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Obama reduces 2010 federal pay increases to two percent

WASHINGTON (AP) - Following the lead of his two immediate predecessors, President Barack Obama has told Congress that he's reducing pay increases for federal workers next year from 2.4 to 2 percent. Obama says the national unemployment rate and the size of the federal payroll demand it.

Obama says the full increase mandated by statute would cost the government $22.6 billion next year. He has budgeted only for a 2 percent increase, at a cost to taxpayers of nearly $20 billion.

Obama also says he'll decide by the end of November on whether to reduce locality pay - extra stipends designed to help federal workers in high-cost living areas.

Obama says he's invoking powers to put in place his own pay plan in times of a national emergency or serious economic conditions affecting the nation. Former President George W. Bush used the authority previously, as did President Bill Clinton before him.

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