No Federal Pay Freeze in Fiscal Cliff Agreement, However…

Legislation passed by the House and Senate yesterday to avoid the fiscal cliff, the American Taxpayer Relief Act of 2012, postpones the sequester for two months, but does not contain a provision to extend the pay freeze on federal personnel. The only provision regarding federal pay prevents a cost of living adjustment to Members of Congress.

Yesterday, however, the House passed separate legislation, HR 6726, “to prevent the 2013 pay adjustment (raise) for Members of Congress and persons holding other offices or positions in the Federal Government from being made.” The bill was considered under suspension of the rules, which is typically used to pass non-controversial bills, and requires a two-thirds majority. Fifty-five Democrats joined nearly all Republicans in passing the bill, which would still need to be approved by the Senate, which is unlikely to happen before the end of the 112th Congress and would need to be re-introduced in the 113th.

Meanwhile, on Thursday last week, President Obama issued an executive order that would lift the pay freeze and grant a half-percent pay increase beginning March 28, the day after the current continuing resolution (CR) expires. Whether or not that will actually occur is difficult to predict. If Congress fails to pass omnibus appropriations legislation to fund the government after March 27, it’s likely that they’ll simply extend the CR for the remainder of FY13. If that happens, it’s not likely that they’d pass separate legislation to grant the federal pay increase. Also last week, OPM issued a memorandum that allows agencies to grant a pay raise after the March 27 expiration of the CR, “Absent any intervening change in law… in accordance with their administrative discretion.”

So, what does all this mean for feds? First, the fiscal cliff agreement doesn’t address the pay freeze for federal workers in any way. The bill that would extend the pay freeze for feds is a separate piece of legislation, which passed in the House with a sizeable majority, 287-129, but has not been brought to the floor of the Senate. If it contained only a pay freeze for feds, it probably wouldn’t be considered by the Senate. However, because it also includes a pay freeze for Members of Congress, who want to demonstrate their austerity to the public, it might well pass in both chambers, if not in the 112th, then in the 113th, even though the fiscal cliff bill already freezes Member salaries. My bet is that Senate Majority Leader Harry Reid (D-NV) won’t bring it to the floor of the Senate in either the 112th or the 113th.

Even in the absence of separate legislation, however, the pay freeze won’t necessarily end. Remember that no FY13 appropriations bills have passed, and that the current CR expires on March 27. Given the fact that Congress still has to deal with the debt ceiling as well as a host of other fiscal issues not addressed in the fiscal cliff agreement, as well as the next sequester deadline of March 2, chances are great that they’ll simply extend the current CR for the remainder of FY13. If left unchanged, that would extend the pay freeze as well. Even though the CR permits the administration to accelerate spending in order to avoid furloughs, I would think it unlikely that the president would take any action on this prior to the expiration of the CR.