Spending Bill Freezes Pay for Federal Workers

Federal workers would face a two-year pay freeze under a spending bill Congress will take up this week to keep the government operating through March 4.

The bill would protect student Pell grants, veteran's benefits and a program that helps low-income families pay their heating bills. A small business loan program would be extended.

Senate Majority Leader Harry Reid, D-Nev., has scheduled a procedural vote on the bill for Tuesday morning. The Senate could pass it as early as Tuesday, sending it to the House, which delayed its holiday vacation to take up the bill.

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Passing the bill -- known as a "continuing resolution" -- would prevent the government from running out of money for daily operations Tuesday night and forcing a shutdown of most federal agencies.

"We need to act as quickly as possible," Reid said Monday.

The budget year began Oct. 1 but Congress hasn't passed any of its annual spending bills.

Last Thursday, Democrats pulled back a $1.3 trillion spending bill for the entire budget year after Republicans decided not to support it. Republicans complained about special projects in the bill, its overall cost and the lack of time for debate.

The new stopgap measure would increase federal spending at an annual rate of just $1.16 billion over the previous budget year, an increase of less than 1 percent.

It would also allow the incoming Congress, with a new Republican majority in the House, to put its stamp on federal spending shortly after the new session begins in January.

Three weeks ago, President Barack Obama proposed a two-year salary freeze for some 2 million federal workers, seizing on an initiative popular among Republicans. Public employee unions are lobbying lawmakers to reject the pay freeze.

"Freezing wages over the next two years will not serve the interests of the taxpayer and will cost us more in reduced services and lost talent from those who choose to retire, just when the government needs them more than ever," Colleen M. Kelley, president of the National Treasury Employees Union, wrote in a letter to lawmakers.

Among the other provisions in the bill:

Pell Grants for college students would stay at the same level they were in the previous budget year, with a maximum grant of $5,550.

The Veterans Benefits Administration would get a $460 million increase in annual funding to prevent layoffs and help reduce processing times for disability claims.

It funds the Low Income Home Energy Assistance Program, making the same amount of money available this winter as last winter.

It prevents the elimination of $4.3 billion in reduced-fee loans for small businesses.

It provides funding for audits and investigations of the Troubled Asset Relief Program, known as TARP.

It provides authority to the Transportation Security Administration, or TSA, to transfer money within its budget to continue beefing up airport security.