In 2011, Taxpayers Will Pay $19 Billion to Fund Federal Pensions, While Federal Employees Will Contribute Only $1 Billion
Reforming Federal Pensions
By Jim Kessler and David Kendall, ThirdWay.orgSeptember 2010
THE PROBLEM
Financing the federal retirement system is more expensive than it should be.
Federal retirement is funded through an antiquated formula.
Since 1987, federal employees including members of Congress have had the benefit of three guaranteed income payments in their retirement.
- First, like nearly all other workers, they receive Social Security.
- Second, like many workers, they have a 401k-style plan with an employer match (known as the Thrift Savings Plan or TSP).
- And third, like most public sector workers, they also receive a traditional pension through a system known as FERS (the federal employment retirement system).
In 1986, Congress enacted FERS to replace a long-standing federal pension program known as CSRS (civil service retirement system). CSRS was more generous to employees than FERS, but with a catch. CSRS recipients did not receive Social Security and they did not contribute to Social Security payroll taxes. In 1983, as part of an effort to shore up the Social Security Trust Fund, new federal employees were placed in a new federal retirement system and they began contributing to Social Security through FICA, the payroll taxes that nearly all employees pay. This was the beginning of FERS.
At the time, lawmakers decided that the new FERS and existing CSRS employees would contribute the exact same amount for their retirement—including FICA contributions. At the time, CSRS employees contributed 7% to their retirement and so did the taxpayer. Because FERS employees would now contribute 6.2% to FICA, the new law limited the employee contribution to FERS to 0.8% of wages. And because Congress required FERS to be completely self-financed, all of the remaining contribution is made by each federal agency for its employees. This works out to 11.2% of federal employee wages, or $14 contributed by the employer for every one dollar that is contributed by the employee.
It is questionable whether there ever needed to be parity between CSRS and FERS workers in the first place, but it is absolutely unnecessary today. Only federal workers employed before 1984 are eligible for CSRS. Four out of every five federal employees today are under FERS and very soon they will all be under FERS. The problem meant to be solved by the parity requirement between CSRS and FERS no longer exists.
Private retirement plans usually split the bill evenly between employers and employees.
Social Security is funded by employers and employees each paying 6.2% of wages into the system. Under private 401(k) programs, employers and employees each make a matching contribution into an individually-directed retirement account.
Federal employees and the government make matching contributions of up to 5% of wages each under the Thrift Savings Plan; most private companies don’t match as much.
And while the costs of a traditional defined benefit pension plan such as FERS are often hidden from the employee, the cost is essentially shared. According to the Department of Labor, about 52% of all private sector pension funds (taking into account defined benefit and defined contribution plans) are contributed by the employer and 48% by the employee.
FERS is unnecessarily expensive for taxpayers.
By themselves, neither FERS nor the Thrift Savings Plans differ much from their private sector counterparts. Together, however, they are much more generous than retirement packages offered by comparable private sector employers.
Today, the federal government contributes a total 12.7% of wages to FERS and the Thrift Savings Plan. By comparison, private employers in similar sectors of the economy (e.g., management, professional services, and information businesses) contribute 5.3% of payroll for their workers’ retirement as show in the chart below.
This comparison also takes into account the older age of the federal workforce, which is nearing retirement sooner and requires higher pension funding levels.
Over the next ten years, taxpayers will contribute more than $263 billion to fund FERS, which is considerably more than what the federal government spends on college financial aid through Pell grants. Over the next twenty years, taxpayer contributions will reach roughly $626 billion. Employee contributions are miniscule—less than $20 billion over ten years and less than $50 billion over twenty years.
THE SOLUTION
Modernize FERS to make employers and employees equal partners.
If employers and employees were to contribute equally to FERS, taxpayers would save $114 billion over ten years, $271 billion over twenty years, and $702 billion by 2050.
This sends an important message to the public: Congress and Feds will take the first hit.
If we are going to achieve meaningful fiscal discipline, Congress, the White House, and the federal government must take the first step and take the first significant cuts as an example to the rest of the country.
Third Way polling shows that three-fourths of Americans believe that cutting government spending and getting rid of government waste is the key to balancing the federal budget.
Federal employees will still receive fair treatment for a comfortable retirement.
Pension benefit payouts will not change whatsoever. Today, a federal employee who works for 30 years and retires with an average “high-three”* salary of $70,000—about the average wage of a federal employee—would:
• Receive a yearly pension of $23,100 that increases at CPI minus 1% each year, just as today.
• Receive Social Security payments of approximately $24,000 that increases by CPI, just as today.
• Have a TSP nest egg that would create an annuity of about $20,000 per year, just as today.
This comes out to roughly $67,000 per year, or approximately the entire replacement salary of an employee’s most lucrative years on the federal payroll. And that is on top of any private savings or spouse benefits. The only change would be that federal employees would be paying for a greater portion of the funding of their pension.
Taxpayers would save hundreds of billions of dollars.
In 2011, taxpayers will pay roughly $19 billion to fund future federal pensions, while federal employees will contribute just over $1 billion. By 2030, taxpayers will fund close to $38 billion to fund future pensions, while federal employees will contribute about $3 billion.
That is simply unfair to taxpayers and a burden that would never occur in the private sector. If there were contribution parity, the savings would increase from $9 billion in 2011 to $18 billion in 2030 and over $30 billion in 2050.
CRITIQUES & RESPONSES
This will harm federal employees.
Federal employees will definitely pay a price, but only as far as they will have to accept the same arrangement offered to most workers. Pension contributions that were once financed almost exclusively by taxpayers will now be shared equally. That is the way it is done for Social Security, 401k-style retirement programs, and most private pension plans. Federal employees, through a quirk in the law that was meant to solve a problem that no longer exists, have gotten a very generous deal for the last 25 years. It is time for all federal employees to pay their fair share.
This will harm veterans and military retirees.
Not true. This covers only those in FERS—federal employees, congressional employees, members of Congress, and judicial branch employees. Military retirees are covered under a separate program administered by the Department of Defense.
Why didn’t you propose a similar change in CSRS financing?
CSRS is financing is already equally shared—7% by the employer and 7% by the employee—so there is no imbalance to rectify. Even if a contribution discrepancy did exist, there haven’t been any new CSRS-eligible employees added to the federal workforce on over 20 years. CSRS employees are quickly leaving the system and being replaced by FERS employees. Roughly four-fifths of current federal employees are under FERS and by the end of this decade very few CSRS employees will remain.
Isn’t another reason for reforming federal retirement that federal workers are paid more than private sector employees?
No, news reports that claim federal workers are overpaid compared to private workers are misleading. Making apples to apples comparison with the private sector doesn’t work because the characteristics of the workforce and the nature of the work are different. Generally, the federal workforce is more highly skilled than the average private employer’s workforce. Detailed analysis shows that federal employees’ salaries are roughly the same or less than private employees’ salaries. To address the controversy, however, the U.S. Office of Personnel Management has recently called for a new analysis of salary comparisons. Such detailed analysis should include a comparison of the financing for federal retirement benefits, which Third Way estimates is more generous than for comparable private workers.
* Federal pension benefits are determined by a simple formula. It equals the average salary of the three most lucrative years of a person’s federal employments, multiplied by 1.1% (or 1.0% if the employee works for less than 20 years), and multiplied by the number of years of service. Thus, $70,000 as a “high three” multiplied by 1.1% equals $770 which is multiplied by 30 years for a total of $23,100.
THE AUTHORS
Jim Kessler is the Vice President for Policy at Third Way and can be reached at jkessler@thirdway.org. David Kendall is Senior Fellow for Health and Fiscal Policy at Third
Way and can be reached at dkendall@thirdway.org. The authors would like to thank Jesse McCormick for his research assistance.
ABOUT THIRD WAY
Third Way is the leading think tank of the moderate wing of the progressive movement. We work with elected officials, candidates, and advocates to develop and advance the next generation of moderate policy ideas.
For more information about Third Way please visit www.thirdway.org.
Federal Employees Retirement System (FERS)
Federal employees have stools with three legs made of solid mahogany. In the FERS, government employees contribute 0.8 percent of pay while their employing agencies [taxpayers] put in 11 percent of pay. On top of that, federal employees can contribute to a Thrift Savings Plan and get a 5 percent matching contribution from their employing agency [taxpayers]. This match is immediately vested to boot. According to the CRS report, "All participants in FERS are immediately vested in their own contributions and in government matching contributions to the TSP, as well as any investment earnings on these contributions." And the third leg for most federal employees is Social Security. If it gives you any comfort, they contribute to FICA to the same extent that everyone else does. - Going postal over federal pensions, Bankrate.com, March 25, 2011New legislation aims to cut federal pensions for all new employees hired after 2012, citing a need to bring benefits in line with those in the private sector. Sen. Richard Burr, R-N.C., on Thursday introduced a bill (S. 644) that would eliminate the pension portion of the Federal Employees Retirement System for all new government hires beginning in 2013. The legislation would not affect Thrift Savings Plan benefits and agency-matching contributions. Nor would it affect FERS pensions for current federal employees and retirees. It would, however, apply to members of Congress. [Senator Proposes Cuts to Federal Annuity Benefits, Government Executive, March 18, 2011]
In addition, an influential panel of military advisors called the Defense Business Board laid out their plan in a 24-page presentation, “Modernizing the Military Retirement System,” which would eliminate the familiar system under which anyone who serves 20 years in the U.S. military is eligible for retirement at half their salary. Instead, they’d get a 401k-style plan with government contributions and have to wait until the normal retirement age. [Military Eying Radical Change to Retirement Pay, Colonel6's Blog, August 15, 2011]
If you are under the Federal Employees Retirement System (FERS) or the Civil Service Retirement System (CSRS), you can take regular optional retirement if you are 55 with at least 30 years of service; age 60 with 20 years of service; or age 62 with 5 years. If your agency offers early retirement, you must be at least 50 with 20 years of service or have 25 years of service at any age. An employee under FERS also is eligible for an immediate annuity if he/she has 10 years of service and has reached the minimum retirement age (55 if born before 1948, and gradually increasing to 57). An employee under CSRS must meet the 1-out-of-last-2 year's coverage requirement and all employees must have at least 5 years of civilian service. [Source]
According to the Bureau of Economic Analysis for 2008, the average federal employee made $79,197 [the average private sector employee made $49,935]. The pension for the average employee can be calculated as follows:
$79,197 x 40 Years x 1% = $31,678
Understanding the FERS Retirement
When we talk about your FERS Retirement, we're really talking about several different benefits. FERS (Federal Employees Retirement System) has three main components:
- Basic FERS Pension
- Social Security
- Thrift Savings Plan (TSP)
Your FERS pension and Social Security will be fixed dollar amounts. But the money you get from your TSP will depend on how much you contributed and how well you managed the money.
As a FERS, you have a chance to take a more active role in managing your own retirement than CSRS do. But, that means you need to stay up-to-date on your benefits.
Here are some important things you need to know about each part of your FERS retirement...Reductions to Your FERS Pension
There are some choices you can make that will reduce the amount of your FERS pension:
- Retiring Before Age 62 with MRA+10
If you retire before age 62 on an Early FERS Retirement (MRA+10), your pension will be reduced. Your FERS pension will be PERMANENTLY reduced by 5% for every year you are under age 62. Click here to see an example of this reduction and how it might affect you
- Survivor Benefits
Your FERS Pension could also be reduced if you choose survivor benefits. Will my survivor still get my pension when I die?
The Thrift Savings Plan (TSP) is a special account for Federal Employees. The TSP was created as part of the Federal Employees Retirement System in 1986. Most government employees (FERS and CSRS) are eligible for the TSP — even those hired before it was created.
The TSP allows you to save pre-tax dollars in a special personal account. You can choose how to invest those dollars — although your choices are limited.
With your FERS retirement pension and Social Security, you will receive fixed amounts. But with your TSP, the amount you receive depends on how much you put in and how well you managed the money.
Your TSP contributions are optional and separate from your FERS pension.
You may also be able to get your Federal Agency [taxpayers] to contribute money to your TSP. Click here to learn more about the match the government gives FERS employees.Social Security for FERS
Employees covered under the Federal Employee Retirement System (FERS) are typically eligible to receive Social Security benefits when they retire. Every pay period, the Federal Government takes out 6.2% of your basic pay to put towards Social Security. But just like your FERS pension, your Social Security benefit is not based on your contributions - it is based on other factors.
According to the U.S. Social Security Administration, the Social Security taxes you and other workers pay into the system are used to pay for Social Security benefits.
You pay Social Security taxes on your earnings up to a certain amount. That amount increases each year to keep pace with wages. In 2011, that amount is $106,800.
You pay Medicare taxes on all of your wages or net earnings from self-employment. These taxes are used for Medicare coverage.
| If you work for someone else | 2011 Social Security tax | Medicare tax |
|---|---|---|
| You pay | 4.2%* | 1.45% |
| Your employer pays | 6.2% | 1.45% |
| If you are self-employed | ||
| You pay | 10.4% | 2.9% |
Currently, U.S. citizens cannot collect Social Security benefits until age 62 (lawmakers are considering raising this age to 67 or 70). The maximum Social Security benefit at age 62 is $21,636 per individual.
* The employee contribution was temporary lowered from 6.2% to 4.2% on January 1, 2011.
Obama and the Government Employees
The horrible public schools, high taxes, and crime have driven families out of Chicago. The city’s job base cannot compete with anti-union places like Houston and Phoenix. The largest employer in the city of Chicago is the Federal government. Followed by the City of Chicago Public School system. Other major employers are the city of Chicago, the Chicago Transit Authority, the Cook County government, and the Chicago Park District. These thousands of government workers provide the backbone of the coalition for higher taxes, generous pensions and “political stability.” Chicago’s political system is inefficient and costly. There are no term limits in Chicago. The Democratic Party has controlled the Mayor’s office since 1931(a big city record). There’s no opposition: Democrat’s control 49 out of 50 seats on the city council. Corruption is everywhere. Barely a month can go by without a major scandal. The FBI has the largest public corruption squad in the United States located in Chicago. Chicago voters don’t seem to care. Those who care about high taxes, good public schools, and low crime are a small minority in Chicago. Chicago's long decline continues. In the coming years, public pension commitments will test even the high tax tolerant Chicago residents. Look for low regulation, low tax Houston to overtake Chicago in population in the next eight to 15 years. [Steve Bartin, The Decline of Chicago: The City That Doesn't Work, New Geography, June 19, 2008]The government does not create a traditional sellable product and thus produces no revenue outside of what it collects from taxpayers. As of 2008, the average federal salary was $79,197, compared with $49,935 for the average private sector employee. In other words, the average federal bureaucrat makes almost twice as much as the average working taxpayer who pays their salaries. Add the value of benefits like health care and pensions, and the gap grows even bigger. The average federal employee’s benefits add $40,785 to his annual total compensation, whereas the average working taxpayer’s benefits increase his total compensation by only $9,974. In other words, federal workers are paid on average salaries that are twice as generous as those in the private sector, and they receive benefits that are four times greater. [Brandon Greife, The Public Sector Weight Around Taxpayers’ Necks, RedStates.com, May 4, 2010]
The public sector, in most instances, is a monopoly. The public sector provides essential services. It is the very nature of government to provide on a monopoly basis those services which everyone needs. Public sector decisions are political decisions no matter how great their economic impact. Government makes decisions every day that have profound economic consequences, but these decisions are based on political, not economic, considerations. In the public sector, decisions that are politically popular but economically ruinous can get you reelected; decisions that are economically sound but politically unpopular are ruinous. The private sector is competitive; there are alternative sources of supply for the goods and services produced. The private sector provides nonessential services. Private sector decisions are economic decisions no matter how great their political impact. In the private sector, economic decisions that have bad political consequences can make you unpopular, but decisions that are politically popular and have bad economic consequences can put you out of business. [David Y. Denholm, Beyond Public Sector Unionism: A Better Way, Public Service Research Foundation, 2001]
By Ed Lasky, American Thinker
February 12, 2010
Barack Obama may not have learned much at Harvard regarding the Constitution, but he did learn in Chicago how politics works: the Chicago way. Reward supporters, and keep the bribery as opaque as possible. Chicago mores have been brought to Washington.
There are two sides of the ledger responsible. Declining state tax receipts (considered "earnings" by government) played a role (the receipts side). But the real scourge has been on the expense side of the ledger: salaries and pension benefits given -- and I do mean given -- to government workers.
Public-sector unions have amassed great power to extract taxpayer dollars from politicians. Politicians reward government workers with our dollars, and they in turn are rewarded at election time by donations, free labor (phone banks, people who pass out flyers), and votes.
Barone describes the corruption at the core of this dealing:"Fully one-third of the 'stimulus' money went to state and local governments -- an obvious payoff to public employee unions that contributed so much to Democrats," as Michael Barone noted.
Public-sector unionism is a very different animal from private-sector unionism. It is not adversarial but collusive. Public-sector unions strive to elect their management, which in turn can extract money from taxpayers to increase wages and benefits -- and can promise pensions that future taxpayers will have to fund.Obama and the Democrats have been well-rewarded for their patronage. Unions contributed up to 400 million dollars to Democrats in 2008 and engage in skullduggery to advance their aims. The latest revelation: a union-funded slush fund secretly targeting GOP candidates through the use of money-laundering and front groups. Unions have funded all sorts of political activity -- undoubtedly the major reason Obama, in one of his first acts as president, ended union disclosure rules requiring them to report how their members' dues were being spent. So much for transparency.
The results are plain to see. States such as New York, New Jersey and California, where public-sector unions are strong, now face enormous budget deficits and pension liabilities. In such states, the public sector has become a parasite sucking the life out of the private-sector economy.
This is one reason why the recent Supreme Court decision leveling the playing field, allowing corporations to exercise their First Amendment rights by contributing to candidates, inflamed unions and President Obama. He violated precedent by attacking the Supreme Court in his State of the Union address. Maybe the title should be changed to State of the Unions.
Franklin Roosevelt, of all people, was alert to the danger of this collusion between politicians and unions. He maintained that "the process of collective bargaining, as usually understood, cannot be transplanted into the public service." Yet it has been transplanted; today, a majority of union workers for the first time work for the government. And the government has brought good things to them.
Government work is one sector of our economy that is booming (besides pawnshops and bankruptcy lawyers). Rich Lowry noted the paradox: We suffer, and government workers prosper.
For most Americans, the Great Recession has been an occasion to hold on for dear life. For public employees, it's been an occasion to let the good times roll.Nor does the boom look likely to end anytime soon.
The percentage of federal civil servants making more than $100,000 a year jumped from 14 percent to 19 percent during the first year and a half of the recession, according to USA Today. At the beginning of the downturn, the Transportation Department had one person making $170,000 or more a year; now it has 1,690 making that.The New York Times reports that state and local governments have added a net 110,000 jobs since the beginning of the recession, while the private sector has lost 6.9 million.
The gap between total compensation of public and private workers has only widened during the downturn, according to USA Today. In 2008, benefits for public employees grew at a rate three times that of private employees.
Federal workers now earn, in wages and benefits, about twice what their private sector equivalents get paid. They often have Cadillac health plans and retirement benefits far above the private sector average: 80 percent of public-sector workers have pension benefits, only 50 percent in the private sector. Many can retire at age 50.The pensions are manipulated upwards and gold-plated, too, as I noted in "Taxpayers: Eat your hearts out, suckers." Many others have begun to notice the drain on public finances by pensions for government workers, and the public pension tsunami has just begun. This is the engine driving our ballooning deficits and public debt. Merely rolling federal employee pay back to where it was in 1998 relative to the private sector, and shifting state and local government pay back to 2005 relative levels, would save $116 billion annually from government costs.
We know this will never happen as long as Democrats are in power. They like this perpetual motion machine. A government bureau, Ronald Reagan quipped, is the nearest thing to eternal life we'll ever see on earth. But we can try, and there is certainly potential for Republicans to seize on this problem as it begins to gain traction in the public mind. The issue seems tailor-made for Tea Partiers.
Barack Obama is planning a major overhaul of the Federal government pay system that would boost pay for government workers while loosening scrutiny on how they do their jobs. When he released his budget, there was a section titled "Improving the Federal Workforce." Sounds good, right? But watch what the man and his minions do, not what they say.
First, the document tries to justify the high salaries government workers are paid (responding to the mounting criticism).
But then comes the trickery, disguised as "reform" and "refreshing" the system. This team is addicted to euphemisms (and their thesauruses are well-thumbed).
John Berry, director of the Office of Personnel Management, is engaged in a major effort to overhaul the G.S., or General Schedule, classification and pay system that began in 1949. Change is coming, and it will gladden the hearts and fill the wallets of government workers. In a Washington Post interview:
Berry mused about eliminating the first two ranks of the 15-grade GS system and adding grades 16 and 17. Berry did not explicitly advocate a pay raise for federal workers during the interview, but those in the added grades presumably would be paid more than the current top rate.Berry made noises about tying pay to performance (consider this chaff to deflect observation and criticism), but then he tipped his hand:
"I'm a strong proponent of breaking the chain to the desk and breaking the chain to the time clock," he said. He wants government to "move in a direction to empower and trust our employees to get the job done ... and not focus so much on where they're sitting and what hours they're sitting there."Does that sound like a plan to increase efficiency of government workers? Give them higher pay, but allow them to set their own hours and work from...where? Starbucks? Home? The zoo?
And how is this "reform" going to happen? Are the people or our representatives going to have a say in how our money is spent? Need one ask?
The plans are in the final stages and will be put in place by a presidential memorandum or executive order. In other words, they'll be implemented by presidential fiat. This is the form of government we have now -- or at least did, before Scott Brown was elected.
Government work...our growth industry.
Collectivists advocate controlled elections, controlled media, controlled education, the elimination of free speech, disarmament of the population, fiat money, a cartelized health-care system, military imperialism, and global government. Individualists advocate honest elections, a competitive media, an educational system responsive to parents, encouragement of free speech, a well-armed citizenry, sound money, freedom-of-choice in health care, a non-interventionist foreign policy, and national sovereignty. [Freedom Force International]
A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship. [Justice Litle, Is America’s Economic Recovery on the Whole Based on a Rotten Sham?, Daily Markets, April 20, 2010]
"If one understands that socialism is not a share-the-wealth programme, but is in reality a method to consolidate and control the wealth, then the seeming paradox of super-rich men promoting socialism becomes no paradox at all. Instead, it becomes logical, even the perfect tool of power-seeking megalomaniacs. Communism or, more accurately, socialism is not a movement of the downtrodden masses, but of the economic elite." [Gary Allen, None Dare Call It Conspiracy, Concord Press, 1971]
Obama's Recession Plan: More Bureaucrats
The HillFebruary 16, 2010
As hard-working Americans struggle through one of the worst recessions in U.S. history, one part of the country remains recession-proof: Washington, D.C.
Even though federal tax revenues are down 20 percent and the national debt has ballooned to $12 trillion, President Barack Obama and his allies on Capitol Hill continue to believe that we can borrow and spend our way to prosperity. As part of that plan, they’re using our hard-earned tax dollars to increase the size of government and the salary of bureaucrats.
While the private sector has lost a total of 7.7 million jobs during the past two years, the ranks of the federal bureaucracy have swelled by nearly 10 percent. Furthermore, while the average salary in the private sector is $40,331, a typical federal worker earns $71,206. Worst of all is the explosion of government salaries at a time when most taxpayers are struggling to make ends meet.
According to an investigative report by USA Today, the proportion of “federal employees making salaries of $100,000 or more jumped from 14 percent to 19 percent during the recession’s first 18 months – and that’s before overtime pay and bonuses are counted.”Since the recession began in December 2007, the U.S. economy has been shedding jobs at its worst rate since the Great Depression. But you would never know it if you worked “inside the Beltway.” When the economy turned south two years ago, the Department of Defense had 1,868 employees earning $150,000 or more. Today, there are 10,100 employees at the Pentagon taking home that salary. At the start of the economic slump, the Department of Transportation had only a single career employee earning more than $170,000. Today, there are more than 1,600 career federal workers at the DOT making that amount. Obama has recommended an additional 2 percent pay raise for 2010. That’s unconscionable.
The time has come for Washington to live within its means. If most Americans are coping with a weak economy by tightening their belts, our public servants can to do the same. That’s why I am calling for a salary freeze on all federal salaries above $120,000 until unemployment is under 7 percent, which should be in the next two or three years. Those who are earning three times as much as their peers in the private sector can make do until we reach that benchmark.
The only way we can rebuild our economy is to spur job growth in the private sector. It is the private sector – not government – that is the engine of our prosperity. After all, every single government job must be paid for through tax revenues – and those revenues come from the private sector. Increasing employment in the federal government is no solution at all. Indeed, by raising the price of government at a time when tax revenues are plunging at the fastest rate in 80 years, we are plunging our nation into its greatest debt crisis in history.
According to the president’s own budget, we will add $9 trillion in government debt over the next decade, bringing the total national debt to $21 trillion. That doesn’t even include the Democrats’ health care bill which – if passed – will cost at least hundreds of billions more. That is the economic equivalent of medical malpractice, and it must stop.
If we freeze the pay of the highest-paid federal employees – including members of Congress – it won’t eliminate our deficit overnight. But it will send a powerful message to the folks in Washington that they work for the taxpayers; not the other way around.
The bureaucrats might complain if the freeze drags on year after year. But my response is simple: If you want a raise, help the private sector start hiring people again. If you want more money, do something about unemployment.
This is an issue where conservatives will naturally take the lead, but we invite Democrats and independents to join us, as well. All Americans can rally around this common-sense issue which is about establishing fairness, accountability, and restoring fiscal sanity to the federal government.
Now is the time for action.
Are Those Horrible, Sometimes Unionized, State and Local Employees Overpaid? Apparently Not
Naked Capitalism, Comment from NOTaREALmericanAugust 10, 2010
The problem is that, over the last 40 years (or so), the entire economic system has turned into a battle-of-the-scams.
Like it or not, the entire country now realizes that if you’re not running a scam on somebody (or participating in one) you’re not going to make money.
What people are pissed off about is that they aren’t in on some scam. The nobility have their scam of owning the Federal Reserve (and control of the country’s currency); the public employee’s unions have a nice scam of being able to purchase politicians to increase their benefits; I’ve been participating in a great scam for 15 years working for a Bank which pimps loans to young people (the colleges employees are participating in the same scam); the military industrial complex is one of the original post WW2 scams; and so it goes…
Socialism (applied real-world socialism, not fantasy socialism) IS completely ONLY absolutely about using political influence to scam somebody. The system is working perfectly IF you happen to be in on a scam. Stop bitching, and find a good scam.
Federal workers earn 30-40% more than their private sector counterparts, qualify for a three-tier retirement plan which includes lifetime pensions, and may retire while still in their 50s, yet those who pay their salaries may have to wait until 70 to collect reduced Social Security benefits. Federal workers and contractors produce nothing and add nothing to the GDP; virtually all they do is rule over and regulate every aspect of our lives.
77,000 Feds Earn More Than Their Governors, Report Finds
GovExec.comMore than 77,000 federal workers earned more than the governors of their states in 2009, according to a new report.
The research found 18,351 federal medical officers earned more than their governors -- the most common occupation to out-earn states' top government executives. More than 5,000 air traffic controllers, 4,346 attorneys, 16 outdoor recreation planners and one interior designer also earned more than the governors of their respective states, the report said.
The Congressional Research Service report, requested by Sen. Tom Coburn, R-Okla., based its comparison on 2009 federal salary data from the Office of Personnel Management and 2009 salaries of governors from the Council of State Governments. The research is dated May 6 and was first reported Tuesday by The Washington Times.
The report did not examine salaries of employees in the Office of the Vice President, White House, CIA, U.S. Postal Service or a handful of other government agencies.
Governor salaries ranged between $70,000 in Maine and $212,179 in California in 2009, according to the report, which noted that California Republican Gov. Arnold Schwarzenegger waived his payment while in office. The governors of Virginia and New Jersey tied for fifth highest salaries in 2009 at $175,000; in Virginia, 606 feds earned more than that figure.
Colorado had the most federal employees -- 10,875 -- with salaries higher than the state's governor, who earned $90,000 in 2009. Maryland placed second, with 7,283 feds earning more than Democratic Gov. Martin O'Malley's salary of $150,000 -- including 2,266 medical officers, 51 employees in human resources, and 30 employees in information and arts. Delaware had the fewest number of federal employees -- 37 -- earning more than the governor, the report found.
The American Federation of Government Employees, the largest federal employee union, pointed to proposed legislation that would cap at $200,000 federal reimbursement for contractor salaries.
"The government's paying $700,000 and more for contractor salaries, and Sen. Coburn worries about the pay of physicians who care for wounded soldiers?" Beth Moten, AFGE's legislative and political director, asked in an emailed statement.
In an emailed response to Government Executive, Coburn said no one would disagree that federal employees should be paid adequately.
"We can all agree on the importance of paying highly specialized doctors to care for wounded soldiers and veterans, or skilled engineers for their services," he said. "However, when our nation is over $14 trillion in debt and American families are struggling to make ends meet, this report begs for an explanation of why interior designers, recreation planners and other public employees are enjoying higher salaries than state governors."
Database Lists Top Federal Earners in 2011
GovExec.comThe highest paid federal employees in 2011 worked primarily in the medical field at government health agencies, according to data compiled by a company that specializes in connecting businesses through technology.
The top 1,000 federal salaries this year ranged from $216,345 to $350,000, with most of the highest earners working at the National Institutes of Health and at the Indian Health Service, according to the data. WikiOrgCharts, a company that seeks to connect businesses and people through a social customer relationship management tool, requested the information from the government through the Freedom of Information Act and developed a crowdsourced database that contains profiles of 1.2 million federal employees. The profiles list employees' names, title or job field, agency, and in many cases, their annual base salary.
"Some people can look at this and say these public servants make too much money," said Farhan Memon, WikiOrgCharts founder and chief executive officer. But Memon said many of the top earners are having a "generational impact" on the study of disease and could command much more in the private sector. "I don't know that you can put a price tag on that," he said.
Topping the 2011 list is Dr. Electron Kebebew, a medical officer at NIH who is widely regarded in the field of cancer research. Dr. Anthony Fauci, who directs the National Institute of Allergy and Infectious Diseases, garnered the No. 3 slot on the list, earning an annual salary of $335,000 in 2011. Fauci has led NIAID since 1984 and is one of the country's leading clinicians and researchers in the field of HIV/AIDS.
Other top earners included employees at the Farm Credit Administration, Federal Deposit Insurance Corporation, and the Securities and Exchange Commission.
Memon said some people have contacted WikiOrgCharts requesting removal from the database, which anyone can access. But the information contained in it is public and most government employees on the list understand that, he said, adding that centralizing such data and making it easy to search improves government transparency. In addition, the database serves as a kind of LinkedIn or similar social media tool, helping people in and out of government connect with one another. For example, Memon said one government contractor used the database to figure out the appropriate federal contact, while another used the information as a recruiting tool to see how much a potential hire was earning.
WikiOrgCharts also created organizational charts with employee profiles for certain large private sector companies, including Wal-Mart, Exxon-Mobil, Apple and Google.
Memon said he expects WikiOrgCharts will produce more lists and compilations based on the government data.
"Once you have a data set, there are multiple ways to cut and slice it," he said.
Senate-passed Defense Bill Would Cap Contractor Pay
GovExec.comThe 2012 Defense authorization bill, which the Senate passed Thursday night in a 93-7 vote, includes an amendment to cap the amount that defense contractors can be reimbursed for any employee's salary at $400,000.
Such a cap is opposed by many in the contractor community, and the Obama administration has favored a lower cap that would apply only to senior executives.
The amendment, approved by voice vote, was offered by Sens. Barbara Boxer, D-Calif.; Chuck Grassley, R-Iowa; and Jay Rockefeller, D-W.Va.
Under current law, a contractor can charge taxpayers $693,951 for the salaries of each of its five highest-paid employees, based on a formula adopted in the late 1990s.
"Taxpayers should not be on the hook for exorbitant government contractor salaries," Boxer said in a statement. "This amendment ensures that no defense contractor will make more in taxpayer funds than the president of the United States."
Grassley said,
"We can't afford to waste increasingly limited defense dollars. This amendment goes after an unnecessary expenditure by containing runaway spending in a type of contract used extensively by the Department of Defense."
The House-passed version of the Defense bill would extend the current cap of slightly less than $700,000 to all employees.
The Boxer amendment is opposed by an alliance of contractors called the Acquisition Reform Working Group. In a Nov. 29 letter, the group warned it "could force companies to reduce its employees' compensation; in turn, these shrinking salaries will make the defense sector less attractive to top talent, which could then negatively impact DoD missions."
The harm to defense companies from lowering the cap, the contractors continued, "would be further compounded by broadening the scope of application to cover all federal contractor employees; highly skilled innovators and technology experts would likely focus their skill sets on the commercial market, thus eliminating the government's ability to develop effective critical mission solutions."
Debate on the Senate floor was tinged by the week's broader political dispute over whether to raise taxes on the wealthy to pay for an extension of a "holiday" on Social Security taxes.
Majority Leader Harry Reid, D-Nev., said, "while targeting the middle class, Republicans proposed to do nothing to cut back on excessive subsidies for many large corporations that benefit from government contracts." Reid said the contractors, who now total 5 million, "caught fire during the Republican control of the presidency."
Minority Leader Mitch McConnell, R-Ky., said his party's proposal to pay for the Social Security holiday by extending the freeze on federal pay, "is a much smarter approach to extending the temporary payroll tax cut than the one proposed by Democrats involving permanent tax hikes on job creators."
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