10.31.2010 0

Pay Freeze Locks in Historically High Gov’t Wages

  • On: 11/30/2010 10:16:33
  • In: Fiscal Responsibility
  • By Bill Wilson

    On the surface, Barack Obama’s announced two-year freeze of federal civilian pay may sound like a reasonable overture to congressional Republicans and the American people who want unsustainable government spending to be reined in. But, just below the surface is the reality that the “freeze” is a token, meaningless move that will do nothing to cut spending.

    Take the supposed cost savings of the proposal. According to the AP, “The freeze is expected to save more than $5 billion in savings over two years, $28 billion over five years and more than $60 billion over 10 years, White House officials said.” One might read that and come to the conclusion that this much money was actually being cut out of the budget. It will not. These are projected increases in spending that would merely be delayed.

    As noted by U.S. News & World Report Editor-in-Chief Mortimer Zuckerman, “In 2008, the average wage for 1.9 million federal civilian workers was more than $79,000”. That amounts to over $150 billion every year in the budget, just for wages. Public sector pay has never been higher.

    Zuckerman notes the tremendous disparity between public sector pay and the 108 million private sector workers, who only make $50,000 on average. So, all a “freeze” of public sector pay would do is lock in this historically high disparity between public and private workers.

    But that part of the story is apparently not registering with Obama. Obama is portraying his proposal as a cut. “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 in his announcement of the federal pay freeze.

    Sacrifice. That means somebody is giving something up. But in this case, that somebody — public sector workers — would only be giving up pay increases, and only temporarily at that. Is that really a sacrifice?

    There are obvious alternatives to Obama’s approach if he is sincere about slashing the $1.3 trillion deficit, to say nothing of reducing the $13.7 trillion national debt. How about cutting public sector pay and slashing the overall workforce? What about paring back onerous health and pension benefit plans? By announcing a pay “freeze,” Obama is staking out very particular territory, one that precludes any possibility for cuts in these areas.

    In several respects this is a preemptive move on Obama’s part, attempting to run to the political right on fiscal issues as a more conservative Congress prepares to take power in January. To pull it off, however, Obama needs public sector unions to decry the move. And ever dutiful, that’s exactly what the unions are doing, even if their objections are sincere.

    “This proposal to freeze federal pay is a superficial, panicked reaction to the deficit commission report,” said AFGE National President John Gage, as reported by the Huffington Post. “This pay freeze amounts to nothing more than political public relations. This is no time for scapegoating.” AFL-CIO President Richard Trumka accused Obama of “undermining” the jobs of public sector workers.

    The unions obviously fear that by ceding pay increases for the public sector that actual cuts become more likely. They are right. Reports the Huffington Post, “the question [unions and liberal economists are] asking in private is, what exactly did the White House get in return for the chip it gave away?”

    What indeed. Obama thinks he has a guard on his sword with which to parry the American people’s demands to cut spending. It gives him something to talk about whenever the issue of the budget comes up. But that is probably not good enough. The Obama proposal will do nothing to actually cut spending.

    Which is exactly what congressional Republicans ought to be saying. Except House Republicans support the pay freeze. To be fair, they have also called for a hiring freeze. But to be effective, they need to go much, much further and put proposals on the table that actually slash a government spending in a meaningful way.

    Bill Wilson is the President of Americans for Limited Government.


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