Fiscal Year 2018 Trump Budget Targets Retirees and Adopts Obama Postal Proposals
05/24/17 – As anticipated, President Trump’s just-unveiled fiscal year 2018 budget levies significant additional costs on current federal and postal employees, while also reducing the value of their retirement benefits. In addition, the budget suggests a number of postal reform proposals previously made by President Obama. Yesterday, the proposed budget was circulated by the White House Office of Management and Budget (OMB).
The specific retirement hits that would impact UPMA members are as follows:
- Increase retirement contributions made by FERS employees by 1% in 2018 and an additional 1% for the next 5 to 6 years, in order that the employee and the employer contribution be equal. The OMB projects that this proposal would save the federal budget $72.1 billion over the next 10 years
- Eliminate the FERS COLA, and reduce the CSRS COLA by 0.5%. These COLA cuts would effect both current and future retirees. The OMB estimates that this proposal would save the federal budget $41.8 billion over the next 10 years.
- Change the formula for calculating the retirement benefits for future annuitants by basing the pension on the highest 5 years’ salary, instead of the highest 3.
- Abolish the FERS retirement supplement for FERS employees who retire prior to their 62nd birthday (i.e., Social Security eligibility).
The last 2 proposals, in combination with other unspecified cuts, would yield 10-year savings of $35 billion.
The fiscal year 2018 budget also adopts a number of postal reform proposals that had been included in budgets submitted by President Obama and also included in postal reform legislation. The OMB estimates that these proposals would save the USPS $47 billion over the next 10 years.
- Permit the reduction in the frequency of mail delivery
- Allow for the relocation of delivery points to centralized and curbside venues
- Provide greater rate flexibility
- Authorize greater collaboration with state and local governments to provide services
- Use postal-specific data to calculate retirement liability
- Unspecified enhancement to postal governance
In addition, the OMB estimates that the government-wide retirement cuts would save the USPS $33 billion over the next decade.
It will be crucial that UPMA members communicate with their Representatives and Senators to oppose the punitive retirement cuts proposed in Trump Budget and explain how they would personally suffer from them if adopted.
“We appreciate that President Obama has acknowledged the enormous value of the United States Postal Service to the nation’s commerce and communications,” said spokeswoman Sarah Ninivaggi.
“In the 2017 budget proposal, the president continued to recognize the urgent need for postal reform to ensure the Postal Service’s future viability,” she said. “We look forward to working with the Administration, Congress and our stakeholders to enact legislation that will help stabilize our financial outlook.”
What are the ideas that Congress seems to be avoiding?
Most controversial, perhaps, is the Obama plan to allow the Postal Service to keep rates at the emergency level set by the Postal Regulatory Commission as a temporary measure.
That plan, which would give the USPS an additional $2 billion a year in revenue, has been strongly opposed by a coalition of big mailers.
It also has been a key part of Postmaster General Megan Brennan’s recovery plan.
The president’s plan would recalculate the Postal Service’s debts, giving the agency $5.7 billion in financial relief through 2016.
It would also allow the USPS to revive its plan to end Saturday deliveries if mail volume drops below 140 billion pieces for four consecutive quarters, and to continue to close small and rural post offices.
The USPS would continue to pay for its retiree health costs, but on a 40-year schedule instead of the 10-year plan enacted in a 2006 law that led to the agency’s current financial problems.
It would “set USPS on a sustainable business path, providing it with over $27 billion in cash relief, operational savings and additional revenues through 2020,” the budget states.
At the moment, however, Congress does not seem willing to adopt the Obama proposals
The miniscule cola’s don’t begin to cover how much good health insurance and every day living.