Economist takes heat for calling for 10% pay cut for federal employees....

[fullautovalmet76]

Here's his follow up to an article he wrote earlier:

More on That Federal Pay Cut
Brian S. Wesbury - Chief Economist
Robert Stein, CFA - Senior Economist
Date: 3/8/2010

Last week we wrote that one way the federal government could show it was serious about the budget deficit would be an across-the-board pay cut of 10% for all civilian federal workers. Although the savings would be only about $15 billion per year (roughly 1% of the budget deficit) the “cut” would send a clear signal to our creditors that policymakers were concerned about the deficit and were willing to take on sacred cows.
 
It seems like we touched a nerve. No article we’ve ever written has generated as much response.
 
In the larger picture, this is a bad sign. If government has become so big that articles about changes to government generate more interest than articles about stock prices, then government has become too big and too entangled in the lives of the American people. Government has become the intermediary in so much of our life that it has crowded out ways of relating to each other through civil society itself.
 
That said, while many of the comments we received were supportive, the majority were downright hostile. Some were too silly to warrant a reply. Maybe it was just a coincidence, but those comments seemed to come from federal employees during work hours.
 
Other criticisms were more serious and fell into a couple of groups. One argument against the pay cut was that many young federal workers are already underpaid.
 
Truth be told, we’re sympathetic. Young workers may do the same jobs as older workers, yet they receive much lower pay – think TSA passenger screening. But, since federal pay is based on seniority, they can move up that scale rapidly and once ensconced in the federal system become very difficult to dislodge. While the federal system attempts to use merit-based pay, the seniority system can undermine the productivity improvements that come from merit.
 
In addition, federal pensions are generous when compared to the private sector, as is worker pay and other benefits. A story published in USA Today three days after our last Monday Morning Outlook (link) showed that federal workers were paid more than their private sector counterparts in more than 80% of occupations. And that does not include benefits which are on average four times higher in the public sector versus the private sector. Maybe that’s why the statistics show that federal workers only quit their jobs at about 25% the rate of private-sector workers. This is an amazing difference. If that’s not the definition of highly paid, we’re not sure what is.
 
Another argument used by government employees was that the earnings of federal workers get spent in the local community, which multiplies the benefits of their pay across the economy. So a pay cut would hurt the economy.
 
This multiplier argument is fallacious and worries us because it seems that government employees do not understand basic economics. Every dollar the federal government pays its workers has to come from someone else (through taxes or borrowing), who would have spent it anyhow. Why is a federal paycheck more likely to be multiplied than a private paycheck?
 
Even if you buy into the idea that a boost in federal spending can temporarily have a multiplier effect, raising pay for government workers – who would provide the same services anyhow – is wasteful. The same money could be spent on hiring new workers to perform additional tasks, like greater port security, for example.
 
Also, the “multiplier” argument implicitly accepts that federal workers are not really paid for the value of the services they render, but instead receive a premium for some larger social good. In essence, they are saying federal pay is a form of “workfare,” a hybrid of a paying job mixed with a welfare payment. That’s a reason to cut pay right there.
 
We are ready for more criticism… and support…from our readers, but we think we have made our point.

[brosometal]

Fullauto,

Do you have the accompanying link? 

[twyacht]

Let's see Congress take a pay cut,,,,oh, wait, they worded the legislation so its automatic...

Fed/Gov't jobs, is one of the fastest growing sections of this so called "recovery" ......at some point this was discussed by the British, Parliament fellow that did such a great job at pointing this out in his own country.

But it is an unresolving issue to the 16.8% "real unemployment" rate.

"As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last and the White House will be adorned by a downright moron."
H. L. Mencken (1880 - 1956)

[fullautovalmet76]

Fullauto,

Do you have the accompanying link? 

Here you go:

The current article:
http://www.ftportfolios.com/Commentary/EconomicResearch/2010/3/8/more_on_that_federal_pay_cut

The article he references:
http://www.ftportfolios.com/Commentary/EconomicResearch/2010/3/1/getting_serious_about_the_deficit

[fightingquaker13]

The article is BS granstanding and deserves the attacks. Federal workers work like everyone else. Cutting their pay to "send a message" is pure garbage. If we really couldn't afford them, why not cut the military's pay too? Oh, gee, I guess my conservative buddies wouldn't like that so I'll exempt them in my article. Now, if we were talking about a 10% cut in federal programs, along with the elimination of those jobs, I would get on board with it. But cutting peoples wages just to make a fashion statement doesn't make you a conservative, it makes you an asshole.
FQ13

[Sponsor]

[JC5123]

The article is BS granstanding and deserves the attacks. Federal workers work like everyone else. Cutting their pay to "send a message" is pure garbage. If we really couldn't afford them, why not cut the military's pay too? Oh, gee, I guess my conservative buddies wouldn't like that so I'll exempt them in my article. Now, if we were talking about a 10% cut in federal programs, along with the elimination of those jobs, I would get on board with it. But cutting peoples wages just to make a fashion statement doesn't make you a conservative, it makes you an asshole.
FQ13

So I guess then, that you are ok with Michelle Obummers twenty seven thousand servants that cost you and I over one and a half million a year? I agree with you to the extent that simply cutting federal salaries is not the answer. (The exception being Congress, more on that in a minute) The real thing to do is to cut the bureaucracies. How many programs do we have now that each have 4-5 agencies all performing essentially the same task?

As far as Congress goes, I have a simple solution that I believe will solve a couple of problems. Unfortunately I believe that it would take a constitutional amendment to make it happen.

Congressional salaries will no longer be set by congress. Instead salaries for both congresspersons, and senators will be set at the mean gross income for the previous year. Data to be gleaned from the IRS. So if the average personal income for the United States last year was say $55,000. Guess what your Salary is this year Madam Speaker?

My reason for believing that this would fix so many problems is this:

1: Congress is going to get out of the private sector, they want people to make more money, so that they can make more.

2: Immigration, keep out the illegals so that the wages stay higher.

3: And this is the big one. These asshats would quit looking at being a legislator as a lifetime career. Because you couldn't get rich on it.

Of course you have to put language in there prohibiting them from accepting money or gifts from lobbys. Or at the very least put some sort of cap on it. Also put some sort of limit on travel expenses that use taxpayer money. Our dear leader going on his little date to New York is a prime example of this abuse. So is Pelosi using military aircraft to fly her grand kids around. These are personal items that you and I are paying through the nose for. Fraud and Waste at it's finest.

If you could get this into the constitution, I think it would help. And while you're at it, let throw in another amendment stating that Congress cannot exempt themselves from any law that they enact. This would include Social Security, and their sweetheart retirement plans. If it's good enough for us, it damn well better be good enough for them. If this were the case, I think you would see things in this country get a lot better in a hurry.

I'm sure that my ideas here still need some refining. But it would be a good start. JC5123 thinking that Tom and Tom may consider keeping the Pay Czar, and would gladly fill that position. Assuming of course that I could only go after elected officials who are bilking the American people...

[brosometal]

While cutting salaries would be grand and JC5123's idea would be good at any level the money saved by these measures would be a drop in the bucket. 

The real cuts need to come from entitlements.  IIRC over 60% of the Federal Budget is already allocated to payouts.  This means pissing on the 3rd rail.  There needs to be substantial cuts in programs like Social Security, Medicaid, Medicare and the like.  No one wants to do this.  Without substantial fixes in the giant anal raping known as the "New Deal" and the "New Society" any of the other measures that feel good will only be rearranging the deck chairs on the Titanic.

[MikeBjerum]

The article is BS granstanding and deserves the attacks. Federal workers work like everyone else. Cutting their pay to "send a message" is pure garbage. If we really couldn't afford them, why not cut the military's pay too? Oh, gee, I guess my conservative buddies wouldn't like that so I'll exempt them in my article. Now, if we were talking about a 10% cut in federal programs, along with the elimination of those jobs, I would get on board with it. But cutting peoples wages just to make a fashion statement doesn't make you a conservative, it makes you an asshole.
FQ13

You nailed it right there FQ!

Now, when the rest of the nation is hurting, even though they are doing their jobs, why should we sheild those we pay with our tax dollars?  When the private sector hurts the public sector should feel the same pain!  I would have actually said it differently - To all departments:  We have a 10% deficit.  Effective immediately you will make cuts in your spending to lower your expenses by 12%.  Please notify the appropriate budget handlers of your cuts.

[fightingquaker13]

You nailed it right there FQ!

Now, when the rest of the nation is hurting, even though they are doing their jobs, why should we sheild those we pay with our tax dollars?  When the private sector hurts the public sector should feel the same pain!  I would have actually said it differently - To all departments:  We have a 10% deficit.  Effective immediately you will make cuts in your spending to lower your expenses by 12%.  Please notify the appropriate budget handlers of your cuts.

And shockingly,we agree. I just think arbitrary paycuts are BS. An order to cut expenses by 12% is just fine. Let the girls and guys on the ground figure out how to do it. Maybe they can save on office supplies, or travel, or avoiding overtime. Maybe it means cutting a position or turing COLA raises into merit based systems. Still, let them figure it out. Giving me a goal and a number is fine. Saying cut everyone's pay by 10% makes as much sense as mandatory minimums and a zero tolerance policy.
FQ13 who is too damned old to put up with fools even if they do have a Ph.D. in economics.

[ericire12]

And shockingly,we agree. I just think arbitrary paycuts are BS. An order to cut expenses by 12% is just fine. Let the girls and guys on the ground figure out how to do it. Maybe they can save on office supplies, or travel, or avoiding overtime. Maybe it means cutting a position or turing COLA raises into merit based systems. Still, let them figure it out. Giving me a goal and a number is fine. Saying cut everyone's pay by 10% makes as much sense as mandatory minimums and a zero tolerance policy.
FQ13 who is too damned old to put up with fools even if they do have a Ph.D. in economics.

And whats your plan for the end of the fiscal year when they dont reach that goal of a 12% reduction in expenses? Are you going to take away the pay that you already gave them? Cant do that. What will happen is that it will just roll over into the deficit and then more "goals" will be set and year after year it will be the same crap all over again.

Its about coming up with real solutions and making the hard decisions. Good intentions dont change red ink to black. If the money is not there, then its not there. If that means pay must be cut, then cut it. Thats a guaranteed way of not spending x-amount of dollars. If it can be done elsewhere then fine, but someone has to step up and say enough is enough.