Tuesday 12 December 2017

Obama announces two-year pay freeze for civil servants

US President Barack Obama speaks about a two-year proposal to freeze most government salaries. Photo: Getty Images
US President Barack Obama speaks about a two-year proposal to freeze most government salaries. Photo: Getty Images

Alex Spillius

President Barack Obama on Monday announced a two-year pay freeze for civil servants, in a move designed to trim the country's massive deficit and ward off criticism that he has not taken cutting costs sufficiently seriously.

The US president said he aimed to start a "serious and long overdue" debate about cutting the deficit, which has risen to $1.3 trillion (€1 trillion) this year.

"The hard truth is that getting this deficit under control is going to require some broad sacrifices and that sacrifice must be shared by the employees of the federal government," he said. The freeze will apply to all civilian government employees but will exclude military personnel.

"After all, small businesses and families are tightening their belts, their government should too," he added.

The plan was seen as a response to the midterm elections, when the Republicans won a majority in the House of Representatives and took six Senate seats amid widespread anger about unemployment and public finances.

The president will today hold his first meeting with the Republican leaders since the Nov 2 polls, with deficit reduction and tax cuts likely to dominate the conversation.

The White House said the freeze, which must be approved by Congress, would save more than $5bn over the next fiscal year and a half. Representing only a fraction of the deficit, its main value will be symbolic.

Some Republicans had proposed pay cuts of up to ten per cent for federal employees and large scale redundancies.

Later in the week a presidential panel is due to present a wider range of measures to bring down the deficit, which are likely to spark controversy.

Its leaders have already advocated deep spending cuts and sweeping tax reforms in a bid to cut budget deficits by $4 trillion over the next decade, but their recommendations were condemned by both Democrats for cutting too deeply and by Republicans for removing well established tax breaks.


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