Lawrence: Welcome to The FED Weekly for 27 July - 2 August 2025, your
essential weekly briefing on the policies and proposals shaping your career,
your benefits, and your retirement.
Whether youâre a current federal employee navigating changes in the civil service,
or a retiree keeping a close watch on your hard-earned pension and healthcare, this
is your source for the latest news from Capitol Hill and the executive branch.
Each week, we cut through the noise to bring you the critical updates on budget
negotiations, pay raises, workforce policies, and the legislative battles that
directly impact the federal community.
Let's get you up to speed on what happened this past week.
Section 1: Issues That Affect Current and Retired Federal Workers
This section examines the broad implications of recent developments
that impact both those currently serving in the federal government and those
who have transitioned into retirement.
The Big Beautiful Bill Act introduces several general tax changes that are
relevant to all taxpayers, including federal employees and retirees.
Some of these changes are effective retroactively to January
First, Two Thousand Twenty-Five.
These include:
The permanent adoption of changes to federal tax rates and standard deduction
amounts that originated from the Tax Cuts and Jobs Act (TCJA), with an increase
for the Two Thousand Twenty-Five tax year and subsequent adjustments for inflation.
A temporary annual deduction of $6,000, available through
Two Thousand Twenty-Eight, for taxpayers aged sixty-five or older.
A temporary increase in the federal cap on the State and Local Tax (SALT)
deduction, raising it from $10,000 to $40,000 (or $20,000 for those filing
separately) beginning in Two Thousand Twenty-Five, with inflation adjustments
through Two Thousand Twenty-Nine.
A new federal income tax deduction for qualified overtime and qualified tips,
effective for tax years Two Thousand Twenty-Five through Two Thousand
Twenty-Eight, subject to phase-outs for higher Modified Adjusted Gross Income.
Expanded benefits for child care and paid family and medical leave tax credits.
Executive Order 14319, "Preventing Woke AI in the Federal Government"
On July Twenty-Third, Two Thousand Twenty-Five, President Trump issued
Executive Order 14319, titled "Preventing Woke AI in the Federal Government".
This executive order mandates that federal agencies procure large
language models (LLMs) only if these models adhere to two specific
unbiased AI principles: "Truth-Seeking and Ideological Neutrality".
Furthermore, the Office of Management and Budget (OMB) has been directed
to issue guidance on implementing these principles by November
Twentieth, Two Thousand Twenty-Five.
This Executive Order imposes stringent new criteria on the acquisition
and utilization of AI technologies across the federal government.
Agencies are now required to ensure that any LLMs they procure align with
principles of objectivity and neutrality.
For federal employees involved in technology procurement, information
technology, or policy implementation, this translates into navigating a new
and potentially complex set of guidelines for selecting and deploying AI systems.
This Executive Order introduces ideologically-driven criteria into
what would typically be a technical and operational decision-making
process, thereby increasing scrutiny and potentially politicizing
federal technology procurement.
This new layer of political oversight could lead to delays in technology
adoption, create potential conflicts with vendors whose AI models may not explicitly
meet these "unbiased" principles, or even pose challenges in practically
defining and measuring "Truth-Seeking and Ideological Neutrality."
For federal employees in IT and procurement roles, this signifies
navigating a more intricate and potentially politically charged
landscape for technology acquisition.
By imposing specific ideological constraints on AI procurement, the
Executive Order could inadvertently limit the range of available
technologies or slow down the adoption of advanced AI solutions.
If agencies are restricted to a narrower pool of vendors or must
allocate significant resources to verify "neutrality," it could hinder
their ability to leverage cutting-edge AI for improved efficiency, data
analysis, or service delivery.
This could create a competitive disadvantage for federal agencies
compared to the private sector in terms of technological advancement,
potentially affecting their long-term operational effectiveness.
OPM Guidance on Protecting Religious Expression in the Federal Workplace
On July Twenty-Eighth, Two Thousand Twenty-Five, the Office of Personnel
Management (OPM) issued a memorandum to the heads of departments and agencies
concerning "Protecting Religious Expression in the Federal Workplace".
This guidance serves to reinforce the rights of federal employees regarding
religious expression within the workplace.
It likely outlines specific policies and procedures designed to ensure
reasonable accommodation for religious practices and to prevent discrimination
based on religious beliefs.
In a period marked by significant changes to civil service protections,
reductions in force, and shifts in hiring policies, OPM's guidance on religious
expression stands out as a reaffirmation of a specific employee right.
While seemingly an isolated development, it signals the administration's intent
to shape workplace culture not only through efficiency and accountability
measures but also through specific social and cultural directives.
This can be interpreted as an effort to balance the more restrictive workforce
policies with an emphasis on certain individual freedoms within the federal
workplace, potentially to address concerns about employee morale or to
align with broader political priorities.
Section 2: Issues That Affect Retired Federal Workers
Analysis of Specific Impacts on Retired Federal Workers
During this current period, the available information does not indicate
any new legislation or significant news that specifically and exclusively
targeted retired federal employees with new provisions or changes to
their benefits, beyond the broader implications discussed in Section 1.
While the current federal workforce faces significant upheaval due to reductions
in force, the introduction of new excepted service schedules, and hiring
constraints, retired federal employees appear to be in a period of relative
stability regarding their direct benefits.
Changes to Medicaid and Affordable Care Act (ACA) coverage detailed in H.R.
1 could indirectly affect retirees or their family members
who rely on these programs.
This emphasizes that while direct federal retirement benefits might remain stable,
the overall financial well-being of retirees is still subject to broader
legislative and economic shifts.
Section 3: Issues That Affect Current Federal Workers
Memorandum: "Ensuring Accountability and Prioritizing
Public Safety in Federal Hiring"
President Trump signed a memorandum on July Eighth, Two Thousand
Twenty-Five, titled "Ensuring Accountability and Prioritizing
Public Safety in Federal Hiring".
This memorandum sets the governing framework for the hiring of federal
civilian employees within the Executive Branch through October
Fifteenth, Two Thousand Twenty-Five.
The memorandum explicitly states that "no federal civilian position
presently vacant may be filled, and no new position may be created, unless
otherwise provided for in this memorandum or required by applicable law".
Furthermore, any hiring that does occur must be consistent with OPM's Merit
Hiring Plan, which was issued on May Twenty-Ninth, Two Thousand Twenty-Five.
This plan itself originates from Executive Order 14170, focusing on
"Reforming the Federal Hiring Process and Restoring Merit to Government Service".
While not explicitly termed a "hiring freeze," the memorandum's directive that
"no federal civilian position presently vacant may be filled, and no new position
may be created" effectively imposes a significant constraint on federal hiring.
This will inevitably lead to workforce stagnation in many areas, exacerbating
existing staffing shortages, particularly in agencies already experiencing high
attrition, such as IRS customer service.
This serves as a direct mechanism for shrinking the federal workforce
through attrition, complementing the ongoing reductions in force.
The combined effect of a de facto hiring freeze and ongoing reductions in force
will undoubtedly place significant operational strain on federal agencies.
With fewer personnel available to manage existing workloads, there
is a high likelihood of increased backlogs in services, slower
processing times, and a reduced capacity to respond to new challenges.
This directly impacts the ability of federal agencies to fulfill their
missions and serve the public effectively, potentially leading to frustration for
citizens who rely on those services.
The stated goal of "government efficiency" could be undermined by the
practical realities of understaffing.
The Federal Employee Return to Work Act (S.
27)
The "Federal Employee Return to Work Act" (S.
27) was introduced in the Senate on January Seventh, Two Thousand Twenty-Five,
by Senator Bill Cassidy of Louisiana.
The bill has since been referred to the Senate Committee on Homeland
Security and Governmental Affairs and currently holds "Introduced"
status, indicating it is in the early stages of the legislative process.
The core provisions of this bill propose to prohibit certain annual
or locality-based pay increases for federal employees who telework at
least one day each week, or twenty percent or more each week if they
are on an alternative work schedule.
Instead, these "covered employees" would be compensated at the "Rest of U.S."
locality pay rate, regardless of their actual geographic location.
The bill is designed to take effect on the first day of the fiscal
year beginning after its enactment.
If enacted, S.
27 could significantly alter compensation for a substantial portion of the federal
workforce that utilizes telework.
It would create a financial disincentive for telework, particularly
for employees living in high-cost areas who would experience a loss
of their locality pay adjustments.
S.
27 represents a clear legislative pushback against the expanded use of
telework within the federal government.
By targeting pay increases for teleworking employees, the bill aims to financially
disincentivize remote work and compel a return to traditional office settings.
This effort is not merely about physical presence; it is also a mechanism
to control federal compensation costs, especially for employees in
high-cost-of-living areas who benefit significantly from locality pay.
This legislative initiative complements the executive order
pushing for a "Return to In-Person Work" , indicating a coordinated
desire across branches of government to reshape federal work arrangements.
Should S.
27 become law, its impact on federal workforce recruitment and
retention could be substantial.
High-skill professionals, who often have private-sector alternatives, might
be deterred from federal service if telework flexibility is curtailed and
locality pay is significantly reduced.
Such a policy could also lead to a geographic redistribution of the
federal workforce, as employees in expensive urban centers might face a
choice between a significant pay cut or relocating to lower-cost areas.
This could affect the diversity of talent, the ability to attract specific expertise,
and the overall competitiveness of federal employment in a modern labor market.
IRS Whistleblower Office Recognition of National Whistleblower Day
On July Twenty-Eighth, Two Thousand Twenty-Five, the IRS Whistleblower Office
publicly recognized the importance of National Whistleblower Appreciation Day.
This recognition highlights the critical role that whistleblowers play in
supporting the nation's tax administration and in promoting accountability
across government operations.
It serves as a public acknowledgment of their contributions and the
legal protections afforded to them.
The IRS's public recognition of National Whistleblower Day, particularly amidst a
period of increased scrutiny on federal employee conduct and efficiency, functions
as a strategic communication effort.
It aims to project an image of commitment to integrity and
transparency within federal operations.
By celebrating whistleblowers, the government implicitly encourages
ethical behavior and the reporting of wrongdoing, which can be seen as
a counter-narrative to the broader focus on workforce reductions
and increased executive control.
This also reinforces the legal protections available to those who come forward
with information about fraud or waste.
And thatâs a wrap on this weekâs Federal Workforce Roundup.
The landscape for federal employees and retirees is constantly shifting,
with major decisions being made about everything from pay and job security
to retirement benefits and the very structure of the civil service.
Staying informed is your best tool.
Be sure to subscribe wherever you get your podcasts, so you never miss an update.
Thanks for tuning in.
Weâll be back next week to track the latest developments
and what they mean for you.
Until then, stay engaged and be well.