Monday, November 29, 2010

Freeze! And Intensity

Good roundup of policy reaction to Barack Obama's executive pay freeze from Brian Beutler here (and do check out Beutler's new blog at TPM), and good comments from Matt Yglesias, plus a suggestion from John Sides.

I'll stick to the politics.  Yglesias says that it won't work:
I 100 percent understand the politics behind the President getting behind the idea of a freeze in federal civilian pay. If it were the case that political messaging gambits had an appreciable impact on election outcomes, this would be a smart political move. In the real world, however, they don’t and the real question is how does this impact the macroeconomy.
I think this takes what we know a little too far.  Messaging, and campaigning in general, aren't as import as the economy, but you'll note that I usually say that such things only matter "on the margins."  And yet, the 2000 presidential election was obviously won on the margins; one can argue that in some or all of 1960, 1968, 1976, and 2004 elections the presidency was won on the margins.  The same is true about House and Senate elections. 

Moreover, there's good reason to believe that there are rarely big gaps between the effects of Democratic and Republican electioneering (including messaging), because both parties and their candidates try hard to do well in those areas.  If one side abdicates, "the margins" may get a bit less marginal.  So while I'd certainly recommend simply as a matter of electoral politics that presidents place a higher priority on economic growth than on spin, that's not the same thing as saying that they should ignore spin.  Plenty of stuff that only matters on the margins is still worth doing.

This particular gambit, however, seems quite unlikely to succeed.  That's because hardly anyone actually cares about budget deficits, and one group of people -- federal employees (and their families, and perhaps their friends) do care intensely about federal employee pay.  Indeed, that's the case with just about all federal spending; cutting spending will at best get very mild approval from mass publics, but will get intense disapproval from the affected constituency. 

So unless there's another shoe somewhere (certainly doesn't appear to be the case, but one never knows), the federal pay freeze certainly looks like a loser -- again, thinking only about electoral politics. 

On the substance, my guess is that Democrats should do what they can to strengthen the capacity of the federal government to actually do the many things Democrats want it to do, and the (minor, but still real) damage the freeze will do to the federal workforce is far more important than anything else.  If the politics worked, I'd probably say it's a good move anyway; as I've said before, my basic sense is that if the White House gets the politics right, the policy will follow.  Given that I don't think it makes any sense at all on a political level, it's hard not to call this one a full-out blunder by Obama.


  1. This particular gambit, however, seems quite unlikely to succeed.... Indeed, that's the case with just about all federal spending...

    So are you saying that cutting spending will always be an electoral loser?

    Put another way: is there any kind of spending cut that Obama (or any other president) could propose that wouldn't be a full-out blunder?

  2. re "Indeed, that's the case with just about all federal spending; cutting spending will at best get very mild approval from mass publics, but will get intense disapproval from the affected constituency."

    Christie's draconian cuts in NJ do seem to winning public approval. We'll see whether that's still true when the pain induced by those cuts starts to bite.

  3. Though people don't care about the budget deficit in that they wouldn't cut spending to reduce it, don't a lot of people care about the deficit in a nonspecfic, abstract way? The sort of way that a insignificant, but visible messaging stunt like this might appeal to?

  4. Andrew,

    I'd generally say that spending cuts are political losers. But the more that groups can tie the cut to presidential action, the more it's likely to be a loser. This just seems like a classic case of where the affected group would be aware of the cut (since it's out of their paychecks) and connect it to the president.

  5. I think you overestimate the reaction of rank and file feds to a pay *freeze* (not cut). Speaking from experience, it isn't the first time the feds had a pay freeze, in fact, it's a pretty common occurrence, and other government workers are getting actual pay *cuts* through furloughs etc. You think that feds aren't aware of that? No, they won't be thrilled about it. But you think they aren't aware of the state of the economy? I'd say with some authority that federal workers will accept the pay *freeze* without much grumbling. And I think very few are going to blame Obama. The liberals are waayyyyy overreacting to this. I wish they'd get a frikkin grip.

    Government union reps will make statements against this freeze because that's their job, and journos will use their quotes, but I'm quite confident that if they go out and interview random rank and file feds, they will find a high degree of resignation and acceptance. Believe me, rank-and-file feds are quite used to being the political football, and that goes back decades. Of course, journos tend to use only the most inflammatory quotes, so I expect they'll go looking for the rare malcontent who is enraged about it, to fit into their preconceived story line.

    How about you university professor-types? You've had a pay freeze at your institution? Do you personally blame Obama (or your governor)? Is there widespread rage and discontent among your colleagues over that? If so, I'd be surprised.

  6. I think it's bad policy, though I'm a Federal employee, so I'm, biased. I'll withhold judgment on the politics, as I'm more interested in what results Obama gets than process or counter-factuals.

    The effects of this won't be that great due to the economy. Since annual raises for federal employees are tied to wage growth in the economy as a whole, they tend to be pretty small when the economy's bad. The expiration of Making Work Pay will probably be more keenly felt. (The endowment effect?)

    Also, this won't affect step increases for federal employees with less than 18ish years service. So a significant percentage of federal employees will still see wage growth within the next 2 years.

    In other words, Federal employees aren't going to be too upset because they're not giving up that much. The raise would have been relatively small, many will still see pay increases and they're not being deprived of something they already have, but something that was coming in the future. Or, to put it another way, I agree with James.

  7. As a retired federal employee I agree with James and Some Guy: there will be grumbling but feds are acutely aware of the bad economy and see the need for sacrifice. What makes this different from other wage freezes is that even as the fed's wages are frozen (representing the middle class) we are likely to see the tax cuts for the very wealthy extended - and this pay freeze will represent one more nail hammered into the middle class's coffin.


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