Obama demands 2-year pay freeze for federal workers

Calling it a starting point for a looming showdown on budget cuts, President Obama on Monday demanded a two-year pay freeze for federal civilian workers, aligning himself with congressional Republicans and against his labor union allies who warned that the freeze would “stick it” to the government work force.

“The hard truth is that getting this deficit under control is going to require broad sacrifice, and that sacrifice must be shared by the employees of the federal government,” Mr. Obama said, upping the ante on House Republicans, who had pushed earlier this year for a one-year freeze.

Mr. Obama’s plan, which must be approved by Congress, would stop automatic raises for federal employees for fiscal years 2011 and 2012, and would save $60 billion over a 10-year budget cycle, the White House said.

The plan was announced two days before the deadline for Mr. Obama’s deficit commission to submit its report proposing broader fiscal and tax policy changes, with the two parties jockeying to claim leadership on budget cutting.

“This is exactly the kind of savings measure we have to make in order to begin to restore some fiscal sanity in America,” said Rep. Eric Cantor of Virginia, the man Republicans have designated to be the majority leader when the GOP takes the reins in the House next year.

But it says much about the changed attitude in Washington that both Republicans and Democrats in Congress sought to go further than the president’s plan.

Rep. John A. Boehner, the Ohio Republican in line to become the next House speaker, asked Mr. Obama to build on the freeze by also halting federal hiring.

House Majority Leader Steny H. Hoyer, Maryland Democrat, said Mr. Obama’s proposed freeze also should include the military.

“It would have produced significantly more savings had that sacrifice been shared between federal civilian and military personnel - with a strong exception for the members of our military and civilian employees risking their lives on our behalf in Afghanistan, Iraq and anywhere else they are serving in harm’s way,” Mr. Hoyer said.

Still, Mr. Hoyer said, he was pleased that the president went for a two-year freeze rather than a three-year plan.

But Mr. Obama’s usually reliable union allies balked at the move, arguing that after businesses have been given billions of dollars in taxpayer bailouts, government workers shouldn’t be shortchanged.

John Gage, national president of the American Federation of Government Employees, called the pay freeze “a superficial panic” ahead of the deficit commission’s report this week.

“A federal pay freeze saves peanuts at best and, while [Mr. Obama] may mean it as just a public relations gesture, this is no time for political scapegoating,” Mr. Gage said. “The American people didn’t vote to stick it to a VA nursing assistant making $28,000 a year or a Border Patrol agent earning $34,000 per year.”

The freeze would apply to cost-of-living raises, but would not stop federal workers from being promoted to higher-paying positions.

Even though the government’s fiscal year 2011 began on Oct. 1, Congress has not passed a single one of the annual spending bills, and the government is operating on a stopgap measure to keep from shutting down. But that also means Congress hasn’t set the official rate of civilian pay for calendar year 2011, which left an opening for Mr. Obama to propose his two-year freeze.

Congressional Republicans tried earlier this year to impose a one-year freeze for 2011. But the effort was sidelined by a procedural vote in the House, an amendment introduced by Sen. Tom Coburn, Oklahoma Republican - which would have frozen wages and halted all bonuses - was defeated by a vote of 53-45.

But in the intervening months, the climate in Washington has shifted dramatically and cutting spending has become a dominant issue. Lawmakers now regularly struggle to find offsetting spending cuts to pay for programs they propose - a major break with the usual practice during much of the past decade.

Still, with the weak economy and the government’s bailout efforts, the federal government has run a deficit of more than $1 trillion in each of the past two years, and the government’s debt stood at $13.794 trillion as of Friday, the latest figures released.

Wages and benefits accounted for $230 billion in federal spending in 2010, and the more than 2 million federal workers’ benefit packages are substantially more generous than the average private-sector worker receives, said Chris Edwards of the Cato Institute, a libertarian think tank.

In an analysis arguing that federal workers are overpaid, Mr. Edwards said federal workers’ benefits averaged $41,791 in 2009, or nearly four times the $10,589 in benefits for a private-sector employee.

But the Economic Policy Institute, a union-funded think tank, argued in its own analysis that federal white-collar workers actually are underpaid by about 22 percent. EPI President Lawrence Mishel said for Mr. Obama to target them “is another example of the administration’s tendency to bargain with itself rather than Republicans.”

USA Today reported earlier this month that the number of federal workers earning more than $150,000 rose more than tenfold between 2005 and 2010, and has doubled in the two years since Mr. Obama took office.

The White House said Monday’s call for a freeze was unrelated to reports of higher pay scales, and that the decision was based on the overall budget situation and a looming deadline to set pay rates.