Obama’s budget plan would increase federal civilian pay by 0.5 percent, a modest bump we first reported in January that would end a two-year cost-of-living pay freeze. Uniformed military personnel would receive a 1.7 percent increase in pay in 2013, the full increase allowed by law, according to the budget proposal.

The budget also calls for federal workers to increase the contribution of federal employees to their retirement program by 0.4 percent each year over three years. (Read more on that proposal here.)

Despite the need to cut federal spending, “A permanent pay freeze is neither sustainable nor desirable,” Obama's budget proposal said, noting that the “slight increase in civilian pay” would make available $2 billion to spend on other programs.

Over the course of the two-year freeze on cost-of-living pay increases, eligible federal employees have received within-grade step increases for advancing through levels of the General Schedule pay system. Republican lawmakers have targeted the within-grade raises, which average $2,000, as another way to cut federal spending.

Federal employees and union leaders expressed tepid support for the pay increase, noting that the low raise may deter potential applicants from seeking federal employment or force current workers to look to the private sector for more lucrative opportunities.

And forcing workers to pay more for their retirement “will have a serious impact on the retirement security federal employees were promised,” National Federation of Federal Employees President William R. Dougan said in an e-mail to reporters.

“A federal employee making $50,000 in salary would have to pay an additional $600 each year for their retirement, without any corresponding increase in benefits,” Dougan noted. “In the wake of a two-year pay freeze, which effectively cut workers pay by thousands after inflation, another $600 bill to pay would be difficult to bear.”

Proposing different pay levels for civilian workers and the troops could create even more opposition for the budget plan. But Obama has said that the federal government has a “moral obligation” to provide for military service members and their families, especially as the wars in Iraq and Afghanistan wind down.

The different pay proposals likely means another Capitol Hill fight between ardent military backers and lawmakers — especially from the Washington area — who fight for “pay parity,” or assurances that civilian employees earn a similar raise.

Obama’s budget also calls for a new Commission on Federal Public Service Reform to propose changes to federal compensation, personnel performance and staff development. The panel would be comprised of lawmakers, agency managers, federal worker union leaders, corporate leaders and academics, according to the White House.

The federal government employs roughly 2 million civilian federal employees, with about 85 percent living and working outside the Washington area. The budget released Monday projects that federal employment levels will remain essentially flat in 2013, increasing by 0.1 percent, or 2,400, to 2,110,000 from the 2012 estimated level. That figure is not a "head count" but rather a measure of work-year equivalents that includes part-time and seasonal workers; it does not include postal employees. The 2011 actual level was 2,102,400.

Among the Cabinet departments, growth is projected at only four, with a 4,300 increase at Veterans Affairs due to increased demand for veterans medial services. The Department of Homeland Security would add about 1,400 employees to deal with air safety and border security. The Justice Department would grow by fewer than 1,000, with most of the new jobs tied to new federal prisons set to open, and the Treasury Department would add about 3,600 positions, mainly for increased tax enforcement, which the administration calls "an investment that more than pays for itself."

 Increases are also projected in several programs that rely on fees, rather than tax revenue, including food safety inspection, financial market regulation and the Patent and Trademark Office. The staffing increases would be offset by small declines at a number of agencies, most notably a decrease of 7,500 at the Defense Department. That is about a 1 percent drop in DOD jobs; employment at the Agriculture and Interior departments also would fall by about the same percentage.

Ahead of Monday’s announcement, smaller, non-security agencies have been preparing to curtail the size of their workforces by offering buyouts or early retirement incentives.

At the National Park Service, “our programs are severely cut,” said one employee contacted in recent days. The cutbacks mean an “inability to continue funding of ongoing research, a lack of funding for new projects, a lack of mobility within the Service because of the lack of vacancies, and increases in collateral duties as employees leave and are not replaced — but the programs must continue.”

Similar staff cuts at the Government Printing Office “leaves a void in leadership and no avenue for advancement in the younger workforce,” an employee there said. “You can imagine what that does to some people’s morale.”

The employees spoke on condition of anonymity for fear of retribution.

At the IRS, “cuts are still happening,” an employee said. The agency is offering early retirement to higher-paid analysts at its Washington headquarters, the employee said. Several workers accepted the offer, forcing colleagues to temporarily assume the now-vacant positions.

“Budget cuts are happening,” the IRS worker said, “but not in the right places.”

Staff writers Eric Yoder and Ryan Kellett contributed to this report.

Follow Ed O’Keefe on Twitter: @edatpost

Further reading:

Fact Checker: Jack Lew’s misleading claim about the Senate’s failure to pass a budget resolution

Obama’s 2013 budget request to include community college training fund

For more, visit PostPolitics and The Fed Page.