The Bible encourages thrift and avoidance of debt. Of course, the Bible does not prohibit the use of debt, but Proverbs 22:7 warns us that the borrower is the slave to the lender (China anyone?). But if we do borrow, we should pay back the debt (see, e.g., Psalm 37:21, and Ecclesiastes 5:4). Then, building on these biblical admonitions, Adam Smith reminded us in his magisterial tome, The Wealth of Nations, “the maxim of . . . prudence in the conduct of every private family, can scarce be folly in that of a great kingdom.”
So, as we go over the “sequester cliff” later this week, I think we will hear many statements by the President and other politicians who intend to frighten us with the dire consequences of the sequester mess. (Homeland Security Secretary Janet Napolitano warned earlier this week that the $85 billion in automatic spending cuts “makes it awfully, awfully tough” to mitigate threats faced by the nation. She stated, “I don’t think we can maintain the same level of security at all places around the country with sequester compared to without sequester.”) Despite the hyperbole, my sense is that we do have a spending and government mismanagement problem in our nation. If you work in the private sector and pay taxes, I suspect you feel as I do that you are paying more than enough taxes for little direct benefit to you and others. At the end of 2012, federal spending totaled $11,292.79 for each of the 313 million people living in the United States. (Do you feel that you got your money’s worth?) You might not be aware as it is not reported in most media, but the Federal Aviation Administration spends $500 million each year on consultants (and an additional $200 million on supplies and travel); the Environmental Protection Agency has sent more than $100 million in grants to foreign countries (for example, $718,000 went toward “air pollution” efforts in China; $191,638 went toward “clean cooking technology” in Ethiopia; $299,468 went toward “methane recovery” in Ecuador; $170,000 went toward “liquefied gas extraction” in Poland; a $7.6 million grant went toward “technical assistance” in Russia; and several million dollars in grants were given to international groups like the United Nations). In addition, the Internal Revenue Service has a $4 million-a-year television studio (where presumably they could film the next Al-Jazeera surprise hit, Return from the Vampire Crypt: Secret Tales of IRS Auditors). At the National Renewable Energy Laboratory (“NREL”) in Colorado, employees decide how to “invest” hundreds of millions each year in taxpayer dollars. NREL’s top executive, Dr. Dan Arvizu, makes almost one million dollars per year, and his two top lieutenants earn more than half a million each, with nine other staffers making more than $350,000 a year. And the federal Office of Personnel Management reported that federal employees were paid $156 million in 2011 for their work as union representatives. But it is still not enough. Presently, at the federal hiring website, USAJobs.gov, among the many job opportunities for federal “public service,” there are these: a staff assistant at the Labor Department, that pays up to $81,204 a year to do scheduling and screening calls (these positions were once called receptionists); a new lawyer for the Morris K. Udall Scholarship program, with a salary of up to $155,000 a year; and a new director for the Air Force’s history and museums program, with a salary of $165,300 a year. In all the hubbub of the sequester mess, you might not realize that this current year’s federal spending, even with the sequester, will still be greater than last year’s federal spending.
One often hears about the need to get special interests out of government, but our government itself has become its own most powerful special interest group that protects its vital interests. As one recent example, the newly-installed Secretary of State John Kerry said in his first foreign policy address that, because of the sequester, the Republican House of Representatives is a greater threat to our nation’s foreign policy than an emerging China or Middle East unrest. (See Secretary Kerry’s comments reported here: http://www.bostonglobe.com/2013/02/20/john-kerry-budget-problems-greatest-challenge-foreign-policy/aMyhzlhSIj6gyX3c35o2EP/story.html.) He might have forgotten that even the mainstream media reported that the idea of the budget sequester originated in the White House.
Since early 2009, while the total number of private sector jobs has decreased, the number of federal jobs has grown steadily. Moreover, the average pay and benefits has increased as well. The average total compensation (wages and benefits) for a federal worker was $123,049 in 2009, more than double the average total compensation for a private sector employee. It is reasonable to infer that this number is even greater today. Further, the average salaries have grown as well. At the beginning of the last recession, our nation’s Transportation Department had one employee making over $170,000 per year. Eighteen months later, there were 1,690 employees making over $170,000 per year. Again, at the start of the last recession, the Department of Defense had 1,868 persons making $150,000 per year. Eighteen months later, 10,100 employees make $150,000 each year. The number of employees that made $100,000 per year has now doubled in two years, and represents 19 percent of the federal work force. (In fact, President Obama’s dog walker reportedly earns $102,000 annually.)
About those special interests: Today, there are more than 21 million employees in the federal, state and local governments. Thus, approximately 16 percent of the electorate depends on government-provided jobs. Further, many government employees have family members living with them who benefit directly from governmental employment, who would also vote to support the expansion of government jobs, and generous wages and benefits. And this does not even begin to include the tens of millions more who benefit from generous government benefit programs. President Clinton famously said in his 1996 State of the Union speech that the era of big government is over. And he was correct, because today, we are now in the era of Gigantic Government. Over the decades, I have managed the budgets of many companies in the US and around the world. When needed, a good manager in the private sector cuts back on the easiest and least disruptive items. But with this upcoming sequester, as we saw earlier from Janet Napolitano’s comments, we can expect that our politicians and bureaucrats will cut those items that will cause the greatest disruption and create the most danger to our national security. It is, of course, a churlish way to show how important they are. But as government workers work for us, and not vice versa, I say let the sequester begin! A very good first step!