November 11, 2010

USAT Report on Highly-Paid Federal Employees Makes Key Points, Misses Several Others

Filed under: Economy,MSM Biz/Other Ignorance,Taxes & Government — Tom @ 12:17 pm


Before critiquing, I should recognize that USA Today, while most of the establishment press has snoozed, has done a very creditable job of exposing the wide differential between federal employee and private-sector pay (Aug. 10, 2010; “Federal workers earning double their private counterparts”), and of identifying the outrageous degree by which salaries in the upper levels of Uncle Sam’s empire are expanding (Dec. 11, 2009; “For feds, more get 6-figure salaries”).

Yesterday, in a mostly well-done report, USAT’s Dennis Cauchon, who also authored the two linked items in the previous paragraph, delved into many of the details concerning the growing number of federal employees who get paid $150,000 or more per year. Among his more important points is the fact that a great deal of the expansion into this high level of pay has occurred since President Obama took office, during a period when overall inflation has been very low:

More federal workers’ pay tops $150,000

The number of federal workers earning $150,000 or more a year has soared tenfold in the past five years and doubled since President Obama took office, a USA TODAY analysis finds.

… Federal salaries have grown robustly in recent years, according to a USA TODAY analysis of Office of Personnel Management data. Key findings:

Government-wide raises. Top-paid staff have increased in every department and agency. The Defense Department had nine civilians earning $170,000 or more in 2005, 214 when Obama took office and 994 in June.
Long-time workers thrive. The biggest pay hikes have gone to employees who have been with the government for 15 to 24 years. Since 2005, average salaries for this group climbed 25% compared with a 9% inflation rate.
Physicians rewarded. Medical doctors at veterans hospitals, prisons and elsewhere earn an average of $179,500, up from $111,000 in 2005.

Federal workers earning $150,000 or more make up 3.9% of the workforce, up from 0.4% in 2005.

Since 2000, federal pay and benefits have increased 3% annually above inflation compared with 0.8% for private workers, according to the Bureau of Economic Analysis. Members of Congress earn $174,000, up from $141,300 in 2000, an increase below the rate of inflation.

Jessica Klement, government affairs director at the Federal Managers Association, says the government’s official pay analysis shows that federal workers earn less than private workers for comparable jobs. Still, she says, managers are willing to give up next year’s (Obama-proposed 1.4%) raise: “If it will help the country bounce back, they’re willing to make the sacrifice.”

Well, that’s mighty nice of Ms. Klement, but she, and Cauchon, overlooked a few key points:

  • The first is that even if there is no officially declared pay raise this year, most federal employees will earn — excuse me, “get paid” — more next year. That’s because federal employees also typically receive seniority-based pay hikes known as “step increases.” These typically average about 1.5%. Cauchon made this point in his December 2009 report; he should also have done so in this one.
  • I haven’t seen the “official pay analysis” for “comparable jobs” to which Ms. Klement refers. But I’d like to see the study telling me that “comparable” doctors have seen their earnings climb by 62% ($179,500 divided by $111,000) in the past five years.
  • Again regarding the “pay analysis,” I’d like to see the reports documenting which “comparable jobs” in the private sector have 5-year track records of pay increases of triple the overall rate of inflation. I will suggest that this has occurred somewhere between rarely and never in “comparable” private-sector occupations.
  • A comparison of salaries is fine, but a complete picture would have to consider the entire compensation and benefits package, which is far more generous in the government than what is found in the private sector. Cauchon did look at benefits in his August report on federal vs. private pay on the whole, and found that federal civilian benefits average $41,791, compared to $10,589 in the private sector.

There are several comparative points I’m leaving on the table, including but not limited to relative job-loss risk and number of hours worked.

Burgeoning federal pay is a key explanation as to why federal spending is out of control, and continues to be. USAT’s Cauchon did a good job of documenting his basic findings, but needed to get to the items I noted to give his readers the necessary overall understanding of the just how outrageous and dangerous the situation really is.

Cross-posted at

About Perry’s Social Security ‘Ponzi Scheme’ Contention

Filed under: Economy,Scams,Soc. Sec. & Retirement,Taxes & Government — Tom @ 8:35 am

SocSecBrokeCard0309In a time of universal deceit, telling the truth is a revolutionary act. – George Orwell


We may not be in a time of universal deceit, but there is a “progressive” universe with its nexus in Washington where deceit is the coin of the realm.

One of the longest-running progressive deceits is Social Security. The falsehoods began early (e.g., in 1936, the government told citizens that $90 per year would be “the most you will ever pay“), and continue to this day in the discussions of an alleged “Trust Fund,” which in reality consists almost entirely of IOUs from a government that is itself $13.7 trillion in debt.

Texas Governor Rick Perry has called Social Security a “bankrupt Ponzi scheme” — because, well, it is.

“Bankrupt” — As of the end of 2009, Social Security had an actuarial liability of $7.7 trillion. Recently revised data from the Congressional Budget Office indicates that the program, which began running at a cash deficit in 2009, will continue to do so indefinitely, and at an accelerating rate. If Social Security were a private pension plan instead of a government-sponsored program, it could not continue. In fact, the government wouldn’t allow it to continue.

“Ponzi scheme” — In August, the estimable Walter Williams wrote (bolds are mine):

Why is Social Security a better deal for today’s seniors? Just look at what they paid in. From 1937 to 1949, the maximum annual Social Security tax was $60. It remained under $200 until 1956. After 1956, Old Age, Survivors and Disability Insurance was added and in 1966, Medicare was added. It wasn’t until 1969 that maximum Social Security taxes exceeded $2,000. Today, the maximum annual Social Security tax is $13,000 and the maximum annual benefit is $25,000.

As with any Ponzi scheme, the people who get on board early make out. This is pointed out by Geoffrey Kollmann and Dawn Nuschler of the Congressional Research Service in their report “Social Security Reform” (October 2002) They say, “Until recent years, Social Security recipients received more, often far more, than the value of the Social Security taxes they paid. … For example, for workers who earned average wages and retired in 1980 at age 65, it took 2.8 years to recover the value of the retirement portion of the combined employee and employer shares of their Social Security taxes plus interest. For their counterparts who retired at age 65 in 2002, it will take 16.9 years. For those retiring in 2020, it will take 20.9 years.” My question is: How can anyone who draws out every penny he’s put into Social Security in a few years say that he’s not living at the expense of another?

In my opinion, it takes a special form of callousness and disregard for the welfare of future generations of Americans for today’s senior citizens to fight against reform. Nobody’s talking about abolition of federal senior programs. We must accept that serious mistakes were made and we must take compassionate corrective action. But what the heck! … “Both today’s politicians and seniors will be dead so why should they make sacrifices now to prevent an economic calamity decades off into the future?”

That Perry’s “bankrupt Ponzi scheme” contention is at all controversial demonstrates the verity of Orwell’s statement — which was, it turns out, aimed directly at Communists and their “progressive” sympathizers.

Williams is incorrect on one point. The “calamity” isn’t “decades off in the future.” It’s on the front sidewalk, walking towards the front door:

Our ever-growing spending, deficit and debt will soon reach a size (possibly in 2020 or sooner) when America can no longer borrow money to finance its deficit spending.

The year 2020 is when CBO projections indicate that “U.S. debt held by the public,” currently $9.135 trillion, or about 65% of gross domestic product (GDP), will hit 90% of GDP. Many economists believe that level of debt to be the trigger point where lenders either stop buying government bonds because of concerns over whether they’ll get paid back, or demand higher interest rates to compensate for the higher risk of default.

That’s only a decade from now. There are plenty of reasons to believe that one of the following will instead occur:

  • We’ll reach the public debt-to-GDP ratio of 90% earlier than CBO’s somewhat rosy projections predict.
  • We’ll learn that the trigger point  really lower than 90% of GDP.
  • The Federal Reserve and the government will decide to hyperinflate its way out of the problem. Ben Bernanke’s QE2 may be an indicator that, like it or not, they’re heading inexorably in that direction. If this happens, fortunes in financial-asset wealth held by individuals and families whose only “mistake” was to trust the system will be wiped out.

The Tea Party-driven wave may have come just in time. It needs to cut government down to size and create the conditions enabling free-market capitalism to save us — and quickly.

Positivity: History of Veterans Day

Filed under: Positivity,Taxes & Government,US & Allied Military — Tom @ 6:23 am

All veterans today deserve a salute for serving their country. Heartfelt thanks to all for their service.

From the US Department of Veterans Affairs:

World War I – known at the time as “The Great War” – officially ended when the Treaty of Versailles was signed on June 28, 1919, in the Palace of Versailles outside the town of Versailles, France. However, fighting ceased seven months earlier when an armistice, or temporary cessation of hostilities, between the Allied nations and Germany went into effect on the eleventh hour of the eleventh day of the eleventh month. For that reason, November 11, 1918, is generally regarded as the end of “the war to end all wars.”

In November 1919, President Wilson proclaimed November 11 as the first commemoration of Armistice Day with the following words: “To us in America, the reflections of Armistice Day will be filled with solemn pride in the heroism of those who died in the country’s service and with gratitude for the victory, both because of the thing from which it has freed us and because of the opportunity it has given America to show her sympathy with peace and justice in the councils of the nations…”

The original concept for the celebration was for a day observed with parades and public meetings and a brief suspension of business beginning at 11 a.m.

The United States Congress officially recognized the end of World War I when it passed a concurrent resolution on June 4, 1926, with these words:

Whereas the 11th of November 1918, marked the cessation of the most destructive, sanguinary, and far reaching war in human annals and the resumption by the people of the United States of peaceful relations with other nations, which we hope may never again be severed, and

Whereas it is fitting that the recurring anniversary of this date should be commemorated with thanksgiving and prayer and exercises designed to perpetuate peace through good will and mutual understanding between nations; and

Whereas the legislatures of twenty-seven of our States have already declared November 11 to be a legal holiday: Therefore be it Resolved by the Senate (the House of Representatives concurring), that the President of the United States is requested to issue a proclamation calling upon the officials to display the flag of the United States on all Government buildings on November 11 and inviting the people of the United States to observe the day in schools and churches, or other suitable places, with appropriate ceremonies of friendly relations with all other peoples.

President Eisenhower signing HR7786, changing Armistice Day to Veterans Day. Standing (l. to r.) are: Alvin J. King, Wayne Richards, Arthur J. Connell, John T. Nation, Edward Rees, Richard L. Trombla, Howard W. Watts.

President Eisenhower signing HR7786, changing Armistice Day to Veterans Day. Standing (l. to r.) are: Alvin J. King, Wayne Richards, Arthur J. Connell, John T. Nation, Edward Rees, Richard L. Trombla, Howard W. Watts.

An Act (52 Stat. 351; 5 U. S. Code, Sec. 87a) approved May 13, 1938, made the 11th of November in each year a legal holiday – - a day to be dedicated to the cause of world peace and to be thereafter celebrated and known as “Armistice Day.” Armistice Day was primarily a day set aside to honor veterans of World War I, but in 1954, after World War II had required the greatest mobilization of soldiers, sailors, Marines and airmen in the Nation’s history; after American forces had fought aggression in Korea, the 83rd Congress, at the urging of the veterans service organizations, amended the Act of 1938 by striking out the word “Armistice” and inserting in its place the word “Veterans.” With the approval of this legislation (Public Law 380) on June 1, 1954, November 11th became a day to honor American veterans of all wars.

* * * * *

Later that same year, on October 8th, President Dwight D. Eisenhower issued the first “Veterans Day Proclamation” which stated: “In order to insure proper and widespread observance of this anniversary, all veterans, all veterans’ organizations, and the entire citizenry will wish to join hands in the common purpose. Toward this end, I am designating the Administrator of Veterans’ Affairs as Chairman of a Veterans Day National Committee, which shall include such other persons as the Chairman may select, and which will coordinate at the national level necessary planning for the observance. I am also requesting the heads of all departments and agencies of the Executive branch of the Government to assist the National Committee in every way possible.” (Click here for the full text of the proclamation.)

On that same day, the President sent a letter to the Honorable Harvey V. Higley, Administrator of Veterans’ Affairs (VA), designating him as Chairman of the Veterans Day National Committee. Click here for the text of President Eisenhower’s letter.)

In 1958, the White House advised VA’s General Counsel that the 1954 designation of the VA Administrator as Chairman of the Veterans Day National Committee applied to all subsequent VA Administrators. Since March 1989 when VA was elevated to a cabinet level department, the Secretary of Veterans Affairs has served as the committee’s chairman.

The Uniforms Holiday Bill (Public Law 90-363 (82 Stat. 250)) was signed on June 28, 1968, and was intended to insure three-day weekends for Federal employees by celebrating four national holidays on Mondays: Washington’s Birthday, Memorial Day, Veterans Day, and Columbus Day. It was thought that these extended weekends would encourage travel, recreational and cultural activities and stimulate greater industrial and commercial production. Many states did not agree with this decision and continued to celebrate the holidays on their original dates.

The first Veterans Day under the new law was observed with much confusion on October 25, 1971. It was quite apparent that the commemoration of this day was a matter of historic and patriotic significance to a great number of our citizens, and so on September 20th, 1975, President Gerald R. Ford signed Public Law 94-97 (89 Stat. 479), which returned the annual observance of Veterans Day to its original date of November 11, beginning in 1978. This action supported the desires of the overwhelming majority of state legislatures, all major veterans service organizations and the American people.

Veterans Day continues to be observed on November 11, regardless of what day of the week on which it falls. The restoration of the observance of Veterans Day to November 11 not only preserves the historical significance of the date, but helps focus attention on the important purpose of Veterans Day: A celebration to honor America’s veterans for their patriotism, love of country, and willingness to serve and sacrifice for the common good. Veterans Day, 1954