Here’s something for Michael “There’s been no short-term austerity” Grunwald to chew on: President Obama will extend the federal employee pay freeze into next year, meaning that federal employees will have seen their wages stagnate for at least two and a half years.
The freeze will stay in effect until a spending plan is passed, but the presidential election makes it unlikely that will happen before the start of fiscal 2013 on Oct. 1. As a result, the president is required by the end of August to come up with an “alternative pay plan” to avoid a legal trigger that would automatically raise federal pay in line with private-sector salaries. The alternative pay plan is usually a routine event signaling that Congress and the White House have agreed on a salary increase for federal workers.
With no budget, the freeze will stay in place until at least April, when a short-term spending deal that congressional leaders reached before their August recess to fund the government for six months runs out. The short-term agreement keeps spending at current levels and is silent on the federal pay freeze.
Austerity, by the way, should get looked at in real-dollar terms. A pay freeze, even if it means the same amount of outlays, is an austere policy because of inflation. If spending is staying constant, that’s a real-dollar cut. That we have a smaller federal workforce serving a greater population is an example of austerity. Spending has dropped from the time before President Obama entered office. We’re not talking about an artificial drop because of the stimulus, but a drop, and a bigger drop in real dollars, from the level at the end of the Bush Administration to now. And because of an artificial spending cap that the