Tuesday, November 30, 2010

Obama's Pay Freeze Helps Keep Frivolous Tax Cuts

Yesterday President Obama called for a two year pay freeze for federal workers, estimated to save the government up to $6 billion a year for the next ten years.*  This bit of preemptive capitulation hasn't pleased anyone, angering the President's supporters while emboldening his detractors who believe that the pay freeze is merely a first step. President Obama gave up this negotiating chit the day before meeting with Repulican leaders in their "Slurpee Summit."

I think this pay freeze is terrible policy for several reasons, especially with the dire state of our economy.  Using the projections of the President's economic team, this pay cut will cost the country 25,000 private sector jobs over the next two years. Despite what Eric Cantor and the Republicans may say, federal employees currently earn 22% less than their private sector counterparts according to the 2009 Office of Personnel Management report.

2009 pay disparity

How can we expect the government to do a better job than it is currently doing when we don't even want to pay the employees a fair wage?  How can we expect to retain the best people we currently have when they are now more open to recruitment to fill jobs in the private sector?** 

Meanwhile, the President still seems determined to allow the tax cuts to be extended permanently*** costing the country $370 billion per year.  He's covered the 2% the cost of these tax cuts with this middle class pay freeze... how will he cover the other 98%?

In 2012, President Obama will be running for his reelection, and the right will have two new memes to press in their campaign.  "President Obama wants to increase the pay of federal workers and raise your taxes."  Follow this up with equally untrue stories about his $2B trip to India, lack of birth certificate, and Muslim faith, and we'll be looking at a serious GOP tea party in November.

* I have seen some conservative commentators wondering how a 2-year freeze can equal ten years worth of savings, I can see how it'd be difficult to accept that not getting a raise this year will make the raises in the future relatively smaller.

** This fits into the long-term plan of the Republicans to shrink the federal government and hand it over to the private sector; as the best employees leave, the quality of work will drop, which tends to feed into more cuts/firings, which tends to lead to private contractors filling in at a much higher cost.

*** There's no doubt in my mind that if they are extended for even a year that they will be extended permanently when they come up to expire next.  If we can't allow them to expire with our large current majorities, what possibility will we have in 2011 or 2012?

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