U.S. President Donald Trump said Thursday he decided to cancel a pay raise for civilian employees in 2019, citing budget concerns.
"I have determined that for 2019, both across the board pay increases and locality pay increases will be set at zero," Trump said in a letter addressed to Speaker of the House Paul Ryan and President of the Senate Mike Pence.
The across-the-board increase of 2.1 percent was set to take effect Jan. 1 but Trump argued the move will save $25 billion.
"As noted in my Budget for Fiscal Year 2019, the cost of employing the Federal workforce is significant. In light of our Nation's fiscal situation, Federal employee pay must be performance-based, and aligned strategically toward recruiting, retaining, and rewarding high-performing Federal employees and those with critical skill sets," Trump said.
The president also argued his decision will not materially affect the government's ability to attract and retain a well‑qualified federal workforce.
Two weeks ago, however, Trump signed $716 billion defense bill that sees a 2.6 percent raise for service members next year.
Earlier, Trump touted gains in financial markets by tweeting: "For all of you that have made a fortune in the markets, or seen your 401k’s rise beyond your wildest expectations, more good news is coming!"
Although the S&P 500 gained around 300 percent since March 2009, and it and the Nasdaq finished at record-highs for four consecutive sessions, the bull market can end with a correction which could trigger steep declines, analysts warned.
Trump's tax cut is also estimated to add $1 trillion to the budget deficit in the next 10 years, according to the Joint Committee on Taxation.
By Ovunc Kutlu in New York