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Plan amounts to $21 billion tax increase on federal employees 

American Federation of Government Employees National President John Gage today denounced President Obama’s proposal to require federal employees to contribute $21 billion more to their retirement.

Under the President’s Plan for Economic Growth and Deficit Reduction, federal employees will have their paychecks reduced by 1.2 percent to pay into a federal retirement system that is already fully funded.  For a GS-9, Step 1 employee in the Rest of U.S. locality zone, who earns about $47,500, this equates to a $570 annual pay cut. The change would be permanent and affect all federal employees.

Federal employees already sacrificed by having their pay frozen this year and next, which will save the government $60 billion during the next decade – an amount unmatched by any other group. In addition, as a result of $1 trillion in cuts to agency budgets, federal agencies have already cut back significantly on hiring employees and many are planning furloughs and reductions-in-force.  These reductions have a direct impact on the ability of agencies to provide adequate levels of service.

“Asking federal employees to accept additional cuts to their take-home pay is unfair, especially at a time when citizens are demanding more services from their government,” Gage said.

“This is a double whammy for federal employees, who are facing the same economic hardships as most other Americans. Enough is enough.”

The Federal Employees Retirement System is fully funded, and there is simply no rationale for cutting federal benefits in this way.  The proposal amounts to a $21 billion tax increase on federal employees, a stunning violation of the president’s promise not to raise taxes on families earning under $250,000. No federal employee earns anywhere near that threshold.

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