Federal Workers: Performance, Pay, and Firing

Americans are concerned about the performance of the federal bureaucracy. Many people think that federal workers are overpaid and underworked. Some recent news stories provide fresh input to the debate.

A story yesterday at GovExec.com regards pay and performance. The federal pay structure is less efficient than private pay structures because it is generally based on seniority, not job performance. But GovExec.com finds that attempts to introduce federal performance pay have not worked very well either:

Most federal agencies are not making meaningful distinctions in performance ratings and bonuses for senior executives, according to a new watchdog report. About 85 percent of career senior executives received “outstanding” or “exceeds fully successful” ratings in their performance reviews between fiscal years 2010 and 2013, at the same time that agencies have made smaller distinctions in the amount of individual bonuses, the Government Accountability Office found. This has created a system where nearly everyone is considered outstanding…

The level of federal pay is the focus of another recent story. GovExec.com reports on the large number of workers who enjoy high pay:

More than 16,900 federal employees took home in excess of $200,000 in base salary in 2014, according to a partial database of federal salary data.

The report is based on data from FedSmith.com, which is an excellent source of federal workforce information. Fedsmith’s database can list employees and their salaries by agency. For example, there are 159 people at the Small Business Administration who made more than $150,000 in wages in 2014. That’s 159 too many in my view, as the agency should be closed down.

Another recent article regards federal firing. The Federal Times confirms the extraordinarily low firing rate in the federal government compared to the private sector:

Even as lawmakers press for greater accountability within government, agencies have fired fewer employees than at any time in the last 10 years, according to data from the Office of Personnel Management.

Agencies fired 9,537 federal employees for discipline or performance issues in fiscal 2014, down from 9,634 in 2013 and down from a high of 11,770 in fiscal 2010, according to the data. The firing rate held at 0.46 percent of the workforce in both fiscal 2013 and fiscal 2014 — the lowest rate in 10 years.

The private sector fires nearly six times as many employees — about 3.2 percent — according to the Bureau of Labor Statistics, and whether the government fires too few people or just not the right people is the subject of continued debate.

For more on the federal workforce, see here.

SCOTUS to Government: Somethin’ Fishy ‘Bout Your Prosecution

This morning the Supreme Court ruled in Yates v. United States that Sarbanes-Oxley—the massive legislation prompted by the accounting scandals of the early 2000s—can’t be used to prosecute a fisherman who caught undersized grouper.  It makes eminent intuitive sense. Luckily, it’s also correct as a matter of statutory interpretation. That is, even though the relevant provision (Section 1519) punishes those who would knowingly destroy or conceal “any record, document, or tangible object” in order to impede an investigation, Justice Ginsburg is correct in writing for the plurality that “it would cut §1519 loose from its financial-fraud mooring to hold that it encompasses [objects not] used to record or preserve information.”

And Justice Alito, in a narrow concurrence that ultimately controls the case, is even more correct to apply traditional canons of statutory construction—the rules that guide judges in interpreting laws—and thereby find that “tangible object,” in the context of the list of nouns that are Sarbanes-Oxley’s target, refers to “something similar to records or documents.” In a colorful opinion rife with salamanders, crocodiles, and oil derricks, Alito asks the correct question: “How does one make a false entry on a fish?”

As Cato wrote in our brief, words such as “record” and “document” modify the term “tangible object” to include things like hard drives and floppy disks (remember those?), not grouper. Moreover, an all-encompassing reading of “tangible object” would render the words “record” and “document” unnecessary. And the broader context of Sarbanes-Oxley illuminates the relevant meaning here: The Act focuses on financial fraud in the context of companies, not fauna. Thus, the words “tangible object” should be read differently in Sarbanes-Oxley than they would be in, say, the Federal Rules of Criminal Procedure.

If the term “tangible object” were read as broadly as the government wished, it could criminalize an unfathomable range of activities, from throwing away cigarette butts to washing away footprints in the sand. It wouldn’t provide adequate notice about potential legal violations, to which individuals have a right to so they can plan their actions accordingly and avoid getting caught in government nets.

After all, prosecutors and law enforcement officials can’t arbitrarily expand the range of criminal offenses as if they themselves were fishermen, exaggerating the size of their catches to a credulous legal system.

China Should Respect Religious Liberty

Christianity is thriving in China. There may be more religious believers than Communist Party members. 

Beijing’s sensitivities to religion are well-known.  Religion offers a competitive worldview to the Party.  The latter fears many Christians, especially Catholics, have loyalties beyond China’s borders.  Religion brings people together in ways that might eventually influence politics.

In its early days, the People’s Republic of China responded harshly to religious activity, but official policy has moderated over time.  There is an increasing amount of reluctant toleration of religious belief. 

Beijing appears to have a more relaxed policy.  Last year, I visited a church of around 800 in the capital.  It operated openly, attracted many young people, and hosted dozens of baptisms on the Sunday I attended.  I saw a car in traffic that sported the traditional Christian “fish.” 

Ironically, the lesson of the West’s experience with religion is that the best way for a government to avoid conflict between religious believers and political authorities is to provide the greatest freedom possible.  Obviously, there have been many strains of Christianity throughout the centuries.  However, the faith emphasizes a transcendent commitment to God while accommodating many different political perspectives.

Marijuana Legalization in DC

On February 26, 2015, marijuana becomes legal (again) under the laws of Washington, D.C. The key rules are:

  • It will be legal to possess up to two ounces of pot.
  • It will be legal to smoke said pot on private property.
  • It will be legal to transfer (give) an ounce or less of pot to someone else.
  • It will be legal to grow and cultivate up to six pot plants—no more than three mature ones—in your home.
  • You must be 21 years old to possess, consume, or grow pot.
  • Selling pot will still be illegal.
  • As will be smoking pot in any public space, which includes restaurants, bars, and coffee shops.
  • And, of course, none of this applies to any federal land (which accounts for 22 percent of the District), which considers marijuana illegal.

Overall, this is progress.  But note that:

1. Federal marijuana prohibition still applies.

2. The age limit of 21 is misguided (just as with alcohol).  That limit guarantees that much marijuana use will remain outside the law.

3. The limit on possession amounts is silly; the ban on sale is idiotic.

4. Perhaps restaurants, bars, and coffee shops will circumvent the ban on smoking in public by offering free edibles.

5. The federal government owns 22 percent of the land in D.C.?  Geez.

 

Congress Should Decide Whether Trade Agreements Abide the Terms of Trade Promotion Authority

Trade Promotion Authority (TPA or Fast-Track Negotiating Authority) is not an executive power grab.  It is a compact between the legislative and executive branches, which each have distinct authorities under the Constitution when it comes to conducting trade policy. The purpose of forging such a compact is that negotiations would be impracticable – and likely interminable – if each provision were subject to the whims of 535 legislators.

Opponents of trade liberalization have smeared TPA as a wholesale capitulation to the president, who allegedly is freed of any congressional oversight and given a blank check to negotiate unamendable trade deals in secret without any input from Congress – only the capacity to vote up or down on the final deal. In reality, though, TPA is the vehicle through which Congress conveys its trade policy objectives, conditions, and demands to the president, who negotiates with those parameters in mind. Provided the president concludes a negotiation that abides those congressional parameters, the deal is given fast track consideration, which means essentially that legislative procedures are streamlined and expedited.

The trade committees are reportedly close to introducing trade promotion authority legislation, although there remains some debate about what it should include. Enforceable provisions to discipline currency manipulation would be a bad idea, as would be including provisions to reauthorize the ineffective and misguided Trade Adjustment Assistance program (which is widely acknowledged to be a payoff to organized labor).

But one important provision (or set of provisions) that has created a bit of an impasse between Senate Finance Committee Chairman Orrin Hatch (R-UT) and its Ranking Member Sen. Ron Wyden (D-OR) concerns certification that an agreement abides the requisite congressional conditions to be afforded fast track treatment. Those of us who argue that TPA is not an executive power grab, but a practical, constitutional solution to a policymaking quandary must acknowledge the propriety of such a provision – or a provision that accomplishes as much. There must be a mechanism through which the president is held to account – that the deal reflects the broad wishes of Congress.

“Strategy” vs. Strategy in the Pentagon

The Boston Globe kindly published a piece I wrote about the lack of strategy guiding Pentagon spending, but gave it the somewhat misleading title and subtitle:  “The Pentagon’s Bloat: Accounting tricks and self-interested politicians ensure that US military spending will remain immune from any real ‘hard choices.’”*

The article doesn’t really bemoan bloat, in the standard sense of wasteful or inefficient pursuit of objectives. It complains about excessive objectives—our overly capacious definition of security—and explains the cause.

My argument is that it would be terrific if Ashton Carter, the new Secretary of Defense, and the military service chiefs were correct in their contention that they cannot execute the U.S. security strategy without exceeding the $499 billion cap that law imposes on 2016 Pentagon spending. They made that claim in requesting a budget that requires raising the cap by $34 billion or eliminating it, another $51 billion for war and relief from future years’ caps.

Our current “strategy” isn’t really one. Strategy, by definition, requires prioritization among competing threats and methods of defending against them. Our government uses that word to rationalize the avoidance of those choices. The primacy theory that best describes our approach to security is really a justification for a log-roll of disparate military interests and goals, most only vaguely related to our safety. A poorer state facing more pressing threats would have to choose among those objectives, which is what strategy does. Poverty demands choices that wealth avoids. And as realists explain, big threats unify preferences, lowering obstacles to strategy formation.

The United States has long been rich and safe enough to minimize choices among defenses and avoid strategy. So we get the phony, listicle sort: recitations of nice things that we hope U.S. military power might accomplish, justified as security objectives. That has the effect of conflating safety with values, and promoting a sense of insecurity.

Ukraine Hyperinflates

Since the New Year, Ukraine’s currency – the hryvnia – has collapsed, losing 51 percent of its value against the U.S. dollar. To put this rout into perspective, consider that the Russian ruble has only lost 8 percent against the greenback during the same period.

Like night follows day, the hryvnia’s meltdown has resulted in a surge of inflation. The last official Ukrainian year-over-year inflation rate is 28.5 percent. This rate was reported for January and is out of date. That said, the official inflation rate has consistently and massively understated Ukraine’s brutal inflation. At present, Ukraine’s implied annual inflation rate is 272 percent. This is the world’s highest inflation rate, well above Venezuela’s 127 percent rate (see the accompanying chart).

When inflation rates are elevated, standard economic theory and reliable empirical techniques allow us to produce accurate inflation estimates. With free market exchange-rate data (usually black-market data), the inflation rate can be calculated. Indeed, the principle of purchasing power parity (PPP), which links changes in exchange rates and changes in prices, allows for a reliable inflation estimate.

To calculate the inflation rate in Ukraine, all that is required is a rather straightforward application of a standard, time-tested economic theory (read: PPP). At present, the black-market UAH/USD exchange rate sits at 33.78. Using this figure and black-market exchange rate data that the Johns Hopkins-Cato Institute for Troubled Currencies Project has collected over the past year, I estimate Ukraine’s current annual inflation rate to be 272 percent – and its monthly inflation rate to be 64.5 percent. This rate exceeds the 50 percent per month threshold required to qualify for hyperinflation. So, if Ukraine sustains its current monthly rate of inflation for several more months, it will enter the record books as the world’s 57th hyperinflation episode.