Self-Mandated Pay Raise for Federal Judges Will Cost $1B

Federal employees are used to Congress limiting their pay raises.

For three consecutive years, lawmakers decided feds deserved no increase at all; Congress has since agreed to provide some of the lowest pay raises in recent history.

For some federal employees, however, federal judges have ruled Congress has no authority to block pay raises. Which employees are those? Why, federal judges, of course!

In multiple recent court decisions, judges ruled that congressionally mandated salary freezes in 1995, 1996, 1997, 1999, 2007 and 2010 were illegal. Specifically, Beer v. United States and Barker v. United States determined lawmakers could not block pay bumps for judgeships established under Article III of the U.S. Constitution, which includes district, appeals and international trade courts, as well as the Supreme Court.

In response to an inquiry from Sen. Patrick Leahy, D-Vt., who chairs the Senate Judiciary Committee, the Congressional Budget Office said 1,330 Article III judges are entitled to salary increases, 300 to annuity adjustments and 1,600 to restitution as a result of the court decisions. Because the pay of many non-Article III judges is tied to the salaries of those impacted by the decisions, more than 3,000 additional salary increases, annuity adjustments and restitutions must be paid.

In total, CBO said the judges will receive a collective $1 billion in extra pay in the next 10 years. About one quarter of that will go to restitution payments for salary increases that should have been previously awarded.

The $1 billion comes from “mandatory funding,” meaning Congress will not have to appropriate additional spending to pay the judges. Some of the changes for non-Article III judges, however, will require an additional $190 million that will have to come out of discretionary funds.

Article III judges’ salaries range from about $200,000 for district judges to $255,500 for the chief justice of the Supreme Court. District judges’ pay spiked a dramatic 14 percent from 2013 to 2014 because of the enactment of various pay increases that were previously denied.

Predatory Loans

The Obama administration has announced steps to widen protections for members of the military against predatory loans.

The 2006 Military Lending Act established what the Pentagon is now calling “narrow” guards against institutions gouging service members with high interest rates and intentionally damaging advances. The law targeted three products: certain closed-end payday loans, closed-end auto title loans and closed-end tax refund anticipation loans. This specificity of the law allowed some lenders to change their offerings so they fell outside the scope of the regulations, “diminishing the full impact of the legislation,” according to the Pentagon. Some lenders charge triple-digit interest rates, the Pentagon said, offered at storefronts “clustered outside military installations.”

In a recently published proposed rule, the Defense Department suggested extending the 2006 law to cover all loans as spelled out in the 1968 Truth in Lending Act. This would include both open and closed-ended products. It would also expand the types of loans subject to the 26 percent interest-rate cap. Certain types of loans, such as those secured by real estate and purchase-money loans, would be excepted.

The Pentagon said the extension would create longer-lasting protections, simplify the lenders’ disclosure obligations and allow them to determine whether borrowers are covered by the MLA through an online database. 

Congress directed Defense to establish additional predatory loan protections in the 2013 National Defense Authorization Act. Military families are seen as particularly vulnerable to unfair lending practices because they frequently relocate, and a failure to maintain good finances could qualify as dishonorable conduct. 

(Image via zimmytws / Shutterstock.com)