Nov. 29 (Bloomberg) -- President Barack Obama proposed freezing the pay of federal civilian employees this year and next as part of an effort to bring the budget deficit under control.
The freeze would hit all civilian workers in the government, including those at the Department of Defense. Military personnel wouldnt be affected. The move would save about $2 billion for the rest of fiscal 2011 and more than $60 billion over the next decade, according to the White House.
Getting the deficit under control will require broad sacrifice and that sacrifice must be shared by the employees of the federal government, Obama said today in Washington.
The administration projects the budget deficit will hit $1.4 trillion in 2011. The chairmen of Obamas commission on deficit reduction have proposed a three-year freeze on federal salaries and a 10 percent cut in the government workforce. The panel is scheduled to deliver its final report Dec. 1.
The pay freeze proposal would require congressional approval. House Republican leader John Boehner of Ohio, who is set to become speaker in January when Republicans take control of the chamber, has said he supports freezing federal hiring and government workers pay.
Clearly this is a difficult decision, Jeffrey Zients, deputy director of the Office of Management and Budget, said on a conference call. Its the first of many difficult steps to be taken by the administration to cut costs and do more with less.
Republican Reaction
U.S. Representative Darrell Issa, a Republican from California, called the proposed two-year freeze in civilian pay long overdue.
At a time when our nations seniors have been denied a cost-of-living increase in Social Security benefits and private sector hiring is stagnant, a freeze is necessary.
Issa, whos poised to become chairman of House Oversight and Government Reform Committee, said the $2 billion in savings for this year is a minuscule amount in a $3.8 trillion budget.
Obama previously proposed postponing raises for senior government officials in his budget for fiscal year 2011, which began Oct. 1. Hes also suspended bonuses, cash awards and other discretionary compensation for political appointees through the end of this fiscal year.
Earlier Actions
The administration already has ordered a three-year freeze in non-defense and national security programs in Obamas budget released Feb. 1 and ordered some agencies to reduce their 2012 budget requests by 5 percent.
A federal pay freeze was inevitable given the politics of the deficit and the limited pay increases that private sector workers are receiving, said Stan Collender, a former congressional budget aide whos now managing director of Qorvis Communications in Washington. Anyone who thinks federal workers will be the only ones to feel the impact of deficit reductions is seriously misreading the budget tea leaves.
The deficit commission co-chairmen, former Republican Senator Alan Simpson and former Clinton administration chief of staff Erskine Bowles, earlier this month proposed a $3.8 trillion deficit-cutting plan that would trim Social Security and Medicare, reduce income-tax rates and eliminate tax breaks including the mortgage-interest deduction.
Their plan also would raise the gas tax, slash defense spending and farm subsidies and bring down health-care costs by clamping down on medical malpractice suits. The Social Security retirement age would rise to 68 in about 2050 and 69 in about 2075.