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Friday, December 28, 2012

Fiscal Cliff Looms! Federal Government Gives Raises! [Updated]

    As the country hurtles toward the fiscal cliff, President Obama signed an executive order cryptically titled "Adjustments of Certain Rates of Pay."  The text of the order on the White House website contains no details, but a copy with the attachments is available at the U.S. Office of Personnel Management.  A cursory examination of the document seems to indicate that those "adjustments" are generally in an upward direction.  For example, "Rates of Basic Pay for the Executive Schedule." Here are the rates that were effective in 2012, frozen at the 2010 levels:
RATES OF BASIC PAY FOR THE EXECUTIVE SCHEDULE (EX)
RATES FROZEN AT 2010 LEVELS
EFFECTIVE JANUARY 2012
Level I  $  199,700
Level II    179,700
Level III    165,300
Level IV    155,500
Level V    145,700 
    Here are the rates in the just-signed Executive Order:
SCHEDULE 5--EXECUTIVE SCHEDULE
(Effective on the first day of the first applicable pay period beginning after March 27, 2013)
Level I  . . . . . . . . . . . . . . . . . . . . . . . . . . $200,700
Level II . . . . . . . . . . . . . . . . . . . . . . . . . .  180,600
Level III. . . . . . . . . . . . . . . . . . . . . . . . . .  166,100
Level IV . . . . . . . . . . . . . . . . . . . . . . . . . .  156,300
Level V  . . . . . . . . . . . . . . . . . . . . . . . . . .  146,400
    Not much of an increase, but an increase all the same.  Other raises are included for, among others, foreign service employees, senators, representatives, and even Vice President Biden.

    Combine federal employee raises with tax increases hitting January 1st, increases that reach down to the lowest level of wage earners with the expiration of the payroll tax holiday, and the government might be initiating a winter storm that will make this week's Euclid look like a few flurries.

UPDATE: The website FedSmith.com posted on this yesterday.  Since that blog is targeted at federal employees, the end of the freeze is of course presented as good news:

As most readers know, President Obama proposed a pay freeze on civilian employee pay that was applicable all federal civilian employees. This was way back in 2010. It did not impact pay raises as a result of promotions or within-grade increases but it was good political theater and the move was supposed to save the government money which it has probably done. 
The White House said at the time that the pay freeze would save $2 billion for the remainder of fiscal year 2011, $28 billion over the next five years, and more than $60 billion over the next 10 years. We do not know if that much has or will be saved or if it was political rhetoric in lieu of actual facts. The president noted that  action had to be taken because of “the massive deficits we inherited and the unsustainable fiscal course that we are on. Doing so will take some very tough choices.” 
But, as readers know, the pay freeze is still in effect today and the deficits in the past four years have swamped previous yearly deficits by adding as much as $1.4 trillion in new debt in one year alone. The other three years of Mr. Obama’s presidency have also exceeded more than $1 trillion each year (despite the federal employee pay freeze) due primarily to increased government spending in the past several years. 
But, the good news is that the pay freeze will end in late March.
The reason: A new executive order has been issued providing for a new pay schedule beginning “on the first day of the first applicable pay period beginning after March 27, 2013.” The pay raise will generally be about 1/2 of 1%... 
The legal authority for the new executive order is in the continuing resolution that is currently in effect... 
For those who may also be wondering if Congress could change the pay rates or completely eliminate the pay raise, the answer is that it could be done. However, the change would have to pass both the House and the Senate and, as a practical matter, the Senate has not displayed any independence from the desires of the White House. So any change is unlikely (although not impossible) prior to the effective date. 
After most readers had an extra holiday on Christmas Eve, and with the announcement of a pay raise—even a small one—many of our readers may be looking at the new year with a more positive outlook. 

UPDATE (1/1/13): The House has voted to reject the raises in the president's executive order.

37 comments:

  1. Really, 1/2 of 1 percent after freezing our pay for 4 years is a joke and is designed to get more money from us not for us. The pay raise for me a 12,is about $20 a pay week. After all these years of pay freeze plus higher tax. Wow that will really help! Yet the private sector will see this as feds getting rich while they starve. Typical class warfare.

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    1. I am in the private sector and I haven't had a raise in over 4 years.

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    2. Well I am glad for all of you. Good for you, I just think it is terrible timing. I work in the private sector. I haven't had a raise in 4 years.

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    3. You ought to work for the state of Washington. We haven't had a COLA in over 5 years, and for the last 1.5 yrs had a 3% cut in our salary. PLUS... we are not allowed COB with our insurance plans. So with my cancer last year, I ended up paying out of pocket over $10,000.

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    4. I am glad that some of the posts cleared up something for me,I think. When I first heard of this pay increase for "congress" my first question was are congressmen/women just included in a pay increase for all government workers down to the guy that sweeps the White House steps? Those people need a pay increase. Can't the congressmen/women refuse the increase and leave it for everyone else? Or am I just to naive?

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    5. Here's at least a partial answer to your question:

      http://www.weeklystandard.com/blogs/dem-representative-moves-block-obamas-congressional-pay-increase_692451.html

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  2. Wow.....Im not sure what Im going to do with that extra 9$ BEFORE taxes!!!

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    1. Well, you could get a job in the private sector and see how that pans out.

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  3. I suppose you can count yourself lucky. Some of us in the private sector LOST OUR JOBS. I took a pay cut of 78%, and my hours are limited. No real jobs to be had. [Slightly edited-SWA]

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  4. If I am asked to cut my spending because of this bozo up in the oval office, EVERYONE should be asked for the same sacrifice. I disagree that anyone in washington or working for the gov't should be getting a pay raise.

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    1. You think that nobody in govt. should get a raise do you? Well, I work for the govt. That pay freeze hurt us civil servants pretty bad and cost us a lot of money. Not all of us are sitting up there in a posh office trying to determine the fate of the nation. We get in our cars and drive (rain, snow, hurricane, tornado, flood) to "protect" a public who trashes us every day. Somebody called us "lucky" I wouldn't call it "luck" Many of us chose our jobs because we really believe we are making a difference and serving the public. Many of us own four wheel drive vehicles because no matter the weather, we HAVE to be on the job. Quite a few of us could be making more money in the private sector but "serving the public" is what we choose to do. So disagree all you want. We [work hard] just like everybody else and I can tell you, I'm sick of living on Ramen noodles and I'm tired of sacrificing. 1/2 of 1% won't even buy chicken to put in my noodles so you can feel enormous pleasure in knowing that our taxes will go up because of this raise and we will be bringing home even less. There. Feel better???? [slightly edited-SWA]

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    2. I agree, I was a private IT consultant for 23 years and then went to work for the fed because I had a chance to work on a side of IT that I wanted to get into. I took a pay cut as a 12. I made more money as a private sector consultant. I was OK with the freeze on our cost of living increases until I saw bailed out and bankrupt companies giving out bonuses and other feds getting raises and the ridiculous amount of money that went into the election last Nov. I do the best at whatever I am tasked to do and really considering going back to the private sector. Sure, there are some losers working for the fed doing as little as they can to get by and there are some perks but most federal workers are in the same boat as the private sector.

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    3. You are free to join the private sector at anytime without giving the garbage of "serving the public" The pay and benefits of government work are more than the same job in the private sector.

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  5. Agree. Slap in the face. Hey Mr. POTUS, don't do us any real favors here. 1/2 of 1 percent won't even begin to make up for the medical health care, fuel increase, or other grocery increase, let alone the fiscal cliff you and your congressional colleagues are about to impose on [the] middle class working. Mine pay raise will be a real $1 perpay period, if I'm lucky. [Slightly edited-SWA]

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    1. Maybe you should try living on SS and see how that works for you. Please, if you don't like your job, quit and get a real job in the private sector.

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  6. Maybe if they prevented the Food Stamp program from paying for cakes, cookies, soda, candy, ice cream, pretzels, chips, party trays and left the nutrition program paying only for NUTRITIONAL food, eliminated duplicate spending programs, cut out the fraud, waste, and incompetence in welfare, rent assistance, medicaid programs, they just might save some cash. Maybe they can explain how so many more Americans suddenly became crippled enough to be put on disability this past year?

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    1. yep, i work in a doctor's office and it has been quite a learning experiance. i am eating tuna and spaghetti, buying my clothes at walmart while the "disabled are eating steaks, buying cold cuts i can't afford and wearing 100 hinting boots. if you can drag a deer you can work. it makes me so mad! if michelle is so concerned let her buy my goroceries, and those of other hard working americans!

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    2. One of my co-workers said that her neighbor receives Welfare, Food stamps, etc. She actually has a man that lives with her that has a good job and she said she would never get married because she would lose all her $. I know that there are two sides to all of this, but I too am on a budget -I cut coupons ......

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  7. Now that he has lifted the ban. These guys can vote themselves pay raises every six months. I promise the next one won't be a 1/2 of 1%. How can you be entitled to a raise if you have passed a budget in 4 years?

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  8. I really enjoy the anti-government worker comments from people who think all government workers do the same job, are lazy and overpaid. When these people need assistance from the government, they are the demanding their services and want money be it Foodstamps, Welfare, unemployment, VA benefits, Wics, loans of all types. medical assistance, employment assistance, disaster relief, Immigration, some law enforcement, college fiancial assistance, etc, etc to name a few.

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  9. I totally agree with Bishop above. I too am a federal employee and I think this hint of a pay raise will cost me more money in taxes, which I believe it is intended to do. Give me a tax cut any day instead of this nonsense.

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  10. Once again the executive schedule get the huge pay raises and [not] the general schedule. To bad main stream media can't see that the little gov guys are the ones to always get shafted. I HATE democrats. [Slightly edited - SWA]

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  11. Remember when the economy was booming in the mid and late 1990s and every year, despite the pay parity law and all the negatives associated with Federal Service, President Clinton would only propose a small raise based on "national emergencies"? Fed workers lost $1000s per year every year and no one came cared then. Now, it's all about the value of job security and how overpaid Fed workers are. Politics are not kind to the public sector worker, but why should they be? Fed workers are fools for thinking that big brother is looking out for them as individuals, just as our in our evolving American Empire the individual is a fool if they think Big Brother is out to help or protect them as an individual.

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  12. Obama needs to cut federal pensions.

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  13. I work for a small private business. No raise in the last five years. More taken from my check for medical care. I would be thrilled with an extra ten bucks a week. Government employees seem to think they are as entitled as welfare people.

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  14. Taxation without representation. Isn't that what started this country in the first place. You can't spend more than you have and expect to survive.

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  15. I see a lot of people complaining about the pay raise for CONGRESS but, as mentioned above, they forget that not all government workers are in the White House. I'm a lowly civil servant who lives in the real world, with real bills and my shit smells just like everybody else's. That pay freeze hurt those of us on the bottom of the government ladder and 1/2 of 1% is not enough to make up for it. And NO they can not vote raises every 6 months. Who made up that crap? I've been working for the govt. for 16 years and I have never known them to vote a pay raise more than once a year because if they did I would get one too, and that doesn't happen.

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  16. A tax cut from this TAX AND SPEND SOCIALIST IDIOT??!!! Never happen!

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  17. 1/2 of 1% wont cover the 5% that our insurance went up, no pay raise in 4 years and this is there way to make us low level government employees think we are getting something till you get the first pay check in may and its less then the one before

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  18. America; you kept him in office for another four years - live with it!

    Anonymous 12/29/12 9:33PM Right on the button - a small raise may put some into a higher tax bracket and the next check may be less.

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  19. I have a hard time sympathizing with anyone making a 6 digit figure with a public or private sector job. At that income, living a modest life would be easy! At least for me.

    These raises are like adding one straw to the proverbial deficit hay stack that's already fallen anyway. so it's only a principle being argued not anything of practical value.
    Though every worker deserves his wages, to give raises now to the highest paid officials in the W.H. sends the message to LOOK OUT FOR #1. History repeating itself over and over.

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  20. $900 a year raise is "not much of a raise, but...." If I had an extra $900 a year it would pay for much of my oil bill to heat my house for the winter. Really wish everyone could just get real and spend a little time on a modest salary and real life expenses, as most of America does. Those in charge just really have no idea...

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  21. As an outsider, I can only speak as I see. When I visit the US, my first encounter is with the endless Fed employees working at the airport purportedly to keep you safe. I'm not blind and for the most part these people do squat, their numbers are multiplied when you add the out of sight thousands of administrators that beaver away doing precisely nothing of value supposedly supporting them. Yet every one of these folks are like all of us, desperate to keep body and soul together.
    Once upon a time there were real jobs out there, that offered a person a reasonable income, independence from the state and personal dignity; but they have gone, taken away by the very people that now create non jobs and treat the public like enemies of the state.
    A recent visit to Russia was eye opening in the degree of personal freedom they have compared to the modern USA.
    Sure there's corruption, there always was, but by no stretch are the people treated as poorly as they are in the US.
    America needs to give its people their dignity back, that can only be done by repatriating jobs and manufacturing to the US, but sadly I don't see a cowed and brow beaten people trying or calling for any such thing.
    The voices of those against giving bankers and big business billions of dollars for feckless behaviour are either ignored or silenced.
    Having seen both sides of the coin, my take on it, is that America is fast on its way to being a police state where the people are in fear and thrall to their own government and by degree to their bosses.

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  22. Obama decided in August to EXTEND the pay freeze another quarter. At that time he announced that federal workers would get 1/2 of 1%. Congressional pay is not determined by the President. Nor does the President decide the base pay of Congress, sitting federal judges, and senior executives. That pay is indexed to Congressional pay and is set by a federal agency staffed by civil servants (whose pay is set by the government bureaucracy. Likewise for Military pay it is set by a committee inside the DOD. Congressional pay is set by congress and placed in the budget or CR, the president signs this into law or vetoes the budget/CR setting up on override or having no money to run the country. Congressional pay has a built in COL. The congress must vote to reject the COL or they automatically get a raise. This raise has nothing to do with Obama. Congress did not vote to reject the COL as they had in the 2 previous sessions. Since Congress didn't stop their self issued pay raise this means that upper level Administrative branch execs and all sitting judges get a raise to. Congressional/ Executive pay and Judges pay are set by law. If Obama accepts the budget/continuing resolution then Congress gets a raise along with judges and Executive branch appointees. Obama has little to no authority in establishing levels of pay in his declaration of pay rates he can control the % of any raise. In this case he said .5% he had the authority to set a 1.5% increase, he chose not to. Obama had little or no discretion other than to extend the wage freeze an additional 3 months. This gives Obama time to prepare for the next fight increasing the debt limit. The GOP could make this all go away but they won't. The only way out is to recall Republican representatives starting with GOP leadership followed by the fundamentalists and the Tea Party. One or two successful recalls and the GOP would be in deeper trouble than they are now.

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  23. The concept that government pays more than private sector for the same jobs is [wrong].

    I took a 20% cut when I left the private sector to come back to the DOD as a civil servant. When I left the government to go to the private sector 10 years ago, the private sector gave me a 50% raise over my federal salary.

    This is not just anecdotal evidence - my professional society does a salary survey each year, and government engineers consistently are paid 15-25% less than their private sector counterparts.

    Our private sector contractors have not seen any freezes - they haven't had as big an increase as usual, but they got raises when those in the fed system didn't.
    [Slightly edited-SWA]

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  24. That the debt ceiling and "fiscal cliff" have been used as leverage to exact concessions on the "other side" suggests that the high-stakes game of political poker may be getting out of hand in Washington. While the political strategy might be clever in a partisan sense, the systemic risk is unprecedented and dangerous. In http://www.thewordenreport.blogspot.com/2013/02/the-debt-ceiling-and-fiscal-cliff-as.html, I argue that we might be seeing one of the weaknesses of democracy itself in how Congressional leaders and the President have gone about "kicking the can down the road."

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