Downsizing Blog

Yesterday the Wall Street Journal took a lengthy look (subscription required) at the deteriorating financial situation of domestic biofuel producers. According to the Journal:

Over the weekend, CNN.com reported on a cringe-inducing story out of the Department of Veterans Affairs:

“While hundreds of thousands of disability claims lay backlogged at the Department of Veterans Affairs, thousands of technology employees at the department received $24 million in bonuses, a new report says.”

Summarizing a new Government Accountability Office study, the Washington Post reports that "the cost of building and operating the controversial U.S. ballistic missile sites in Europe could substantially exceed the original estimate of more than $4 billion."

Another day, another story on financial troubles at the federal government’s mail monopolist.  We don’t expect the government to make our blue jeans, transport fruits and veggies from the farm to the market, build computers and IPods, or manage the manufacturing of automobiles, so why must it continue to deliver first-class mail? 

Federal unions, government officials, and the Washington Post’s “Federal Diary” column frequently suggest that federal civilian workers are underpaid. They suffer from a large “pay gap” compared to private sector workers, or so the story goes.

But in the Post’s “Jobs” section yesterday, human resources specialist Lily Garcia argues that “Uncle Sam Is a Boss You Can Rely On.” For job seekers, Garcia points to the many advantages of federal work:

My old boss, Sen. Tom Coburn (R-OK), has a report out this morning that identifies 100 “questionable” projects funded by the federal “stimulus” package.  I’m not going to mention particular examples here.  I’ll simply say that I hope the theme that readers of the Coburn report come away with is that the federal government should not fund state and local activities.  The numerous examples in the Coburn report provide concrete evidence of this truth, and I wish the report would have spent more time in the introduction fleshing it out.  Fortunately, my colleague Chris Edwards wrote an excellent policy analysis on the problems with federal subsidies to state and local government.  Thus, I would encourage those interested to read the Coburn and Edwards reports together.

A month ago, President Obama issued a list of proposed spending cuts that I dismissed as “unserious” due to the fact that they were trivial when compared to his proposed spending and debt increases.  Today, the House Republican leadership released a list of proposed spending cuts.

I’d love to say I’m impressed, but I can’t.

Both proposals indicate that neither side of the aisle grasps the severity of the country’s ugly fiscal situation, or at least has the guts to do anything concrete about it.

The GOP proposal claims savings of more than $375 billion over five years, the bulk of which ($317 billion) would come from holding non-defense discretionary spending increases to no more than inflation over the next five years.

First, it should be cut — period.  Second, non-defense discretionary spending only amounts to about 17% of all the money the federal government spends in a year, so singling out this pot of money misses the bigger picture.  At least, defense spending, which is almost entirely discretionary, should be included in any cap.  But it has become an article of faith in the Republican Party that reining in defense spending is tantamount to putting a white flag in the Statue of Liberty’s hand.

Ohio lawmakers are hot under the collar about federal stimulus dollars possibly helping Georgia bid away one of its big employers. Here’s the Dayton Daily News:

NCR’s news release touting its decision to move jobs from Dayton to the Atlanta, Ga. suburbs includes one factoid that has Ohio lawmakers in a fury: The City of Columbus, Ga. plans to use federal stimulus dollars to buy a building and construct another to accommodate the 870 manufacturing jobs expected to come to the that Atlanta suburb. ‘The fact that economic stimulus dollars were used to move an Ohio company to Georgia at taxpayer expense is an outrage,’ said state Sen. Jon Husted.

Added U.S. Rep. Pat Tiberi, R-Columbus: “Federal stimulus money is being used to create winners and losers among workers in different states and that’s just not right; it’s dirty.”

All I can say to both parties is that’s what you get for building an imperial city on the Potomac and spending the last few decades destroying the constitutional principle of federalism. As I’ve described in this study, regional warfare over federal subsidies has escalated in recent years. It’s horribly wasteful, and it’s getting worse.

The head of the Office of Personnel Management claims that federal workers are underpaid compared to private sector workers by 20 percent, on average. Federal unions and other cheerleaders for the bureaucracy have been making similar claims for years.

I’ve pointed out the dramatic acceleration of federal compensation over the last decade and the excessive generosity of federal worker benefits.

Federal workers are not underpaid.

Now a Human Resources expert writing in The Washington Post backs up my claims. Lily Garcia writes:

The primary advantages of working for the federal government are generous benefits, solid pay, and relative job security, a combination that is challenging to find in the private sector, even in the best of times … In addition to these benefits, federal employees, contrary to popular belief, are paid relatively well.

One policy implication is that federal worker compensation would be a good place to look for budget savings to reduce the federal deficit. We could start with a two-year freeze on federal salaries to save about $20 billion. During a recession, private wages are not increasing, so why should federal wages?

The Federal Diary column in the Washington Post is a curious piece of newspaper real estate. Most newspaper columns are aimed at the broad general public, but this column is aimed directly at the few hundred thousand government workers in the DC region. The result is that it takes a very government- and union-centric view of the world. The fact that the federal civilian workforce costs taxpayers an enormous $300 billion or so every year is beside the point for the column.

In a briefing with reporters yesterday, the head of the Office of Personnel Management complained about a Lou Dobbs television bit that featured this data that I assembled from the Bureau of Economic Analysis. The Federal Diary columnist called me yesterday about the data, and I explained to him the shortcomings of the OPM claims that federal workers are underpaid.

Unfortunately, the Federal Diary today simply parrots the OPM’s claims, calling the Dobbs/Edwards/BEA data “misleading.” Yet this data clearly shows that federal compensation has taken off like a rocket this decade.