Blog on the Run: Reloaded

Wednesday, December 1, 2010 8:22 pm

Several reasons why the federal pay freeze is a bad thing

Filed under: I want my money back. — Lex @ 8:22 pm
Tags: ,

In no particular order:

Mislabeling: We’re freezing some federal pay. The proposal doesn’t affect congresscritters or their employees, nor, so far as I can tell, does it affect employees of the judiciary branch or the military.

Economic malpractice: The biggest problem in the current economy isn’t taxes or the size/cost of government, it’s unemployment. The biggest reason why unemployment is as high as it is, is no one’s spending. The biggest reason for that is that so many people are un- or underemployed (and many others have good reason to think they might soon be). In that kind of trap, history suggests, the best way to create jobs is to stimulate consumer spending. Freezing government workers’ pay does the exact opposite of that, and no one besides the federal sector is in a position to do it at all right now.

Fairness: It is commonly believed that federal employees get better pay than their private-sector counterparts. Nominally, this is often true. However, to do an apples-to-apples comparison, you have to adjust for geography (i.e., cost of living in different regions) and type of work. When you do, you find that federal employees already make about 22% less than their private-sector counterparts. (h/t Andy Brod)

(In)effectiveness: Someone can, and probably will, write a book on this. If your concern is the size of the deficit, you have many other choices, some of which would be not only more effective but also less damaging in the short term to the so-called recovery. The freeze is expected to save perhaps $5 billion a year initially. When deficits are north of $1 trillion, that’s a joke. We’re spending more on war and defense right now than the rest of the world combined, and just to make things more interesting, we’re losing both of the wars in question, politically if not militarily. Defense costs $600B+ annually, and a dollar spent on defense creates fewer jobs than a job spent on civilian pursuits. Like Willie Sutton, we need to go where the money is. You could enact real health-care reform and save a boatload (and any serious deficit-reduction plan is going to have to do that because health care is the main deficit driver long-term). You could raise top marginal income tax rates even back to the level where they were when Clinton was president. If you were really serious about cutting the deficit, you could raise them back to the stratospheric levels of the prosperous Eisenhower era and even enact a wealth tax to go after some of what the banksters stole.

For Obama to propose this freeze as a serious deficit-reduction step goes so far beyond unseriousness that it calls his basic intelligence or his basic ethics into question. In fact, anyone who says this is a meaningful step toward deficit reduction, let alone prosperity, is either stupid or lying.

 

4 Comments

  1. Obama is a fool . A jester in his own court.

    This action doesn’t stop automatic grade escalation to journeyman level nor in-grde step increases or ” meritorious ” just for hll of it.

    A Very Thin Piece Of The Pie

    Comment by Fred Gregory — Wednesday, December 1, 2010 9:03 pm @ 9:03 pm

  2. I knew it would be just a matter of time before common knowledge pulled back the curtain on this political slight of hand. You recken he knew. It’s hard to even guess.

    Told you so

    Comment by Fred Gregory — Friday, December 3, 2010 6:52 pm @ 6:52 pm

  3. They keep telling me I was right:Federal pay freeze plan wouldn’t stop raises

    From the Federal Times:

    “President Obama spoke of the need for sacrifice last week when he announced a two-year pay freeze for federal employees.

    But feds won’t be too terribly deprived in 2011 and 2012. Despite the freeze, some 1.1 million employees will receive more than $2.5 billion in raises during that period.

    Congress is expected to approve Obama’s proposal, which cancels only cost-of-living adjustments for two years. Regularly scheduled step increases for the 1.4 million General Schedule employees — who make up two-thirds of the civilian work force — will continue. The size of those increases ranges from 2.6 percent to 3.3 percent and by law kick in every one, two or three years, depending on an employee’s time in grade.

    John Gage, national president of the American Federation of Government Employees, called Obama’s plan “wrongheaded” and driven by politics. But he said the news that step increases will not be affected takes some of the sting out of the decision.

    “They’re doing this as a symbol, but it’s the wrong type of symbol to take it out on working people making basic wages,” Gage said.

    But Rep. Jason Chaffetz, R-Utah, called the retention of step increases a hole in Obama’s plan. He also said the administration should freeze hiring and reduce the federal payroll from $447 billion to $400 billion.

    “Somehow, someway I think this country can survive on just a $400 billion payroll,” Chaffetz said. He is the ranking Republican on the House Oversight and Government Reform subcommittee on the federal work force, and could become chairman when Republicans take control of the House next year.

    In addition to General Schedule employees receiving step increases, some of the government’s roughly 187,000 wage-grade employees also will receive step increases.

    And many employees will receive promotions, which also come with salary increases, Jeffrey Zients, the Office of Management and Budget’s deputy director for management, said last week.

    Many senior employees won’t get raises, but will receive bonuses for good performance, although OMB and the Office of Personnel Management are telling agencies to cap bonuses at 2010 levels. OPM said it does not yet have information on fiscal 2010 bonuses, but the Asbury Park Press of New Jersey reported in June that the government paid $408 million in bonuses to 359,400 people, an average $1,135 each, in fiscal 2009.”

    Comment by Fred Gregory — Tuesday, December 7, 2010 2:39 pm @ 2:39 pm

  4. $408 million in bonuses for everyone in the federal government who gets one, almost 360,000 people. Wow. That’s not even seven times what the CEO of Goldman Sachs got paid all by himself last year.

    Comment by Lex — Tuesday, December 7, 2010 2:50 pm @ 2:50 pm


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