Anti-Union Drumbeat of Trump, Congress Spells Trouble for IRS

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By Colleen Murphy

Dec. 7 — IRS employees could be in for a rocky ride if President-elect Donald Trump and Congress move forward with sweeping pledges to rein in federal employee benefits and cripple unions.

Trump has vowed to place a hiring freeze on federal jobs and shrink the workforce, as one of his first efforts once in office, and ease firing restrictions. Other ideas Republican lawmakers have floated could also come to fruition now that no veto threat looms, such as ending automatic pay raises and changing benefits plans.

Those moves would be jarring for employees across federal agencies, but would particularly sting at the Internal Revenue Service, an agency that has lost millions of dollars through budget cuts and thousands of employees through attrition and retirement. Steps to cut benefits would hurt the agency’s ability to recruit and retain employees, and any efforts to weaken unions would hurt the 50,000 who are members of the National Treasury Employees Union, practitioners specializing in labor law and tax administration told Bloomberg BNA.

“If people are afraid that they’re going to be fired and you can’t attract the people you need to solve the problem, it will put the IRS in an even less favorable position to do its job,” said Robert M. Tobias, director of business development in key executive leadership programs and a professor at American University in Washington. Tobias spent three decades at the NTEU and was also a member of the Internal Revenue Service Oversight Board.

Trump’s transition team didn’t return a request for comment.

The Impact

Efforts to crack down on union activity or on federal employees would further damage the morale of IRS employees who are already struggling, practitioners said. The IRS has been the subject of attacks from Congress for the past several years, after employees subjected social welfare organizations seeking tax exemptions to heightened scrutiny.

“It’s hard for me to imagine what the administration or Congress could do to the IRS to make it even more demoralized,” said Christopher S. Rizek, a member at Caplin & Drysdale, Chartered, in Washington. Rizek spent several years at the Treasury Department, where he helped craft the IRS Restructuring and Reform Act of 1998.

Stripping benefits for federal employees would also make the agency an even less appealing place to work, practitioners said. Being able to recruit young staff and retain experienced talent is necessary and already a challenge, they said.

“That economic bargain of taking less but also having huge retirement benefits is something a lot of people have chosen to do,” said Robert E. McKenzie, a partner at Arnstein & Lehr LLP in Chicago who is a former member of the IRS Advisory Council. “Would that over time reduce the talent pool if I could be fired easily from the government, and the benefits for retirement are less and I’m a young accounting student leaving school?”

More to Come?

Republican lawmakers have frequently called for a tighter leash on IRS employees. A fiscal year 2017 funding bill (H.R. 5485) that passed the House on July 7 would forbid the agency from using funds for bonuses or from rehiring former employees without considering their tax compliance. Lawmakers are expected to pass a continuing budget resolution this week.

Several bills to restrict the agency passed the House last spring, including one (H.R. 4890) from Rep. Patrick Meehan (R-Pa.) to ban the payment of bonuses to IRS employees until more a more stringent customer service strategy is in place. Lawmakers have long expressed concern about whether the IRS is doing enough to help taxpayers.

Meehan hasn’t decided whether to reintroduce the bill next session, but he will work with the administration and other members of the Ways and Means Committee “to ensure we have an IRS that works for the taxpayers that pay for it,” a spokesman said in a Nov. 7 e-mail to Bloomberg BNA.

Another bill that passed the House in April (H.R. 3724) would prohibit the IRS from rehiring any individual previously removed for misconduct. The sponsor of that bill, Rep. Kristi Noem (R-S.D.), didn’t return a request for comment.

Worries at NTEU

Members of the NTEU are already alarmed, though it’s too early to say exactly what will happen to unions, Tony Reardon, NTEU president, said Dec. 5.

“I think the recent election results have clearly created uncertainty among federal employees,” he said. “I think they’re concerned, I think they’re apprehensive about what their futures hold.”

The NTEU represents 150,000 workers across 31 departments and agencies. Members have expressed dismay about potential hiring freezes, pay raise denials or health insurance downgrades, he said. The organization is in touch with Trump’s transition team to set up a meeting, where he will “educate them about what it is federal employees do,” Reardon said.

“I don’t assume that everyone who is elected to Congress, nor do I assume that all those in the president-elect’s new administration have a full understanding of what it is federal unions do,” Reardon said.

Reardon said Trump may not be completely opposed to unions, and noted he has likely worked with them through his various businesses.

“I think it’s important to remember the people who make up the federal employee workforce really fall into the demographic of people Mr. Trump has claimed he supports—the middle class,” he said.

Bad News for All Unions

Labor attacks could take various forms over the next four years, practitioners said. Trump could sign legislation that bars using administrative time to perform representational duties, stripping unions of “the most essential service that they perform,” Tobias said.

Or, Trump could appoint an anti-union justice to the Supreme Court to fill the spot left vacant after Justice Antonin Scalia died in February, said Charlotte Garden, a law professor specializing in labor and employment law at Seattle University School of Law. A case regarding right-to-work laws for public-sector employees could also reach the Supreme Court, she said. The issue deadlocked there in March.

“It’s almost hard to narrow down how bad the Trump administration and the incoming legislature could be for unions,” Garden said Dec. 6. “I don’t think you can discount the effect of the steady drumbeat of ‘federal workers are lazy or unproductive or venal'—the denigration of public workers.”

Things could also get heated, Caplin & Drysdale’s Rizek said, citing a 1981 confrontation between President Ronald Reagan and air traffic controllers. Reagan fired 11,000 striking employers who had ignored his demands to get back to work, and federal judges called for fines on the union during the strike. Another such incident is “not at all beyond the realm of possibility,” he said.

To contact the reporter on this story: Colleen Murphy in Washington at cmurphy@bna.com

To contact the editor responsible for this story: Meg Shreve at mshreve@bna.com

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