Fact Sheet: Cutting the Deficit by Freezing Federal Employee Pay

Because of the irresponsibility of the past decade, the President inherited a $1.3 trillion projected deficit upon taking office and an economic crisis that threatened to put the nation into a second Great Depression. He moved quickly to get the economy moving again. Now, the economy is growing, and we have gained private sector jobs for the past 10 months. But families and businesses are still hurting, and our top priority is making sure that we are doing everything we can to help boost economic growth and spur job creation.

Now, we need to turn our attention to addressing the massive deficits we inherited and the unsustainable fiscal course that we are on. Doing so will take some very tough choices. Just as families and businesses around the nation have tightened their belts so must their government. That must be done in a targeted way that focuses our investments in what works and in what will lay the foundation for job creation and economic growth for years to come while cutting back elsewhere in our budget.

That is why the President has decided to propose a freeze in civilian pay for federal employees for two years, 2011 and 2012.         

• This two-year pay freeze will save $2 billion for the remainder of FY 2011, $28 billion over the next five years, and more than $60 billion over the next 10 years.
   
• It will apply to all civilian federal employees, including those in various alternative pay plans and those working at the Department of Defense – but not military personnel.

This was a decision that was not made lightly. From the doctors and nurses who care for our veterans to the scientists searching for better treatments and cures, the men and women who care for our national parks, and the thousands who make sure that the Social Security check is in the mail and that students get their scholarships, federal workers serve their fellow Americans. They do so often with great sacrifice and motivated by a patriotic love for their country. This freeze is not to punish federal workers or to disrespect the work that they do. It is the first of many actions we will take in the upcoming budget to put our nation on sound fiscal footing – which will ask for some sacrifice from us all.

This move also is another step in what the Administration has done as part of its Accountable Government Initiative to cut costs, save taxpayer dollars and do more with less in the federal government:

• Upon taking office, the President froze salaries for all senior White House officials; in last year’s budget, he proposed to extend this freeze to other top political appointees; and he eliminated bonuses for all political appointees.
   
• The President directed agencies to dispose of excess real estate to save $8 billion over the next two years.
   
• The President set an aggressive goal of reducing improper payments by $50 billion by the end of 2012.
   
• In each of his budgets, the President put forward approximately $20 billion in terminations and reductions, encompassing more than 120 programs all of which have strong supporters.
   
• The President put forward more than $1 trillion in deficit reduction in his 2011 budget, including a three-year freeze in non-security spending – which will bring non-security discretionary spending to its lowest level as a share of the economy in 50 years.

Ultimately, reining in our deficits will take tough decisions and sacrifices made by us all. We look forward to working with both sides on Capitol Hill over the next several months to forge a commonsense deficit reduction strategy that will rein in our deficits, keep our economy growing, and lay the foundation for American competitiveness for years to come.