The FED Weekly

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 you’re 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 that’s a wrap on this week’s
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.

We’ll be back next week to
track the latest developments

and what they mean for you.

Until then, stay engaged and be well.