Pay Freezes: More Harm Than Good?

Pay freezes and other restrictions on federal compensation could hurt the government more than help it, a leading budget analyst said on Thursday.

"Yes, you can get some savings, but in the long run, I think it could be counterproductive," said Jim Horney, Vice President for Federal Fiscal Policy at the Center on Budget and Policy Priorities, during a conference call on the center's new report outlining a framework for deficit reduction.

Horney said recent legislative proposals to cap federal employees' pay, freeze bonuses, and reduce other benefits could make recruiting and retaining an able government workforce even harder than it already is. "It is absolutely important that we have a highly skilled and highly motivated federal workforce."

President Obama has proposed and Congress have agreed on a two-year pay freeze for federal workers, which the administration estimates will save $28 billion during the next five years. A recent report from the Congressional Budget Office said reducing annual pay increases for federal civilian workers and military personnel would save the government billions of dollars during the next decade. Lawmakers have introduced a raft of legislation ranging from eliminating pensions for federal employees hired in 2013 and after to denying step increases and freezing bonuses.

Are the savings generated by these types of measures worth the risk of losing much-needed talent in government? That's the question.