Why Did Obama Give Congress a Raise?

President Obama has lifted the executive order that froze wages of federal workers, including Congress. Why he chose right now to do it is anyone’s guess, but the idea of giving pay raises to the most ‘do-nothing’ congress since the 1940’s sure is unpleasant. The Huffington Post reports:

As of March 27, 2013, federal employees will see a half-percent to one percent pay increase, marking the end of a pay freeze that has been in place since late 2010. Congress hasn’t seen a pay raise since 2009.

According to the order, Biden’s pay will increase from $225,521 to $231,900 a year, before taxes. House Speaker John Boehner (R-Ohio) will see his salary increased to $224,500 and Senate Majority Leader Harry Reid (D-Nev.) will take home an annual pay of $194,400 after his raise.

While Obama’s order made no mention of merit for such a raise, HuffPost’s Amanda Terkel reported on Friday that the 112th Congress is set to end the session as the most unproductive since the 1940s, with only 219 bills passed by the body becoming law. The raise won’t take place until the 113th Congress, meaning that outgoing members will see no effect from the order.

No one in the Federal Government should be given a pay increase at this point, particularly  Congress.

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10 Responses to Why Did Obama Give Congress a Raise?

  1. Raises for federal employees is just fine. It sucks congress is included but I support raises for federal employees. I am a state employee and I have been on a wage freeze for 4yrs. It is hard on you to deal with that. The price of food, gas, electricity, water and everything else goes up while your wages are stagnant. But the impact is greater than just that. Not getting a raise effects your productivity and loyalty to an organization. If they won’t / can’t reward you for good service then you are less apt to go the extra mile for your employer. Furthermore it can lead people to seek employment elsewhere which causes a loss of institutional knowledge. Think about those that got jobs in the last 4 yrs and have never gotten a single raise. How loyal do you think they are to their job? Finally employee salaries in the federal government make up a very small proportion of the total cost of running the government. I can’t find the numbers at the moment but employee salaries aren’t driving our deficit, not by a long shot.

    Simply put freezing employee wages to deal with federal (or state) budget problems is a band-aid. It can’t be a long term fix because it doesn’t drive the budget. Largely it is entitlement and defense spending that is driving the deficit.

    • No offense intended. I wrote that post when the fiscal cliff deadline was quickly approaching. I’d love to see some sensible reforms to medicare and social security. Once that is in order I’m all for raises on Federal workers.

      My wage was frozen for two years at the company i work for. Once they got their house in order, raises resumed.

      I also agree that federal wages aren’t the problem, the entitlements you mentioned are as well as the fact that revenues have been at the lowest levels since the 1950s. At that moment in time, I was hoping for a grand bargain between Obama and Boehner.

      • No offense taken, it is just a subject I have put much thought into (and bitched about for years). I understand that wage freezes can be good if it is a temporary measure while getting your house in order. The problem is that it can’t be a permanent solution. After 4yrs of a wage freeze it is time to at least give a cost of living raise so that the employees aren’t being punished because the powers that be can’t get their house in order.

        What needs done is Medicare, Medicaid, Social Security reform combined with reduction in defense spending. We spend more on defense than the next 17 countries in the world, why do we need to spend to that level? There is no need for it, we need to cut defense spending outright.

        When it comes to entitlements I think the first thing we should do is implement means testing for Medicare and Social Security. If you have plenty of resources then you shouldn’t receive either of those. I see no reason why somebody who is wealthy should get Medicare or Social Security. Though I know that won’t do as much as we need. In order to fix Medicaid and Medicare we need to figure out how to deal with health care costs in general. That is the primary driver of cost growth for Medicaid and Medicare.

        Social security is a bit difficult. We could increase taxes to fully fund it, unfortunately that would stick the younger generation with the bill racked up by the older generation. We could increase the age but it is already getting pretty ridiculous considering that you can’t get it until 67 and average life span is 74. So you only get a few years as is. Another option is to drastically alter social security in some form. It could individualize payments so that you only receive what you put in plus some interest or what not. It could be like a mandatory 401k to ensure which would require you to pay into a completely private retirement account.

      • I think all those entitlement fixes are good ideas. I am particularly interested in the partial privatization of social security. Switzerland was able to do something very similar to your idea.

        I think the left looks to Europe for inspiration so much that they need to understand when a European country does something right-wing it can be done here.

      • My idea for Social Security is a type of partial privatization. I think that the government should collect Social Security like it does now. But individual accounts should be maintained so that you don’t get back more than your share. Then the government should offer the Social Security money to private businesses to invest and make money off of. But here is the catch. Any business that takes the money has to agree to give a specific % return on the money. Though the business is allowed to keep all profit beyond the required return. So the business would incur all risks yet also can keep all the profit it makes. The government on the other hand gets a return on their investment that is consistent and reliable so that they can plan for the future with less uncertainty.

        Now there would be requirement to meet in order to receive the money. The business would be required to pay out as they agreed no matter what, even if that means they pay out of pocket for it. Also the business would have to meet certain financial criteria such as having cash flow, assets or other collateral to help guarantee they will pay as required. Furthermore failure to pay could result in liquidation of the all business assets in order to pay.

        But I think that many businesses would be quite interested in managing that quantity of money. The shear amount would be very enticing to many. So they may be willing to incur the risk in order to make the profit.

        At some point I will write this up in a more in-depth and organized manner.

      • That’s a really interesting idea. You should definitely write about it.

        Have you read Paul Ryan’s plan for Social security? Its sort of in that ballpark.

      • No I haven’t read anything of detail about Paul Ryan’s plan for Social Security. I will have to check that out.

  2. Holly says:

    My husband works for the Veterans Administration that takes care of all of our veterans and he is one the federal employees that you say doesn’t deserve a raise after he has had excellent reviews for the past three years and got no raise. So clue yourself on who should and shouldn’t get raises. Congress doesn’t deserve one but alot of other federal workers do!!

    • Thank you for your comment. I never suggested Federal workers do not deserve raises. There is, unfortunately, a big difference between ‘not deserving’ and ‘not able to afford.’ I am sure your husband does fine work at the VA. Thank him for helping our veterans.

      That being said, raises should not be given because of the dire fiscal situation in the Federal budget. Many companies have not given raises to their employees to avoid layoffs. Others have had to cut back hours or take unpaid days off. Almost all have had to increase the amount employees contribute to health plans. The federal government is not above such measures.

  3. I also find it interesting that the threshold they passed also covers them (400k). I think that’s how much president makes. So none of them will see their taxes go up. Wonder why they were in such a “rush” to compete before midnight.

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