According to Politico:
Senate Republicans are coalescing around a plan that would continue the current salary freeze for all federal workers and lawmakers to pay for an extension of the payroll tax cut favored by President Barack Obama and other Democrats…
The GOP apparently calculates that they can shift the discussion from their defense of tax cuts for the most prosperous Americans by attacking Federal workers.
Sadly, they’re probably right. But this trial balloon also demonstrates just how little the Republicans care about deficits or stimulating growth. After all, their offset plan involves reducing demand-side stimulus in one sector to increase it elsewhere. It’s also a revenue loser, insofar as those salaries would be subject to state and federal taxes. A simple surtax on millionaires would be much better policy.
Don’t get me wrong: cutting payroll taxes is probably somewhat more stimulative than increasing the salaries of Federal employees, insofar as the additional money goes to people who make more than the payroll-tax cap, and therefore are that much more likely to save than to spend. The freeze is kind of a sham anyway, insofar as the big salary boosts for Feds come from promotions to higher pay grades. But this looks to be yet another depressing chapter in the GOP’s war on the 99%.
Update: the proposal is even worse than what was leaked. Means-testing Medicare has some pros and cons, but slashing the Federal workforce is a terrible idea.