No pay freeze extension in Democrats' budget plan

Tuesday - 3/27/2012, 8:57am EDT

Last week, House Republicans introduced their budget proposal in response to the budget plan President Barack Obama introduced in February. Now House Democrats are adding their two cents to the debate.

Rep. Chris Van Hollen (D-Md.), ranking member of the House Budget Committee, described the Democratic budget alternative he introduced Monday as standing in "clear contrast to the budget that our Republican colleagues have put forward."

"This budget demonstrates that we can put our fiscal house in order without blindly slashing investments and breaking our promises to seniors, low-income kids and individuals with disabilities," Van Hollen said in a press release.

Van Hollen's proposal does not mention an extension of the federal pay freeze or increased retirement contributions by federal workers.

The Republican budget proposal called for extending the federal pay freeze through 2015, increasing federal retirement contributions and cutting the federal workforce by 10 percent.

In his proposal, President Obama introduced the idea of a O.5 percent pay raise for civilian federal workers. The request also proposed increasing retirement contributions by 1.2 percent, phased in at 0.4 percent over three years.

Bearing the title "Making It in America," the Democratic proposal incorporates much of the President's plan, while aiming to reduce the deficit in a "balanced and credible way." It also preserves the Medicare guarantee and permanently extends the 2001-03 tax cuts for the middle class.

The proposal also calls for elimination of the sequester required by the Budget Control Act of 2011. If Congress fails to balance the budget by the end of the year, the sequester would trigger automatic budget cuts starting in January 2013.

"Proposals to implement an indiscriminate 10 percent across-the-board cut to the federal civilian workforce would adversely affect security agencies, leaving them unable to manage their total workforce, which includes contractors, and their operations in a cost-effective manner," the Democratic proposal said.

In place of the sequester, Democrats are proposing a deficit reduction plan through targeted spending cuts and revenue increases. It keeps the annual discretionary caps imposed by the Budget Control Act and anticipates no more funding for Overseas Contingency Operations after 2014. The latter item takes into account the President's goal of shifting security operations in Afghanistan to Afghan forces.

Budget savings include reductions in agriculture direct payments and duplications found by the Government Accountability Office. Savings would also be found by improving the solvency of the Pension Benefit Guaranty.

In addition, the Democratic proposal calls for the end of the nearly $1 trillion in Bush-era tax cuts for millionaires and closes various corporate tax loopholes.

"We will provide tax relief for working families, not a tax windfall to millionaires and corporations that is financed by middle-income Americans," Van Hollen said. "And we will protect the promise and opportunity of the American Dream for all, instead of leaving future generations behind."

In the job creation arena, Making It in America incorporates a number of the President's budget proposals, most of which are missing from the GOP plan. These include:

  • Transportation - $50 billion to fund jobs for surface transportation needs and $10 billion to set up an infrastructure bank.

  • Tax Credits - President Obama called for a temporary tax credit of 10 percent for wage increases and new jobs.

  • Education - $80 billion to build infrastructure to help educate students and establish a better workforce for the future.

  • First Responder - $5 billion to help states and localities hire public safety personnel.

  • Veterans - $1 billion to set up a Veterans Job Corps, employing at least 20,000 veterans.

RELATED STORIES:

GOP budget plan extends federal pay freeze, changes retirement benefits

Pay raise, increased retirement contributions in President's FY2013 budget request