Tuesday, November 30, 2010

Pros/Cons Of Federal Government Pay Freeze

At least part of the message sent by taxpayers in the last election has been received by President Barack Obama. Yesterday, the President put a freeze on increases in the pay of all federal employees with the exception of people in the military. So, what are the pros and cons of a federal government pay freeze and will this one step help reduce the expanding deficit? The simple answer is yes, but the larger answer is that it only amounts to a drop in the bucket when the trillions of dollars it current takes to pay all the bills racked up by the US federal government are put on the table. To me, it's a huge thing on the pros side that President Obama is doing something to address the concern of average Americans that the US federal governments spending habits need to be slowed down. However, President Obama needs to do much more - if this country is to ever see "black ink" on our balance sheet again.

The cons of a federal government pay freeze are small, but none the less they will have a negative impact on the US economy. It's important to remember that folks who work for the US federal government are Americans too and when any American finds their take home pay not going up for a period of time - that prospect will cause consumers to not spend their money and in doing so further delay an economic recovery. The part of the United States that will feel the biggest impact of a federal pay freeze will be the Washington D.C., Maryland and Virginia areas. One thing to remember about President Obama's decision to freeze the pay of federal employees is that decision does not include a hiring freeze - so hundreds and potentially thousands of new federal government employees could be hired, even though no current federal employees will be getting a raise.

The biggest thing on the pros side of freezing the pay of US federal employees is that President Obama is doing something to slow down the rate of government spending. However, the biggest thing on the cons side to a federal government pay freeze is that he has left a huge loophole in his decision, which allows him to hire many more employees that could render his pay freeze idea moot - when exposed to the light of day. The real cuts that are needed to put the United States back on a sound financial footing are things that no politician is willing to touch. Big cuts in Medicare, Social Security and the defense budget must be done in order to give more than lip service to the problems a greedy public and their politicians have used as a selfish crutch for far too long.

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