NEW YORK (CNNMoney.com) -- President Obama on Monday will call for a two-year freeze in the wages of federal employees.
The freeze, which would 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.
Still, it's an important step to help generate taxpayer support at a time when policymakers will need to make numerous difficult decisionsabout curbing the debt, one fiscal expert said.
"It's a real money issue and a psychological first step," said Maya MacGuineas, fiscal policy director at the New America Foundation. (Obama's debt panel nears final report)
This article is about Obama calling for a two year freeze pay for federal civilian employees. I wonder if this is a bad idea for our wreaked economy since the consumption coming from the federal civilian employees will drop dramatically. Obama also stated that the federal civilian employees won't be singled out, implying that there are more sacrifices on the way.
Did anyone notice that the freeze will not affect military personnel ? That does not seem fair since 2 million civil servants will be affected. The article did not say if they will not receive any pay for a whole two years - this seems too drastic, is the government really doing this ?
ReplyDeleteOK. Farther down in the article it does say that critics are coming from Obama's own party - saying that cuts should apply to more military personnel. I agree entirely with this (although no one is pushing to cut the pay for those actively serving in the war.)
ReplyDeleteFederal wage freeze means NO increase in salary, just in case people misunderstood the meaning of it. For instance, some people thought it means federal civilian employees won't get paid at all. That is definitely extreme. I wonder if this will affect immensely, depending on inflation.
ReplyDeleteThis seems to be a random and ill-advised cracking of the whip to reduce the debt. As mentioned in a previous post, this will reduce consumption for these employees which will affect the economy. Government spending, particularly in the form of salaries, has a larger effect due to the government multiplier, meaning that the effect of this legislation will be much larger than the actual freeze itself. We need to be looking at the real issues in government spending, namely the defense budget. Obama needs to make hard, concrete choices, not lower the debt through tiny cuts like this.
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