President Donald Trump is putting in a federal salary freeze in 2019. This doesn’t contradict what we reported just last week; that Trump signed into law a 2.6% pay rise for members of the military and their families, which is the largest pay raise in nine years. Those in the armed forces are the only ones exempt from the federal pay freeze.
“I have determined that for 2019, both across the board pay increases and locality pay increases will be set at zero,” President Trump said in a letter that was released by the White House. “These alternative pay plan decisions will not materially affect our ability to attract and retain a well qualified Federal workforce.”
According to CNBC, “The Trump administration proposed $143.5 billion in cuts to federal employee compensation in May, including substantial decreases in retirement funding. Also that month, Trump signed three executive orders that made it easier to fire civilian employees and put new limits on union activity. A federal judge invalidated many of the provisions in those executive orders on Saturday.”
NEWS: President Trump says he's eliminating a pay raise for civilian federal employees slated for 2019 in order to "put our Nation on a fiscally sustainable course." pic.twitter.com/7wNAgoMdKX
— Sahil Kapur (@sahilkapur) August 30, 2018
Freezing government spending is a stealthy way to cut spending, given that inflation will decrease the real value of stagnant salaries being paid out by the federal government.
This freeze will only occur if Congress agrees to it. The Senate has proposed a 1.9% pay increase for federal workers, and given the Republican majority, it’ll be a test of just how fiscally conservative they really are in choosing between a freeze and 1.9% hike.
In addition to the hike, Trump also called for future pay increases to be performance-based, not automatic. “As noted in my Budget for Fiscal Year 2019, the cost of employing the Federal workforce is significant. In light of our Nation’s fiscal situation, Federal employee pay must be performance-based and aligned strategically toward recruiting, retaining, and rewarding high-performing Federal employees and those with critical skill sets. Across-the-board pay increases and locality pay increases, in particular, have long-term fixed costs, yet fail to address existing pay disparities or target mission-critical recruitment and retention goals.”
Federal bureaucrats make 78% more in total compensation than people in the private sector, and state and local employees make on average 25% more. The salaries of federal workers could be frozen for a decade and they’d still be out-earning their counterparts in the private sector.
While the federal deficit is expected to be $1 trillion this year, even a 1% annual cut in the federal budget would balance it by 2024.
What makes this proposed cut even better is that it comes on top of other proposed spending cuts. While President Trump hasn’t been as strong as we’d like to see in reducing the deficit, at least he shows a willingness to cut spending. (RELATED: White House Planning to Rescind Spending From $1.3 Trillion Omnibus.)
More so, cutting government worker pay may incense federal employees, but Trump should keep one thing in mind: most bureaucrats already hate his guts. This is a nice way to get even with people who are trying to subvert his agenda from the inside.
Overall, preventing the federal worker from getting a raise is good economics. And it will probably be good politics too during the 2020 election. Trump doesn’t need the support of federal workers to win re-election. He needs the support of normal working Americans, just like last time.