The federal government is borrowing too much and costs too much to run. If it were a private company, it would have cut employee salaries a long time ago to make ends meet, say two economists in a column for Forbes magazine.
And that’s what the federal government needs to do to show it’s serious about fiscal responsibility and reducing the deficit, write economists Robert Stein and Brian Wesbury.
If private companies operated like the federal government, creditors and analysts would have serious concerns about the companies’ fiscal health and reconsider doing business with them, they write. And with unemployment hovering at 10 percent, the remaining employed workforce — many of whom have dealt with pay cuts, furloughs and pay freezes — shouldn’t keep giving their income to provide for pay raises for federal employees, they write.
The pay increase in his budget would actually be the smallest in 20 years. But total compensation per federal worker — cash earnings plus fringe benefits — now averages twice that of the private sector. So cutting cash earnings by 10 percent across the board seems not only reasonable, but justified.
A 10 percent cut would save $15 billion a year, not a lot when compared to the $14 trillion deficit, they write. But “with today’s interest rates, the present value of all future outlay savings would total roughly $750 billion,” they calculate.
What say you? Debates over federal pay can often get heated, so let’s have a vigorous debate — but keep it civil.