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Archive for the ‘Bureaucrats’ Category

An utterly depressing statistic is that the Washington, D.C.-area is now the richest region of the country.

At the risk of understatement, that wealth is largely unearned. It’s mostly a reflection of overpaid bureaucrats, greedy politicians, fat-cat lobbyists, beltway-bandit contractors, and other insiders who have their snouts buried in the federal trough.

I’m not a fan of class warfare, but there’s one exception: It’s galling that lower-income and middle-class taxpayers across the nation are subsidizing a gilded class in Washington.

That’s the type of redistribution that should be ended first.

So what can be done to address this inequity? Is there an approach that will curtail D.C.’s entitled, self-aggrandizing elite?

In a column for the Wall Street Journal, Terry Wanzek, a state legislator from North Dakota, makes the case for new legislation that would shift government bureaucracies from Washington to the hinterland.

The Hawley-Blackburn bill calls for moving Agriculture and its more than 100,000 employees to Missouri. Other departments would go elsewhere: Commerce to Pennsylvania, Education to Tennessee, Energy to Kentucky, Health and Human Services to Indiana, Housing and Urban Development to Ohio, Interior to New Mexico, Labor to West Virginia, Transportation to Michigan, and Veterans Affairs to South Carolina. …The bill’s sponsors pitch their legislation as an employment program…but the main benefit would come from putting regulators into proximity with the people whose lives and businesses they regulate. …This would be a government “of the people”—something that is lacking as the administrative state inexorably grows in Washington, D.C.

This is an interesting proposal. But does that mean it’s a good idea?

Clyde Wayne Crews of the Competitive Enterprise Institute is not overly impressed.

In today’s Wall Street Journal, he opines that it would backfire.

The bill’s sponsors, Sens. Josh Hawley of Missouri and Marsha Blackburn of Tennessee, would send the Agriculture and Education departments to their respective states. Eight other federal departments and most nondepartment agencies would also be dispersed throughout the land, often to places intended to suit their functions—for example, the Transportation Department would be sent to Michigan to be near the auto industry. …The only understandable part of this plan is conservatives’ visceral desire for revenge. People across the county can see the massive houses Washington bureaucrats and consultants occupy, walled off in single-party strongholds like Fairfax, Va. …But since when did Republicans accept the idea that the federal government ought to be a premier job creator? The GOP insisted for decades that many New Deal agencies and subsequent government bodies should never have been created in the first place, and that their red tape and interference is a dominant cause of economic inefficiency. …It will be impossible to uproot or at least prune the bureaucracy once its seeds are spread to every state. …Would legislators from the “lucky” chosen states ever have the gumption to slash funding from agencies that employ thousands of their constituents and pay them generously? The HIRE Act would tie Middle America inextricably to big progressive government, remaking America in Washington’s image.

So who is right?

I wrote about this topic back in 2016.

Part of me liked the idea, though mostly for punitive reasons.

…it wouldn’t be a bad idea. …locate some bureaucracies in the dodgy parts of cities such as Detroit. Especially departments such as HUD and HHS since they helped cause the economic misery in inner cities. And the Department of Education could be placed somewhere like Newark where government-run schools are such awful failures.

But I concluded it would be a bad idea.

Shouldn’t we focus on shutting down counterproductive bureaucracies rather than moving them? …If we move bureaucracies (whether they are necessary ones or useless ones), does that create the risk of giving other parts of the nation a “public-choice” incentive to lobby for big government since they’ll be recipients of federal largesse? Will we simply get duplication, meaning a new bureaucracy somewhere in America without ever really getting rid of the original bureaucracy in Washington, DC?

So I’m siding with Mr. Crews over Mr. Wanzek.

P.S. I’ve already identified bureaucracies that should be terminated.

Looking at this list, it reminds me that I need to make the case for the abolition of some other bureaucracies.

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The Bureaucrat Hall of Fame recognizes government employees who go above and beyond the call of duty in terms of getting over-paid or being under-worked.

Or both.

Adding insult to injury, many recipients of this award are employed by bureaucracies that shouldn’t even exist.

Today we’re going to look at the Oakland police department, which is a part of the government that presumably should exist (though Camden, NJ, shows that maybe we shouldn’t make that assumption).

The Oakland PD is notorious for being over-compensated, but one cop stands out.

Eric Boehm of Reason has the sordid details.

When Oakland, California, police officers are needed at Golden State Warriors basketball games and other special events, Malcolm Miller is the officer in charge of making those assignments. Often, he assigns himself. As a result, Miller has become one of the highest paid officers in the department. He’s earned nearly $2.5 million over the past five years—most of it overtime pay—according to data collected by Transparent California, a watchdog group.

What a scam.

It’s highly likely that Mr. Miller is a basketball fan, so he’s figured out a great racket.

He basically gets a big pile of money for going to the games.

He and his colleagues are making out like bandits.

…he’s hardly the only officer to take advantage of poor oversight and a general lack of accountability. According to the audit, 217 officers worked roughly 520 hours of overtime last year, helping to cost the department more than $30 million in overtime pay—about twice as much as had been budgeted. Over the past four years, overtime expenditures have ranged from $28 million to $31 million. Proper documentation of overtime work was lacking in 83 percent of cases, the auditors found.

Though Officer Miller might not be the worst of the group.

One officer was paid for more than 2,600 hours of overtime—equal to 108 days of round-the-clock work—in just a single year.

So how do cops get away with this scam?

Simple, they make sure to negotiate contracts that have sweetheart provisions that they can exploit.

And why does Oakland agree to such contracts?

Well, as Michael Ramirez illustrated, bureaucrat unions give lots of money to state and local politicians, and those politicians then conspire with the unions to give them contracts with the sweetheart provisions.

Let’s close by looking at an example of this kind of scam.

Perhaps the most stunning part of the audit is the explanation of a department-wide policy that allows Oakland cops to accrue 1.5 hours of “comp time” for every hour of overtime worked. When an officer cashes in that comp time and isn’t working, other officers have to work overtime to fill the gap. That creates a cascade of additional overtime pay—10 hours of overtime creates 15 hours of comp time, which some other cop has to work, earning 22.5 hours of comp time (if they’re also working overtime), and so on.

Here’s the accompanying illustration.

How ridiculous. Extra money for overtime, combined with being able to work fewer hours in the future. Which then gives other cops an opening to rack up more overtime pay.

Everyone wins…except for taxpayers.

P.S. Some bureaucrats earn admission to the Bureaucrats Hall of Fame by misbehaving. Often in very strange ways.

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When I gave readers an opportunity to select their favorite political cartoonist back in 2013, they picked Michael Ramirez.

And I can understand, given the excellent options that I shared (here, here, here, and here).

But I now think I overlooked his true masterpiece, at least if salience is an issue. The cartoon he produced on politicians and bureaucrat unions perfectly identifies the problem that has produced gaping fiscal shortfalls in so many states and communities.

Simply stated, politicians and bureaucrats have figured out how to gang up against taxpayers.

The Chicago Tribune recently opined on this horrific example.

…a controversial state law…allowed a lobbyist for the Illinois Federation of Teachers, David Piccioli, to become certified as a substitute teacher in December 2006 by working one day at a Springfield elementary school — and to buy pension credit for his 10 previous years working as a lobbyist. That sweet deal qualified him for a pension windfall from a teachers retirement fund that as of late 2018 carried an unfunded liability of more than $75 billion-with-a-B. Because he also draws a pension from a previous job as a House Democratic aide, Piccioli’s total pension income now rises to nearly $100,000.

Sadly, Illinois courts routinely acquiesce to this kind of scam.

…the court upheld a dubious loophole that allowed government employees who left those jobs to work for their union in the private sector to still qualify for a public pension — with payouts based on their much higher salaries in their union roles. One example: Former Chicago labor boss Dennis Gannon, who started out working for the city, was able to retire at age 50 with a city pension based on his union salary of at least $240,000. The Supreme Court upheld that arrangement too.

Perhaps those actually were correct legal decisions.

But, if so, that underscores my original point about politicians and bureaucrat union working together to fleece taxpayers.

This story underscores the unfairness of a system that provides much higher levels of compensation for government bureaucrats compared to those toiling in the economy’s productive sector.

But it also can be seen as a Exhibit A for why Illinois is a fiscal black hole. Which is, of course, why the state’s politicians are so anxious and determined to get rid of the state’s flat tax.

And this explains why productive people are leaving.

Needless to say, this won’t end well.

P.S. I’m not going to put Mr. Piccioli in the Bureaucrat Hall of Fame. That high honor is reserved for people who actually had government jobs for longer than one day (such as the Philadelphia bureaucrat who “earned” a $50,000 annual pension after being employed for just 2-1/2 years. As a consolation prize, I will instead offer him up as a potential candidate for Bureaucrat of the Year.

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I periodically will make use of “most depressing” in the title of a column when sharing bad news.

And new data from the Census Bureau definitely qualifies as bad news. It confirms what I’ve written about how the Washington region has become the richest part of America.

But the D.C. area didn’t become wealthy by producing value. Instead, it’s rolling in money because of overpaid bureaucrats, fat-cat lobbyists, sleazy politicians, beltway-bandit contractors, and other grifters who have figured out how to hitch a ride on the federal gravy train.

Anyhow, here’s a tweet with the bad news (at least if you’re a serf elsewhere in America who is paying taxes to keep Washington fat and happy).

Most of my friends who work for the federal government privately will admit that they are very fortunate.

But when I run into someone who denies that bureaucrats get above-market compensation, I simply share this data from the Labor Department. That usually shuts them up.

By the way, there’s strong evidence from the European Central Bank that overpaid bureaucrats have a negative impact on macroeconomic performance.

And the World Bank has produced a study showing how bureaucrats manipulate the political process.

…public sector workers are not just simply implementers of policies designed by the politicians in charge of supervising them — so called agents and principals, respectively. Public sector workers can have the power to influence whether politicians are elected, thereby influencing whether policies to improve service delivery are adopted and how they are implemented, if at all. This has implications for the quality of public services: if the main purpose of the relationship between politicians and public servants is not to deliver quality public services, but rather to share rents accruing from public office, then service delivery outcomes are likely to be poor.

Here’s my video explaining how bureaucrats are overpaid. It was filmed in 2010, so many of the numbers are now out-dated, but the arguments are just as strong today as they were back then.

But keep in mind that the bureaucracy is only one piece of the puzzle.

The D.C. metropolitan region is unjustly rich because of everyone else who has figured out how to divert taxpayer money into their pockets. That includes disgusting examples of Democrat sleaze and Republican sleaze.

Simply stated, Washington is riddled with rampant corruption as insiders get rich at our expense. No wonder many of them object to my license plate!

P.S. Here’s some data comparing the size and cost of bureaucracy in various nations.

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President Trump has proposed a one-year pay freeze for federal bureaucrats, which has reinvigorated the debate over whether compensation levels for the civil service are too lavish.

The Washington Post opines this is nothing but “government bashing,” but this chart from my former colleague Chris Edwards should be more than enough evidence to show that federal bureaucrats have a big advantage over workers in the economy’s productive sector.

And there is plenty of additional evidence that federal employment is very attractive. For instance, it’s just about impossible to get fired from a bureaucracy.

Though defenders of the civil service sometimes make the preposterous claim that nobody gets fired because bureaucrats are such good employees.

The low rate at which federal employees are fired for poor performance doesn’t prove the government accepts it but instead “could actually be a positive sign,”… A report from the Merit Systems Protection Board in effect responds to members of Congress and others who contend that federal managers don’t care, or don’t dare, to take disciplinary action because of civil service protections. “…If the agency is successful in preventing poor performance…, a small number of performance-based removals could actually be a positive sign,” MSPB said. …Of the 2.1 million federal employees in a government database…, about 10,000 are fired for either poor performance or misconduct each year. …That low rate of firing has been cited in proposals to force agencies to take action… Individual employees, too, commonly express dissatisfaction with how agencies handle poor performers among their co-workers.

I have to confess that my jaw dropped when I read this article. Maybe we should ask veterans whether they think all federal bureaucrats do a good job?

Or we can ask non-profit groups whether they think IRS bureaucrats are top-quality workers? Or ask anyone who has ever tried to navigate the federal government?

We also know that the counties where most federal bureaucrats reside are now the richest region of the entire nation.

The three richest counties in the United States with populations of 65,000 or more, when measured by their 2016 median household incomes, were all suburbs of Washington, D.C., according to data released today by the Census Bureau. Eight of the 20 wealthiest counties with populations of 65,000 or more were also suburbs of Washington, D.C.–as were 10 of the top 25. …With Falls Church City included in the 2015 data, the nation’s four wealthiest counties were D.C. suburbs.

To be fair, this data is also driven by all the high-paid lobbyists. contracts, consultants, and others who have their snouts buried in the federal trough. So the incredible wealth of the DC region is really an argument for shrinking the size and scope of the federal government.

But the bureaucracy is part of the problem.

Interestingly, even the Congressional Budget Office concluded that bureaucrats are overpaid. And CBO almost certainly understated the gap, as noted in congressional testimony.

The CBO report’s headline figure is that, on average, federal salaries and benefits are 17 percent above private-sector levels. … I would consider the CBO’s reported federal compensation premium to be on the low end… when I analyze federal employee wages using the methodology that the progressive-leaning Economic Policy Institute has used in numerous studies of state and local government salaries, I find an average federal salary premium of not 2 percent but of about 14 percent. … The CBO chose to value federal employees’ pension benefits using a 5 percent discount rate. Using that discount rate, the federal employee retirement package was found to be substantially more generous than is received by comparable private-sector employees. But…corporate pensions are not nearly as safe as federal pensions, as witnessed by pending benefit reductions for “multiemployer” defined benefit plans. Valuing federal pension benefits using a lower discount rate to better reflect their safety would find a higher overall federal compensation premium.

Notwithstanding all this evidence, the unions representing bureaucrats nonetheless try to crank out numbers showing federal employees are underpaid.

To be sure, overall compensation levels don’t tell us everything. It is important to adjust for education, skills, and other factors.

Which is why the most useful, powerful, and revealing data in this debate is produced by the Bureau of Labor Statistics, which measures voluntary quit rates by industry. If there is a lot of turnover in a sector of the economy, that suggests workers are underpaid. But if there are very few voluntary departures, that suggests workers in that part of the economy are overpaid.

And the numbers from BLS clearly show that federal bureaucrats are far less likely to leave their positions when compared to employees in the private sector.

This five-fold gap is staggering. I have lots of friends who work for the federal government. Most privately confess that they know that are making out like bandits. I think I’ll send this chart to the few holdouts.

By the way, I shared the numbers about quit rates for state and local bureaucrats back in 2011. Same story, though the compensation gap isn’t quite as large and may be driven mostly by unfunded fringe benefits.

P.S. I’m much more interested in shrinking government rather than shrinking pay levels. The correct pay for bureaucrats at the Departments of TransportationHousing and Urban DevelopmentEducationEnergy, and Agriculture is zero. Why? Because they bureaucracies shouldn’t exist.

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When I first created the Bureaucrat Hall of Fame, I confess that my standards were a bit slack. I awarded membership to government workers that are grossly overpaid (see here and here, for instance), but otherwise didn’t really do anything special to merit awards.

In recent years, I’ve been more judicious. I only give the “honor” to bureaucrats who go above and beyond the call of duty.

  • A new Jersey bureaucrat got almost $250,000 per year for simultaneously holding six different government jobs.
  • Figuratively screwing taxpayers wasn’t good enough for a welfare bureaucrat in Pennsylvania.
  • The civil servant at the Veterans Administration who overlooked deadly waiting lists but had…um…time on his hands for other things.

There’s even a foreign wing in the BHoF

We’re going to expand our list today, but by using a different approach. We’re going to have a poll so you can decide which bureaucrat is most worthy.

Is Darryl De Sousa the most deserving?

Federal prosecutors have charged Baltimore Police Commissioner Darryl De Sousa with three misdemeanor counts of failing to file federal taxes… De Sousa, 53, willfully failed to file federal tax returns for 2013, 2014 and 2015 despite having been a salaried employee of the Police Department in those years, prosecutors said Thursday. …“There is no excuse for my failure to fulfill my obligations as a citizen and public official,” he said in a statement. “My only explanation is that I failed to sufficiently prioritize my personal affairs.” …Mayor Catherine Pugh expressed “full confidence” in De Sousa. …De Sousa earned $93,104 in 2013, when he is first accused of failing to file taxes. He earned $101,985 in 2014 and $127,089 in 2015. …The Police Department routinely suspends with pay officers accused of a misdemeanors pending the outcome of the case. De Sousa remained on the job Thursday. He currently earns a salary of $210,000 a year.

Does Thomas Tramaglini merit this award?

The Kenilworth school superintendent charged Monday with defecating in public was caught in the act at the Holmdel High School football field and track after surveillance was set up due to human feces being found “on a daily basis,” police said. Thomas Tramaglini, 42, …was running at the track on the athletic fields at 5:50 a.m. before he was arrested. Track coaches and staff at Holmdel High School told the district’s resource officer that they found human feces on or near the football field and track daily… Tramaglini is also charged with lewdness and littering.

Should Donn Thompson win the prize?

Los Angeles firefighter Donn Thompson had a busy year in 2017. If his pay stubs are to be believed, he literally never stopped working. Data obtained by Transparent California…show that Thompson pulled down $300,000 in overtime pay during 2017, on top of his $92,000 salary. Over the past four years, Thompson has earned more than $1 million in overtime… To earn that much in overtime pay, Thompson would have had to work more hours than actually exist in a single year. Either the highly paid firefighter found a way to stretch the space-time continuum or something fishy is going on. …earning $302,000 at a rate of $47.40 per hour would require working more than 6,370 hours. Add that to the 2,912 hours he worked as a salaried employee, and you get more than 9,280 hours worked, despite the fact that there are only 8,760 hours in a year. …Thompson…might very well be the highest paid firefighter in American history. …During 2017, the Los Angeles Fire Department had 512 employees who cashed in with at least $100,000 in overtime pay… Thompson was one of 26 employees to get at least $200,000 in overtime pay.

This is a tough contest.

In Baltimore, I suspect ordinary people don’t get a mulligan when they commit a crime, so Mr. De Sousa’s kid-glove treatment stands out. I’m also impressed (in a bad way) that his salary soared from $93K to $210K in just five years. Nice work if you can get it.

On the other hand, Mr. Tramaglini has…um…layed down a special type of marker. Was he inspired by fellow bureaucrats from the Postal Service and Environmental Protection Agency?

But let’s not forget Mr. Thompson. Claiming to have worked more hours than actually exist is rather extraordinary. Though ripping off taxpayers apparently is a tradition for firefighters, particularly in California.

As they say in Chicago, vote early and vote often.

If you like making your opinion heard, my most recent poll was about which state will be the first to suffer political collapse. And my favorite poll was to pick the best political cartoonist.

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Back in 2013, I shared a poll to see who people would pick as their “favorite political cartoonist.” Michael Ramirez currently has the lead, which doesn’t surprise me when you look at options (here, here, here, and here) I provided.

But if there was a prize for the most depressingly accurate political cartoon, he also would win the prize for his depiction of what happens when state and local politicians “negotiate” compensation packages for bureaucrats.

Simply stated, politicians have a giant incentive to provide lavish benefits to interest groups that then recycle some of the loot back to elected officials in the form of campaign contributions.

But the real key to the scam is that the bill gets imposed on future generations.

The American Legislative Exchange Council has a must-read report on the giant funding gaps that this has produced in the pension plans for state and local government bureaucrats.

If net pension assets are determined using more realistic investment return assumptions, pension funding gaps are much wider than even the large sums reported in state financial documents. Unfunded liabilities (using a risk-free rate of return assumption) of state-administered pension plans now exceed $6 trillion—an increase of $433 billion since our 2016 report. The national average funding ratio is a mere 33.7 percent, amounting to $18,676 dollars of unfunded liabilities for every resident of the United States. …the personal share of liability for every resident in each state, an indicator of the severity of the taxes to be borne now or in the future by each taxpayer for promises made but not funded. In Alaska, each resident is on the hook for a staggering $45,689, the highest in the nation. Connecticut, Ohio, Illinois, and New Mexico follow for the five highest per person unfunded pension liabilities.

This map is the most important takeaway from the report. It shows which states have the highest per-capita unfunded liabilities.

I’m not surprised to see Alaska, Illinois, Connecticut, and New Jersey near the bottom of the rankings. All of them were choices in my poll on which state was “most likely to collapse.”

But perhaps New Mexico, Hawaii, and Ohio should have been on that list as well.

For further background on the issue, here are some passages from a pension primer published by Forbes.

Years ago, as an actuarial student, …I remember…first, the eye-popping idea that state constitutions promised state and local employees that they could keep their existing benefits, not just for past service accruals, but for all future years of employment; and, second, the notion that it was generally accepted for public plans to be un- or underfunded… this is the story that’s repeated over and over again.  Pensions are made more generous — with high accrual rates, low retirement eligibility ages, generous cost of living provisions — as a means of providing more generous compensation to state and local employees, without actually needing to pay anything from the current year’s budget.  Costs are deferred until well after current legislators have themselves retired. …pension debt is even worse than ordinary state debts, for instance, bond issues for building up infrastructure.  Pension debt is nothing other than borrowing to pay for present-day employee salaries.

In other words, bureaucrat pensions are a scam, an opportunity for politicians to buy off a powerful voting bloc today while imposing the bill on the future.

Bureaucrats are making out like bandits, as the New York Times recently reported.

A public university president in Oregon gives new meaning to the idea of a pensioner. Joseph Robertson, …who retired as head of the Oregon Health & Science University last fall, receives the state’s largest government pension. It is $76,111. Per month. That is considerably more than the average Oregon family earns in a year. Oregon — like many other states and cities, including New Jersey, Kentucky and Connecticut — is caught in a fiscal squeeze of its own making. Its economy is growing, but the cost of its state-run pension system is growing faster. More government workers are retiring, including more than 2,000, like Dr. Robertson, who get pensions exceeding $100,000 a year. The state is not the most profligate pension payer in America… “It’s an affront to everybody who pays taxes,” said Bruce Dennis, a retired carpenter from outside Portland who earned a $54,000-a-year pension by swinging a hammer for 45 years. No one gives him extra money.

But there’s a problem with this scam.

As Margaret Thatcher famously noted, sooner or later you run out of other people’s money.

And we’re getting to that point, as illustrated by this article for the Wall Street Journal. It cites what’s happening on the state level in Connecticut.

Connecticut has just 31.7% of what it needs to pay its employees’ future retirement benefits, according to state financial reports. A fund for teachers has 52.3%. Together, that adds up to more than $37 billion in unfunded pension liabilities, or about $10,300 per Connecticut resident. Connecticut’s unfunded pension liabilities resulted from nearly 40 years of politicians making promises about benefits without adequately funding them, according to a 2015 study by the Center for Retirement Research at Boston College.

And it gives an example of trouble at the local level from a city in Michigan.

East Lansing, home of Michigan State University…is struggling with almost $125 million in unfunded pension and retiree health-care liabilities, has been cutting services… East Lansing asked MSU to pony up $100 million over 20 years to help shore up the city’s underfunded pension plan. The alternative, the city said, was asking voters to approve a 1% income tax that would hit university employees and working students. After negotiations went nowhere, the city brought the income-tax proposal before voters in a referendum last November. …On Nov. 7, East Lansing residents shot down the income-tax referendum, forcing the city to debate what services to cut to save money for the pension obligations. …The city hopes to shed another 17 police and fire positions over the next two years… Altmann suggested a long list of potential cuts to make more room in the budget for increased pension payments: closing the fire station on MSU’s campus, shuttering the city’s pool, aquatic center, dog park and soccer complex, suspending bulk leaf pickup and plowing of public sidewalks and ending annual jazz, folk, film and art festivals.

This is not going to end well.

And the problem seems to get worse every year.

Doesn’t matter who is slicing and dicing the data. The numbers always look grim.

When the next recession hits, many of these simmering problems are going to explode.

P.S. In addition to extravagant and unfunded pensions, don’t forget that state and local bureaucrats (and their federal cousins) are overpaid.

P.P.S. And if you don’t believe that they’re overpaid, then please explain why they don’t voluntarily leave their jobs for positions in the economy’s productive sector?

P.P.P.S. Also keep in mind that there are negative macroeconomic repercussions when bureaucrats are overpaid.

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