WASHINGTON — President Obama on Monday announced a two-year pay freeze for civilian federal workers as he sought to address concerns over high annual deficits and appealed to Republicans to find a common approach to restoring the nation’s economic and fiscal health.
...The move would save $2 billion in the 2011 fiscal year that ends Sept. 30 and $5 billion by the end of two fiscal years. Over 10 years, it would save $60 billion, according to Jeffrey Zients, deputy director of the Office of Management and Budget and the government’s chief performance officer.
Americans have an appetite for government benefits that greatly exceeds their appetite for taxes. For more than a generation, we have squared this dishonest circle by borrowing vast amounts of money. As more people age, this gap between what we want the government to provide and what we are willing to pay for is going to widen to an unsustainable level. Over the next 75 years, benefits under entitlement programs will exceed government revenue by $40 trillion. The federal budget deficit, if unattended, will reach 24% of GDP in 2040 —well beyond Greek and Irish territory. At that point, the measures it would take to close the gap are so punitive — we're talking tax hikes of 70% or spending cuts of 50% — that it is inconceivable that we will make them. If by some chance we were to make them, they would put the economy in a death spiral.