Topic: Tax and Budget Policy

Cut Saturday Mail to Fund Highways?

The Highway Trust Fund will be out of money in a few months, mainly because Congress insists on spending more than it takes in. To avert this supposed crisis, Republican leaders are proposing to cut Saturday deliveries of mail and use the savings to replenish the trust fund.

There’s actually a tiny grain of Constitutional sense behind this proposal. The original legal justification for federal involvement in highways, back when members of Congress actually cared about such things, was that the Constitution authorizes Congress “to establish Post Offices and post Roads.” If the “post roads” aren’t paying for themselves, then who better to pay for them than the post offices?

In this sense, the Republican proposal is slightly more rational than President Obama’s proposal to use the increased revenues from a corporate income tax reform that will eliminate loopholes but reduce corporate tax rates. The administration predicts reducing rates will reduce corporate tax obligations in the long run but closing loopholes will increase revenues in the short run (interesting how Obama is promising corporations lower taxes after he is out of office in exchange for higher taxes when he is still in office). Obama wants to use some of those increased revenues to supplement the Highway Trust Fund.

More than offsetting the tiny Constitutional sense of the Republican proposal is that it will take ten years of Postal Service cuts in order to cover one year’s worth of red ink from the Highway Trust Fund. In other words, the plan is far from sustainable and will simply lead to another transportation cliff in a year or so.

Pareto on Piketty

“The man in whose power it might be to find out the means of alleviating the sufferings of the poor would have done a far greater deed than the one who contents himself solely with knowing the exact numbers of poor and wealthy people in society.”

—Vilfredo Pareto, “The New Theories of Economics,” Journal of Political Economy 5: 485–502 (1896–97).

Federal Firing Rate by Department

The VA scandal has prompted a debate about whether it should be easier to fire federal workers. I’ve argued that the firing rate for poor performance should be increased.

However, there can be no debate that the current firing rate is very low. In 2013 just 9,244 workers out of a civilian federal workforce of 1.87 million were fired for poor performance or misconduct, according to OPM data underlying this Govexec.com article by Eric Katz. That is a rate of just 0.49 percent, or 1 in 200 a year. Most federal firings are for misconduct, with a smaller share for poor performance.

The Govexec.com analysis found that firing rates by type of employee vary dramatically. Blue collar and lower GS levels (1-10) are many times more likely to be fired than higher GS levels (11-15) and those in the Senior Executive Service (SES). The GS 11-15 firing rate was just 0.14 percent, while the SES rate was just 0.09 percent. Just 7 out 7,940 SES employees got fired in 2013. What would Piketty say about that?

Govexec.com charted the firing rates by department, but part of the differences stemmed from the type of workforce each department has. So, instead, let’s focus on just the largest group of civilian workers in the government—the GS 11-15 group—and see how firing rates vary. These differences may tell us more about how employment cultures differ between departments.

Govexec.com kindly provided me their firing-by-department data sourced from the OPM. I combined that information with data from these OPM tables on total GS 11-15 employment by department.

The chart shows the results. Annual firing rates vary from a low of 0.07 percent in Transportation to high of 0.22 percent in Labor. In Transportation, just 9 out of 12,389 GS 11-15 workers were fired in 2013. In HUD it was just 7 out of 7,703. In Education it was 6 out of 3,477.

VA has one of the highest firing rates for this class of worker at 0.18 percent. But that’s still just 1 in 555 workers in 2013.

Highway Bill: Fiscal Reform or Big Government?

If you are interested in financial markets, Cato has an interesting forum tomorrow on bank runs. But if you are more interested in highways and spending, you can catch me at this Heritage forum tomorrow on the Hill.  

Which Way for the Highway Bill: Fiscal Reform or Big Government?

Emily Goff, Heritage Foundation; Chris Edwards, Cato Institute; Ken Orski, Innovation NewsBriefs

Wednesday, June 4th, 2014 at 12:00p.m.

1310 Longworth House Office Building

I’m not sure which lunch forum will have the best sandwiches, but I do know that fiscal reform is the best direction for transportation policy.

Federal Employment by Department

We’ve learned about what a huge and dysfunctional agency Veterans Affairs is in recent weeks. I had not realized that the agency added 100,000 workers in just the past seven years.

How large is the VA compared to the rest of the federal bureaucracy? OPM publishes historical data here for the major departments, which I’ve summarized in the two figures below covering 1950 to 2012.

Figure 1: Splits total federal civilian (non-uniformed) employment into defense and nondefense. For nondefense, you can see the modest retrenchments under Reagan and Clinton, and you can see the expansions under Bush 1, Bush 2, and Obama.

Figure 2: Shows the breakdown by department, aside from defense. Veterans (blue line) is by far the largest nondefense department, with 69 percent more employees that second place Homeland Security (red line). One alarming trend is the rapid growth in Justice Department employment (black line), which has doubled since the late-1980s to 117,000 workers.

Data notes: For some departments created since 1950, such as Homeland, it looks like OPM extrapolated the time series backwards based on the original component agencies of the new department. For Transportation on the other hand, it looks like OPM represented employment as zero before it was created. I did one tweak to the OPM data, which was moving TSA from Transportation to DHS for 2002. 

VA Scandal: Crisis of Big Government

Peggy Noonan’s op-ed on the weekend was titled “The VA Scandal Is a Crisis of Leadership.” Noonan discusses how President Obama “doesn’t do the plodding, unshowy, unromantic work of making government work.” Obama is not a good manager, and so scandals like the current one are to be expected.

I enjoy Noonan’s articles and her observations on Obama’s style are right on target, but her view about why the VA scandal happened is off the mark. The president does seem to spend his time giving speeches, strategizing politics, and playing golf rather than rolling up his shirt sleeves and fixing programs. He does seem to be “a show horse, not a workhorse,” as Noonan says. But that’s not why the VA scandal happened.

The VA situation is appalling, but it has common elements with scandals that happen under every president. Those elements include bureaucrats behaving selfishly, politicians promising reforms and not following through, federal workforce dysfunction, and the failed central planning of a complex industry. The VA scandal happened because the government is a giant monopoly with none of the built-in checks of the marketplace. Federal politicians themselves are not a check because they are too distracted and the government is far too large for them to keep track of.

Noonan says, “the president is an executive, and executives manage.” Really? He could efficiently manage the entire $3.5 trillion government and its 2.1 million workers and 2,200 programs? I doubt it. I think we could vote in the head of PWC as the next president, and we would still have scandal after scandal in Washington.

Noonan worked in the Reagan administration, and so she remembers the 1980’s HUD scandal. The shenanigans, waste, and bad behavior under Reagan’s HUD secretary Sam Pierce over eight years were jaw-dropping. HUD under Pierce was a cronyism factory for the secretary’s buddies and Republican donors. Tad DeHaven discusses the abuses in this essay.

Perhaps Ronald Reagan should have been a better manager. But he understood that the problem in Washington is far deeper than just a need to run things better, as many of his famous comments reveal:

Government is not a solution to our problem, government is the problem.”

No government ever voluntarily reduces itself in size. So governments’ programs, once launched, never disappear. Actually, a government bureau is the nearest thing to eternal life we’ll ever see on this earth.”

The nine most terrifying words in the English language are: I’m from the government and I’m here to help.”

Walking to School? Yeah, There’s a Federal Program for That

The Associated Press reports:

For a growing number of children in Rhode Island, Iowa and other states, the school day starts and ends in the same way — they walk with their classmates and an adult volunteer to and from school. Walking school buses are catching on in school districts nationwide because they are seen as a way to fight childhood obesity, improve attendance rates and ensure that kids get to school safely….

Many programs across the country are funded by the federal Safe Routes to School program, which pays for infrastructure improvements and initiatives to enable children to walk and bike to school.