Trump cancels pay raise due to federal workers in January

WASHINGTON – President Donald Trump is canceling pay raises due in January for most civilian federal employees, he informed Congress on Thursday, citing budget constraints. But the workers still could see a slightly smaller boost in their pay under a proposal lawmakers are considering.

Trump said he was nixing a 2.1 percent across-the-board raise for most workers as well as separate locality pay increases averaging 25.7 percent.

“We must maintain efforts to put our Nation on a fiscally sustainable course, and Federal agency budgets cannot sustain such increases,” said Trump. The president last year signed a package of tax cuts that is forecast to add about $1.5 trillion to federal deficits over 10 years.

Trump cited the “significant” cost of employing federal workers as justification for denying the pay increases, and called for federal worker pay to be based on performance and structured toward recruiting, retaining and rewarding “high-performing Federal employees and those with critical skill sets.”

His announcement came as the country heads into the Labor Day holiday weekend.

In Spokane and the Spokane Valley Metropolitan area, roughly 5,400 federal civilian employees – spread among organizations like the Veteran’s Authority, the U.S. Post Office and Fairchild, among many others – would be impacted by the cancellation. There are about 77,200 civilian federal employees in Washington state, up from 75,700 in July 2017.

Paul Turek, labor analyst for the Washington Employment Security Department, said there would be no effect, at least initially, on canceling a scheduled pay increase in January.

“Initially you’re looking at a non-event,” he said. The number of federal civilian employees is a relatively small fraction of the total Washington workforce – some 3,445,700, a figure that includes all non-farm workers. It would also be different from a raise, which can bring more money into the economy.

Over time, it could cause federal workers to move out of their job and look for another one, but that would depend on what is happening elsewhere in the economy.

“It obviously affects the people,” Turek said, but as far as an impact on the economy, “It would be more negligible than not.”

Democrats immediately criticized the move, citing the tax cuts Trump signed into law last December. That law provided steep tax cuts for corporations and the wealthiest Americans, and more modest reductions for middle- and low-income individuals and families.

Under the law, the 2.1 percent raise takes effect automatically unless the president and Congress act to change it. Congress is currently debating a proposal for a slightly lower, 1.9 percent across-the-board raise to be included in a funding bill that would require Trump’s signature to keep most government functions operating past September.

In July, the Trump administration sharply revised upward its deficit estimates compared to the estimates in the budget proposal it sent Congress in February. The worsening deficit reflects the impact of the $1.5 trillion, 10-year tax cut, as well as increased spending for the military and domestic programs that Congress approved earlier this year.

The administration’s July budget update projected a deficit of $890 million for the fiscal year that ends Sept. 30, up from the February estimate of $873 billion. The $890 billion projection represents a 34 percent increase from the $666 billion in 2017. For 2019, the administration is projecting the deficit will top $1 trillion and stay above that level for the next three years.

The only other period when the federal government ran deficits above $1 trillion was the four years from 2009 through 2012, when the government used tax cuts and increased spending to combat the 2008 fiscal crisis and the worst economic downturn since the 1930s.