Well, It's a Start

Today the President announced a proposal to freeze salaries for non-defense civilian federal employees for 2 years, beginning with 2011.  The announcement came as a bit of a shock to liberals, and a slap in the face  unions, historically strong Democratic supporters. 

The idea is not a new one, as short-lived salary freezes are used commonly during times of financial stress in the private sector.  And arguably the private sector has been under a "salary freeze" if not a "salary decrease" cycle since the start of the Great Recession. 

The idea is also not truly the President's either.  Almost 3 weeks ago, the chairs of the President's Fiscal Commission (Alan Simpson and Erskine Bowles) released their draft plan for deficit and debt reduction, which included the idea the President advocated today, as well as many others, aimed at reducing the federal deficit, and the growth of the federal debt.  I summarized previously - take a look.

Despite the President's near alignment with what most people would categorize as a Republican position, even Republicans were not without complaint today.  Politico, in an article published today, quoted a Repulican aid as saying "If he wanted to work together, he could’ve called up and did something jointly.

I think if the president is willing to focus on the issues Republicans trying to champion, I think Republicans would welcome that and join in a partnership.”  While not complaining directly, the aid is voicing some GOP frustration.  The President is taking this position a day before a planned White House meeting with Congressional leaders, allowing him to take credit for the initiative himself, without appearing to be reaching across the aisle. 

 

To me, the President coming out with this idea without first working collaboratively and publicly with Republican leaders is not surprising at all.  The President's support of this idea will irritate his base enough all by itself - I'm sure the President doesn't want to further irritate by doing it in open collaboration with the opposition party. 

 

While it's a start in the right direction (starting to put some costs controls in place), we're talking about a relatively symbolic gesture (that is still subject to Congressional debate and support - or not).  With a mere $2 billion in savings in 2011, and a 10-year cumulative budget impact of just $60 billion, it's really just a drop in the bucket.  The federal budget contains more than $3 trillion in spending annually.  $2 billion in 2011 is a reduction of just 0.067%. 

 

If you look at the Fiscal Commission's draft proposal, you'll find a couple more areas of federal spending related to federal empoyees that come under fire.  The Fiscal Commission advocates a 10% reduction in the federal workforce, through a 2-for-3 replacement rule, for a net savings of $13.2 billion by 2015.  This would be not a hiring freeze or reduction in force (as is more common in the private sector) but instead a focused re-hire program that would likely force justification of replacement positions across most, if not all federal branches. 

 

Also targeted by the Fiscal Commission co-chairs is the army of staff-augmentee contractors.  From 2002 through 2005 more than 2.4 million contractors were added to the federal payrolls.  This was arguably a reaction to the reductions in the federal workforce experienced in the 1990s.  The commissions recommendation would be to take a wholesale inventory of all contractors and their roles/responsibilities, followed by a reduction of 250,000 contract positions.  This initiative is estimated to offer savings of $18.4 billion by 2015.

 

The commission offers approximately $200 billion in illustrative savings, but that is only part of the plan.  The commission, in addition to budget cuts in both domestic and defense spending, recommends major reform to the tax codes, additional healthcare reforms (not included in the health care reform bill earlier this year, which did more to expand coverage than to control costs), mandatory savings from farm subsidies, military and civil servant retirements, and even changes to Social Security.

 

The question is, why would the president take aim at federal employees when the goal should be Shared Sacrifice?  Why not come out in support of more of the commission's ideas at the same time, which when combined would have a larger impact on federal spending?  It would seem wise to show a broad dedication to deficit control, spreading the sacrifice among multiple groups. 

 

But, though I often disagree with the President and his politics, I will give him credit for supporting something that will actually have a positive impact.  Maybe it's a sign of things to come - or we can hope.