President Obama on Monday called for a two-year freeze in the wages of federal employees. The freeze, which would need congressional approval and save $60 billion over 10 years, would make a small dent in the nation's debt problem. The accumulated deficits are currently forecast to exceed $9 trillion over the next decade.
This strikes me as short-term fiscal restraint but not a really serious attempt to getting the long-term fiscal house in order. In other words precisely the opposite of what we should be doing while in a very depressed economy. So why would this President make such a recommendation:
On Capitol Hill, Obama's proposal is likely to pick up support on the other side of the aisle. Republicans have argued in favor of a freeze in recent weeks, and the co-chairmen of Obama's bipartisan deficit commission made a similar recommendation earlier this month. "It's a great start. I'll applaud when he [Obama] does the right thing, and he did in this case," said Rep. Jason Chaffetz, a Utah Republican and the presumptive chairman of the House subcommittee on federal workers. "I'd like to see things go further. Personally, I would like to see the overall payroll cut by 10%."
The President has decided to go with what Republicans want to do. Fortunately, congressional Democrats are already speaking out against this proposal.
Update: Larry Mishel gets it right:
In the context of the deficit, Obama will get chump change from freezing federal pay, and will only enlarge the degree to which federal pay lags that of the private sector ... This is another example of the administration’s tendency to bargain with itself rather than Republicans, and in the process reinforces conservative myths, in this case the myth that federal workers are overpaid. Such a policy also ignores the fact that deficit reduction and loss of pay at a time when the unemployment rate remains above 9% will only weaken a too-weak recovery.