • Retirement surge continues 4 • CFC changes proposed 4 • In Brief 4 • Informed Investor 7 • Federal Benefits Q&A 8 continued on page 3
April 8, 2013
April 22, 2013