The Foreign Service Journal, May 2011

M A Y 2 0 1 1 / F O R E I G N S E R V I C E J O U R N A L 5 By the time this column ap- pears, Congress will have either passed another continuing res- olution for Fiscal Year 2011, shut down the government, or agreed on a budget that may impose a nearly 25-percent pay cut on our Foreign Service personnel serving abroad by abolishing overseas comparability pay. How should we look at such a pay cut, should it materialize? At one level, this measure, however miniscule its ef- fect on federal spending, and however severe its impact on the affected indi- viduals, will be justified as part of the ef- fort to reduce the massive budget deficit. But on another level, which should not escape the attention of law- makers, themeasure will have grave im- plications for the Foreign Service as an institution, as well as for our national se- curity. The fundamental question is this: What impact will such a measure have on the Foreign Service? Will the insti- tution be able to attract and retain the strong, professional and dynamic corps of diplomats and development experts that we need to serve our national in- terests in the future? There should be little doubt that this measure will in- stead emaciate the spirit of this vital in- stitution. Effective diplomacy averts the need for costly military engagement, poten- tially saving taxpayers billions of dollars. Unless we dismiss this propo- sition as mere academic mus- ing, does it make sense to cut the pay of the diplomats and development experts who are taking on tough, risky assign- ments all over the world, from Mexico to Egypt and Pakistan, from Sudan to Zimbabwe, and side by side with our military in Iraq and Afghani- stan? A pay cut on this scale will de- press the morale of Foreign Service personnel serving abroad even if they are primarily motivated by altruistic considerations ranging from patriotism to a deep interest in foreign affairs. In 1990, Congress passed the Fed- eral Comparability Pay Act (5 U.S.C. 5304(c) (4) (B). As a consequence of this legislation, the Foreign Service pay systemdiverged into two separate struc- tures — one for those serving in the United States which includes locality pay; another for those assigned abroad, which does not. Since 1990, the Wash- ington, D.C., locality rate has grown to nearly 25 percent. A 2006 Government Accountability Office study confirmed that the steadily increasing domestic lo- cality pay rates had created a growing fi- nancial disincentive for overseas service. AFSA’s efforts to draw attention to this gap led to hard-won congressional ap- proval for overseas comparability pay, starting in 2009. Some argue that housing and al- lowances compensate for comparability pay, but that is a different issue. Al- lowances and differentials are marginal and temporary, and are not included in base pay, which determines pension benefits through a combination of a fixed annuity, Social Security and the Thrift Savings Plan. Discontinuation of OCPwill reduce base pay and therefore both individual and federal levels of contributions to Social Security and TSP. Thus, the penalty for overseas service is both immediate lost income and lower overall retirement benefits. The remedy is for Congress to au- thorize federal employees who serve overseas to receive salaries that include Washington, D.C., locality pay as the basis for calculating taxes and retire- ment income, thereby restoring a sin- gle, basic Foreign Service compen- sation system. What types and levels of allowances and benefits are then justi- fied and affordable after basic salaries are regularized is a legitimate question, but one that should be examined sepa- rately through the authorization pro- cess. Certainly we must all do our part to reduce the national deficit. But pulling the plug on the longstanding effort to remove the growing salary disincentive to overseas service will degrade the U.S. government civilian service as a key instrument of national power — one that promotes our interests abroad and functions as our first line of de- fense. P RESIDENT ’ S V IEWS The Fundamental Question about Overseas Comparability Pay B Y S USAN R. J OHNSON