Except as political showmanship, there’s nothing to be said for a freeze on Federal salaries. The President’s call for such a freeze was lousy negotiating strategy, lousy public management, and lousy fiscal policy.

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.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com

26 thoughts on “Ridicu-lousy”

  1. >Today’s move was worse than a crime: it was a blunder.

    There have been quite a few of them in just 2 years, hasn't there? My top 3:

    1. Ramping up the Afghanistan War to the point we have more troops in the Middle East than under Bush

    2. A stimulus that was obviously too small at the time, weighted heavily towards bank bailouts and tax cuts

    3. Leaving seats open at the Fed, appointing federal judges at the slowest rate in recent history despite 59-60 seats in the Senate

  2. Mark:

    It was reported that bonuses and Step increases are not affected. Does this offset some of the problem with issue #2?

  3. "losing their services"

    I had read the quit-rate is very low for federal employees (or was it government employees generally?), but I can't find the link now.

  4. Truly, the utter contempt on the left for even the barest nod toward fiscal sanity is a thing of wonder. Govt workers, generally, are not overpaid. But just for the record, at my NorCal county government, workers are taking a 7 percent pay cut over the next two years. At our school districts, teachers aren't seeing raises but are paying ever more for health insurance. At my own private employer, salaries have generally been frozen for two years now, and optimism for next year is scant.

    Meanwhile, there is essentially no inflation. And the economy's in the toilet. And the federal deficit is nauseating. On what planet is this anything other than a modest piece of prudent management.

    Honestly, you guys are making me want to vote Republican — and that's really hard.

  5. So some guys at Goldman Sachs (which only still existsbecause the government gave them billions upon billions of dollars) make a lot. The rest of the private sector is suffering, while the government expands and salaries go up. If nothing else, this was a great PR move. And if it causes some people to leave government service for the private sector… Good. That means more salary to tax, and less government employees to pay with that tax.

    The funny part is that many of us warned time and time again of Obama's lack of experience, and were poo-pooed. Guess we were right. Where's your admission that you were wrong?

  6. As a former Federal employee I can vouch for #2. The lowly pharmacist trying to impose some therapeutic rationality and fiscal sanity on the MD stuffed to the gills with pharma propaganda is not paid anywhere near what his private hospital counterpart is paid.

    But, since average Federal pay is so far above their private counterparts, all this ultimately means is that there must be MANY other classes of Federal employees who are being grossly overpaid.

  7. It's impressive that after launching a barrage of hatred at Bankers, at Goldman Sachs employees, at healthcare and health insurance company employees and at defense contractors, the author then accuses others of a "continual barrage of hatred directed at the people who keep the wheels turning".

    Self-awareness is lacking in this one.

  8. Point number 3 may be obvious to you, but it isn't to me. This Keynesian notion that deficit spending is great during recession is a crock. Deficits are financed by borrowing, which sucks investment capital out of the private sector, so every dollar spent in the public sector is a dollar not spent in the private sector. The ratio of public sector to private sector is already at historic highs, time to bring it back into balance. If the problem is to prevent deflation, the quantative easing policy by the fed is better, since it pumps cash into the private sector, where it belongs. The only deficits that might be good are those caused by tax cuts, since once again they transfer capital from the public to the private sector, where it is most needed (although I also have indications that tax cuts on the high rates dont really cost revenue, since they tend to encourage transfer of assets from tax shelters to more profitble investments).

    As for point number 2, public sector salaries are once again at historic highs in relation to the private sector, and need to be brought back into balance. If this causes shortages of talent for some public sector jobs, then make those positions a higher pay grade, but only if it is proven that there are shortages of qualified applicants (right now, I dont see any indications of that for most gov jobs). But I am pretty sure that the ast majority of public employees that will not leave if their pay is frozen. Private sector employees face actual pay cuts, and possible unemployment, which gov workers do not face. About time the public sector shares some of the pain.

    As for point 1, I thought this was a time to do what is best for the country, not for scoring political points. And I thought this last election was at least partly about doing something about excess spending and growth of government. About time Obama proposed something, in addition to the repubs.

    The fact that lefties like you oppose even this timid step by Obama shows you learned nothing from this election, and are still completely out of touch. But keep right on saying that the dems lost because Obama was not leftist enough. I am sure another lesson can be applied in 2012.

    Basic, Mark Klienman, your entire post is complete clueless idiocy.

  9. Government employees are overwhelmingly people who could never find white collar employment in the private sector. Public Policy majors, Sociology majors, low horsepower lawyers.

    I have an acquaintance working for the federal government in California. His office is overstaffed to the point of distraction. He claims firing half the people, IT WOULDN'T MATTER WHO, would make the office work better. But firing people is impossible, so they just have to wait for people to retire.

    "And it’s lousy budget policy, because until the economy starts to recover we want deficits to be larger, rather than smaller."

    How about a payroll tax holiday, then? Big tax break for businesses, more money in the pockets of lower income private sector workers. And "pay for it" with a real pay cut for lazy government workers.

  10. 1. We won. if you don't like the way we're acting, then your side should have thought about that from 2006 to 2010. The VAST majority of Americans are sickened by a mere 4 years of Democrat control of Congress.

    2. Even if your premise is correct there are *some* grossly underpaid Federal employees, there are still MILLIONS of Federal workers who are grossly – make that obscenely – overpaid. But no. Rather than reduce the bloat, rather than try to reduce the obvious problem your side is only interested in swelling the number of Federal employee Union members because you're trying to permanently enlarge the size of the Democrat vote-buying plantation. Enough.

    3. Really? I mean, really? You guys had 2 years to try that piling-money-on-a-bonfire voodoo you call stimulus and all you did was triple the deficit – well, that, and drive unemployment to 9.8% for the longest period since the 1930s. And even with your vaunted stimulus money you couldn't even be disciplined about it, what with all the pork kickbacks and the blatant corruption of money going to fund ACORN and every other left-wing propaganda vote-fraud outfit under the sun. And, now….that Americans have restored some prospect of fiscal sanity and the possibility of spending restraint on out-of-control Federal spending….watch and learn as the economy starts to recover. Remember – if you will – that the ONLY time in the last 60 years when we had a balanced Federal budget was under a REPUBLICAN congress and the Contract With America. The ONLY time. Not under JFK or LBJ or Nixon or Ford or Carter or Reagan or Bush. But under Clinton. And what was the key? Not whether the President was a Dem or a Rep, but whether Congress was Democrat or Republican. So, if you want the possibility of fiscal health, history shows the only way is under a Repblican Congress.

  11. If the theoretical gov lawyer is so good, and we got him at this price, why would we pay more? Or, why doesn't quit and 'get' ten times his salary? Maybe he's not that good. Do you have any evidence, at all? No, you don't.

    Government is the high cost, low quality, late deliverer of goods and services.

  12. I figure that as the freeze doesn't count step and bonuses, we can expect a rash of step increases and bonus payments.

    Every single thing Obama says is a lie, to include "and", "or", and "but".

    When I worked civil service, I was in a shop with 12 other "engineers". I did half the work on each of 7 projects. The contractors loved to work with me because I was (1) honest, and (2) didn't demand they treat me at expensive restaurants when we traveled. One "engineer" couldn't read English, much less an engineering drawing. Waste? There was one senior lady who's job was to keep track of everyone's birthday, and be sure they got a present. There was another GS-13 whose job was to travel and prosecute his affair with his secretary. He had a sponsor (Senator Proxmire) and could not be fired.

    Enron went out of business. The departments of Agriculture and Education should go out of business. Title 42 should be completely repealed.

    If taxes don't prevent productive people from being productive, I propose a 200% tax on Senators and Representatives. After all, we have a deficit, and allowing the government fat cats to keep their money is a giveaway.

  13. With regard to #2:

    Those overworked, underpaid, unfortunate government employees are free to leave, you know.

    For real. There is no law keeping them in their government jobs.

    They are free to quit and apply for jobs in the private sector.

  14. Luke:

    You're simplifying something that had many causes when referring to the Clinton years. Yes, having a Republican congress had a bit to do with the fiscal restraint experienced in the 90s. However, having a Democrat in the White house was also a piece of that. Look what happened when the Republicans took the white house. Fiscal restraint: Gone.

    The Dems like to take credit for that balanced budget too, but the reality is that the economy was soaring and neither party had enough power to spoil that to any large extent.

    One of the issues not being brought up about public sector employees is that most of the lower paying jobs the government used to do are contracted out now, leaving a larger share of public jobs that require higher skills. So you'd expect the average wage of a public employee to be higher than the average wage of people working in the private sector.

    However, I think ultimately Bruce (above) has the best point here so far. Set aside whether or not public employees are getting paid equitably verses their private sector counterparts. In what universe does employees getting cost of living increases and step increases when there's a recession and virtually no inflation make sense?

  15. Many federal employees are "underpaid?" Do you know anyone who thinks they are not underpaid and overworked? Not many. You fear these valuable federal employees will be "lost" if they don't get the raises no one in the private sector is getting these days. Lost to where? The barren job market of the private sector?

    But the bottom line problem is that the nation is broke. The government is massively overspending the country's ability to sustain it. Higher tax rates for "the rich" aren't going to solve that problem. Is anyone on the left looking at Greece, Ireland, Spain, Portugal, Italy, Belgium, all high-tax. high government spending environments that are going broike, and learning anything? Anything at all? Looking at bankrupt states like California that have raised and raised and raised taxes and government salaries tgo the brink of utter ruin? What part of we're broke don't you get?

  16. "…that’s the downside of electing a President without long experience in Washington, or any experience as a manager."

    Well, no cr*p, genius.

    Welcome to the party, pal, you are only 2+ years behind about 47% of us. And we had to put up with months of guys like you insulting the h*ll out of guys like us.


  17. "important classes of Federal employees are already grossly underpaid"

    Actually, this point is not "pretty obvious." It's simply an opinion masked as a fact and lazily supported by, "it's obvious except to the dolt. Are you a dolt, sir?" argumentation. Examples of factual statements which are "pretty obvious," would be:

    – It is a sunny day, with nary a cloud in the sky.

    – The mail carrier is later today than she usually is.

    – No, dear, those jeans do not make your butt look big.

    Why not provide examples of "important" "classes" of Federal employees which are already "grossly" "underpaid" so that the reader may determine for him or herself whether they agree with your opinions: a) on the definition of "grossly underpaid; and b) whether we could live without their "services?"

  18. Really, you want to compare the work of the private sector to that of government? Most government workers work 8 hours per day and 5 days per week. They receive 3 weeks vacation after 2 years of work and 26 days vacation after 8 years.

    So let's ask a private sector attorney or a worker at Goldman Sachs if they have those benefits. So again I ask do you really want to make that comparison?

  19. There are some very good posts here and I agree with the thrust of their message: a bloated, inefficient, overly-intrusive bureaucracy stifles and inhibits a growing, vibrant, wealth-producing economy that provides a better life for everyone. As one who worked only in the private sector for 40 years I can tell you that bloat and inefficiencies occurs within corporate bureaucracies all the time. The difference between the private sector and pubic sector in this regard is that the private sector has to address these inefficiencies to survive and the public sector does not. This is the reason you see the hopeless over staffing in the public sector mentioned in one post. Based on personal experience I could virtually guarantee that a 50% reduction in the size of the public sector bureaucracy would result in a more efficient and more effective delivery of services to the public. Given there are somewhere north of 20 million Americans now working in the federal, state, and local municipal governments, the potential for massive savings are obvious. And of course these savings would then be available for the expansion and growth of the private sector where real jobs and wealth are created.

  20. Its refreshing to see that when Mr. Kleiman's pet issue is put under the microscope with a modest suggestion of freezing pay levels for two years, he is resorting to hysterical examples of the utter unfairness of it all. Unemployment is high, the private sector is in shambles overall, and Government employees are not only overpaid but are too numerous as well. I am sure there are some solid employees, but we all have stories of the insanity that is government employees and their "work ethic". There is no inflation, there is little optimism about when the economy will recover, so government employment looks like a safe haven. Fat benefits, a union to cover your lazy self and now the highest level of pay as well? Who wouldn't want that? The problem is it takes tax dollars from the private sector to prop this sham up, and since govt doesn't produce any product that can generate new taxes, unlike the private sector, its bound to fail in the long run.

    It would be nice to see actual numbers in your examples, Mr. Kleiman, so that the rest of us dolts can see for ourselves what is so obvious to you. We are also eagerly waiting for you to acknowledge you were wrong about The One. The first step is the hardest, but we are super supportive; say it with me: "I was wrong. Barry is not the right person for the job. Please accept my apology." There, that's better. The real Reality-based community welcomes your important first step in your long journey away from delusion, conceit, lies and half-truths that is your current location.

  21. "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."

    [Sigh] Okay, I've been asked not to mock you and I won't, but you've got to admit that's an awfully tempting target for mockery. It must be especially difficult for someone who claims to be part of "The Reality-Based Community" when actual reality intrudes.

  22. Richard – I don't disagree with you that there were myriad causes of the balanced budgets of the 90's. But the fact still remains that the ONLY time in the last 60 years when we had a balanced budget was when we had a Republican congress. I'm not some rancorous partisan, I mentioned Clinton was the Prez when it happened. Heck, Reagan couldn't do it…no one could…until one of them got that rare Republican Congress that was interested in some semblance of fiscal discipline. The fact is that the one unifying factor was that no president in the 40 years before 1994 had a Republican majority in both houses of Congress. No one can seriously argue that ANY Democrat Congress is going to balance a budget. There's just no historical evidence for such a position. That's reality, in all of its naked splendor – for this "reality-based" community.

    And, notice that I'm not praising GWBush. The Republican Congress from – oh say – 1998 to 2006 was atrocious. And so was "Compassionate Conservatism"…eee-gads what a fiscal abomination. Oh, and for what it's worth, the financial meltdown that we are now seeing (and that perhaps permitted the dotcom boom/bust and fueled the housing boom/bust) was also spawned in the Community Reinvestment Act of the mid 90's. That was, not coincidentally, protected and nurtured (and festered) during the Republican controlled Congress…although it is probably worth noting that once the fetid smell of Fannie/Freddie started wafting into Congress the ONLY members who even hinted at trying to regulate it were…..wait for it….Republicans.

    All I'm saying is that no one in Congress is particularly noted for fiscal responsibility…but if fiscal restraint is going to have a scintilla of a chance, history tells us you have to have a Repulican Congress. Let's hope that the current combination of Democratic President and Republican House can rekindle some of the magic we had in the 90's.

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