Jeffrey Zients, Office of Management and Budget deputy director for management, also said Monday employees could still be promoted to the next GS grade in either year, and those promotions would come with pay raises.
And some employees will still receive bonuses for good performance, although OMB and the Office of Personnel Management are telling agencies to cap bonuses at 2010 levels. OPM has not released information on fiscal 2010 bonuses, but the Asbury Park Press of New Jersey reported in June that the government paid $408 million in bonuses to 359,400 employees in fiscal 2009.
Obama's plan would freeze the pay scales for the General Schedule and halt raises to employees in alternative pay systems. The White House said it would save $2 billion in 2011 alone, $28 billion over the next five years, and more than $60 billion over the next decade.
Rep. Jason Chaffetz, R-Utah, called the retention of step increases a hole in Obama's plan. He also said the administration should freeze hiring and reduce the federal payroll from $447 billion to $400 billion.
"Somehow, someway I think this country can survive on just a $400 billion payroll," Chaffetz said. He is now the ranking Republican on the House Oversight and Government Reform subcommittee on the federal work force, and could become its chairman when the Republicans take control of the House next year.
John Gage, national president of the American Federation of Government Employees, told reporters Monday the plan was "wrongheaded" and driven by politics. He said the chances of Congress rejecting Obama's pay freeze call were slim.
But Gage said the news that step increases would still be handed out took some of the sting out of the decision.
"They're doing this as a symbol, but it's the wrong type of symbol to take it out on working people making basic wages," Gage said. "I don't want to hear how we will recruit and retain the best and brightest. I don't want to hear that rhetoric, because this is not the way to do it."
The White House specifically exempted military service members from the freeze. And OMB said employees in the government's legislative branch and the U.S. Postal Service also will not have their pay frozen.
The Administrative Office of the U.S. Courts said judiciary branch employees don't get a cost-of-living adjustment unless GS employees do, so the freeze would cover them.