WEBVTT NOTE This file was generated by Descript 00:00:00.050 --> 00:00:06.130 Lawrence: Welcome to The FED Weekly for 7-13 December 2025, your essential 00:00:06.130 --> 00:00:10.020 weekly briefing on the policies and proposals shaping your career, 00:00:10.260 --> 00:00:12.399 your benefits, and your retirement. 00:00:12.880 --> 00:00:17.100 Whether you’re a current federal employee navigating changes in the civil service, 00:00:17.489 --> 00:00:22.610 or a retiree keeping a close watch on your hard-earned pension and healthcare, this 00:00:22.610 --> 00:00:27.040 is your source for the latest news from Capitol Hill and the executive branch. 00:00:27.646 --> 00:00:31.865 Each week, we cut through the noise to bring you the critical updates on budget 00:00:31.865 --> 00:00:37.585 negotiations, pay raises, workforce policies, and the legislative battles that 00:00:37.585 --> 00:00:39.795 directly impact the federal community. 00:00:40.285 --> 00:00:43.566 Let's get you up to speed on what happened this past week. 00:00:44.167 --> 00:00:47.407 Issues That Affect Current and Retired Federal Workers 00:00:48.017 --> 00:00:52.658 The Conclusion of Open Season and the 2026 Healthcare Cost Reality 00:00:53.266 --> 00:00:59.085 As of Monday, December 8, 2025, the annual Federal Benefits Open Season 00:00:59.125 --> 00:01:03.766 officially concluded, locking in health, dental, and vision coverage 00:01:03.766 --> 00:01:05.755 choices for the upcoming plan year. 00:01:06.405 --> 00:01:10.416 For the vast majority of the federal community, the close of this window 00:01:10.445 --> 00:01:13.795 marks the beginning of a significantly more expensive fiscal year. 00:01:14.445 --> 00:01:17.826 The Office of Personnel Management has confirmed that the enrollee share 00:01:17.826 --> 00:01:22.785 of premiums for the Federal Employees Health Benefits (FEHB) program 00:01:22.785 --> 00:01:25.256 will increase by an average of 12.3 00:01:25.256 --> 00:01:27.026 percent in 2026. 00:01:27.666 --> 00:01:31.385 This figure is not merely a statistical fluctuation but represents 00:01:31.385 --> 00:01:35.695 a compounding economic pressure; coming on the heels of a 13.5 00:01:35.695 --> 00:01:40.995 percent increase in 2025, federal employees and retirees have now absorbed 00:01:40.995 --> 00:01:46.475 a cumulative premium hike exceeding 25 percent over a twenty-four-month period. 00:01:47.131 --> 00:01:51.291 The drivers of this cost escalation are multifaceted and affect both 00:01:51.291 --> 00:01:53.722 current employees and retirees equally. 00:01:54.311 --> 00:01:58.201 The Office of Personnel Management attributes the sharp rise to the aging 00:01:58.201 --> 00:02:02.552 demographic of the covered population, which now averages sixty years of 00:02:02.552 --> 00:02:07.372 age when annuitants are included, alongside surging costs for medical 00:02:07.372 --> 00:02:09.151 services and prescription drugs. 00:02:09.202 --> 00:02:13.852 A primary inflationary factor identified in 2025 has been the 00:02:13.852 --> 00:02:18.091 explosion in utilization of GLP-1 medications prescribed for weight 00:02:18.091 --> 00:02:19.952 loss and diabetes management. 00:02:20.492 --> 00:02:25.661 While these drugs offer significant health benefits, their high cost has forced 00:02:25.661 --> 00:02:28.161 carriers to restructure benefit designs. 00:02:28.551 --> 00:02:33.172 For example, in 2026, Kaiser Permanente plans will increase the member cost 00:02:33.172 --> 00:02:38.211 share for these specific medications to 50 percent, a move indicative of a 00:02:38.211 --> 00:02:42.492 broader trend among carriers to shift the financial burden of high-cost 00:02:42.492 --> 00:02:44.981 pharmaceuticals onto the enrollee. 00:02:45.650 --> 00:02:50.940 Beyond the premium increases, the 2026 plan year introduces structural changes 00:02:50.940 --> 00:02:55.560 to benefits that will affect out-of-pocket exposure for all beneficiaries. 00:02:56.480 --> 00:03:00.789 An analysis of the plan documents reveals that twenty-nine of the one hundred and 00:03:00.789 --> 00:03:05.350 thirty-two available FEHB plans have increased their catastrophic limits—the 00:03:05.850 --> 00:03:11.030 maximum amount an enrollee must pay before the plan covers 100 percent of costs. 00:03:11.929 --> 00:03:15.880 A notable example is the GEHA Standard Option, a popular plan among 00:03:15.880 --> 00:03:18.090 both active workers and retirees. 00:03:18.539 --> 00:03:23.329 For 2026, GEHA has raised its out-of-network catastrophic limit by 00:03:23.329 --> 00:03:28.559 135 percent, moving the cap from eight thousand five hundred dollars to twenty 00:03:28.559 --> 00:03:30.859 thousand dollars for self-only coverage. 00:03:31.519 --> 00:03:35.769 Similarly, the Blue Cross Blue Shield Basic Option, one of the most widely 00:03:35.769 --> 00:03:40.160 held plans in the federal system, will implement increased copayments for 00:03:40.160 --> 00:03:45.509 emergency room visits, inpatient hospital admissions, and outpatient services. 00:03:46.050 --> 00:03:50.180 These changes effectively erode the value of the coverage while the cost to 00:03:50.180 --> 00:03:55.000 maintain it rises, creating a scenario where federal workers and retirees 00:03:55.000 --> 00:03:59.360 are paying significantly more for theoretically less financial protection. 00:04:00.121 --> 00:04:03.792 The Open Season period also witnessed significant market exits 00:04:03.792 --> 00:04:07.581 that caused disruption for specific subsets of the federal population. 00:04:08.251 --> 00:04:12.112 HealthPartners Dental announced its withdrawal from the Federal Employees 00:04:12.112 --> 00:04:17.712 Dental and Vision Insurance Program (FEDVIP) for the 2026 plan year. 00:04:18.081 --> 00:04:22.501 This exit necessitated active engagement from enrollees who, if 00:04:22.501 --> 00:04:27.391 they failed to select a new carrier by the December 8, 2025, deadline, 00:04:27.421 --> 00:04:32.321 would find themselves without dental coverage effective January 1, 2026. 00:04:33.191 --> 00:04:36.672 This churning of carriers underscores the volatility of the 00:04:36.672 --> 00:04:40.461 current insurance market, where regional availability and provider 00:04:40.461 --> 00:04:42.722 networks are increasingly unstable. 00:04:43.290 --> 00:04:48.589 The narrative of "sticker shock" for 2026 is further complicated by the divergence 00:04:48.589 --> 00:04:53.380 between the premium increases and the cost-of-living adjustments (COLAs) or 00:04:53.380 --> 00:04:55.870 pay raises slated for the same period. 00:04:56.550 --> 00:04:58.660 With premiums rising 12.3 00:04:58.660 --> 00:05:02.809 percent, the absorption of this cost will essentially negate the modest 00:05:02.809 --> 00:05:08.340 income adjustments for many retirees and active employees, a dynamic that NARFE 00:05:08.340 --> 00:05:12.389 National President William Shackelford described as a continued trend of 00:05:12.389 --> 00:05:17.399 steep rates that forces enrollees to make difficult financial trade-offs. 00:05:18.140 --> 00:05:22.940 As the federal community moves into the new year, the "net" financial position 00:05:22.940 --> 00:05:27.019 of the average household is likely to be static or negative once healthcare 00:05:27.019 --> 00:05:29.530 deductions are processed in January. 00:05:30.137 --> 00:05:34.508 The Fiscal Cliff: Continuing Resolution Extended to March 2026 00:05:35.146 --> 00:05:39.346 While healthcare costs present a long-term economic challenge, the 00:05:39.346 --> 00:05:43.705 immediate operational stability of the federal government remained in flux 00:05:43.705 --> 00:05:46.766 throughout the week of December 7, 2025. 00:05:47.346 --> 00:05:50.766 Following the cessation of the forty-three-day government shutdown 00:05:50.766 --> 00:05:56.296 on November 12, 2025, federal agencies have been operating under a temporary 00:05:56.296 --> 00:06:01.026 Continuing Resolution (CR) scheduled to expire for various agencies 00:06:01.026 --> 00:06:03.495 beginning in late December and January. 00:06:04.155 --> 00:06:08.645 However, legislative maneuvering during this reporting period has fundamentally 00:06:08.706 --> 00:06:13.656 altered the timeline for the fiscal year 2026 appropriations process. 00:06:14.271 --> 00:06:18.081 Congressional leadership, facing the dual pressures of a holiday recess 00:06:18.081 --> 00:06:22.302 and deep ideological divisions over spending levels, unveiled a new 00:06:22.302 --> 00:06:24.321 short-term spending deal this week. 00:06:25.031 --> 00:06:28.342 This legislation, a second Continuing Resolution (H.R. 00:06:28.411 --> 00:06:35.791 10545), extends federal funding at fiscal year 2025 levels through March 14, 2026. 00:06:35.882 --> 00:06:40.781 The bill passed the House of Representatives by a vote of 366 to 34 00:06:41.142 --> 00:06:46.542 and the Senate by a vote of 85 to 11, narrowly averting a shutdown threat that 00:06:46.542 --> 00:06:50.302 would have triggered on December 20, 2025. 00:06:51.135 --> 00:06:56.815 The passage of this extension to March 14, 2026, has profound implications for the 00:06:56.815 --> 00:06:59.266 operational capacity of federal agencies. 00:06:59.875 --> 00:07:03.715 By relying on a Continuing Resolution for nearly half of the fiscal year, 00:07:04.096 --> 00:07:08.915 Congress has effectively imposed a "shadow freeze" on government operations. 00:07:09.366 --> 00:07:13.145 Under a CR, agencies are generally prohibited from initiating new 00:07:13.145 --> 00:07:17.346 programs, awarding new multi-year contracts, or increasing hiring 00:07:17.346 --> 00:07:19.475 above previously authorized levels. 00:07:19.526 --> 00:07:22.505 They are restricted to the funding rates and conditions of the previous 00:07:22.505 --> 00:07:27.035 fiscal year, regardless of new statutory mandates or shifting priorities. 00:07:27.735 --> 00:07:32.906 For active employees, this translates to continued uncertainty regarding resources, 00:07:33.265 --> 00:07:35.485 travel budgets, and staffing support. 00:07:36.165 --> 00:07:40.996 For retirees, while annuity payments are protected from lapses in appropriations, 00:07:41.035 --> 00:07:45.426 the administrative functions that support them—such as the processing of retirement 00:07:45.426 --> 00:07:50.176 applications or complex benefits changes by OPM—remain vulnerable to the 00:07:50.176 --> 00:07:53.195 resource constraints imposed by the CR. 00:07:53.987 --> 00:07:57.908 The new spending deal does include specific anomalies, or 00:07:57.958 --> 00:08:01.908 "anomalies," to address urgent needs that cannot wait until March. 00:08:02.387 --> 00:08:06.448 Notably, the CR includes over one hundred billion dollars in supplemental 00:08:06.448 --> 00:08:10.968 funding for critical federal disaster programs, specifically allocating 00:08:10.968 --> 00:08:13.917 twenty-nine billion dollars to the Federal Emergency Management 00:08:13.917 --> 00:08:16.808 Agency (FEMA) Disaster Relief Fund. 00:08:17.308 --> 00:08:21.007 This injection of capital is critical for FEMA, which has been operating 00:08:21.007 --> 00:08:25.917 under severe strain following a series of natural disasters and the abrupt 00:08:25.917 --> 00:08:30.677 cancellation of its review council’s scheduled vote on the agency’s future 00:08:30.677 --> 00:08:32.988 recommendations earlier in the week. 00:08:33.657 --> 00:08:38.317 The deal also provides a year-long extension of the 2018 Farm Bill through 00:08:38.317 --> 00:08:44.047 September 30, 2025, ensuring continuity for agricultural programs that employ 00:08:44.047 --> 00:08:47.087 thousands of federal workers in the USDA. 00:08:47.791 --> 00:08:52.362 However, the "clean" nature of the CR—meaning it largely lacks controversial 00:08:52.362 --> 00:08:57.861 policy riders—masks the intense partisan conflict occurring beneath the surface. 00:08:58.361 --> 00:09:02.411 The initial proposal for the CR had included provisions for workforce and 00:09:02.411 --> 00:09:06.331 reentry services that were priorities for county governments and social 00:09:06.331 --> 00:09:11.002 service agencies, but these were rejected by the House in the final version. 00:09:11.622 --> 00:09:15.411 Furthermore, the extension does not resolve the looming expiration 00:09:15.411 --> 00:09:18.911 of the enhanced Affordable Care Act subsidies, which are set 00:09:18.911 --> 00:09:22.121 to expire on December 31, 2025. 00:09:22.592 --> 00:09:27.071 Senate leaders have indicated a separate vote may occur in December to address 00:09:27.071 --> 00:09:32.242 these subsidies, but as of December 13, no such legislation has passed. 00:09:32.511 --> 00:09:36.932 The failure to extend these subsidies would likely result in increased workload 00:09:36.932 --> 00:09:40.882 for federal employees at the Centers for Medicare and Medicaid Services 00:09:41.082 --> 00:09:46.082 (CMS) and the IRS, who would be tasked with managing the fallout of increased 00:09:46.082 --> 00:09:48.522 premiums for millions of Americans. 00:09:49.241 --> 00:09:52.731 The persistence of the shutdown threat, even deferred to March, 00:09:53.011 --> 00:09:55.431 continues to affect workforce morale. 00:09:55.981 --> 00:10:00.821 The Office of Management and Budget (OMB) recently issued a memo arguing 00:10:00.821 --> 00:10:04.842 that the administration is not legally required to provide backpay 00:10:04.842 --> 00:10:08.802 to federal employees furloughed during a lapse in appropriations, 00:10:09.052 --> 00:10:13.511 despite the language of the Government Employee Fair Treatment Act of 2019. 00:10:13.691 --> 00:10:17.982 This interpretation has drawn sharp rebuke from employee advocacy groups like 00:10:17.982 --> 00:10:23.452 NARFE, who argue the law clearly mandates that furloughed employees be made whole. 00:10:24.022 --> 00:10:28.292 This legal ambiguity adds a layer of anxiety to the workforce, who 00:10:28.292 --> 00:10:32.202 now must wait until spring to know if their agencies will be fully 00:10:32.202 --> 00:10:34.592 funded for the remainder of 2026. 00:10:35.746 --> 00:10:37.955 Administrative and Regulatory Shifts 00:10:38.574 --> 00:10:42.694 Beyond the budget, the week of December 7, 2025, saw significant 00:10:42.694 --> 00:10:46.254 administrative actions that will reshape the regulatory environment 00:10:46.254 --> 00:10:48.444 in which federal employees operate. 00:10:48.933 --> 00:10:53.843 On December 11, 2025, President Trump signed an Executive Order titled 00:10:54.053 --> 00:10:59.534 "Eliminating State Law Obstruction of National Artificial Intelligence Policy". 00:10:59.573 --> 00:11:03.974 This directive mandates the establishment of a uniform federal policy framework 00:11:03.974 --> 00:11:08.394 for artificial intelligence that preempts conflicting state laws. 00:11:09.011 --> 00:11:12.902 For federal employees in regulatory agencies such as the Federal Trade 00:11:12.902 --> 00:11:16.341 Commission, the Department of Commerce, and the Office of Science 00:11:16.341 --> 00:11:21.372 and Technology Policy, this Executive Order represents a massive expansion 00:11:21.372 --> 00:11:23.452 of federal authority and workload. 00:11:24.052 --> 00:11:28.372 Staff will be required to draft new legislative recommendations and 00:11:28.372 --> 00:11:32.941 regulatory guidance that overrides the growing patchwork of state-level 00:11:32.941 --> 00:11:35.382 AI safety and transparency laws. 00:11:35.501 --> 00:11:39.722 The order specifically instructs the Special Advisor for AI and Crypto 00:11:40.251 --> 00:11:44.222 and the Assistant to the President for Science and Technology to jointly 00:11:44.222 --> 00:11:45.992 prepare these recommendations. 00:11:46.341 --> 00:11:50.871 This centralization of AI governance in the federal executive branch elevates the 00:11:50.871 --> 00:11:56.521 strategic importance of federal technology roles but also places federal workers at 00:11:56.521 --> 00:12:01.582 the center of a contentious debate over federalism and technology regulation. 00:12:02.723 --> 00:12:06.273 Additionally, the regulatory landscape for workplace compliance 00:12:06.273 --> 00:12:08.133 is shifting as winter approaches. 00:12:08.803 --> 00:12:13.284 Legal experts have advised employers, including federal agencies, to prepare 00:12:13.284 --> 00:12:17.864 for a surge in regulatory action now that the government has reopened and 00:12:17.864 --> 00:12:19.993 funding is stabilized through March. 00:12:20.714 --> 00:12:25.134 Agencies are expected to ramp up oversight activities that were stalled 00:12:25.134 --> 00:12:29.583 during the 43-day shutdown, potentially leading to increased field work for 00:12:29.583 --> 00:12:33.423 inspectors and compliance officers in the Department of Labor and the 00:12:33.423 --> 00:12:35.353 Environmental Protection Agency. 00:12:36.163 --> 00:12:40.184 This return to "normal operations" comes with the added pressure 00:12:40.314 --> 00:12:43.744 of clearing backlogs accumulated during the funding lapse. 00:12:44.575 --> 00:12:47.155 Issues That Affect Retired Federal Workers 00:12:47.783 --> 00:12:51.553 For the millions of retired federal employees and their survivors, the 00:12:51.553 --> 00:12:56.404 week of December 7, 2025, brought the final crystallization of their 00:12:56.404 --> 00:12:58.684 financial outlook for the coming year. 00:12:59.213 --> 00:13:04.494 The news is dominated by the finalized Cost-of-Living Adjustment (COLA) for 00:13:04.494 --> 00:13:09.703 2026, which, when analyzed against the backdrop of inflation and healthcare 00:13:09.703 --> 00:13:14.594 costs, paints a picture of diminishing purchasing power for a significant 00:13:14.594 --> 00:13:16.723 portion of the retiree population. 00:13:16.773 --> 00:13:21.893 This section details the specifics of the 2026 income adjustments, the 00:13:21.893 --> 00:13:26.964 legislative efforts to address inequities in the system, and the broader financial 00:13:26.964 --> 00:13:29.354 implications for the retired community. 00:13:30.130 --> 00:13:32.119 The "Net" Income Analysis: COLA vs. 00:13:32.119 --> 00:13:32.760 Healthcare 00:13:33.321 --> 00:13:37.692 The true financial picture for 2026 only emerges when the COLA is weighed 00:13:37.692 --> 00:13:42.321 against the simultaneous increase in non-discretionary expenses, most 00:13:42.321 --> 00:13:44.321 notably health insurance premiums. 00:13:45.092 --> 00:13:49.241 As detailed previously, the enrollee share of FEHB premiums 00:13:49.241 --> 00:13:51.501 is rising by an average of 12.3 00:13:51.501 --> 00:13:53.361 percent in 2026. 00:13:53.941 --> 00:13:58.052 Because these premiums are typically deducted directly from federal annuities 00:13:58.052 --> 00:14:02.482 before the funds are deposited, the "net" increase in a retiree's monthly 00:14:02.482 --> 00:14:07.041 payment will be significantly lower than the headline COLA figure suggests. 00:14:07.647 --> 00:14:12.358 For many retirees, particularly those with modest annuities or those enrolled 00:14:12.358 --> 00:14:15.298 in more expensive health plans, the 12.3 00:14:15.298 --> 00:14:18.958 percent premium hike will consume the entirety of the 2.0 00:14:18.958 --> 00:14:20.847 percent (or even 2.8 00:14:20.847 --> 00:14:21.878 percent) COLA. 00:14:22.878 --> 00:14:27.298 In some scenarios, retirees may see a net reduction in their monthly deposit in 00:14:27.298 --> 00:14:31.138 January 2026 compared to December 2025. 00:14:31.878 --> 00:14:35.788 This phenomenon effectively freezes the purchasing power of the federal 00:14:35.788 --> 00:14:39.777 annuity, leaving the retiree to cover other inflationary costs—such 00:14:39.777 --> 00:14:43.788 as food, utilities, and property taxes—with fewer real dollars. 00:14:44.411 --> 00:14:48.062 Furthermore, while not explicitly detailed in every snippet, the 00:14:48.062 --> 00:14:51.741 interaction with Medicare Part B premiums must be considered. 00:14:52.232 --> 00:14:56.161 Historically, Part B premiums rise in tandem with healthcare costs. 00:14:56.661 --> 00:15:01.542 If the Part B premium increase for 2026 follows the trend of FEHB 00:15:01.542 --> 00:15:05.421 increases, the combined deduction load will place extreme pressure on the 00:15:05.421 --> 00:15:07.431 fixed incomes of federal annuitants. 00:15:09.007 --> 00:15:11.297 Taxation Changes for 2026 00:15:11.894 --> 00:15:16.394 Amidst the challenging news regarding COLAs and insurance costs, there 00:15:16.394 --> 00:15:20.474 is a potential bright spot in the federal tax code for 2026. 00:15:21.114 --> 00:15:24.753 Reports indicate that an enhanced tax deduction for seniors aged 00:15:24.753 --> 00:15:28.964 sixty-five and older will take effect in the 2026 tax year. 00:15:29.553 --> 00:15:33.854 This legislative change is intended to reduce the amount of income subject 00:15:33.854 --> 00:15:36.173 to federal tax for older Americans. 00:15:37.083 --> 00:15:41.274 Although this deduction does not apply exclusively to federal annuities, it will 00:15:41.274 --> 00:15:46.674 impact the taxation of income derived from them, as well as Social Security benefits. 00:15:47.351 --> 00:15:49.692 Legislative Advocacy and Future Outlook 00:15:50.323 --> 00:15:52.744 Issues That Affect Current Federal Workers 00:15:53.330 --> 00:15:55.930 The 2026 Pay Raise: 1.0 00:15:55.930 --> 00:15:57.700 Percent and the LEO Exception 00:15:58.283 --> 00:16:02.144 The most immediate concern for the active workforce is the compensation 00:16:02.144 --> 00:16:05.713 adjustment scheduled for January 2026. 00:16:06.523 --> 00:16:11.323 During this reporting period, the contours of the raise were effectively finalized, 00:16:11.613 --> 00:16:16.043 revealing a significant divergence from the adjustments seen in recent years. 00:16:16.725 --> 00:16:19.846 President Trump’s "Alternative Pay Plan," submitted to Congress 00:16:19.846 --> 00:16:23.496 in August 2025, proposed a 1.0 00:16:23.496 --> 00:16:28.475 percent across-the-board base pay increase for most federal civilian employees, 00:16:28.815 --> 00:16:31.626 with zero increase to locality pay rates. 00:16:32.326 --> 00:16:36.845 Under the Federal Employees Pay Comparability Act (FEPCA) of 1990, the 00:16:36.845 --> 00:16:41.046 President has the authority to submit an alternative plan if he deems the 00:16:41.046 --> 00:16:46.025 statutory formula (which would have called for a much higher raise, approximately 00:16:46.025 --> 00:16:51.045 22 percent in total) to be economically unfeasible due to "national emergency 00:16:51.045 --> 00:16:52.916 or serious economic conditions". 00:16:53.499 --> 00:16:59.829 As of December 13, 2025, Congress has taken no action to override this plan. 00:17:00.400 --> 00:17:03.920 The Senate Appropriations Committee’s draft of the Financial Services and 00:17:03.920 --> 00:17:08.010 General Government appropriations bill—the vehicle typically used to mandate a 00:17:08.010 --> 00:17:10.169 pay raise—was silent on the issue. 00:17:10.880 --> 00:17:15.759 In the absence of legislative language mandating a higher figure (such as the 4.3 00:17:15.759 --> 00:17:19.779 percent endorsed by the FAIR Act and unions like AFGE and 00:17:19.779 --> 00:17:21.970 NTEU), the President’s 1.0 00:17:21.970 --> 00:17:25.719 percent plan will take effect by default on the first full 00:17:25.719 --> 00:17:28.309 pay period of January 2026. 00:17:28.974 --> 00:17:29.913 This 1.0 00:17:29.913 --> 00:17:34.654 percent raise is the smallest increase for the federal workforce since 2021. 00:17:35.393 --> 00:17:37.004 When adjusted for the 2.8 00:17:37.004 --> 00:17:40.784 percent inflation rate indicated by the 2026 COLA, this 00:17:40.784 --> 00:17:43.464 represents a real wage cut of 1.8 00:17:43.464 --> 00:17:45.713 percent for the average federal employee. 00:17:46.803 --> 00:17:50.694 The freeze on locality pay is particularly damaging for employees in 00:17:50.694 --> 00:17:55.264 high-cost areas such as San Francisco, New York, and Washington, D.C., 00:17:55.373 --> 00:18:00.113 where the gap between federal and private sector pay exceeds 30 percent. 00:18:00.859 --> 00:18:04.560 However, a significant exception to this austerity has been carved 00:18:04.560 --> 00:18:06.320 out for federal law enforcement. 00:18:07.059 --> 00:18:11.320 The President has directed the Office of Personnel Management (OPM) to 00:18:11.320 --> 00:18:16.219 utilize its "Special Salary Rate" authority to provide an additional 2.8 00:18:16.219 --> 00:18:19.899 percent increase for "certain law enforcement officials". 00:18:20.639 --> 00:18:23.100 This additional adjustment brings the total raise for 00:18:23.100 --> 00:18:25.690 these specific employees to 3.8 00:18:25.690 --> 00:18:27.930 percent, creating parity with the 3.8 00:18:27.930 --> 00:18:31.760 percent pay increase authorized for the military in the NDAA. 00:18:32.398 --> 00:18:35.897 OPM is currently in consultation with agencies to determine the 00:18:35.897 --> 00:18:38.108 exact coverage of this special rate. 00:18:38.538 --> 00:18:42.437 It is expected to apply to front-line personnel in agencies such as 00:18:42.437 --> 00:18:46.527 Customs and Border Protection (Border Patrol), Immigration and Customs 00:18:46.527 --> 00:18:50.588 Enforcement (ICE), and potentially the Federal Bureau of Prisons. 00:18:51.178 --> 00:18:56.397 This creates a two-tiered compensation system for 2026: a 3.8 00:18:56.397 --> 00:19:00.168 percent raise for those in security roles, and a 1.0 00:19:00.168 --> 00:19:02.647 percent raise for the remainder of the civil service. 00:19:03.157 --> 00:19:07.737 The National Treasury Employees Union (NTEU) has condemned this disparity 00:19:07.737 --> 00:19:12.638 as "inadequate" and "meager," arguing that all federal employees deserve 00:19:12.638 --> 00:19:16.397 the same economic consideration as the military and law enforcement. 00:19:17.719 --> 00:19:20.850 Thrift Savings Plan (TSP) Limits for 2026 00:19:21.450 --> 00:19:25.709 While base pay stagnates, the capacity for federal employees to save for 00:19:25.709 --> 00:19:27.729 their own retirement has expanded. 00:19:28.590 --> 00:19:32.509 The Internal Revenue Service and the Federal Retirement Thrift Investment 00:19:32.509 --> 00:19:35.830 Board announced the contribution limits for the Thrift Savings 00:19:35.830 --> 00:19:39.340 Plan (TSP) for the 2026 tax year. 00:19:39.950 --> 00:19:44.139 The maximum amount an employee can contribute from their salary increases 00:19:44.479 --> 00:19:49.170 from twenty-three thousand five hundred dollars in 2025 to twenty-four 00:19:49.170 --> 00:19:52.559 thousand five hundred dollars in 2026. 00:19:53.639 --> 00:19:58.810 For employees turning fifty or older in 2026, the catch-up limit increases 00:19:58.810 --> 00:20:02.520 from seven thousand five hundred dollars to eight thousand dollars. 00:20:03.079 --> 00:20:07.020 This allows older workers to contribute a total of thirty-two thousand 00:20:07.020 --> 00:20:09.690 five hundred dollars to their TSP. 00:20:10.435 --> 00:20:12.945 A new provision under the SECURE 2.0 00:20:12.945 --> 00:20:17.035 Act maintains a higher "Super Catch-Up" limit of eleven thousand two hundred 00:20:17.035 --> 00:20:20.795 and fifty dollars specifically for participants aged sixty, 00:20:20.795 --> 00:20:23.435 sixty-one, sixty-two, or sixty-three. 00:20:24.111 --> 00:20:28.841 A critical change taking effect in 2026 involves the "Roth Catch-Up Rule." 00:20:29.341 --> 00:20:30.751 Under SECURE 2.0, 00:20:30.981 --> 00:20:35.882 if a participant’s wages (specifically, Medicare wages) exceeded one hundred and 00:20:35.882 --> 00:20:41.492 fifty thousand dollars in the preceding year (2025), any catch-up contributions 00:20:41.492 --> 00:20:46.541 made in 2026 must be designated as Roth (after-tax) contributions. 00:20:47.121 --> 00:20:50.131 They cannot be made to the traditional tax-deferred balance. 00:20:50.211 --> 00:20:54.131 This mandatory change requires high-earning federal employees to 00:20:54.131 --> 00:20:58.382 adjust their tax planning, as they will no longer receive an immediate 00:20:58.382 --> 00:21:01.101 tax deduction on these catch-up funds. 00:21:01.691 --> 00:21:03.242 The Battle for Labor Rights: H.R. 00:21:03.242 --> 00:21:04.441 2550 vs. 00:21:04.441 --> 00:21:05.312 The NDAA 00:21:05.922 --> 00:21:09.112 The most volatile developments of the week concerned the fundamental 00:21:09.112 --> 00:21:12.431 rights of federal workers to organize and bargain collectively. 00:21:12.832 --> 00:21:17.012 This battle was fought across two major pieces of legislation: the 00:21:17.012 --> 00:21:19.552 Protect America's Workforce Act (H.R. 00:21:19.552 --> 00:21:23.572 2550) and the National Defense Authorization Act 00:21:23.652 --> 00:21:26.622 (NDAA) for Fiscal Year 2026. 00:21:27.623 --> 00:21:27.994 H.R. 00:21:27.994 --> 00:21:34.094 2550 On Thursday, December 11, 2025, the House of Representatives passed H.R. 00:21:34.094 --> 00:21:38.784 2550 by a vote of 231 to 195. 00:21:39.154 --> 00:21:43.994 The bill was designed to nullify President Trump’s March 27, 2025, Executive 00:21:44.023 --> 00:21:48.404 Order titled "Exclusions from Federal Labor-Management Relations Programs". 00:21:48.453 --> 00:21:53.393 This Executive Order had used statutory authority to strip collective bargaining 00:21:53.393 --> 00:21:57.623 rights from approximately one million federal workers in agencies with 00:21:57.623 --> 00:22:02.133 national security missions, including the Department of Defense and the VA. 00:22:02.725 --> 00:22:03.755 The passage of H.R. 00:22:03.755 --> 00:22:09.016 2550 was achieved through a "discharge petition," a rare procedural maneuver 00:22:09.016 --> 00:22:13.756 that allows a majority of House members (218) to force a bill to the floor 00:22:13.756 --> 00:22:15.355 over the objection of the Speaker. 00:22:15.956 --> 00:22:19.476 The success of this petition, which garnered support from all Democrats 00:22:19.476 --> 00:22:23.745 and twenty Republicans, represents a significant bipartisan rebuke of 00:22:23.745 --> 00:22:25.655 the administration’s labor policies. 00:22:26.275 --> 00:22:27.706 Proponents, including Rep. 00:22:28.105 --> 00:22:30.585 Jared Golden (D-ME) and Rep. 00:22:31.136 --> 00:22:34.835 Brian Fitzpatrick (R-PA), argued that the Executive Order was a 00:22:34.835 --> 00:22:39.196 pretext for union-busting and that collective bargaining enhances, rather 00:22:39.196 --> 00:22:41.216 than diminishes, national security. 00:22:42.211 --> 00:22:43.691 However, the victory on H.R. 00:22:43.691 --> 00:22:49.802 2550 was immediately tempered by a simultaneous defeat in the must-pass NDAA. 00:22:50.432 --> 00:22:56.201 Previously, the House version of the NDAA included Section 1110, known 00:22:56.201 --> 00:22:59.411 as the "Norcross Amendment," which would have prohibited the Department 00:22:59.411 --> 00:23:03.772 of Defense from using any funds to implement the anti-union Executive Order. 00:23:03.901 --> 00:23:07.911 This provision was seen as the most effective shield for defense workers 00:23:08.192 --> 00:23:12.321 because the NDAA is essential legislation that the President is unlikely to 00:23:12.321 --> 00:23:15.162 veto solely over a labor provision. 00:23:15.890 --> 00:23:20.410 During the conference negotiations between the House and Senate held the week of 00:23:20.410 --> 00:23:25.770 December 7, Senate Republicans insisted on the removal of the Norcross Amendment. 00:23:26.360 --> 00:23:29.810 Reports indicate they feared a confrontation with President Trump, 00:23:30.140 --> 00:23:34.200 who had threatened to veto the entire defense bill if it restricted 00:23:34.200 --> 00:23:36.290 his authority over the workforce. 00:23:36.999 --> 00:23:41.669 Despite a letter from sixteen House Republicans urging the Senate to keep 00:23:41.669 --> 00:23:46.409 the provision, the final compromise version of the NDAA emerged on December 00:23:46.409 --> 00:23:50.119 10, 2025, with Section 1110 stripped out. 00:23:50.734 --> 00:23:56.934 The final NDAA passed the House on December 10 by a vote of 312 to 112. 00:23:57.473 --> 00:24:01.793 The removal of the labor protections drew sharp condemnation from major unions. 00:24:02.253 --> 00:24:06.494 The American Federation of Government Employees (AFGE) and the International 00:24:06.494 --> 00:24:11.434 Federation of Professional and Technical Engineers (IFPTE) expressed profound 00:24:11.434 --> 00:24:13.384 disappointment, noting that while H.R. 00:24:13.384 --> 00:24:18.364 2550 passed, it faces a likely filibuster in the Senate, whereas the 00:24:18.364 --> 00:24:20.513 NDAA provision would have been law. 00:24:21.073 --> 00:24:23.904 Consequently, despite the symbolic victory of H.R. 00:24:23.904 --> 00:24:28.373 2550, the legal reality for Department of Defense civilians remains 00:24:28.373 --> 00:24:32.593 precarious, with no legislative barrier preventing the implementation 00:24:32.593 --> 00:24:35.213 of the Executive Order in 2026. 00:24:36.618 --> 00:24:39.018 Retroactive Pay for Wage Grade Employees 00:24:39.647 --> 00:24:43.698 Finally, a specific positive development occurred for Federal 00:24:43.698 --> 00:24:46.488 Wage System (Wage Grade) employees. 00:24:47.198 --> 00:24:51.758 After months of delays, the Department of Defense Wage Committee acted this week 00:24:51.758 --> 00:24:56.057 to process retroactive pay raises for approximately one hundred and eighteen 00:24:56.057 --> 00:24:58.598 thousand blue-collar federal employees. 00:24:59.288 --> 00:25:02.338 These adjustments, which had been stalled due to administrative 00:25:02.338 --> 00:25:06.208 backlogs and the previous government shutdown, will be retroactive 00:25:06.208 --> 00:25:08.698 to the effective dates in 2024. 00:25:09.108 --> 00:25:12.538 Employees can expect to see these adjustments, along with the 00:25:12.538 --> 00:25:17.768 lump-sum backpay, reflected in their paychecks as early as January 2026. 00:25:18.407 --> 00:25:21.947 And that’s a wrap on this week’s Federal Workforce Roundup. 00:25:22.398 --> 00:25:26.708 The landscape for federal employees and retirees is constantly shifting, 00:25:27.038 --> 00:25:31.538 with major decisions being made about everything from pay and job security 00:25:31.748 --> 00:25:35.747 to retirement benefits and the very structure of the civil service. 00:25:36.128 --> 00:25:38.497 Staying informed is your best tool. 00:25:38.868 --> 00:25:43.097 Be sure to subscribe wherever you get your podcasts, so you never miss an update. 00:25:43.737 --> 00:25:44.877 Thanks for tuning in. 00:25:44.918 --> 00:25:47.618 We’ll be back next week to track the latest developments 00:25:47.738 --> 00:25:48.918 and what they mean for you. 00:25:49.378 --> 00:25:52.588 Until then, stay engaged and be well.