A Really Bad Idea

In their Pledge to America, House Republicans promised to place a "federal hiring freeze on nonsecurity employees," whom they define as workers "outside of the Department of Defense, Department of Homeland Security and Department of Veterans Affairs." What they did not pledge was an explanation of what that meant, the repercussions it might have for ordinary families, or how much money it would save.

Lacking such information, I decided to do a little research.

The federal government has 2.5 million full-time civilian employees, but nearly 600,000 of them work for the U.S. Postal Service, which is run by an independent commission that by law makes its own personnel decisions based on revenue intake. That leaves 1.9 million federal employees subject to the annual budgetary decisions of Congress and the president. The pledge would exempt three of the 15 departments of the federal government from the hiring freeze, but those three have 58 percent of the remaining civilian workforce: 600,000 at Defense, 250,000 at Veterans Affairs and 150,000 at Homeland Security. That leaves only 800,000 full-time employees subject to the hiring freeze.

How much could you save in a year by stopping all new hiring at those departments and agencies? According the Census Bureau, the government employees outside the Postal Service were paid about $145 billion in 2008, the last year for which data is available. We can estimate that those classified by the pledge as nonsecurity accounted for about $61 billion of that.

What portion of that $61 billion could be saved with a hiring freeze? Bureau of Labor Statistics data indicates that a little more than 1 percent of the federal workforce turns over each month. During the last 24 months the average annual rate has been 14 percent. That means a hiring freeze imposed for a year on agencies and departments containing the 800,000 nonsecurity workers in the government would eliminate about 112,000 federal jobs.

Since that reduction would be phased in on a monthly basis, however, the government savings would amount to only about half the annual salaries of those workers, or about 7 percent of $61 billion. In the first year, the hiring freeze outlined in the Pledge to America would save a little more than $4 billion -- not chump change but certainly peanuts compared to the Republicans' proposed extension of the Bush tax cuts to households with incomes of more than $250,000. That costs the Treasury $60 billion a year.

But would the freeze really save $4 billion a year? There are four reasons to believe it would not only fail to save that much money, but it also would actually cost the Treasury money.

First, if you were surprised by how many federal employees the pledge excludes from the hiring freeze then you will be even more surprised by some of the employees it classifies as nonsecurity. Take the 32,000 men and women who work for the FBI. Instead of getting the extra 1,000 agents and support staff promised in President Obama's budget to help with the surveillance and apprehension of terrorists and other criminals, the pledge would cut about 4,500 positions from the FBI during a period of 12 months.

The same problem exists with 5,500 U.S. Marshals; the 9,000 Drug Enforcement Administration agents and support staff; the 5,000 employees at the Bureau of Alcohol, Tobacco, Firearms and Explosives; and the 12,000 people who staff the U.S. Attorneys' offices across the country. All of them are on the front line of putting terrorists in prison. Simply put, saving $750 million by freezing these assorted law enforcement agencies is a proposal that works only when buried in a vaguely drawn and poorly described aggregate proposal. It is money the overwhelming majority of Americans, including most members of the House Republican Conference, would insist be spent.

There are other examples that are only slightly less compelling. For instance, last year the 9,600 inspectors and staff of the Food Safety Inspection Service at the Department of Agriculture stopped 243 million pounds of tainted meat from reaching consumers. The hiring freeze would cut that work force by more than 1,300, significantly reducing inspections of slaughter houses and meat processing facilities. A similar story can be told with respect to the food safety inspectors at the Food and Drug Administration who examine food additives being imported from China and other countries. FDA's field operations would be cut from 4,200 to 3,600 in the space of a year.

Second, some government agencies have responsibilities that require staffing levels that are nearly impossible to reduce. One example would be the Bureau of Prisons, which is responsible for more than 200,000 federal prisoners. If staffing levels fall below minimum requirements the safety of inmates, staff and nearby communities are placed at risk. Currently, the Bureau of Prisons employs 38,000 corrections officers and staff. A hiring freeze probably would push employment levels for the bureau below 33,000 by the end of 2011, and probably would result in a dramatic increase in overtime pay, significantly increasing incarceration costs.

A similar situation exists at the Federal Aviation Administration, where the number of air traffic controllers is driven by annual takeoff and landing rates. FAA projects about 1,000 of the 15,000 air traffic controllers will leave service next year. Failure to replenish those losses could significantly increase overtime pay and jeopardize public safety.

Three, a big part of the government's civilian workforce is tasked with either buying needed goods and services at the best price, detecting overpayments and fraudulent claims, or collecting revenue. Numerous studies demonstrate that reducing that workforce costs the government far more than maintaining or increasing it. For instance, the 94,000 Internal Revenue Service agents, auditors, technical and support staff alone account for nearly one-eighth of the total staff the pledge would subject to a hiring freeze. That potentially could reduce IRS staffing levels by more than 12,000 by the end of 2011, saving more than $1 billion in salary outlays. But studies indicate the government collects $3 in taxes for every $1 it spends to hire new agents, and by an employee's third year, the government is collecting $9 in taxes for every $1 spent on agent salaries or for support staff.

Similar situations exist at the Social Security Administration and the Centers for Medicare and Medicaid Services, where employees determine eligibility for benefits and ferret out fraudulent claims. SSA employs 65,000 people nationwide and makes payments of nearly $600 billion a year to 44 million beneficiaries. CMS employs about 4,500 people responsible for dispensing more than $500 billion a year. One activity within CMS, the Medicare Integrity Program, was recently found to have a return on investment of 14-1. The proposed hiring freeze would reduce staff at the agencies by about 600.

The point here isn't that there aren't places where the federal payroll could be and should be cut, but if you use a broadax rather than a scalpel you will do more harm than good. Further, you might think that such cuts in the federal workforce will yield great savings, but in fact they don't. There are several reasons for this.

First, federal workers' salaries represent a tiny fraction of government spending. The $145 billion we spend each year outside of the Postal Service equals less than 5 percent of all federal spending. The nonsecurity employees House Republicans have targeted account for only about 2 percent.

Second, if the goal is to reduce the deficit then the portion of the federal workforce with jobs directed at raising revenues or fighting overpayments and fraudulent claims must be protected. The hiring freeze at the IRS alone would cost the government almost as much in revenues in the first year as the entire freeze would save. When Social Security auditors and Medicare claims processors are included, the proposal almost certainly would add to the deficit.

Third, a large majority of the entire federal workforce is not directly on the government payroll. They are what some people refer to as the shadow government -- contractors providing government services. Some are janitors, dishwashers, security guards and clerical staff working for low wages and few benefits. Others are consultants sitting in federal buildings and doing work very similar to that of federal employees but usually at higher pay.

The real question is why Republicans, in their earnestness to reduce the deficit, have not taken on the issue of government contracting. That has been where the real growth in government has occurred. Between 2000 and 2008, total "real" dollar expenditures on contracts (after accounting for inflation) grew by 127 percent, while noncontract spending in the discretionary budget grew by only 24 percent, even with two wars and sizable increases in military pay.

With contract spending amounting to more than $500 billion and salaries for non-Postal Service employees amounting to less than $150 billion, you sort of wonder what they are thinking.

Scott Lilly is a senior fellow at the Center for American Progress. He worked on Capitol Hill for more than 30 years, most recently as the House Appropriations Committee minority staff director.