Obama pay-freeze plan an opening move in busy week

McClatchy NewspapersNovember 29, 2010 

WASHINGTON — President Barack Obama called Monday for a two-year freeze on federal workers' pay, a largely symbolic act that kicked off a week of partisan debate over how to contain government spending while stabilizing the economy.

"Going forward, we're going to have to make some additional very tough decisions that this town has put off for a very long time, and that's what this upcoming week is really about," Obama said in announcing the freeze plan, which would save $5 billion over two years and affect civilian workers, not the military. Congress must approve the pay freeze for it to become effective.

The federal budget deficit was about $1.3 trillion in the recently ended fiscal year, and the national debt is estimated at nearly $14 trillion. Paying interest on that debt alone gobbles 6 percent of all federal spending, and that's projected to rise to 17 percent by 2020.

On Tuesday, the president is to meet with congressional leaders from both parties to haggle over what can get done in their lame-duck session over the next three weeks, especially whether to extend Bush-era tax cuts that otherwise will expire at year's end.

On Wednesday, the National Commission on Fiscal Responsibility and Reform, also known as Obama's bipartisan deficit commission, is to issue its report on how to bring down the crippling budget deficits and debt.

On other urgent fiscal fronts, some 2 million people stand to lose extended unemployment benefits over the next few weeks unless Congress acts soon; the money runs out Tuesday.

Congress also must act by Friday to authorize money to keep the government functioning; otherwise, most nonessential government services would shut down.

Obama's pay-freeze proposal drew fast opposition from labor and liberal groups, while many Republicans and some Democrats said it wouldn't go far enough.

Lawrence Mishel, the president of the liberal Economic Policy Institute, called the plan "another example of the administration's tendency to bargain with itself rather than Republicans" and said it reinforced a "conservative myth" that federal workers were paid too much.

House Minority Leader John Boehner, R-Ohio, who's to become the speaker of the House of Representatives next year, said that Obama should go further and support a federal hiring freeze.

Like the ban on earmarks — the local projects that lawmakers slip into legislation — which congressional Republicans endorsed earlier this month, independent budget analysts thought the pay freeze would make little difference to the federal budget but that it did give Obama a head start in this week's political gamesmanship.

"Freezing federal pay is just getting ahead of the curve. It's a good talking point," said Tripp Baird, who was a top aide to former Senate Republican leader Trent Lott of Mississippi and is now an analyst at the Heritage Foundation, a conservative research center.

The president indicated that his plan is a compromise that acknowledges that millions of Americans have been living with pay cuts and furloughs since the Great Recession of 2007-08 — or have lost their jobs altogether.

"After all, small businesses and families are tightening their belts," Obama said. "Their government should, too."

His plan arrived against the backdrop of a widening debt crisis in Europe that's a brutal reminder of what the United States could face someday if it doesn't get its fiscal house in order.

Still, it's not clear what hard choices politicians are prepared to make in Washington's polarized partisan culture. White House Press Secretary Robert Gibbs said Monday that he didn't expect Tuesday's meeting between Obama and congressional leaders to be decisive.

Any final recommendations that the deficit commission submits to Congress are to include only proposals that 14 of 18 commission members support, which means they must draw bipartisan backing.

With Bush-era tax cuts set to expire Dec. 31, there's a lack of consensus on how to proceed on that hot-button issue as well. The Democrats who are in control of the lame-duck House of Representatives say they'll vote to extend only those reductions that affect individuals who earn less than $200,000 annually and couples that make less than $250,000. Most Senate Democrats are expected to follow suit.

But at least five Senate Democrats have said they want the cuts extended for those who earn more, too, at least temporarily. Sen. Jim Webb, D-Va., said that he "doesn't think they ought to be drawing a distinction at $250,000," while Sen. Evan Bayh, D-Ind., said that "raising taxes will lower consumer demand at a time when we want people putting more money into the economy."

Democrats control 58 Senate seats, but they need 60 votes to cut off debate. All 42 Republicans are expected to push to extend all the cuts — and to block anything less.

More immediate issues for Congress are extending unemployment benefits and renewing government funding.

Congress has missed the deadline for jobless aid before; this summer, it waited 51 days before extending it. The debate's the same this time: Republicans want the $12.5 billion in benefits paid for through cuts in other spending; most Democrats say that extending the jobless benefits is an emergency, which makes it OK to add that cost to the budget deficit.

"Republicans found a wedge issue that seems to work for them in some weird sort of way," said Maurice Emsellem, a policy co-director at the National Employment Law Center, which studies jobless issues.

As for keeping the government funded, the two parties are at odds over how much federal spending should increase, whether to include a ban on earmarks and whether the funding will stretch until Sept. 30, 2011, the end of the fiscal year.

Also, will tea party-backed Republicans try to stall the measure until they get the kinds of huge cuts they insisted on during their recent campaigns?

While there probably aren't enough votes to shut down the government very long, if at all, being obstinate against a business-as-usual funding plan "could be a good photo op, because if you're Republican, you may be thinking anything is better than capitulation," veteran budget analyst Stan Collender said.

(Kevin G. Hall contributed to this report.) MORE FROM MCCLATCHY

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Follow political developments at McClatchy's Planet Washington

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