White House opposes bill that includes a pay freeze extension

The White House on Thursday said it opposes legislation that would extend the payroll tax cut in part by prolonging the federal pay freeze.

This week two Republican senators unveiled proposals to pay for an extension of the payroll tax cut by -- among other measures -- continuing the two-year salary freeze on federal civilian employees that started in January and by reducing the government workforce through attrition. Sen. Dean Heller, R-Nevada, introduced a bill (S. 1931) that would institute a five-year pay freeze on feds and replace every three workers who leave with one employee. A similar proposal by Sen. Jon Kyl, R-Ariz., would extend the pay freeze for another one to two years and also would downsize the government workforce through attrition.

The Obama administration released a statement saying it does not support S. 1931 partly because it is "paid for by unbalanced cuts that would break a bipartisan deal achieved in August and would undermine the nation's ability to invest in areas that are key to America's future, to maintain core government functions and to defend the United States." The statement, however, did not specifically mention the proposed pay freeze or workforce downsizing recommendations. Office of Management and Budget Director Jack Lew has said previously that he could not rule out further sacrifice from federal workers in the name of deficit reduction.

OMB did not respond Thursday to a request for comment on the pay freeze proposal.

The administration wants to extend the Social Security payroll tax cut to help stimulate the economy. The White House supports a bill (S. 1917) sponsored by Sen. Bob Casey, D-Pa., that would pay for the tax cut extension by levying a tax on individuals with incomes exceeding $1 million. Workers covered by the Federal Employees Retirement System benefit from the payroll tax cut, but those in the Civil Service Retirement System do not because they don't pay into Social Security. The tax holiday and unemployment insurance both expire at the end of the month.

Heller's bill would require millionaires and billionaires to pay higher Medicare premiums, and it would eliminate their eligibility for unemployment compensation and food stamps.

Federal employee advocates are upset over what they view as more attacks on government workers' pay and benefits. "Asking middle income federal employees who remain under a pay freeze, and not millionaires, to foot the bill is not only unacceptable, it is cruel and insensitive," Gregory Junemann, president of the International Federation of Professional and Technical Engineers, said in a Dec. 1 letter to senators. The Federal-Postal Coalition, a group of more than a dozen federal employee unions and associations, also sent a letter Thursday to senators urging them to reject proposals to further freeze government salaries or shrink the workforce. "The impact of a 10 percent federal workforce reduction and a five-year federal pay freeze will be felt throughout the economy and it will very likely lead to private sector job loss and wage deflation," the letter said.

The administration estimated that the current two-year pay freeze will save $2 billion by the end of this year, and more than $60 billion over the next decade.

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