Obama seeks first two-year pay freeze in US history for federal workers

In another austerity move and ceding to political pressure from the Republicans, the Obama administration has proposed a two-year pay freeze for federal workers in its efforts to cut the $1.3 trillion budget deficit, and spur economic growth and create more jobs.

The freeze will apply to most of the 1.9 million civilian federal employees, including those in various alternative pay plans and those working at the department of defence, but will not affect the defence personnel.

The proposal, which requires the approval of the US congress for its implementation, is the first two-year pay freeze in the US history. Earlier in 1986, a 1-year freeze was introduced by president Ronald Regan.

A statement issued yesterday by the Whitehouse said: ''Now, we need to turn our attention to addressing the massive deficits we inherited and the unsustainable fiscal course that we are on. Doing so will take some very tough choices.''

''Just as families and businesses around the nation have tightened their belts so must their government. That must be done in a targeted way that focuses our investments in what works and in what will lay the foundation for job creation and economic growth for years to come while cutting back elsewhere in our budget,'' the statement further said.

The freeze, proposed for federal employees for two years, 2011 and 2012, is expected to save $2 billion for the remainder of fiscal 2011, and $28 billion over the next five years, and more than $60 billion over the next 10 years.

''This freeze is not to punish federal workers or to disrespect the work that they do. It is the first of many actions we will take in the upcoming budget to put our nation on sound fiscal footing – which will ask for some sacrifice from us all,'' the statement said.

Obama has already taken up various measures to cut costs, which include freezing of the salaries of all senior White House officials, and proposing to extend this freeze to other political appointees, as well as directing to dispose of excess real estate assets.

Besides proposing to terminate and reduce several programmes to save approximately $20 billion in each of his budgets, the president also plans to reduce improper payments by $50 billion by the end of 2012.