Other than as an act of political showmanship, there’s absolutely nothing to be said in favor of President Obama’s call for a freeze on Federal salaries.
1. It’s lousy negotiating strategy, because it gives the right wing something it wants without getting anything back.
2. It’s lousy public management, because important classes of Federal employees are already grossly underpaid, and losing their services will cost us far more than we could possibly save.
3. And it’s lousy budget policy, because until the economy starts to recover we want deficits to be larger, rather than smaller.
Since (1) and (3) are pretty obvious, let me focus on (2). The junior-most Wall Street lawyer trying to help the banksters hold on to what they’ve already grabbed and help them grab more, is paid more than the senior-most lawyer working for the Treasury or the Fed trying to get some of it back. A fresh MBA at Goldman receives (I refuse to say “earns”) more than the highest-paid government official on the other side of a negotiation. The same is true of the corporate bureaucrats in the health-care and health-insurance industries confronting the people in the government trying to prevent health care from swallowing all of GDP. To make the government’s competitive position even worse is sheer madness.
Not only does the salary imbalance limit the government’s capacity to hire and retain the best, it also challenges the loyalty of those who are currently on the government payroll to the public interest. Every 0-6 or flag officer, and every high-level procurement official at the Defense Department, knows that the way to personal wealth is pleasing the defense contractors who provide such cushy post-retirement employment to those who, while drawing a paycheck from Uncle Sam, didn’t fight too hard to keep costs down or (God forbid!) try to kill any useless weapons systems.
Despite this, and despite the continual barrage of hatred directed at the people who keep the wheels turning, the Federal government manages to attract and retain some first-rate people (along with the usual proportion of turkeys). The President properly referred to the damage done to them by his decision. But he neglected to mention the damage done to the public.
What’s terrifying is the possibility that he hasn’t thought seriously about the problem: that’s the downside of electing a President without long experience in Washington, or any experience as a manager. So far, he has given very little indication that he understands the importance of all those GS-15s and SES employees who actually do the work.
None of this, in my view, justifies Jonathan’s insult. I think the President’s morals are pretty damned solid. But on this point I doubt his understanding. Today’s move was worse than a crime: it was a blunder.