Extended Pay Freeze Spared For Now

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By on December 23, 2011 in Current Events with 38 Comments

The heated debates in Congress over extending the payroll tax cut through 2013 have come to a temporary end just in time for Christmas. The House and Senate reached an agreement to extend the cut for two months, through the end of February 2012, and the President is expected to sign the bill shortly.

Debates on a year long extension are expected to resume after the new year in January.

The current agreement includes a two-month extension of emergency federal unemployment benefits and the so-called “doc fix,” a delay in scheduled pay cuts to Medicare physicians. The payroll tax will remain at the current 4.2% rate instead of reverting to the 6.2% rate where it was previously.

The agreement also includes the addition of legislative language to ease the administrative burden on small businesses implementing the plan.

Also absent from the current agreement: a one year extension of the pay freeze on most civilian federal employees. This was part of the House Republicans’ proposal in a previous version of one of the proposals to fund the payroll tax cut extension.

There are also no modifications to the federal retirement structure as was previously proposed.

Will the pay freeze or retirement changes be permanently off of the table in the debates? This is unknown at this point since the discussions are expected to resume on a year long extension and the issue could come up again. As always, we will keep you updated with the latest information on the situation as it unfolds.

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About the Author

Ian Smith is one of the co-founders of FedSmith.com. He enjoys writing about current topics that affect the federal workforce.