Diplomats' Union Pushes Back on Proposal to Cut Foreign Service 'Locality Pay'

The organization representing America's diplomats is pushing back after the House voted to strip pay bonuses for Foreign Service officers working overseas.

The House voted Saturday for the Foreign Service pay provision as part of the broader Republican-authored budget bill to fund the government at reduced levels through the end of the fiscal year. Rep. Tom Reed, R-N.Y., who sponsored the amendment, said it would save taxpayers millions.

"At a time when other federal employees have had their salaries frozen or reduced, we cannot and should not be giving massive, automatic pay raises to any federal employees," Reed said in a statement.

But Susan Johnson, president of the American Foreign Service Association, said it's wrong to call it a pay raise.

The policy targeted by Reed involves what's known as "locality pay," which provides federal workers with extra money on top of their base salaries which varies depending on what city they're in. Employees living in costly areas like New York get a bigger bump than those in less expensive areas like central North Carolina. For years, Foreign Service workers abroad did not receive locality pay, though their counterparts in Washington, D.C., did -- that is, until Congress in 2009 approved a short-term fix, phasing in the Washington, D.C., rate of 24 percent for those serving abroad.

Reed's proposal would do away with that increase, but Johnson said the change would effectively "penalize" any Foreign Service worker who wants to serve overseas. The lower pay doesn't just affect their annual salary, she said, but also their pension benefits, which are based on pay. Plus she said Foreign Service workers sometimes lose the benefit of a second salary, if their spouse moves with them and can't find a job. Take out locality pay and the problem deepens, Johnson said.

"It's a recruitment issue. It's a retention issue. It's a morale issue. It's an equity issue," she told FoxNews.com.

But leaders of the bipartisan deficit commission suggested last year that the locality pay be stripped for overseas workers. Their report cited Congressional Budget Office estimates that claimed permanently repealing locality pay for State Department workers overseas could save $427 million in fiscal 2013. Reed said his proposal would save $140 million this year.

The commission report also noted Department of Defense employees do not receive locality pay, "but there are currently no proposals to give them this benefit" -- though Johnson noted they receive other benefits.

Johnson said her group is lobbying senators to oppose Reed's proposal.