American federal employee wage freeze looming as Obama submits proposal to trim budget deficit

American federal employee wage freeze looming

American federal employee wages will be frozen if the Obama administration implements a plan to save some funds in order to trim the huge budget deficit. The proposal covers approximately 2 million civilian federal workers excluding military personnel. A panel overseeing the deficit cut wants to freeze wages of federal employees for the next three years and to reduce the workforce by 10 percent. The White House targets savings of $2 billion next year, and as much as $60 billion during the next ten years because of the move. For fiscal year 2010, the U.S. budget deficit has hit a record-high of $1.3 trillion.

President Barack Obama described the need for the freeze in a statement today. “Getting this deficit under control is going to require broad sacrifice,” he said in Washington. “And that sacrifice must be shared by the employees of the federal government.”

The administration has already instituted a moratorium on raises for senior government officials next year and cancelled bonuses and other extra compensation for presidential appointees. There is also a suspension of programs not related to national security and told a few agencies to cut their budget proposals by five percent.

The American Federation of Government Employees, the biggest union in the government sector, voiced their displeasure of the President’s plan. “A federal pay freeze saves peanuts at best,” said union president John Gage in a statement. “The American people didn’t vote to stick it to a Veterans Administration nursing assistant making $28,000 a year or a border patrol agent earning $34,000 per year.”

Posted by James Fried on Tuesday November 30 2010, 3:34 AM EST. Ref: Bloomberg. All trademarks acknowledged. Filed under Featured News, Finance. Comments and Trackbacks closed. Follow responses: RSS 2.0