Federal Payroll Freeze a Futile Measure

Donald Lambro
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Posted: Nov 30, 2010 3:53 PM
Federal Payroll Freeze a Futile Measure

In a move to regain his relevance and perhaps his former popularity, President Obama tackled his multitrillion-dollar budget deficit Monday with a feeble federal payroll freeze that has the potential to save a puny $5 billion.

Still recovering from the midterm elections "shellacking" the voters dealt him and the Democrats in Congress, Obama and his advisers have been searching frantically for a strategy to get him back in the game and save his threatened presidency.

But the impotent two-year freeze, one of several initiatives he will be announcing to deal with runaway spending, fell with a thud among Democrats on Capitol Hill, angered federal employee unions in his party's base who felt betrayed, and made the effort to battle a $2.7 trillion deficit monster of his own making look utterly futile.

Obama's 2009 and 2010 deficits and skyrocketing debt that, if they continue, will push yearly interest payments to more than $1 trillion in 2020, were one of the voters' biggest election-year complaints.

Republicans gave the move muted praise, though many newly elected tea-party warriors dismissed Obama's announcement as a cosmetic gimmick that won't really curb spending.

Indeed, it was a transparent maneuver timed to show that he is concerned with bringing down the government's mounting $14 trillion debt, just as the bipartisan National Commission on Fiscal Responsibility and Reform is about to unveil their more ambitious debt-reducing plan this week. Among the reforms: freezing civilian federal payrolls for three years.

"The hard truth is that getting this deficit under control is going to require some broad sacrifice, and that sacrifice must be shared by the employees of the federal government," Obama said.

But the American people can add two and two, and they know the difference between $2.7 trillion in new debt and a minuscule $2 billion a year in savings that barely scratches the surface, especially when the deficit is expected to grow by an additional $1 trillion next year and probably the year after that.

This is what passes for fiscal progress at the White House where 10 percent unemployment is now considered the "new normal."

"It's a start," was the best that former Wyoming senator Alan K. Simpson, co-chairman of the commission, could say about it.

Obama's union allies were not so polite. "Two unfunded wars, a stock-market collapse and trying to solve the deficit by going after working people's salary -- I just expected more from the Obama administration," said John Gage, head of the American Federation of Government Employees.

Other union leaders are mobilizing to have the Democrats in this lame-duck Congress reject the budget freeze before the end of the month.

Left unsaid was the fact that the federal bureaucracy has grown exponentially under Obama and the Democrats' two-year spending binge, pushing the total federal payroll to 2.15 million employees. It will grow even larger in the next two years as a result of Obamacare and an army of federal regulators let loose under his financial reform programs.

The civilian workforce alone numbered 1.2 million in 2008, the last year of the Bush presidency. It's expected to hit 1.43 million by the end of this year, an alarming 20 percent increase, according to Utah Sen. Orrin Hatch, who has introduced legislation to cut payrolls back to pre-2009 levels.

Thus, the government was expanding its workforce at a time when millions of private sector workers were losing their jobs or forced to take pay cuts. Over the course of the recession, the government added 240,000 new employees, while the private economy was shedding more than 8 million jobs.

Union complaints that federal workers will suffer egregiously from any salary freeze is an exaggeration. They earn on average more in pay and benefits than their counterparts in the private sector.

A Heritage Foundation study of federal civilian pay scales found that the government pays hourly wages "22 percent above that of comparable private sector workers," more "generous health care and pension plans," and "total compensation on the order of 30 percent to 40 percent above similarly skilled private sector workers."

Currently, more employees in the federal government earn more than $100,000 a year than make $40,000.

For many if not most federal employees, salaries will continue to rise under Obama's so-called freeze through yearly step increases and widespread federal bonuses.

Federal agencies "rarely lay off employees for poor performance. The government does not let workers go in economic downturns, either," says Heritage senior analyst James Sherk, who authored the study.

Instead of freezing or cutting all salaries, Sherk proposes bringing federal compensation into line with market pay rates, which he says "would save taxpayers approximately $47 billion a year.

As the late Sen. Everett Dirksen of Illinois would have said, "Now we're talking real money."