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68–216 PDF 2011

RIGHTSIZING THE FEDERAL WORKFORCE

HEARING

BEFORE THE

SUBCOMMITTEE ON FEDERAL WORKFORCE,

U.S. POSTAL SERVICE AND LABOR POLICY

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

MAY 26, 2011

Serial No. 112–38

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.fdsys.gov

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

DARRELL E. ISSA, California, Chairman

DAN BURTON, Indiana

JOHN L. MICA, Florida

TODD RUSSELL PLATTS, Pennsylvania

MICHAEL R. TURNER, Ohio

PATRICK T. MCHENRY, North Carolina

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

JAMES LANKFORD, Oklahoma

JUSTIN AMASH, Michigan

ANN MARIE BUERKLE, New York

PAUL A. GOSAR, Arizona

RAU ́ L R. LABRADOR, Idaho

PATRICK MEEHAN, Pennsylvania

SCOTT DESJARLAIS, Tennessee

JOE WALSH, Illinois

TREY GOWDY, South Carolina

DENNIS A. ROSS, Florida

FRANK C. GUINTA, New Hampshire

BLAKE FARENTHOLD, Texas

MIKE KELLY, Pennsylvania

ELIJAH E. CUMMINGS, Maryland, Ranking

Minority Member

EDOLPHUS TOWNS, New York

CAROLYN B. MALONEY, New York

ELEANOR HOLMES NORTON, District of

Columbia

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

MIKE QUIGLEY, Illinois

DANNY K. DAVIS, Illinois

BRUCE L. BRALEY, Iowa

PETER WELCH, Vermont

JOHN A. YARMUTH, Kentucky

CHRISTOPHER S. MURPHY, Connecticut

JACKIE SPEIER, California

LAWRENCE J. BRADY, Staff Director

JOHN D. CUADERES, Deputy Staff Director

ROBERT BORDEN, General Counsel

LINDA A. GOOD, Chief Clerk

DAVID RAPALLO, Minority Staff Director

SUBCOMMITTEE ON FEDERAL WORKFORCE, U.S. POSTAL SERVICE AND LABOR

POLICY

DENNIS A. ROSS, Florida, Chairman

JUSTIN AMASH, Michigan, Vice Chairman

JIM JORDAN, Ohio

JASON CHAFFETZ, Utah

CONNIE MACK, Florida

TIM WALBERG, Michigan

TREY GOWDY, South Carolina

STEPHEN F. LYNCH, Massachusetts,

Ranking Minority Member

ELEANOR HOLMES NORTON, District of

Columbia

GERALD E. CONNOLLY, Virginia

DANNY K. DAVIS, Illinois

(III)

C O N T E N T S

Page

Hearing held on May 26, 2011 ............................................................................... 1

Statement of:

Biggs, Andrew G., resident scholar, American Enterprise Institute for

Public Policy Research; and William R. Dougan, national president,

National Federation of Federal Employees, chairman of the Federal

Workers Alliance ........................................................................................... 20

Biggs, Andrew G. ....................................................................................... 20

Dougan, William R. ................................................................................... 29

Lummis, Hon. Cynthia M., a Representative in Congress from the State

of Wyoming .................................................................................................... 8

Marino, Hon. Thomas, a Representative in Congress from the State of

Pennsylvania ................................................................................................. 14

Letters, statements, etc., submitted for the record by:

Biggs, Andrew G., resident scholar, American Enterprise Institute for

Public Policy Research, prepared statement of .......................................... 22

Connolly, Hon. Gerald E., a Representative in Congress from the State

of Virginia, prepared statement of .............................................................. 66

Dougan, William R., national president, National Federation of Federal

Employees, chairman of the Federal Workers Alliance, prepared statement of ........................................................................................................... 31

Lummis, Hon. Cynthia M., a Representative in Congress from the State

of Wyoming, prepared statement of ............................................................ 10

Lynch, Hon. Stephen F., a Representative in Congress from the State

of Massachusetts, various prepared statements ......................................... 50

Marino, Hon. Thomas, a Representative in Congress from the State of

Pennsylvania, prepared statement of .......................................................... 16

Ross, Hon. Dennis A., a Representative in Congress from the State of

Florida, prepared statement of .................................................................... 3

(1)

RIGHTSIZING THE FEDERAL WORKFORCE

THURSDAY, MAY 26, 2011

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON FEDERAL WORKFORCE, U.S. POSTAL

SERVICE AND LABOR POLICY,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 9:39 a.m., in room

2154, Rayburn House Office Building, Hon. Dennis A. Ross (chairman of the subcommittee) presiding.

Present: Representatives Ross, Amash, Jordan, Chaffetz, Gowdy,

Issa (ex officio), Lynch, Norton, Connolly, Davis, and Cummings (ex

officio).

Staff present: Ali Ahmad, communications director; Robert Borden, general counsel; Molly Boyl, parliamentarian; Lawrence J.

Brady, staff director; John Cuaderes, deputy staff director; Linda

Good, chief clerk; Jennifer Hemingway, senior professional staff

member; Ryan Little and James Robertson, professional staff members; Justin LoFranco, deputy director of digital strategy; Laura L.

Rush, deputy chief clerk; Rebecca Watkins, press secretary; Peter

Warren, legislative policy director; Nadia A. Zahran, staff assistant; Ronald Allen, minority staff assistant; Jennifer Hoffman, minority press secretary; Lucinda Lessley, minority policy director;

William Miles, minority professional staff member; and Mark Stephenson, minority senior policy advisor/legislative director.

Mr. ROSS. Good morning. I would like to call the Subcommittee

on Federal Workforce, U.S. Postal Service and Labor Policy to

order. As we do in every subcommittee and full committee, we read

the mission statement of the Oversight Committee.

We exist to secure two fundamental principles. First, Americans

have a right to know that the money Washington takes from them

is well spent; and, second, Americans deserve an efficient, effective

government that works for them. Our duty on the Oversight and

Government Reform Committee is to protect these rights. Our solemn responsibility is to hold government accountable to taxpayers

because taxpayers have a right to know what they get from their

government. We will work tirelessly in partnership with citizen

watchdogs to deliver the facts to the American people and bring

genuine reform to the Federal bureaucracy. This is the mission of

the Oversight and Government Reform Committee.

I will move into my opening statement.

Last December, the White House’s deficit commission outlined a

plan of action to address our Nation’s fiscal woes. Included in the

report was a recommendation to reduce the size of the Federal

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work force by 200,000. Recently, the House budget resolution

adopted a similar policy, in assuming a 10 percent reduction—via

attrition—in the size of the Federal work force.

White House officials have repeatedly stated that they would implement many of the commission’s ideas, but they did not incorporate a Federal work force reduction proposal into the President’s

February budget release, or his recently issued deficit reduction

plan. In fact, the President’s budget, while acknowledging that the

Federal work force has actually grown by 325,000 since President

Obama took office, requests an additional 15,000 new Federal

workers for fiscal year 2012.

The size of the Federal work force now stands at over 2.1 million,

the largest Federal work force in modern history. At the same time,

our economy has lost over 4 million private sector jobs and the unemployment rate hovers around 9 percent. According to the Office

of Personnel Management, the average pay and benefits of a Federal employee in 2010 was $101,751, a rate of compensation the

Nation can no longer afford.

The members of this subcommittee appreciate our talented Federal work force and the critically essential services it provides.

However, the current size of the Federal work force is fiscally

unsustainable. Congress has an obligation to consider all policy reforms that halt the sprawl of government and force agency heads

to make government more efficient.

Several Republican Members have offered bills to shrink the size

of the Federal work force. I, myself, have introduced H.R. 821, the

Zero Based Budget Act of 2011. This legislation would require all

departments and agencies in the Federal Government to provide a

funding justification each year, as well as a summary of their costeffectiveness and efficiency.

Today’s witnesses include two distinguished Members of Congress, Representative Lummis and Representative Marino, who

have both introduced legislation that would institute tough measures to halt government growth and produce a smaller, leaner Federal work force.

At a time when our economy is in a recession and budget deficits

are at staggering record levels, taxpayers can no longer be asked

to foot the bill for a bloated Federal work force. This hearing presents an opportunity for lawmakers on this committee to hear important testimony on how best to rightsize the Federal work force.

I thank the witnesses for appearing here today and I look forward to their testimony.

[The prepared statement of Hon. Dennis A. Ross follows:]

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Mr. ROSS. I now recognize the distinguished Member from Massachusetts, the ranking member, Mr. Lynch, for an opening.

Mr. LYNCH. Thank you, Mr. Chairman. It is an honor to be here.

Let me just try to reset the discussion that has been put forward

here in terms of rightsizing the Federal work force. Let me just put

some numbers out there that I think are striking.

We have two types of Federal employees that work for our government, or two types of Federal workers. We have the traditional

Federal employees who are the target of this hearing, and then we

have a group called private contractors. Now, in common parlance

people think of contractors as companies, but in this U.S. Government contractors are people. So rather than hiring under the Bush

administration employees, they simply hired contractors.

Now, not only do we have the largest number of Federal employees, 21⁄2 million people, but if you look at the number of folks that

we have added to government, the government payroll, by the Bush

administration, it comes not to 21⁄2 million, but to 101⁄2 million contractors, people who are working under government contract, instead of employees. So what we are doing in this hearing is we are

ignoring 80 percent of the cost. We are completely ignoring the contractor side of this equation, 101⁄2 million people, and we are instead focusing on 21⁄2 million Federal employees.

It strains the limits of credibility to ignore 80 percent of our costs

and instead to point the finger of blame on Federal employees. It

continues to mystify me in the midst of this recession that while

we all are in agreement that it was the folks on Wall Street who

caused this mess, we don’t have hearings on Wall Street up here.

The finger of blame has gone around and around, and where does

it fall? It falls on Federal employees. It falls on teachers. It falls

on firefighters. It falls on police officers. It falls on their right to

bargain over terms and conditions of employment. It is obscene

that we are focusing today on the 21⁄2 million employees of the Federal Government while we are completely ignoring the 101⁄2 million

contractors and grantees that work for this government.

Bear in mind that there is great need to reduce the costs within

our government. There is no question about it. We have to reduce

spending. But you have to ask whether we are really serious about

it when we choose to ignore 80 percent of the cost. There is not a

word in here about reducing the number of contractors.

I have traveled to Iraq and Afghanistan many, many times, 14

times I think in Iraq. I have seen the troop levels go down from

170,000 to 45,000 today. But I still see 100,000 contractors in Iraq.

And when you compare what an Army private or a private first

class for the U.S. Marine Corps is making per month with what the

private contractor costs, or if you compare what the State Department employees are making overseas compared to what these private contractors are making, it is astounding. It is really astounding.

So if we are serious about reducing costs, then we need to look

at the contracting community, the 101⁄2 million people out there

that are on the government payroll. Just because President Bush

decided to hire them as private contractors instead of Federal employees, it doesn’t mean the cost isn’t there.

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In fact, think about this: If we are seeking to reduce costs, if you

force a Federal employee out, they are going out, and they are

going to collect their pension and probably get health care benefits.

If you cut a contractor lose, that is all savings. That is all savings.

So why aren’t we looking at that?

This will be a great hearing. I have a lot of figures, a lot of data,

and hopefully we will get the complete picture out there. But, Mr.

Chairman, I am delighted that you held this hearing, I really am.

I yield back the balance of my time.

Mr. ROSS. Thank you, Mr. Lynch.

The chair now recognizes the chairman of the full committee, the

distinguished gentleman from California, Chairman Issa, for an

opening.

Mr. ISSA. Thank you, Chairman, and thank you, Congressman

Lynch, for giving me the opportunity to come after you, and I don’t

mean come after you personally.

Mr. LYNCH. Have at it. Bring it on.

Mr. ISSA. No, no.

We have two congressional colleagues here and they both have

business backgrounds. Congress Marino, like you, I spent decades

on the factory floor.

One thing we understand in the private sector, and I think you

are going to hear it in their testimony and in any Q and A, we understand in the private sector that you are probably absolutely

right on some portion of what you just said; two million people,

101⁄2 million full or part-time contractors, all or part. We are not

debating that. They all fall under this committee’s jurisdiction.

The real question is, how are we getting the best value? And the

one thing I believe that this committee has seen in hearing after

hearing after hearing, and we will continue to see until we make

real fundamental change is, there is no cost accounting.

Now, in the previous time under President Bush I sat on this

committee and other committees and, rightfully so, I saw them not

do cost accounting, they simply hired a bunch of people to get us

through the early days of the war. And on this side of the aisle and

on your side of the aisle we started complaining that, well, where

is the cost justification for this and that? Why does it cost hundreds of dollars a gallon to bring a gallon of fuel out to the combat

and into the line?

The real question is not is there waste in government. We exist

because there is a tremendous amount of waste and we have done

very little to deal with it.

Now, as we look at attrition or changes in the Federal work

force, including an end to arbitrary insourcing, which is what has

been happening under the Bush administration, arbitrary

insourcing. They tap contractors on the shoulder, tell them their

contract is going to be ending, and we say we will give you a pay

raise if you come work for us now. Felony, stupid behavior for anyone to do. And we have business people here who will explain exactly how stupid it is to arbitrarily pay more than you need to.

What this committee needs to do, and, Mr. Lynch, I want to be

very much in partnership with you on this committee, we need to

cost-benefit both outsourced and insourced costs. We need to move

this government toward making a genuine decision about what

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makes long-term and short-term sense and to do the kind of analysis.

Additionally, and Chairman Ross I think did a very good job in

his opening statement, we need to go to a system in which we justify the individual pay of individual members of the Federal work

force, dynamically understanding that some people in the Federal

work force are underpaid and their jobs go unfilled and it is difficult. We have seen this before. Some, their jobs become less valuable, but the scale of the system has no flexibility even for new hiring. We need to change that.

The private sector understands that supply and demand varies,

that what you have to pay to hire a software programming in 1999

in Silicon Valley is very different than 2001. It was a radical

change between you hired people from anywhere and stole them

from your competitors to, oh, there was an abundance. That abundance disappears, the price goes up.

I look forward to this committee having an honest dialog, not

about what was wrong in outsourcing under the Bush administration or wrong necessarily in insourcing under this administration.

We have an obligation to get it right, to figure out how sensible

government accounting can in fact put, using your numbers, 121⁄2

million full or part-time jobs to better use at better value for the

American people.

I believe this is a good start today. I believe we have the right

witnesses to help us set the tone for why it is not about how many

workers we have in-house or how many contractors we have outhouse. The question is, are we getting our best value. And until we

have a system that we can all be confident on a regular and constant basis makes those decisions, those, if you will, dynamic scoring so that we get the best value, we are not going to rightsize the

Federal work force in-house or get the best value from our contractors out of the house.

I look forward to working with this entire committee. This is the

most legitimately bipartisan issue we will have on this committee.

I yield back.

Mr. ROSS. Thank you, Mr. Chairman.

I now recognize the ranking member of the full committee, the

distinguished gentleman from Maryland, Mr. Cummings, for an

opening.

Mr. CUMMINGS. I want to thank you, Mr. Chairman, and I certainly thank our ranking member and want to associate my comments with those of the ranking member.

You know, in listening to all of this, and I am glad we are doing

this hearing, but at a time when Congress is looking for ways to

cut spending, I certainly appreciate that everything should be on

the table. However, I believe that Federal employment in particular has gotten more scrutiny from the majority than it deserves.

While I agree that serious changes must be made to improve our

financial footing, I disagree with the viewpoint that Federal employees should shoulder a disproportionate amount of that burden.

As I have mentioned previously before this committee over the

past several months, I have been meeting with Federal workers

who are rightly dismayed that their jobs and benefits are being

used as a political football on Capitol Hill. Federal employees saw

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their 2011 pay raises blocked by the recently enacted 2-year pay

freeze. They are deeply concerned with the daily barrage of news

about the possibility of further congressional action affecting their

benefits.

My office has been deluged with inquiries from Federal workers

and their families concerned about agency furloughs and reductions

in force, wondering how they will keep paying their mortgages and

feeding their children if their paychecks are suddenly stopped.

These are the same employees that on this side of the aisle took

a 5 percent cut and probably will not get another pay raise for the

next 4 years. But at the same time, they work on the Hill and they

hear our Republican colleagues say that in a fragile economy, we

cannot afford to tax the rich, but yet and still they are being cut

in pay and, again, their wages are being frozen and they are not

making the money that the rich folks are making. Give me a break.

Despite assertions to the contrary, the Federal work force has decreased significantly since the 1960’s when measured in terms of

the number of workers per capita. According to the Office of Management and Budget, in 1962 there were 13.3 executive branch employees for every 1,000 Americans, while as of 2010 there were 8.4,

the lowest level in the past 50 years. Furthermore, we have seen

decreases in the Federal work force are often met with increases

to the contractor work force, as Mr. Lynch stated.

On this point, I would like to be very clear: Cutting the Federal

work force is not a magic solution to our financial troubles. Cutting

the Federal work force does not diminish the demand for taxpayer

services. For that reason, proposed indiscriminate cuts stand to

have two effects: One, increasing the more costly contractor work

force; or, two, reducing the efficiency and effectiveness of the services delivered to taxpayers.

Recently in response to Representative Lummis’ proposed legislation, Max Stier, the CEO of the nonpartisan Partnership for Public

Service, had these simple words to stay. ‘‘History has shown that

governmentwide hiring freezes result in neither smaller nor more

effective government. Indeed, downsizing the Federal work force

without strategic work force planning will result in skill gaps and

increased reliance on contractors and ultimately a government that

is less efficient and effective than the American people deserve.’’

None of the proposals we will consider today have adequately addressed Mr. Stier’sconcerns over blanket cuts.

So I do look forward to the hearing today. I look forward to hearing our witnesses. And I agree with the chairman of the full committee, Mr. Issa. This is a problem that should have bipartisan solutions. These are issues that affect the very people that we work

with every day, the very people that we go back to our offices and

see in the next hour or so, the ones that get the early bus, the ones

that work hard and give their blood, their sweat, their tears, their

compassion, to us Americans. And I do want us to stop beating up

on our public employees because they play an integral role in all

of our society, and I want them to come to work knowing that we

appreciate every single thing they do.

With that, Mr. Chairman, I yield back.

Mr. ROSS. Thank you, Mr. Cummings.

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Members may have 7 days to submit opening statements and extraneous material for the record.

As you know, we do have two panels today. Based on agreement

that I have with our presenters now, we are going to limit their

testimony to 5 minutes each with regard to their respective legislation.

I will now recognize the distinguished gentlewoman from Wyoming, Mrs. Lummis.

STATEMENT OF THE HON. CYNTHIA M. LUMMIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WYOMING

Mrs. LUMMIS. Well, thank you, Chairman Ross and Ranking

Member Lynch and members of the committee. It is an honor to

appear before your subcommittee.

I want to assure the ranking member of the full committee of my

deep regard for public employees. I was the State Treasurer in my

State. I had a loyal, hard-working work force that contributed

mightily to converting our portfolios of savings from $6 billion to

over $8 billion during my 8 years as State Treasurer. They are

hard-working, dedicated employees, and I see similar skills, abilities, and dedication every day here in the Federal Government. I

am proud of public workers. I am proud to be a public worker.

My bill is not designed as an attack or an indictment of their

skills. It is recognition of where we are in 2011 with regard to the

size of our Federal Government and what we need to do to address

the impending unsustainable shortfalls, our debts, our deficits. If

we wiped out every single Federal agency that is not interest on

the debt and an entitlement program mandatory spending, we still

would not have enough money collected in revenues to cover the expenditures of this country.

It is going to take every single program, every single person,

every single branch of government, every entitlement, every mandatory spending program in order to solve the problems we have

today. So this is a small component of the problem, and I bring it

to you because of my experience in Wyoming State Government.

Wyoming has the smallest population in the Nation. We also

have per capita the largest cadre of State, local and county government workers. Now, in order to maintain a level of service, but

nevertheless adjust to Wyoming’s boom and bust economy, since

our economy really is just entirely based on minerals, the revenues

of the State of Wyoming go up and down as mineral production and

mineral prices go up and down. So I have learned to adjust to a

growing government and a declining government over the course of

my political life as a Wyoming legislator, as director of a State government agency and then as State Treasurer.

Among the tools that we believe works well is the opportunity to

up and downsize the State work force in a way that does not hurt

the employee, and you do it by attrition. This bill, the bill that I

am sponsoring, the Federal Workforce Reduction Act of 2011, H.R.

657, does reduce the Federal work force by attrition.

Under my bill, the Federal Government could hire one employee

for every two that retire or separate, for whatever reason. So nobody loses their job. Nobody loses their benefits. These are people

that are leaving voluntarily through retirement or separating from

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government for whatever reason. And the notion is, of course, is

the government could hire one employee for every two that retire

or separate.

This notion of attrition has been replicated by the House Republican budget resolution, which assumes a more aggressive three to

one replacement rate. It was also proposed, as has been pointed

out, by the President’s deficit commission which called for a less

aggressive three to two replacement rate, and I prefer attrition to

rigid firing or hiring freezes. I don’t just want smaller government,

I want a more efficient and responsive government.

Now, let me give you some of the details of my bill. I did decide

to exempt the Department of Defense, Homeland Security, and Veterans Affairs from the new attrition policy. I also included a general national security waiver of the bill’s hiring limitations, and I

did so to acknowledge the preeminent importance of national security, our constitutional obligations versus our statutory obligations.

Working with Republican staff on the House Budget Committee,

we estimate the Federal Workforce Reduction Act would save something in the ballpark of $35 billion over 10 years. The more aggressive attrition policy in the House Republican budget combined with

a Federal pay freeze would save $248 billion over 10 years.

I am on the Appropriations Committee, and we talk repeatedly

about how we are having to cut programs, and Democrats and Republicans on the committee alike are saying, but we need to know

that when we cut programs, we are not just retaining middle and

higher administrative positions. We need to know that the people

who are actually doing the work in the bowels of government, those

workers who are less highly paid, are the ones who are retained

and not just the mid-managers and higher level managers in the

Federal Government who are highly compensated.

One closing comment, Mr. Chairman: In my home State of Wyoming, if you look at the pay between Federal employees, State employees, county employees, the Federal Government is compensating their employees by far, by far more than State employees

and other government workers. So what we are seeing here is an

opportunity to return some normalcy as we downsize the Federal

Government in order to save our country, and in doing so not inflict pain on people by RIFs and other policies that really do hurt

a family’s well-being.

Mr. Chairman, I again thank you so much for the opportunity to

testify before you today.

[The prepared statement of Hon. Cynthia M. Lummis follows:]

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Mr. ROSS. Thank you, Mrs. Lummis.

I now recognize the distinguished gentleman from the Commonwealth of Pennsylvania, Mr. Marino.

STATEMENT OF THE HON. THOMAS MARINO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA

Mr. MARINO. Chairman Ross, Ranking Member Lynch, and members of the subcommittee, thank you for holding this hearing today

and giving me the opportunity to testify, and I also want to pay

my respects to Chairman Issa. Thank you.

Our Nation is more than $14.3 trillion in debt, a record high and

the equivalent of approximately $46,000 owed by every child born

today. It is estimated that in 2011 we will have a Federal budget

deficit of more than $1.6 trillion. 2011 will represent the third

straight year in which revenues to the Federal Government have

fallen below spending by more than $1 trillion. We are borrowing

approximately 42 cents for every dollar we spend.

Our current fiscal course is unsustainable and disastrous. The

American people have sent a clear message to Washington, and the

American people deserve more. We must cut spending, reduce the

size and scope of the government, and keep taxes low to grow the

economy and create jobs.

Earlier this month I introduced H.R. 1779, the Federal Hiring

Freeze Act of 2011, because the time for talk has ended and the

time for action is now. We cannot continue down this road of big

government and deficit spending.

The general framework for my legislation and the concept that

we must put a freeze on Federal spending is not a new idea. President Reagan’s first official act upon being sworn in as our Nation’s

40th President on January 20, 1981, was signing a Presidential

memorandum calling for an immediate freeze on the hiring of civilian employees in the executive branch. In a statement at the signing of the memorandum, he stated that the freeze was a first step

toward controlling the growth and size of the government and reducing the drain on the economy for the public sector.

My legislation builds on Reagan’s plan by imposing a hiring

freeze on Federal employees until the budget deficit is eliminated,

and I want to add into this, this includes also contract individuals.

The bill contains specific limited exceptions in which hiring

would be permitted, such as time when our Nation is at war, vital

national security interests, Federal law enforcement purposes, to

honor prior contractual obligations, reassignment of personnel

within agencies to fill needed positions, positions to facilitate the

orderly transition and operation of a new Presidential administration, and the U.S. Postal Service. These commonsense exemptions

assure that the most critical and basic functions of our Federal

Government remain unaffected by the freeze. The fact is, we need

to manage the government more like we manage our businesses.

I am perplexed that people are opposed to this idea. I recently

was informed that we do not need to operate the government like

a business because the government can print money at any time.

This argument does not resonate with me or my constituents in the

10th District of Pennsylvania.

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I worked in a factory until I was 30 years old. I worked my way

up into management from sweeping floors. When the revenues

weren’t coming in, we cut our costs. One of the ways we cut our

costs was by not replacing people when they left and asking the remaining employees to produce a little more. And they did. And this

isn’t about firing or laying off either.

This approach is what we need to do in Washington with Federal

employees. My legislation is not an attack on Federal employees or

the work that they do. I have the utmost respect for the Federal

work force. I am and I was one. As a U.S. attorney, I had the best

and the brightest attorneys and staff working for me. This is why

I know that Federal workers are willing and able to step up to be

a part of the solution to our Nation’s problems.

According to the Congressional Research Service, the total cost of the Federal work force in 2010 was $590 billion, with a ‘‘B.’’ This

accounted for nearly 30 percent of total Federal receipts for that

year. We cannot and should not allow the cost of the Federal work

force to grow while millions of Americans are struggling.

This legislation calls on the Federal work force to take a prominent role in the process of leading the country out of our current

fiscal crisis. Obviously a hiring freeze is not, I repeat, is not the

silver bullet that will unilaterally lead us out of this crisis. It is a

part, but also it is a start. It is in combination with other efforts

that we have started to enact; for example, the step that we took

in slashing our own office budgets by 5 percent.

Just because this legislation is not the cure-all for the Nation’s

ills does not mean that we cannot begin deliberately addressing an

issue that is important to most Americans. This bill would be a

good faith step toward reducing the size of government, in addressing the out-of-control government spending.

And, again, I want to emphasize, this is a start. This includes

not only the permanent employees, but contracting employees, and

any other budgeted payout to an individual or an entity. It is not

a layoff program. Please don’t twist this into a layoff or getting rid

of Federal employees. It is by attrition. When they retire, when

they leave, for whatever reason, pass away, you name it, that is the

position that we do not fill.

The time for action is now.

Once again I would like to thank the chairman and ranking

member for giving me the opportunity to provide my thoughts on

this important issue. I stand ready and willing to work with the

committee and my colleague from Wyoming on any issues or any

amendments or any editing of this bill that I submit.

Thank you very much.

[The prepared statement of Hon. Thomas Marino follows:]

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Mr. ROSS. Thank you, Mr. Marino. Mrs. Lummis, thank you as

well.

We will now take a short recess as we prepare for our second

panel. Thank you.

We will now reconvene and welcome our second panel of witnesses. We have Dr. Andrew Biggs, who is a resident scholar at the

American Enterprise Institute for Public Policy Research, and Mr.

Bill Dougan, national president of the National Federation of Federal Employees and chairman of the Federal Workers Alliance.

Welcome.

Pursuant to committee rules, all witnesses will be sworn in before they testify. If you wouldn’t mind, please stand up and raise

your right hands.

[Witnesses sworn.]

Mr. ROSS. Let the record reflect that all the witnesses have answered in the affirmative. Please be seated.

In order to allow time for discussion, which we should have plenty of time, please limit your testimony to 5 minutes, and please

note that your entire written testimony has been entered into the

record and made part of the record.

Mr. Biggs, you are recognized. Thank you.

STATEMENTS OF ANDREW G. BIGGS, RESIDENT SCHOLAR,

AMERICAN ENTERPRISE INSTITUTE FOR PUBLIC POLICY

RESEARCH; AND WILLIAM R. DOUGAN, NATIONAL PRESIDENT, NATIONAL FEDERATION OF FEDERAL EMPLOYEES,

CHAIRMAN OF THE FEDERAL WORKERS ALLIANCE

STATEMENT OF ANDREW G. BIGGS

Mr. BIGGS. Thank you very much. Chairman Ross, Ranking

Member Lynch, and members of the committee, thank you for the

opportunity to discuss efforts to rightsize Federal employment

going into the future.

Academic economists agree that Federal employees receive higher salaries and benefits than private workers with similar education and skills. Much less is known, however, regarding the appropriate number of Federal employees. Is the Federal work force

larger than necessary to provide the services Americans require?

There are no definitive answers, but several points may be helpful

in considering these issues.

First, how does today’s Federal civilian work force compare to

that of the past? In 1969, there were 67 Americans for each Federal employee, while in 2009 there were 111 Americans per Federal

worker. However, this does not necessarily imply that today’s Federal work force is too small. If the productivity of the Federal work

force followed that of the economy as a whole, each Federal employee today would be capable of serving around 135 Americans,

just as each private sector employee today provides more goods and

services than he did in 1969.

Moreover, there is a large shadow work force of Federal contractors who are not included in work force statistics. Indeed, there are

few good estimates of the total number of Federal contractors, nor

is it easy to say whether overall they offer better or worse value

to the taxpayer than career civil service employees. However, the

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rise of the contracting work force does imply that the total number

of Federal employees may be significantly higher than official statistics indicate.

Second, how do Federal staffing levels compare to those in the

private sector? The answer is that we simply do not know, principally because Federal activities often do not have clear private

sector analogs. At the State and local level, such comparisons are

easier to make. We know, for instance, that private schools often

have less administrative overhead than public schools, allowing

them to focus more resources on teachers in the classroom. If overstaffing is most likely to occur in places where it is most difficult

to detect, then it could occur at the Federal level. We cannot know

for certain without further analysis.

Third, we can compare the United States to other countries, although because countries differ in how they delegate responsibilities along levels of government, only measures of the total public

sector work force are truly meaningful.

Compared to other OECD countries, the U.S. Federal, State and

local work force is slightly above the median. However, most OECD

countries spend more than the United States, making raw comparisons potentially misleading. Compared to governments that spend

around the same as the U.S. Government, which is around 36 percent of gross domestic product, the United States does have an unusually large public sector work force. Of the seven OECD countries of similar economic size to the United States, public employment averaged 11 percent of the total work force versus 14 percent

in the United States.

Policymakers hoping to reduce the size of the Federal work force

have focused on attrition, which seems a fair and less disruptive

way to reduce the labor force if desired. Ordinary Federal turnover

is very low compared to the private sector. However, the Federal

work force is around 5 years older than the private sector average

and is generally eligible to retire at younger ages. Thus, there is

the potential to reduce the size of the Federal work force without

firings and layoffs through the gradual process of retirement.

When we think of rightsizing the Federal work force, we need a

clearer idea of what the right size will be. A 10-percent reduction

in the Federal work force, as recommended by the President’s Fiscal Commission, is not a hard number. The appropriate number

could be higher or lower. On the other hand, given the State of the

Federal budget, there is also the danger of studying the issue to

death without doing anything to address it.

Gradually reducing the size of the Federal work force while commissioning further analysis of the best size of total Federal employment and the best allocation of employees between agencies has

the potential to shift staffing levels in the right direction without

the danger of dramatically overshooting in the short term. Along

the way, policymakers should monitor the effects of work force reductions on the productivity of the Federal Government.

I am confident that we can do more with less, but lawmakers

should work together to find ways in which to do so.

Thank you very much.

[The prepared statement of Mr. Biggs follows:]

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Mr. ROSS. Thank you, Mr. Biggs.

Mr. Dougan, you are recognized for 5 minutes for an opening.

STATEMENT OF WILLIAM R. DOUGAN

Mr. DOUGAN. Thank you, Chairman Ross and Ranking Member

Lynch, for inviting me to testify today. I am here on behalf of the

National Federation of Federal Employees and the 110,000 Federal

workers we represent, as well as nine member unions of the Federal Worker Alliance on which I serve as chairman.

If I can leave you with only one message today, let it be this: You

do not measure the size of government by the number of Federal

workers; you measure the size of government in dollars and cents.

This hearing is called ‘‘Rightsizing the Federal Workforce.’’ Implicit in the hearing’s title is the insinuation that the Federal work

force is too big. While it may seem logical that if you reduce the

Federal work force you have also reduced the size of the Federal

Government, I can assure you that arbitrary reductions in Federal

agency staff do not truly reduce the size of government at all. Reducing an agency’s work force without a corresponding reduction in

the agency’s mandate actually tends to increase the size of government because arbitrary staffing limitations tend to cost Federal

agencies more than they save.

How is that possible? Federal work force reductions without corresponding decreases in the work expected of agencies force agencies to rely on contractor employees to meet their work force needs.

However, relying on contractors in this way generally costs taxpayers more than simply maintaining and properly staffing an inhouse agency work force.

Contracting, though useful and economical in many cases, has

some characteristics that make it expensive for agencies. Contracting out requires the government to conduct contractor oversight, which adds costs if done properly, but is sure to be expensive

if not done properly. Private firms have to pay executive salaries,

which make private firms more expensive than in-house staff. On

top of that, contractors have to make a profit. All these factors

make it difficult to deliver contractor services at the same value to

the American taxpayers that the civilian Federal work force can.

This is particularly true for work that is has not already been

contracted out. The contractor work force is currently about five

times the size of the civilian Federal work force. What is left in

government is here for a reason. That is precisely why during the

Bush administration’s competitive sourcing initiative, in-house Federal workers won the vast majority of public-private competitions,

100 percent of them in some agencies.

In the end, there are generally no savings derived from arbitrary

staff reductions. Rather, a cost shift moves resources away from

the Federal work force to contractors. This is a pointless exercise

that reduces government efficiency, hurts the services that Federal

agencies provide, and sticks taxpayers with a bigger bill. Of course,

a bigger bill for taxpayers means bigger government, regardless of

the impact on the size of the Federal work force.

As I said before, you do not measure the size of government by

the number of Federal employees. You measure the size of government in dollars and cents. This is precisely why we are opposed to

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proposals that take a non-strategic, broad-brushed approach to cutting Federal jobs.

Here are just a few we have seen recently. The Federal Workforce Reduction Act, H.R. 657, aims to reduce the size of the Federal work force by allowing Federal agencies to hire just one employee for every two that leave the Federal service. The Federal

Hiring Freeze Act, H.R. 1779, would abruptly freeze practically all

hiring in Federal agencies with very few exceptions. The BowlesSimpson proposal included a provision to arbitrarily reduce the

Federal work force by 200,000 FTEs by 2020 through allowing

agencies to hire two new employees for every three that leave Federal service. Finally, the U.S. House of Representatives passed

their fiscal year 2012 budget resolution which called for an attrition policy in the Federal Government that permits Federal agencies to hire only one new employee for every three workers who

leave Federal service.

We strongly oppose all of these proposals to arbitrarily and nonstrategically reduce the Federal work force while showing little regard for the impact it will have on the services that the American

people will lose as a result or the net budget impact when all costs

are considered. However well-intentioned these proposals may be,

they do not save taxpayers money and therefore they do not shrink

the size of government.

That is not to say that we are opposed to all Federal Government

downsizing. The realities of our Federal budget situation are such

that downsizing in some Federal agencies is appropriate. We understand that. However, if Congress is serious about truly reducing

the size of government, then lawmakers are going to have to make

the tough choices about which programs to reshape, scale back or

discontinue altogether.

A non-strategic, broad-brushed approach to cost cutting that simply mandates significant personnel reductions in Federal agencies

will fail to achieve savings and will cause wastefulness and disarray in numerous agencies throughout the government. Again,

you do not measure the size of government by the number of Federal employees; you measure the size of government in dollars and

cents.

I appreciate the subcommittee’s decision to hold a hearing on this

matter, and I thank the subcommittee for the opportunity to provide testimony.

[The prepared statement of Mr. Dougan follows:]

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Mr. ROSS. Thank you, Mr. Dougan. I will now recognize myself

for 5 minutes for questions.

The National Commission on Fiscal Responsibility’s report states

‘‘Although the Nation’s economy continues to struggle, there is no

recession in Washington.’’

Mr. Biggs, would you agree with that?

Mr. BIGGS. Sure. The Federal Government has grown during a

time of recession, and there is some understandable reasons for

that. Federal outlays on things like unemployment benefits are

countercyclical, and there has also been an increase in employment

due to the Census. At the same time, though, it is difficult on taxpayers and a burden on the economy if the Federal Government is

growing in size and the Federal work force is growing in size at a

time when the rest of the economy is least able to support that. So

the burden is difficult for the private economy when that economy

is in recession and they have to support a larger government.

Mr. ROSS. Mr. Dougan, would you agree?

Mr. DOUGAN. If you could restate it?

Mr. ROSS. No problem. The National Commission on Fiscal Responsibility’s report states ‘‘Although the Nation’s economy continues to struggle, there is no recession in Washington.’’ Would you

agree with that statement?

Mr. DOUGAN. I am not an economist, but I can tell you for purposes of the Federal works force, about 85 percent of the Federal

work force lives and works outside of Washington, DC.

Mr. ROSS. Let me ask you this: The quit rate for Federal employees is about 1.57 percent, meaning that about 11⁄2 percent of all

Federal employees quit, which is by way of attrition. Would you not

agree then that attrition is a good start in terms of trying to reduce

the size of the Federal work force?

Mr. DOUGAN. I think if your goal is strictly to downsize the work

force, then certainly attrition is a good tool. But, again, if you are

downsizing the work force without looking at the work that is going

to be left or that you expect the remaining work force to do, I am

not sure that it makes sense to reduce a work force until we have

a discussion and an agreement on what the work is that is to be

done and let the work dictate the size of the work force that you

need to accomplish that.

Mr. ROSS. On that point, Mr. Biggs, Mr. Dougan stated in his

testimony, and I kind agree with this, that you don’t assess the

Federal work force by its numbers but rather by dollars and cents.

And in light of the fact that our national debt has reached $14.3

trillion, the fact that we have spent $400 billion last year in interest payments alone, we face difficult tradeoffs in trying to balance

our budget. Can, or let me ask you this, should the Federal Government do more with less?

Mr. BIGGS. Sure. I think the Federal Government has no choice

but to do more with less because we are facing an increasing burden in the future. And if you look at the Federal budget today, we

are borrowing something like 35 cents out of every dollar we spend.

So we have to fix that and deal with the challenges of entitlements

and other issues going forward. I think the size of the public sector

work force is something that needs to be addressed. It will not by

itself fix these problems. I think we all recognize that.

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Mr. ROSS. And reducing the size of the Federal work force

through attrition, would it disrupt critical functions of the government services?

Mr. BIGGS. Well, obviously that depends on what your view of

critical functions is. I remember that when the President took office, he said he was going to go through the Federal budget line

by line and eliminate wasteful or non-critical spending. Obviously

in their point of view there wasn’t very much there. My opinion

would differ on that.

I think we can maintain staffing and maintain effectiveness for

the programs and the agencies that people clearly see as the most

important. We have to make difficult decisions going forward about

certain activities. Are these things the Federal Government is no

longer going to do or no longer needs to do. Those are the tough

choices we face.

Mr. ROSS. Do you have any examples of the jobs that could be

better performed by the private sector at a cost savings to the taxpayers?

Mr. BIGGS. Well, I would think things like say computer service

support, things like that, activities where you have clear private

sector analogs to what the Federal Government does. I fully acknowledge that many Federal workers have a skill set which is

unique and which differs from what private sector workers do.

Those are hard to outsource. At the same time, though, the Federal

Government runs computer systems, it has upkeep and maintenance just as private sector plans do. And I strongly suspect from

my work on Federal pay issues that the Federal employees in

many of those areas may be overpaid relative to what private sector workers receive.

Mr. ROSS. Thank you.

Mr. Dougan, on April 8, 2011, you wrote a letter to the White

House asking them to hold firm against Federal pay cuts in fiscal

year 2011 budget negotiations. In the letter you stated, ‘‘Federal

workers are in fact severely underpaid.’’

Given the fact that as of December 2010 the average Federal compensation, according to OPM, including benefits, was $101,751,

is it still your contention that they are underpaid?

Mr. DOUGAN. Well, I think there obviously has been a lot of debate on this issue, both on Capitol Hill as well as in the media, and

I think the question begs or the answer begs what data sets you

are looking at. When you look at the Department of Labor’s Bureau

of Labor Statistics data, they show a pay gap of approximately 24

to 26 percent, I believe, with respect to the compensation for private sector workers versus the compensation that Federal workers

make in similar types of jobs. So, again, the data is going to lead

you to different conclusions depending on where you get your data.

Mr. ROSS. Thank you. I see my time has expired.

I now recognize the ranking member of the subcommittee, the

gentleman from Massachusetts, Mr. Lynch, for 5 minutes.

Mr. LYNCH. Thank you, Mr. Chairman. Just following up on that

note on the cost of Federal employees, I looked at those numbers

and what they have done is they have basically double counted. If

you look at the cost figure, $101,000, that is the pay. That is also

unemployment. You can’t get your pay and unemployment at the

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same time. It is hospitalization benefit. You can’t get your pay and

unemployment and hospitalization benefit at the same time. And

a death benefit. And you can’t get your pay and your health benefits and unemployment and a death benefit, obviously, if you are

dead, at the same time. So they have multiplied the costs.

Now, the employee does not get those all at one time, but they

have lumped those together to reflect what the cost would be for

the Federal employee. I agree that is an expenditure for the Federal Government, each one of those, but that doesn’t go to overpayment of the Federal employee. They don’t get all that at once. They

cannot. It is physically impossible.

I do want to ask you, Mr. Dougan, the President—well, we have

a couple of bills up here before us today that are the focus of this

hearing. Mrs. Lummis’ bill I think is the more aggressive one, and

it purports to save $13 billion over 5 years.

The President’s proposal, now that focuses just on, ‘‘Federal employees,’’ the people that you represent. The President’s proposal

looks at the other 80 percent of the work force, the contractor work

force, and it proposes cutting contractors from the payroll, and that

is a savings of $40 billion per year; not $13 billion over 5 years,

but $40 billion per year. That is the President’s proposal by cutting

loose contractors.

Help me with this. If we are interested in saving money, and,

Mr. Biggs, I would open this up to you as well, wouldn’t that seem

to be the more impactful approach to take, given the fact that we

have 101⁄2 million Federal contractors and grantees and you have

only 21⁄2 million Federal employees.

Mr. BIGGS. What the Congressional Budget Office calls the fiscal

gap, which is the change we have to make between our revenues

and our outlays, is around 20 times higher than the $40 billion figure you cite. We would have to make up around $800 billion.

Mr. LYNCH. How much multiples is it of the $13 billion?

Mr. BIGGS. I am bad at math.

Mr. LYNCH. It is a lot more.

Mr. BIGGS. But the point is if you pose this as an either/or, my

point is it has to be both and then a lot more. Put those two together, multiply by 10 or so, and you are still not there. The point

is we have to look at both of these.

I would not be opposed at all to looking at contractors. I think

not enough is known about how the contract work force functions,

whether we are getting good value for our money. My point is the

fiscal gap we face is huge. So if we think we can look at one group

of employees or another group of employees, we are just kind of

kidding ourselves.

Mr. LYNCH. I think you raise a great point about the little we

know about value on the contractor side. I remember one of our

earlier hearings when I was new to this committee asking the Defense Department audit agency how many auditors we had in Iraq.

We were spending $10 billion a month. And they said actually zero.

And I said, give me that again? They said, well, we don’t actually

have auditors in Iraq. We have them in Virginia and we are auditing Iraq from Virginia. That is what led to my repeated travels to

Iraq. So it is very difficult to do the oversight of these contractors

and we are not really set up to do that.

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Mr. Dougan, any comments on that?

Mr. DOUGAN. Yes. I mean, I think both the contracting work

force and the Federal work force need to be on the table with respect to looking for places to save money. There is no question

about that.

But the biggest concern with that is if all we are interested in

doing is saving money and we are not looking at the consequences

of slashing budgets or doing away with a certain percentage of the

work force and not accounting for the work that is not going to be

done or the reduced delivery of services to the taxpayers, I mean,

that doesn’t ever seem to be a part of any discussion when we talk

about, you know, either cutting the salaries or freezing wages or,

you know, rightsizing or downsizing the work force through attrition or whatever other means.

There is no accountability for what is the impact to the services,

what is it that we are not going to do or we are going to do less

of, and nobody seems willing to make decisions on that. That is the

concern that I have.

Mr. LYNCH. Thank you.

Mr. Chairman, if I could, our friends, the National Treasury Employees Union and the National Active and Retired Federal Employees Association have submitted comments in opposition to reducing the size of the Federal work force in a haphazard fashion,

and I would like those reports, those comments to be entered into

the record, if you would.

Mr. ROSS. Without objection, they are entered.

[The information referred to follows:]

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Mr. LYNCH. Thank you.

Mr. ROSS. I now recognize the distinguished gentleman from Virginia, Mr. Connolly, for 5 minutes.

Mr. CONNOLLY. Thank you, Mr. Chairman, and thank you for

having this hearing.

I would note that I represent the third largest number of Federal

employees in the United States. I also probably represent the largest number of Federal contractors in the United States, and I think

they are both doing a wonderful job. But I also believe, as does

Chairman Issa, based on his statement today, that this ought not

to be a matter of theology.

The idea that somehow platonically there is some ideal size for

Federal employees, the number of Federal employees and/or the

number of Federal contractors, gets us into the realm of theology

rather than analysis, and I think Congress needs to insist on rigorous analysis, not arbitrary goal setting that has no basis in any

kind of analysis that tells us what our needs are or what value we

get for our dollars.

If I understood the testimony of our colleague, Mrs. Lummis, she

would exempt civilian employees from her attrition plan in DOD,

Veterans Administration, and DHS. If that is a correct understanding, that exempts 66 percent of the entire civilian work force,

meaning that the attrition she talks about to achieve the goals she

wishes falls disproportionately on those remaining civilian agencies, many of which, by the way, operate in her home State of Wyoming. And I would—I thought, Mr. Dougan, you made a very telling point. The title of this hearing, a very biased title, is

Rightsizing the Federal Workforce, as if there apparently is some

right size all of us subscribe to. I would like to know what that is.

Mr. Biggs, do you have some idea about what the right size the

Federal Government ought to be in the 21st century?

Mr. BIGGS. Well, the technically economist answer would be you

hire Federal employees until the gain produced by the additional

Federal employee equals the cost of the Federal employee. The

marginal benefit equals the marginal cost. And when we think

about the productivity effects of downsizing the Federal Government, we think if we lose that employee, are we losing services to

the public sector for the cost of that employee.

Mr. CONNOLLY. Fair enough. But would you not agree, though,

frankly in the public sector—in the private sector, we have to do

some differentiation. For example, how you measure productivity of

border security guards is different than how you measure the productivity of some lab scientist in FDA trying to protect public safety. There is health, foodborne illnesses and pharmaceuticals.

Mr. BIGGS. You are exactly right. It is far, far easier to measure

productivity and output in the private sector because you have dollars and cents attached. If somebody is not willing to pay for a good

and service, you say it is not worth what is being charged. I think

that is one reason, though, why we want to have more activities

conducted in the private sector where you do have a much more

rigorous cost-benefit analysis.

Mr. CONNOLLY. So you would actually like to increase

outsourcing with Federal contractors?

Mr. BIGGS. In theory, yes.

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Mr. CONNOLLY. You don’t think we have done enough of it in the

last 10 years?

Mr. BIGGS. The raw numbers are troubling. If outsourcing is

done in essence to cover up Federal hiring, you don’t want to admit

you are hiring Federal employees and you say, well, let’s just do

contracting instead, that is a wrong thing. But if you say that a

contractor provides better value for money on a year-to-year basis,

but also provides, which I think is extremely valuable, the ability

to recast the Federal work force according to changing needs, then

it may make sense. A contractor can be let go and you can hire new

contractors in different areas. We want fewer people in Iraq and

more people working in health care, we can’t do that with the current Federal——

Mr. CONNOLLY. Well, what percentage of the current work force

is eligible for retirement in the near future?

Mr. BIGGS. I think over the next 10 years or so a majority—I believe the number is around 60 percent.

Mr. CONNOLLY. Do you think it is reasonable to say that if 60

percent of the entire Federal work force is eligible for retirement—

of course, this Congress seems to be doing everything in its power

to want to incentivize and accelerate retirements where possible—

and we are going to have attrition at the rate of two to one, do you

think the Federal work force can actually do its job, especially

when we are exempting 66 percent of it. With that kind of attrition

rate, given the pending retirements we are looking at?

Mr. BIGGS. I don’t believe the proposals are to replace all retiring

people forever at a one-to-two or one-to-three ratio. I believe the

proposals are to do it until you reach some level, say 10 percent,

below the current work force.

Mr. CONNOLLY. Would it surprise you to learn that one of the

major employers in Congresswoman Lummis’ home State, Wyoming, is the Federal Government?

Mr. BIGGS. Not at all.

Mr. CONNOLLY. And would it surprise you to know in fact it is

the dominant employer in many small rural places because of the

Forest Service putting out fires, attending to the protection of federally protected land?

Mr. BIGGS. That wouldn’t surprise me at. In many ways, particularly out West, the Federal Government is a larger presence in

many ways than it is on the East Coast.

Mr. CONNOLLY. Thank you. I see my time is up, Mr. Chairman.

Mr. ROSS. Thank you, Mr. Connolly. I now recognize the distinguished gentleman from Illinois, Mr. Davis, for 5 minutes.

Mr. DAVIS. Thank you very much, Mr. Chairman. I thank the

witnesses for coming. I admit that I must be put in the column of

those who are trying to figure out what is right. I am trying to be

as rational as I can.

I remember my mother used to tell us that right is right if nobody is right, and wrong is wrong if everybody is wrong. And so

trying to figure out what would be the right size of government it

seems to me begs the question, because the first question that has

to be answered is what do you view as the role and function of government? What is the purpose? What is the mission? What are you

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trying to accomplish? And I guess if we can answer those questions, then it gets easier to decide what the right size would be.

It seems to me that the purpose of living, quite frankly, is to try

and improve the quality of life and to make living more qualitative

than what it is. And it has always been my opinion that if we are

not doing that, then we are just kind of taking up space and perpetuating a world that we accept.

But let me ask you, Mr. Biggs. You state in your testimony that

the U.S. public sector work force is around the middle of the pack—

and I am quoting—when compared to other developed countries,

that 14.1 percent of total employment. In making these comparisons you include State and local governments. Of course, we here

in Congress cannot control what goes on in State and local government size. Many other comparisons, when you talk about other

countries, are not necessarily including State and local government, though if one was to exclude State and local governments

and make it a straight comparison with other developed countries,

where would we then rank?

Mr. BIGGS. The figures I cited were total government. And the

reason I cited those figures, one, is that is the only data available.

But second, the United States is different from other countries—

and all countries differ in the activities and responsibilities they allocate to the central government versus state versus local governments. So because of those difference in how we allocate different

activities, looking at one sector of government between countries

could give you a very, very misleading point of view. We could look

very big, we could look very large. It doesn’t stand up analytically.

So the point I made is a limited point where I can look only at

combined State, Federal, and local work forces relative to other

countries. And compared to countries that spend around the same

share of their economies as us, our total public sector work force

is somewhere around 30 percent larger. Some of that is accounted

for by the military, but I don’t believe very much of it.

Mr. DAVIS. Mr. Dougan, let me ask you. If in fact our work force

is larger than other countries’ public work forces, what difference

do you see that making in terms of the economy of the countries?

Mr. DOUGAN. Well, again, I think the focus needs to be on coming up with an answer to the question that you posed at the beginning of your statement, what is the work that we are about? And

I don’t believe that we have a definite answer to that. I think we

have some notion of what all of the Federal agencies currently do

in terms of the work that they provide and the goods and services

that they provide to taxpayers. But the question on the table is, do

we want and expect all of those agencies to continue to provide

those goods and services? Or is there some different mix of goods

and services that we are looking for? Until you answer that question, I don’t see any utility in talking about the numbers of Federal

employees, because we have to decide what work it is that they are

going to do and what the cost of that work is, and then ask ourselves can we afford that? And if we can’t, then we are going to

have to decide what work it is we are not doing. And that is the

conversation that hasn’t been taking place in this country. And

from my perspective, if we are going to get serious about reforming

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our financial house, that is the first piece of business that needs

to be done.

Mr. DAVIS. I see my time is up. Thank you very much, Mr.

Chairman.

Mr. ROSS. Thank you. I wish to thank the witnesses for testifying

today and taking time from your busy schedules to do so.

That being all, this committee stands adjourned. Thank you.

[Whereupon, at 10:50 a.m., the subcommittee was adjourned.]

[The prepared statement of Hon. Gerald E. Connolly follows:]

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