Donald Trump Scraps Federal Employees' Planned Pay Raise, Calls It 'Inappropriate'

President Trump answers a reporter's question after announcing a grant for drug-free communities support program in the Roosevelt Room of the White House in Washington DC on Aug. 29 2018

President Donald Trump has told Congress he is canceling a pay raise that most civilian federal employees were due to receive in January, citing budgetary constraints.

At the same time, Trump planned during a Friday appearance in Charlotte, North Carolina, to direct the Labor and Treasury departments to issue regulations created to make it easier for small businesses to pool resources so they can offer retirement savings plans to their workers, administration officials told reporters.

Trump also canceled "locality" pay increases - adjustments based on where an employee lives and separate from the across-the-board increase scheduled for 2019- that he said would average 25.7 percent and cost $25 billion.

The federal deficit has exploded under Trump, with the advent of the GOP tax law that is projected to cost $1.9 trillion over the course of a decade, as well as a bipartisan spending deal that increased discretionary spending by almost $300 billion in 2018 and 2019.

"We must maintain efforts to put our Nation on a fiscally sustainable course, and Federal agency budgets can not sustain such increases", Trump said in a letter informing House Speaker Paul Ryan (R-WI) of the pay freeze.

There may be some pay raises on a performance basis, but across-the-board increases won't happen, Trump said.

The Democratic National Committee described Trump's letter as "yet another slap in the face to American workers" by the president, while Sen.

Trump's 2019 budget proposal, released earlier this year, included a pay freeze for civilian federal workers. The Senate has already voted for a 1.9 percent pay raise for civilian federal employees in 2019, but the House version of the spending bill does not include that increase.

It's not clear how much money the pay freeze would save.

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The salary freeze won't affect military personnel, who will still get a 2.6 percent pay bump next year.

"Republicans gave corporations a trillion dollar tax cut and are now cutting pay raises for social workers, janitors, painters, clerical workers, and more".

The administration's July budget update projected a deficit of $890 million for the fiscal year that ends September 30, up from the February estimate of $873 billion.

The CBO also estimated that due in part to the tax law, the annual U.S. federal deficit would exceed $1 trillion by 2019.

Why it might not matter: Congress could still override Trump's decision.

The American Federation of Government Employees, a union for federal workers, is now calling on the House to pass a similar measure.

The president says that federal employee pay should be based on performance and should not involve fixed pay increases.

J. David Cox, president of AFGE, said the Senate bill "would help prevent workers from falling further behind next year and help federal agencies recruit and retain the high-caliber workforce that the public expects and deserves".

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