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GOP Group Seeks Cuts
In Federal Retiree Benefits
To Fund Hurricane Relief

APWU Web News Article #48-05, Sept. 26, 2005

A group of Republican lawmakers has called for cuts to federal retirees’ benefits to offset the cost of recovery from Hurricane Katrina.

The House Republican Study Committee recommended calculating retirement annuities for federal employees based on the average of their five highest-earning years of service. Currently, annuities are based on the average of employees’ “high three.” Adding two years to the calculations would decrease the average — and retirees’ benefits.

The committee also proposed lowering the government contribution to federal retirees’ health benefit costs if the retirees had less than 30 years of service. According to the Congressional Budget Office, the proposal would cut government contributions by two percentage points for every year of service less than 30.

Other proposals made by the group include cutting Medicare by $80 billion and Medicare by $60 billion over the next five years, and reductions in school lunch and rent subsidies for the poor. The conservative lawmakers also recommended postponing the Medicare prescription drug program for a year and cutting funding to Amtrak, NASA, and the Corporation for Public Broadcasting.

The proposals were denounced by retiree organizations, unions, and advocates for the poor. “This year alone, the nation’s wealthiest citizens will receive $225 billion in tax cuts enacted by the Bush Administration in 2001 and 2002” said APWU President William Burrus. “Yet conservative ideologues are suggesting that America’s workers and poor should sacrifice in order to pay for the rebuilding effort.”

Many mainstream Republicans also criticized the proposals. Government Executive magazine quoted an unnamed GOP aide as saying, “The leadership has said repeatedly that we are willing to look at offsets that make sense. But what they [the Republican Study Committee] are offering is just not realistic.”

The committee, led by Rep. Mike Pence (R-IN), is comprised of 100 conservative Republicans. (Postal workers may remember Pence as the representative who recently offered an amendment to postal reform legislation that would have eliminated a labor representative on the USPS Board of Governors. The amendment was defeated, 345-82.)

Fair-Pay Rules Suspended

In a related development, on Sept. 8, President George W. Bush issued an executive order suspending application of a federal law that governs workers’ pay on federal contracts in the areas damaged by Hurricane Katrina.

The Davis-Bacon Act, passed in 1931, sets a minimum pay scale for workers on federal contracts by requiring contractors to pay the prevailing or average pay in the region. Suspending the law will allow contractors to pay substandard wages to construction workers rebuilding the hurricane-ravaged region.

AFL-CIO President John J. Sweeney denounced the move as “outrageous.”

“Employers are all too eager to exploit workers,” he said. “This is no time to make that easier. What a double tragedy it would be to allow the destruction of Hurricane Katrina to depress living standards even further.”

Rep. George Miller of California, the ranking Democrat on the House Committee on Education and the Workforce, said Bush is “using the devastation of Hurricane Katrina to cut the wages of people desperately trying to rebuild their lives and their communities.”

“In New Orleans, where a quarter of the city was poor, the prevailing wage for construction labor is about $9 per hour, according to the Department of Labor. In effect, President Bush is saying that people should be paid less than $9 an hour to rebuild their communities.”

Burrus also condemned the move. “At the same time that workers’ wages are being suppressed in the name of patriotism, reports are pouring in of extravagant no-bid reconstruction contracts being awarded to Republican contributors.”

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