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Obama calls for Federal worker pay freeze to tackle huge deficit

Text by News Wires

Latest update : 2010-11-29

US President Barack Obama proposed a two-year government pay freeze Monday, in an effort to cut back the country's massive deficit of 1.3 trillion dollars in 2010, and to fend of Republican attacks that Obama is a big spender.

AFP - US President Barack Obama on Monday proposed a two-year freeze on most government pay in a move to trim the country's massive deficit.

The White House said the freeze -- which must be approved by Congress -- would save more than five billion dollars over the remainder of the 2011 fiscal year that ends in September and the next fiscal year.

Kicking off what Obama termed a "serious and long overdue" debate about cutting the budget shortfall, he insisted the United States must make "broad sacrifice" to correct its long-term fiscal course.

The freeze will apply to all civilian federal employees including those at the Department of Defense. Military personnel, facing wars in Afghanistan and Iraq, will not be affected.

The plan, although politically sensitive, would cut only a fraction of the deficit, which stood at about 1.3 trillion dollars in fiscal 2010.

But Obama said these measures and others show that the government, long accused of burdening future generations with unsustainable debt, was indeed willing to sacrifice.

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

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

The announcement came a day before the president was to hold a long-planned pow-wow with his Republican adversaries.

Fresh from victory at the mid-term elections, Republicans have pressed Obama to slash federal spending.

While the need for cuts is agreed, both parties have clashed over how far and how fast to trim costs, with Democrats insisting measures cannot be so draconian that they stymie growth.

With an annual budget of over 3.5 trillion dollars, they argue the government is still a key driver of growth in the world's largest economy and provides many vital services.

"There is no doubt that if we want to bring down our deficits it is critical to keep growing our economy," Obama said. "We can't put the brakes on too quickly."

But wary of big government, some Republicans have proposed pay cuts of up to 10 percent for federal employees and a swathe of layoffs.

Republican congressman Darrell Issa said Monday's proposal was "long overdue."

"At a time when our nation’s seniors have been denied a cost-of-living-increase and private-sector hiring is stagnant, it is both necessary and quite frankly, long overdue to institute a pay freeze for the federal workforce."

Monday's announcement marks an opening salvo in what is sure to be a tough political fight over how to bring the US budget back into the black.

In December a presidential panel is due to put forward a wider range of measures to bring down the deficit, which are likely to spark a political firestorm.

Initial plans from the panel caused widespread opposition on both sides of the political divide.

The task force -- co-led by former Republican senator Alan Simpson and veteran Democratic operative Erskine Bowles -- set out deep spending cuts and sweeping tax reforms Wednesday in a bid to slash US budget deficits by four trillion dollars over the next decade.

The measures include a 200 billion dollar cut in discretionary spending in 2015, split equally between defense and domestic outlays, to bring the annual deficit down to 2.2 percent of gross domestic product.

But amid a bitter partisan divide some observers have questioned whether the committee can reach significant recommendations, as 14 out of 18 votes are needed to agree such a step, meaning several Republicans on the panel would have to vote with Democrats.

Date created : 2010-11-29


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