President Obama will propose today freezing federal employee pay for the next two years, a move no doubt aimed at Republican attacks that the White House isn't willing to substantively address the debt and deficit problem. While the exact details are still to come—and even then will be adjusted by Congress—reports are suggesting this could stave $2 billion in 2011, $28 billion over the next five years, and $60 billion over a ten-year horizon.
While there will certainly be more to report from the president later today, White House spokesman Dan Pfeiffer said this morning: "Just as families and businesses around the nations are tightening their belts in this economy, so must the government."
If this is truly a 180 degree turn towards a more sound fiscal policy from the administration that is great news. But the White House will have to come up with some more serious proposals for cutting spending to truly "tighten their belts." This is a start, but its barely reaching for the belt. With a projected $1.3 trillion deficit for fiscal year 2011, a pay freeze is more a token offering than anything else.
That is not to say this is a bad idea or to slap away the gesture. Cutting federal pay has long been a suggestion from the political right for how to address deficit problems. Even going back to the Bush administration, there were calls to curb the out of control pay privileges for federal employees. According to data from the Bureau of Economic Analysis, last year federal employees earned an average of more than $30,000 more per year than comparable private sector workers (not counting the USPS or military). See for yourself, look at tables in Section 6 of this list of BEA data.
But with all the options on the table in the wake of the Bowles-Simpson report, the White House is going to have to cut much deeper, and make a much more serious compromise proposal if budget reform is going to move anywhere over the next two years. And as my colleague Sam Staley just wrote, for the administration to do this they will have to look at structural cuts, "the only real way to get a handle on federal spending is to engage in a fundamental realignment of government priorities that involves less federal involvement."