Obama proposes two-year pay freeze for federal workers

By Lisa Rein and Perry Bacon Jr.
Washington Post Staff Writers
Tuesday, November 30, 2010; 12:46 AM

President Obama on Monday announced a two-year pay freeze for most of the 1.9 million civilians who work for the federal government, as he tried to address concerns over a mushrooming deficit and placate Republicans who have targeted the workforce for big cuts.

"Getting this deficit under control is going to require some broad sacrifices, and that sacrifice must be shared by the employees of the federal government," Obama said in a White House speech. He called federal workers "patriots who love their country" and said the cut is not just "a line item on a federal ledger." But he said he is asking federal workers to sacrifice for the country as "they've always done."

The president's proposal comes just before a fiscal commission he appointed is scheduled to issue a final report Wednesday on how to staunch deficit spending. The panel's leadership has recommended a three-year pay freeze for most federal workers.

The freeze, which must be approved by Congress, would be the first two-year halt to federal raises in modern history. With health insurance premiums for civil servants set to jump 7.2 percent on average next year and a federal transit subsidy to be cut by half Dec. 31, the plan will amount to a pay cut for many workers.

But the freeze is a largely symbolic move to address a federal deficit that will top $1 trillion next year. It is estimated to save just $2 billion over the next year.

"You could always count on your increase," said Danielle Swain of Manassas, an analyst for the foreign export service of the Agriculture Department who is nervous about the cut to her commuter-rail subsidy. "If you don't get a bonus, this is all you get. They're picking on the government because they assume we sit around and don't do anything. Well, it's not true."

The last freeze to federal pay came in 1986, and it was for one year. President Bill Clinton proposed skipping the 1994 raise but was rebuffed by Congress.

Obama's proposal would apply to nearly all federal civilian workers, including 600,000 in the Washington area, for 2011 and 2012. Defense Department civilians would be included but uniformed military personnel exempted. The government would save $5 billion over the two years, White House officials said; the savings would grow to $28 billion over five years because future salary increases would be set from a lower base, said Jeffrey Zients, deputy budget director and the government's chief performance officer.

Civil servants still will be eligible for bonuses and promotions to higher pay grades. However, John Berry, the government's personnel chief, said the White House has told federal managers to ensure that bonuses are "truly performance based" amid what he expects to be a declining pool to reward good workers.

Federal employees were scheduled to receive a 1.4 percent across-the-board raise in 2011.

Rochelle Diamond, a program analyst for the Agriculture Department, said that raise would have been insignificant anyway. But on principle, she's mad that Republicans have, in her view, pushed the president to take aim at federal workers. "I look at those Republicans who are forcing his hand, and I think, 'We should be looking at what they make and start there,' " Diamond said.

The move comes amid a festering debate over pay and benefits of federal workers that became an issue on the campaign trail this fall. Congressional Republicans and other critics have said the workforce is being shielded from an economic downturn that has left millions of Americans at private companies facing layoffs and pay cuts.

For months, administration officials and critics have battled over whether federal workers, on average, make more than their private sector counterparts. Government officials defend public-sector pay and say that the way critics have calculated averages is misleading.

Obama froze senior White House officials' pay for a second year and froze all political appointee pay in 2010. Congress voted itself a pay freeze for members in 2011.

Zients said the president announced the salary freeze onMonday ahead of a Tuesday deadline for submitting pay plans to Congress. Obama hopes to avoid a potential fight with the GOP next year on federal pay by promoting the move as a sign of his willingness to work with Republicans, who will take over the House and gain more power in the Senate in January.

The GOP and the leaders of the bipartisan deficit panel have pledged deeper cuts, including furloughs, reductions to bonuses and the size of the workforce, and scaling back retirement pay and the use of contractors.

"It will be hollow if we see a net increase in the federal payroll," Rep. Jason Chaffetz (R-Utah) said of the pay freeze, noting that the government's plans to continue hiring and to hand out bonuses "are not going to reduce the costs to the taxpayers." But Chaffetz, who is slated to head the House subcommittee that oversees federal pay, called the plan "a good start."

White House officials frame the initiative as part of a broader series of moves to reduce the budget deficit. Officials said other strategies, including some that might affect federal workers, would be rolled out when the administration releases its budget proposal next year. "We will evaluate other proposals beyond federal workers, all the different various proposals from the fiscal commission and others, as part of our 2012 budget process and be rolling that out across the next couple of months," Zients said. He called the freeze "the first of many difficult steps ahead."

Federal unions and employee groups criticized Obama, a serious break between organized labor and an administration that has relied heavily its support. Unions cited data from the Bureau of Labor Statistics that suggest the pay gap between federal and private salaries grew last year in favor of the private sector. John Gage, president of the American Federation of Government Employees, called the plan a "superficial, panicked reaction to the deficit commission report."

With rare exceptions, executive branch employees can't bargain over pay. The freeze would not affect Postal Service workers, whose salary is set by contract.

White House officials played down any concern that the proposal would reduce agencies' ability to recruit new talent. "I'm confident . . . that this freeze will not get in the way of our efforts to bring in the best and brightest," Zients said.

Some liberal groups said the freeze won't reduce the deficit or gain Obama the GOP's cooperation. "This is another example of the administration's tendency to bargain with itself rather than Republicans, and in the process reinforces . . . the myth that federal workers are overpaid," said Lawrence Mishel, president of the Economic Policy Institute, a liberal think tank, said.

According to a Washington Post poll last month, 52 percent of Americans say they think federal workers are overpaid, a view held by nearly six in 10 Republicans and about seven in 10 conservatives. Far fewer Democrats, independents, liberals and moderates agreed. Among Americans, one in 10 of those polled say federal workers should be better compensated. Still, of those who have interacted with a federal agency employee, three in four report that the experience was positive.

reinl@washpost.com baconp@washpost.com

Staff writers Joe Davidson and Ed O'Keefe and researcher Eric Yoder contributed to this report.

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