No Tax on Bonuses Act of 2025

— 76 — Mandate for Leadership: The Conservative Promise to delay. With the proper limitation of labor union actions, the FLRA should have limited reason for appeals. The EEOC’s federal employee section should be transferred to the MSPB, and many of the OCS’s investigatory functions should be returned to the OPM. The MSPB could then become the main reviewer of adverse actions, greatly simplifying the burdensome appeal process. Making Civil Service Benefits Economically and Administratively Ratio- nal. In recent years, the combined wages and benefits of the executive branch civilian workforce totaled $300 billion according to official data. But even that amount does not properly account for billions in unfunded liability for retirement and other government reporting distortions. Official data also report employment as approximately 2 million, but this ignores approximately 20 million contractors who, while not eligible for government pay and benefits, do receive them indirectly through contracting (even if they are less generous). Official data also claim that national government employees are paid less than private-sector employees are paid for similar work, but several more neutral sources demonstrate that pub- lic-sector workers make more on average than their private-sector counterparts. All of this extravagance deserves close scrutiny. Market-Based Pay and Benefits. According to current law, federal workers are to be paid wages comparable to equivalent private-sector workers rather than compared to all private-sector employees. While the official studies claim that federal employees are underpaid relative to the private sector by 20 percent or more, a 2016 Heritage Foundation study found that federal employees received wages that were 22 percent higher than wages for similar private-sector workers; if the value of employee benefits was included, the total compensation premium for federal employees over their private-sector equivalents increased to between 30 percent and 40 percent.18 The American Enterprise Institute found a 14 percent pay premium and a 61 percent total compensation premium.19 Base salary is only one component of a federal employee’s total compensation. In addition to high starting wages, federal employees normally receive an annual cost-of-living adjustment (available to all employees) and generous scheduled raises known as step increases. Moreover, a large proportion of federal employ- ees are stationed in the Washington, D.C., area and other large cities and are entitled to steep locality pay enhancement to account for the high cost of living in these areas. A federal employee with five years’ experience receives 20 vacation days, 13 paid sick days, and all 10 federal holidays compared to an employee at a large private company who receives 13 days of vacation and eight paid sick days. Federal health benefits are more comparable to those provided by Fortune 500 employers with the government paying 72 percent of the weighted average premiums, but this is much higher than for most private plans. Almost half of private firms do not offer any employer contributions at all. — 77 — Central Personnel Agencies: Managing the Bureaucracy The obvious solution to these discrepancies is to move closer to a market model for federal pay and benefits. One need is for a neutral agency to oversee pay hiring decisions, especially for high-demand occupations. The OPM is independent of agency operations, so it can assess requirements more neutrally. For many years, with its Special Pay Rates program, the OPM evaluated claims that federal rates in an area were too low to attract competent employees and allowed agencies to offer higher pay when needed rather than increased rates for all. Ideally, the OPM should establish an initial pay schedule for every occupation and region, monitor turnover rates and applicant-to-position ratios, and adjust pay and recruitment on that basis. Most of this requires legislation, but the OPM should be an advocate for a true equality of benefits between the public and private sectors. Reforming Federal Retirement Benefits. Career civil servants enjoy retire- ment benefits that are nearly unheard of in the private sector. Federal employees retire earlier (normally at age 55 after 30 years), enjoy richer pension annuities, and receive automatic cost-of-living adjustments based on the areas in which they retire. Defined-benefit federal pensions are fully indexed for inflation—a practice that is extremely rare in the private sector. A federal employee with a preretire- ment income of $25,000 under the older of the two federal retirement plans will receive at least $200,000 more over a 20-year period than will private-sector work- ers with the same preretirement salary under historic inflation levels. During the early Reagan years, the OPM reformed many specific provisions of the federal pension program to save billions administratively. Under OPM pres- sure, Reagan and Congress ultimately ended the old Civil Service Retirement System (CSRS) entirely for new employees, which (counting disbursements for the unfunded liability) accounted for 51.3 percent of the federal government's total payroll. The retirement system that replaced it—the Federal Employees Retirement System (FERS)—reduced the cost of federal employee retirement dis- bursements to 28.5 percent of payroll (including contributions to Social Security and the employer match to the Thrift Savings Plan). More of the pension cost was shifted to the employee, but the new system was much more equitable for the 40 percent who received few or no benefits under the old system. By 1999, more than half of the federal workforce was covered by the new system, and the government’s per capita share of the cost (as the employer) was less than half the cost of the old system: 20.2 percent of FERS payroll vs. 44.3 percent of CSRS payroll, representing one of the largest examples of government savings anywhere. Although the government pension system has become more like private pension systems, it still remains much more generous, and other means might be considered in the future to move it even closer to private plans. GSA: Landlord and Contractor Management. The General Services Administration is best known as the federal government’s landlord—designing, constructing, managing, and preserving government buildings and leasing and

— 76 — Mandate for Leadership: The Conservative Promise to delay. With the proper limitation of labor union actions, the FLRA should have limited reason for appeals. The EEOC’s federal employee section should be transferred to the MSPB, and many of the OCS’s investigatory functions should be returned to the OPM. The MSPB could then become the main reviewer of adverse actions, greatly simplifying the burdensome appeal process. Making Civil Service Benefits Economically and Administratively Ratio- nal. In recent years, the combined wages and benefits of the executive branch civilian workforce totaled $300 billion according to official data. But even that amount does not properly account for billions in unfunded liability for retirement and other government reporting distortions. Official data also report employment as approximately 2 million, but this ignores approximately 20 million contractors who, while not eligible for government pay and benefits, do receive them indirectly through contracting (even if they are less generous). Official data also claim that national government employees are paid less than private-sector employees are paid for similar work, but several more neutral sources demonstrate that pub- lic-sector workers make more on average than their private-sector counterparts. All of this extravagance deserves close scrutiny. Market-Based Pay and Benefits. According to current law, federal workers are to be paid wages comparable to equivalent private-sector workers rather than compared to all private-sector employees. While the official studies claim that federal employees are underpaid relative to the private sector by 20 percent or more, a 2016 Heritage Foundation study found that federal employees received wages that were 22 percent higher than wages for similar private-sector workers; if the value of employee benefits was included, the total compensation premium for federal employees over their private-sector equivalents increased to between 30 percent and 40 percent.18 The American Enterprise Institute found a 14 percent pay premium and a 61 percent total compensation premium.19 Base salary is only one component of a federal employee’s total compensation. In addition to high starting wages, federal employees normally receive an annual cost-of-living adjustment (available to all employees) and generous scheduled raises known as step increases. Moreover, a large proportion of federal employ- ees are stationed in the Washington, D.C., area and other large cities and are entitled to steep locality pay enhancement to account for the high cost of living in these areas. A federal employee with five years’ experience receives 20 vacation days, 13 paid sick days, and all 10 federal holidays compared to an employee at a large private company who receives 13 days of vacation and eight paid sick days. Federal health benefits are more comparable to those provided by Fortune 500 employers with the government paying 72 percent of the weighted average premiums, but this is much higher than for most private plans. Almost half of private firms do not offer any employer contributions at all.

— 101 — Department of Defense 1. Ensure that senior U.S. military leadership emphasizes exportability in the initial development of defense systems that are both available and interoperable with our partners and allies. 2. Create a funding mechanism to incentivize exportability in initial planning, which can be recouped after future FMS transactions. l End informal congressional notification. Informal congressional notification or “tiered review” is a hinderance to ensuring timely sales to our global partners. The tiered review process is not codified in law; it is merely a practice by which the Department of State provides a preview of prospective arms transfers before Congress is formally notified.9 1. End the tiered review process to eliminate at least 20 days from the FMS process. 2. Use the tiered review process only when unanimous congressional support is guaranteed in order to eliminate the “weaponization” by select Members of Congress that has prevented billions of dollars of arms sales from moving into formal congressional notification. l Minimize barriers to collaboration. The high cost of developing advanced defense platforms requires the United States to collaborate with key allies to minimize waste, complement strengths, and supplement our defense industrial base to create a system that is greater than that of the United States alone. 1. Enhance defense industrial base planning with partners to allow them to focus on niche areas where there are cost advantages for the United States. 2. Decrease International Traffic in Arms Regulations (ITAR) to facilitate trade with such allies as the United Kingdom, Canada, and Australia. 3. Create opportunities to improve the health of the defense supply chain with added opportunities for partners and allies to contribute. l Reform the FMS contracting process. The contracting timeline for the FMS process is shockingly slow. On average, the DOD contracting timeline takes approximately 18 months because of slow bureaucratic processes and chronic understaffing.10 — 102 — Mandate for Leadership: The Conservative Promise 1. Immediately fund more contracting capacity in all services to decrease the contracting timeline and improve the delivery of defense articles to our global partners. 2. Rationalize and speed arms sales decision-making to preclude our enemies from exploiting bureaucratic slothfulness and allow us to manage the development of indigenous defense industrial bases. DOD PERSONNEL The men and women of America’s armed forces are the most critical component of our national defense strategy, but in recent years, they have been overextended, undervalued, and insufficiently resourced. Their families help them to carry the burden of service, but the assistance they receive is disproportionately less than the sacrifices they make. Young civilians who would thrive in a military environ- ment are disenfranchised when educators and influencers discourage them from learning about military service and preparing for the honor of wearing Ameri- ca’s uniform. The United States military is an extraordinary institution, staffed by exceptional people who have defended our nation and changed the course of history, but the Biden Administration, through word and deed, has treated the armed forces as just another place to work. We must restore our military to a place of honor and respect and recruit and retain the individuals who will meet the rigorous standards of excellence that are required for membership in the world’s greatest fighting force. Needed Reforms l Rescue recruiting and retention. Recruiting was the worst in 2022 that it has been in two generations and is expected to be even worse in 2023. Some of the problems are self-inflicted and ongoing. The recruiting problem is not service-specific: It affects the entire Joint Force. 1. Appoint a Special Assistant to the President who will maintain liaison with Congress, DOD, and all other interested parties on the issue of recruiting and retention. 2. Improve recruiting by suspending the use of the recently introduced MHS Genesis system that uses private medical records of potential recruits at Military Entrance Processing Stations (MEPS), creating unnecessary delays and unwarranted rejections.11 3. Improve military recruiters’ access to secondary schools and require completion of the Armed Services Vocational Aptitude Battery