Debt Deal Could Lead to Federal Workforce Cuts

Although the debt ceiling deal doesn’t include cuts in the federal workforce or benefit reductions, provisions in the plan could lead to just that. The plan includes caps on federal spending over the next 10 years and the creation of a congressional committee to determine further cuts.

Taken together, the plan could lead to pay freezes, unpaid furloughs, hiring freezes, layoffs, increases in employee contributions to retirement plans, and reductions in retirement benefits, The Washington Post reported.

National Treasury Employees Union President Colleen Kelley said she is pleased that the plan did not include “any immediate cuts to federal pay or pensions. However, the impact on the federal workforce remains uncertain and agencies are likely to face reductions in their budgets,” the Post reported.

Programs such as disaster relief and efforts to detect fraud in disability and health insurance programs would have some protection from cuts and the caps would not apply to spending for the wars in Afghanistan and Iraq. The special House-Senate committee charged with finding another $1.5 trillion in additional savings has wide discretion to come up with reductions and could look at the federal workforce and its benefits, the Post reported.

Should the committee not be able to come up with cuts, automatic ones would go into effect that would put pressure on employees, the Post reported.