Author Archive
Direct Democracy
Aside from voting for “Congress critters,” Americans in many states today have a chance to directly control government fiscal policy.
They will be voting on whether to approve $80 billlion in government bonds in states and cities across the country, including a huge bond package in California endorsed by Governor Arnold Schwarzenegger. Voters usually approve about two-thirds of proposed bonds, but hopefully they will be more skeptical this year given their generally foul mood toward politicians and government.
In addition, voters have a chance to approve new budget limits on spendthrift politicians in Maine, Nebraska, and Oregon. Most states already have detailed restrictions on their budgets such as balanced budget requirements. This year’s proposals would impose limits on annual increases in taxes and spending, similar to the successful TABOR limit in Colorado. Such limits recognize the fact that politicians love to spend, but they often lack the discipline to make the needed tough trade-offs in budgeting priorities.
Here [.pdf] is a useful summary of ballot measures across the country, both fiscal and nonfiscal.
Bonds on the Ballot
Bloomberg is reporting that American voters will be asked to approve a record $80 billion in bonds next Tuesday to fund an array of state and local spending projects. The previous record was $47 billion in proposed debt in 2002.
As I argued in an op-ed yesterday, state and local revenues have been rising rapidly, so voters should be very suspicious about loading even more debt onto the next generation of taxpayers. For background on state debt see here, and here.
Peace with Paganism
The street I live on in Northern Virginia is like the United Nations. My neighbors are from Vietnam, Russia, Iran, El Salvador, Hungary, Morocco, and Virginia. And thus perhaps a mix of Christians, Muslims, Buddists, and atheists. My wife is Jewish.
Last night, as we went trick-or-treating with our kids, we noticed that every house was participating in the Halloween rituals of costumes, decorations, and candy hand-outs.
It was peace, harmony, and smiles all around—there were no politicians present, and thus no one to sour the mood or tell anyone what to think. I guess it wasn’t like the UN at all.
Income Data Misquoted and Fundamentally Flawed
An op-ed in the Washington Post on Sunday included data purporting to show that the rich are grabbing an increasing amount of the income earned in this country.
Jacob Hacker of Yale University cites data from economists Thomas Piketty and Emmanuel Saez supposedly showing that “the share of national income held by the richest 1 percent of Americans–stable at about 32 percent throughout the middle decades of the 20th century–began to rise sharply in the 1970s and by 2002 had surpassed 40 percent.”
Actually, the Piketty Saez data show that it is the top 10 percent whose share supposedly rose from 32 to 40 percent.
More importantly, a forthcoming Cato paper by Alan Reynolds shows that the Piketty-Saez data, based on federal tax return information, is a deeply flawed source for such income “distribution” analyses.
For example, because of tax law changes since the 1970s, a huge share of business income that used to be reported on corporate returns is now reported on individual returns. Reynolds finds that much of the supposed rise of the share of income at the top is simply a result of this paper shuffling regarding where business income is reported.
This Piketty-Saez data has been frequently misused by Paul Krugman, the Economist magazine, and many other news outlets to draw grand conclusions about how the gains of U.S. economic growth have supposedly only gone to the those at the top. Reynolds study shows that that is probably not true. At least, his findings show that reporters and pundits should be very careful in using any data that claims to show changes in income shares over time.
Certainly, they should not use sloppy language like Hacker’s phrase ”income held by the richest.” Income data shows an annual flow–it is not “held” like wealth. Note that “richest” also refers to wealth holdings, not annual income flows.
Federal Robbers
The Washington Post ran a short piece on October 26 that reported on $2.6 million flushed down the drain by the Department of Agriculture. Federal auditors looked at housing subsidies handed out after Hurricanes Katrina and Rita and found: “Based on discussions with disaster victims, we concluded that much of the $2.6 million in emergency rental assistance that [the department] provided to disaster victims was unnecessary.” Apparently, officials overlooked basic accounting controls and most of the covered costs were already paid for by another federal agency.
After reading such stories, I wonder: Will any official get fired? Shouldn’t officials at least apologize to us for wasting our hard-earned dollars? How is this sort of wasteful tax-and-transfer activity any different than bank robbery?
Spontaneous Order Be Damned
In the Washington Post today, columnist Marc Fisher discusses the birth of a community gathering place in Silver Spring, Maryland, a suburb of D.C. The county government cleared a downtown area a couple years ago in preparation for a big and expensive redevelopment scheme featuring an ice rink, civic building, and veterans memorial. The 35,000 square foot site has been covered with inexpensive artificial grass and citizens of all ages are using it as a meeting place and an area to play games and have family picnics.
Now that the government wants to go ahead and put up its fancy structures on the grass area, citzens are saying essentially “wait a minute, we kinda like this impromtu community gathering place, we don’t want to see it go.” One young person said the current place is such a success because it is “unprogrammed.”
I’m no expert, but I suspect that much urban planning has been poor because planners and politicians fall in love with pristine architectural sketches of grand new projects, and don’t spend much time actually observing how citizens use the streets, buildings, roads, and environment.
Rants vs. Reason
I have received hundreds of incoming emails in response to my articles suggesting that federal civilian workers are overcompensated (see here and here).
Many emails have been rants claiming that I’m an idiot or don’t know what I’m talking about. Very few of those opposed to my arguments expressed any interest or curiosity in the actual underlying government data.
Some emails have been supportive. Here are two that suggest reasons why federal pay has been growing much more quickly than private pay.
This one came from a federal worker in Maryland:
I thoroughly enjoyed reading your 13 August opinion piece in the Washington Post–thanks!! As a senior military officer in a command that employs a large number of civilians, I have become increasingly frustrated at the excesses of the civil service system. Not only have the salaries gone up through the cost of living increases, we’re also paying more because of little control on promotions which has resulted in significant “grade creep.” Until your article, however, I continued to hear the confusing mantra that our civil servants were underpaid. I am grateful because you have provided me with some ammunition for my next command personnel discussion.
Here’s another from a retired federal worker in Virginia:
I would like to offer what I think are contributing explanations for the problem of excessive pay and benefits among the members of the Federal workforce.
First, the most salient explanation for overgrading in the Federal civil service is the conflict of interest posed by having the personnel function embedded within each Federal agency. Directors of personnel of Federal agencies report directly to their respective agency heads, all of whom have a vested interest in having as high a graded workforce as possible. Reporting to the directors of personnel are specialists called position classifiers. To be cynical about it, the responsibility of the classifiers is to write job descriptions that justify whatever grade levels that their respective managements want the jobs under them to have. In short, classifiers are wordsmiths who rationalize with contrived language raising position grades, almost never lowering grades. The result is that, over time, Federal job grades (and often titles) bear little relation to the real duties and responsibilities of the jobs to which they are applied. (Classifiers are a kind of inside joke among Federal employees.)
The remedy, it is obvious, is to take the personnel function out of the agencies and place it solely in an independent agency responsible to the White House, at least indirectly. Once that is accomplished, all the jobs in the Federal workforce should be reclassified and given realistic and appropriate grade/pay levels.
Read more public comments on my arguments here, here, and here.
Welfare for Wineries?
In researching government budgets, I come across dubious spending projects all the time, but one recent example struck me as particularly idiotic and unjust.
The title of a recent press release from New York governor George Pataki says it all: “GOVERNOR ANNOUNCES $500,000 IN GRANTS AVAILABLE FOR NEW YORK WINERIES TO IMPROVE THEIR WEBSITES.”
So, New York is taxing the hard-earned wages of truck drivers and retail clerks and giving it to well-heeled winery owners and web services companies?
Come on Americans, wake up. Far too much of what our federal, state, and local governments do these days is just pure theft.
Catching Terrorists with 1920s Technology
On August 18, the Washington Post ran a story on the post-9/11 technology investments at the FBI. The story concludes, “five years after the Sept. 11, 2001 terrorist attacks and more than $600 million later, agents still rely largely on the paper reports and file cabinets used since federal agents began chasing gangsters in the 1920s.”
As part of the agency’s enormous Trilogy project, a proposed Virtual Case File system designed to help agents share terrorist threat information was scrapped after $170 million and four years of development.
The Post story details the management lapses and lack of oversight at both the FBI and contractor SAIC that led to the breakdown and waste of taxpayer dollars (probably why companies like SAIC get the moniker “Beltway bandits”).
A few of the all-too-common government failings relayed in the article:
The FBI-VCF management disaster is one of many I discuss in my book Downsizing the Federal Government (see here [pdf] for a shorter summary).
The federal government simply cannot manage large, complex tasks with any degree of efficiency. The list of multi-billion dollar failures of technology, highway, and weapons projects grows longer all the time.
Don’t Shoot the Messenger
Nothing like a discussion of federal salaries to fill up my inbox with angry comments from federal workplaces across the land. In a post last week, I simply pointed out that new data from the U.S. Bureau of Economic Analysis (BEA) showed that federal worker wages and benefits have been rising quickly, and by 2005 averaged twice the average in the private sector. Then came the email.
Fedsmith, a very useful website that focuses on federal workforce issues, discussed the data this morning, and federal workers also responded with dozens of comments.
GovExec.com also ran a story today.
By the way, I can say nice things about federal workers–BEA economists do quality work, churn out loads of great data, and are very helpful when you send them a query.
New Milestone for Federal Pay
New data was released today by the U.S. Bureau of Economic Analysis on federal employee wages and benefits. The data for 2005 shows that compensation for the average federal civilian worker ($106,579) is now exactly double the average compensation in the U.S. private sector ($53,289).
(See Tables 6.2D, 6.5D, and 6.6D here, www.bea.gov/bea/dn/nipaweb/index.asp).
The federal pay advantage has been soaring in recent years. The ratio of average federal to average private compensation increased from 1.51 in 1990, to 1.68 in 2000, to 2.00 today.
Both federal wages and benefits have been galloping ahead. The new data shows that the average federal civilian worker earned $71,114 in wages in 2005, compared to an average $43,917 in the private sector.
I discussed the federal pay advantage based on data for 2004 in a recent bulletin. I thought that new data for 2005 would show the federal advantage narrowing due to strong private sector growth. Instead, the federal advantage increased once again. Average federal wages rose 5.8 percent in 2005 compared to an increase of 3.3 percent in the private sector.
See the full details in a summary spreadsheet here [.xls].
The Big Dig
With Boston’s Big Dig highway project in the news, a brief review is in order:
As the project was getting started in 1985, government officials claimed that it would cost $2.6 billion and be completed by 1998. The cost ultimately ballooned to $14.6 billion and new problems continue to arise as the project finally nears completion. (The federal share of the project’s cost was $8.5 billion.) In 2004, hundreds of leaks were found in the project, which added millions of dollars in taxpayer costs. And in recent weeks, parts of new road tunnel ceilings have collapsed.
Raphael Lewis and Sean Murphy wrote an excellent Boston Globe series a couple of years ago revealing how the Big Dig had been grossly mismanaged. A key problem was that Massachusetts repeatedly bailed out bungling Big Dig contractors instead of demanding accountability. Contractors were essentially rewarded for delays and overruns with added cash and guaranteed profits.
When federal money is involved, state and local profligacy and corruption are usually the result. For background on the general problem of cost overruns on federally funded projects, see my compilation of evidence here.
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