Here’s something for Michael “There’s been no short-term austerity” Grunwald to chew on: President Obama will extend the federal employee pay freeze into next year, meaning that federal employees will have seen their wages stagnate for at least two and a half years.
The freeze will stay in effect until a spending plan is passed, but the presidential election makes it unlikely that will happen before the start of fiscal 2013 on Oct. 1. As a result, the president is required by the end of August to come up with an “alternative pay plan” to avoid a legal trigger that would automatically raise federal pay in line with private-sector salaries. The alternative pay plan is usually a routine event signaling that Congress and the White House have agreed on a salary increase for federal workers.
With no budget, the freeze will stay in place until at least April, when a short-term spending deal that congressional leaders reached before their August recess to fund the government for six months runs out. The short-term agreement keeps spending at current levels and is silent on the federal pay freeze.
Austerity, by the way, should get looked at in real-dollar terms. A pay freeze, even if it means the same amount of outlays, is an austere policy because of inflation. If spending is staying constant, that’s a real-dollar cut. That we have a smaller federal workforce serving a greater population is an example of austerity. Spending has dropped from the time before President Obama entered office. We’re not talking about an artificial drop because of the stimulus, but a drop, and a bigger drop in real dollars, from the level at the end of the Bush Administration to now. And because of an artificial spending cap that the President touts in his speeches (“We’ve already cut $1 trillion”), that will continue, dropping to 22% of GDP from 25% by 2021.
Meanwhile, union leaders are pissed off that they have to continue to endure austerity measures while the rich get off scot-free, at least for the moment:
“The well is dry, Mr. President,” J. David Cox Sr., the newly elected president of the American Federation of Government Employees, said in an interview.
“This is a president who has said he wants to end the freeze,” Cox said. “It’s unconscionable.” AFGE is the largest federal employee union.
While pay has frozen for federal workers, their health care premiums have not, incidentally. So it’s a real cut in wages, by $2,000 for the employee averaging $30,000 per year in salary. Cox wants premiums frozen for 2013.
So the next time you hear someone say that the President has “outfoxed” Congress, and that the Administration hasn’t “turned the country into Spain,” don’t say it in front of a federal employee, who hasn’t had a raise since 2010.