Two-year pay freeze proposed for feds

Monday - 11/29/2010, 12:32pm EST

Dan Pfeiffer, White House Communications Director, and Jeff Zients, U.S. Chief Performance Officer and Office of Management and Budget Deputy Director for Management

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By Suzanne Kubota and Jason Miller
Federal News Radio

President Barack Obama announced a proposal to freeze pay for federal employees for the next two calendar years. (Scroll down for video of announcement)

According to the White House, the proposed freeze in civilian pay for federal employees would be for 2011 and 2012, and would "apply to all civilian federal employees, including those in various alternative pay plans and those working at the Department of Defense - but not military personnel," said Dan Pfeiffer, White House Communications director in a teleconference with reporters today. (Scroll down to continue reading.)

"Clearly this is a very difficult decision," said Jeff Zients, the Office of Management and Budget's deputy director for management and chief performance officer.

"Federal employees are hardworking and dedicated, and essential in delivering services essential to the American people. The President is asking them to make a sacrifice. We believe it is the first of many difficult steps ahead we will be taking in the upcoming budget to put the nation on sound fiscal footing. Steps that will ask all of us to sacrifice. It's a tough decision, but it is also consistent with actions we've made as part of the Accountable Government Initiative to cut costs and do more with less."

Zients said this move would save $2 billion in 2011 and $5 billion over the next two years.

He added that this also follows the President's decision to freeze senior White House officials pay for a second year in a row and freeze all political appointee pay in 2010.

John Berry, director of the Office of Personnel Management, also commented on the President's decision.

"Federal employees work hard for our nation each day, and this sacrifice the President asked them to make today is significant and emblematic of the shared sacrifice we all will have to make if we are to bring the deficit to heel and preserve an economic future for our children."

Pfeiffer said Congress still must approve the pay freeze.

The last President to propose a pay freeze was in 1994, but Congress did not approve President Clinton's request.

President Reagan also proposed and Congress agreed to a federal pay freeze in the mid-1980s.

Earlier this year, the president had proposed a 1.4 percent pay raise for both civilian and military employees in the FY 2011 budget.

Zients said the White House is announcing the decision now for two reasons. First, the President must submit to Congress by Dec. 1 a proposal for locality pay for 2011. Zients said the locality pay will be zero for 2011. Senior Correspondent Mike Causey explains, "You can't have locality without a basic pay raise."

Secondly, OMB is working on the 2012 budget request and they are at the point where they have to decide on how much the President will request for federal employees in 2012.

"We're in the midst of the 2012 budgeting process, clearly agencies will need to do more with less, and there have been no specific decisions made about the size of the federal workforce at this point," Zients said. "We will roll this out as part of the federal budget."

Federal News Radio Senior Correspondent Mike Causey reports he has spoken to the heads of major federal unions who told Federal News Radio they had been trying to contact the White House all morning to voice their objections to the freeze.

Causey said there are major ramifications across the federal workforce and for contractors. For example, it is not known how the proposed freeze would affect within-grade promotions and pay raises. And, as for contractors, Causey notes many contractors' pay rates are tied to federal pay. Zients would not go as far as to say this is a pay cut for federal employees even though health insurance premiums are increasing, but their pay will stay the same.

Zients also said this decision is not in response to recent media coverage and calls by lawmakers that feds are overpaid.

"The decision is made in the context of the difficult deficit situation and the need to make the decision at this point," he said.

Zients said the pay freeze would not affect an employee's ability to receive more money through a promotion.

The chairman of Obama's bipartisan deficit commission has proposed a three-year freeze in pay for most federal employees. The commission's report is due to be released later this week.