As Obama myopically pushed for more stimulus spending among the other G20 nations, the Europeans, having had a near-death experience with the Greek budget crisis, see through the preposterous assertion by progressive economists (like the NYT's Nobel Prize winning Paul Krugman) that government spending is, by its very nature, stimulative. As former British Prime Minister Margaret Thatcher famously said in the mid-1970's, "Socialist governments traditionally do make a financial mess. They always run out of other people's money." Or, as libertarian CATO fellow Michael Tanner restates it in a recent op-ed: "These [European] countries are discovering a basic economic truth: eventually you run out of Peters with which to pay Paul."
In fact, Thatcher's party leadership successor and new Prime Minister, David Cameron, has already announced budget CUTS, which attempt to address a massive $133K national debt per household. (We are already better than halfway there, even with less of a social net than the British.) These budget cuts over the next 5 years are projected to accumulate about 750,000 public-sector job losses (not to mention real wage cuts). One of the reasons we have to look at that is the massive amount of government labor costs: in 2008, the civilian federal payroll of 2 million accounted for nearly a quarter trillion dollars in cost. The USA Today survey cited above, based on the Bureau of Labor Statistics, did some interesting comparative analyses. First of all, the average federal worker pulled in about $66,600, over $11K more than the average But, and hence is what makes the comparisons even more incredible is the fact that the value of benefits (insurance, pension, etc.) per federal worker amounted to roughly $40,000 per worker, over 4 times the comparable amount in the private sector. So when you look at total compensation, the average federal worker costs over $100K per year, more than $40K per year more than the average private sector worker; so pay averages about 20% more, but total compensation increases the difference to over 40%. This is on top of legendary stability of federal government employment. What we have is a growing gulf of the have's and the have not's--namely the federal government worker. (State and local government workers are very close to private sector means in terms of pay, although overly generous, unrealistic pension plans are pushing related governments to bankruptcy.) Here is a subset of the comparable occupations where the federal worker makes proportionately a lot more than the private sector (approximately 4 out of 5 occupations do better in the federal space):
| OCCUPATION | AVG FED PAY | AVG PRVT PAY | DELTA |
|---|---|---|---|
| Broadcast technician | $90,310 | $49,265 | $41,045 |
| Chemist | $98,060 | $72,120 | $25,940 |
| Clergy | $70,460 | $39,247 | $31,213 |
| Cook | $38,400 | $23,279 | $15,121 |
| Graphic designer | $70,820 | $46,565 | $24,255 |
| Landscape architects | $80,830 | $58,380 | $22,450 |
| Laundry, dry-cleaning worker | $33,100 | $19,945 | $13,155 |
| Public relations manager | $132,410 | $88,241 | $44,169 |
| Recreation worker | $43,630 | $21,671 | $21,959 |
| Secretary | $44,500 | $33,829 | $10,671 |
Not all occupations do better; optometrists, pilots, and editors make considerably less pay. Of course, federal union apologists attempt to argue that federal work is intrinsically more complex and argue other factors as well (tenure-driven increases and a relatively older worker population). [My experience is anecdotal and does not constitute statistically valid results, but my productivity and performance as a modestly-compensated contractor have vastly exceeded the federal employees I've worked with.] No doubt progressives will point at the fact BP CEO Tony Hayward made more money than President Obama. However, no one can deny BP under Hayward, over and beyond the tragic oil spill accident, has made money, while the Obama Administration (and/or the Democratic Congress) will have added $3T in deficits in the last two fiscal years ending in September. For whatever reason the Democrats will insist that the GOP is "responsible" for the explosion in spending, but the only times over the past 40 years the federal budget has been balanced was under a GOP Congress, and TARP spending was authorized by a Democratic-controlled Congress. And, fundamentally a huge part of the problem is the fact, despite federal revenues dropping by 40% or more, Obama and his Democratic majority in Congress have been on a federal hiring spree.
I have a few family members (by birth) and relatives whom are working or have worked for Civil Service and probably would disagree with me. In most cases, they had to wait a period of time before being accepted. This is a classic symptom of a labor supply/demand imbalance, i.e., artificially high compensation. In fact, employees should be willing to accept a lower wage, just in terms of all but guaranteed employment. The same rationale explains why, for instance, the Treasury can pay lower interest rates for debt than corporations or many other national governments.
Other Contrasts Between the American and Developed Countries' Budget Approach
I would like to reorganize some of the observations in the Tanner and WSJ op-ed articles cited above: [Note that some of the proposed changes have not necessarily been passed but are being supported by current leadership]
- Great Britain: Deep spending cuts and some tax increases. Raising the retirement age. American conservative style welfare reform and cuts in payment subsidies (e.g., newborns).
- US/Progressive Dems: Deep spending increases, increased percentage of American workers not contributing to government cost burden. Counterproductive punitive tax increases on the economically successful, already paying a disproportionate amount of the tax burden, and to big banks. Increased unemployment payments, "doughnut hole" prescription drug payments to senior citizens, a vast array of generous subsidies to households contributing little, if anything, to government burden (e.g., mortgage assistance, cash for clunkers, etc.) No attempt to address over $40T in unfunded social security and Medicare liabilities.
- France: Increases in the retirement age, state sale of assets, increased co-payments for health service.
- US/Progressive Dems: Bragging over how preventive health care, even for questionably cost-effective medical tests, will be "free", not to mention lowering or eliminating co-pays. Making more federal assets off-limits for commercial uses and essentially freezing exploration on oil shale and offshore assets, making our economy even more dependent on questionably reliable foreign-produced energy supplies.
- Germany: Increases in the retirement age, a nearly 3% drop of GDP in public spending. Universities increasing tuition payments for college students.
- US/Progressive Dems. A nearly 3% drop of our $14.6T GDP would amount to almost a $440B drop in spending. Obama bragged about a $17B cut while adding $3T to the national debt. In the meanwhile, Obama nationalized student loans, promised to prop up the college cost bubble by guaranteeing student loans (despite the fact that many such students never graduate), and furthermore offered to forgive college student loans if they take a job with the government, at compensation levels far above the private sector (see above).
- Italy: Budget cuts, crackdown on health care fraud, and a 3-year pay freeze on all government workers.
- US/Progressive Dems. Obama tried to make a watered-down version of medical malpractice tort reform a political carrot in a failing bid to attract GOP support for the corrupt Democratic Party Health Care Bill/Law, despite of the fact that he was proposing adding millions of newly insured into a system where insurance costs are driving overutilized doctors out of business. And Obama's proposed pay freezes for federal workers applied to only a small percentage of highly-compensated Civil Service workers.
- Spain: Budget cuts, cuts in cash payments (e.g., newborns), higher retirement age.
- US/Progressive Dems. Are you kidding? At the same time Spain is cutting back on the giant budget sinkhole of alternative energy subsidies, US progressive Democrats have accelerated such "investments" and are trying to use the BP oil spill to pass tax-and-trade.
Political Cartoon
Chip Bok doesn't have to note that the claim won't be processed because the bird didn't initial the second copy of Section 2143 Item 24, he failed to leave a permanent address, and that signature was too blotchy. But on the bright side, the Dems' jobs program includes plenty of money borrowed from future generations to pay for pencil-pushers and red tape.
Quote of the Day
The last thing one discovers in writing a book is what to put first.
Blaise Pascal
Musical Interlude: Chart Hits of 1977
Helen Reddy, "You're My World"
Andy Gibb, "I Just Want to Be Your Everything"
Queen, "Somebody to Love"
Foreigner, "Cold as Ice"
Kansas, "Carry On, My Wayward Son"
