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Shrinking the “Bloated” Federal Bureaucracy: A Bad Solution to a Non-Problem

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During his campaign, Donald Trump promised “a hiring freeze on all federal employees to reduce the federal workforce through attrition (exempting military, public safety, and public health).” Recently, the Washington Post reported that Trump and Republican legislators are drawing up plans for “eroding job protections and grinding down benefits that federal workers have received for a generation.” The bloated federal bureaucracy has long been a favored target of Republicans aiming to solve the problem of big government.

But the Trump plan solves a non-existent problem: It turns out that the huge federal bureaucracy is not that huge. The civilian federal workforce is smaller than it’s been in 50 years, when the U.S. population was only 62 percent what it is today. If anything, it’s too small, not too large.

The table here, from the Office of Personnel Management, is a compilation of the number of federal employees (both civilian and military) from 1962 to 2014, and it is surprising. More or less steadily, the federal workforce has shrunk over the years – not just relative to the population, but in absolute numbers.  

Let me repeat: The population keeps going up, while the federal civilian workforce keeps shrinking. It peaked in 1969. Today’s federal workforce has 377,000 fewer employees than in 1969, while today’s population is 58 percent larger. And today’s economy is 348 percent bigger (as measured by GDP in constant dollars; see here ). Where many Americans perceive a large and inefficient bureaucracy, what they are actually watching is an ever-shrinking bureaucracy trying to do a larger job.

If you factor in the uniformed military, the shrinkage becomes even more dramatic. Today’s military is about half the size it was in 1962 and 40 percent the size it was in 1969, at the height of the Vietnam War when 543,000 U.S. military personnel were deployed to Vietnam. In 1968, the total federal workforce (civilian plus military) was more than 6.6 million men and women; in 2014, it was less than 4.2 million.

Obviously the federal budget is vastly bigger now than in 1969 – more than three times as large, in constant dollars. Broken down, though, it scarcely confirms the Myth of Big Government. About a third goes to entitlements; and close to two-thirds of government spending is mandatory. Defense accounts for 54 percent of discretionary spending, but it still amounts to only 4.5 percent of GDP (in 1969, it was about 2 percent of GDP). How about the cost of the government itself? It amounts to $72.9 billion – about six percent of discretionary spending, or less than two percent of the total federal budget.

Last but not least: a lot of government spending goes to private contractors, especially private military contractors. Although there is no comprehensive database, the Congressional Budget Office estimates that in 2012, federal agencies spent half a trillion dollars on contracted goods and services. According to CBO:

Spending on federal contracts grew from 11 percent of federal spending in 2000 to 15 percent in 2012 …. DoD accounted for about 62 percent of the spending on contracts in 2000 and 70 percent in 2012, partly because of the rise of spending for the two wars fought during that period. The share of DoD’s own spending that was allocated to contracts also rose during that period—from 47 percent to 56 percent.

The largest part of DoD private-contracting growth was in medical services and fuel – unsurprisingly, given the wars in Iraq and Afghanistan.

Suppose that Donald Trump keeps his promise of shrinking the federal workforce. It obviously doesn’t follow that that will shrink the federal workload or the federal budget. Too much of the budget is mandatory or defense-related, and Trump has called for more defense spending, not less. If the workload stays the same, it does follow that a larger piece of governance will go to private contractors.

The net result: first, by eroding civil service protections, Trump would undermine the apolitical part of government, that is, the part that may keep the executive under control and ensure it plays by the rules.

Second, private contractors are more difficult to bring under public control. And they have incentives of their own that don’t necessarily align with those of the American people or our national security. Trump hopes to control defense costs by reducing fraud and waste – but privatization makes fraud and waste more likely, not less likely, by making oversight more distant. In some cases, government contractors are immunized against tort liability – so-called Boyle immunity.

Third, the change will do nothing to benefit the working-class voters in Trump’s core constituency. Federal employees do have higher pay-plus-compensation than their private sector counterparts. The federal pay is somewhat better for employees with a bachelor’s degree or less, and slightly worse for those with advanced degrees; but federal benefits are superior to private-sector benefits at all educational levels. This is no surprise. Private contractors, unlike the public sector, need to make a profit, and the way they compete against the not-for-profit public sector is by squeezing labor costs.

If Trump’s intention is to “equalize down” – by squeezing federal compensation packages to private-sector levels – it is hard to see what benefits that will confer on the working class, unless gratifying resentment counts as a benefit. If the idea is to transfer federal work to private contractors, some additional private sector jobs would be created (but, obviously, federal jobs would be lost). These are not the high-paying industrial jobs that Trump constituents want; they aren’t industrial jobs at all, because the government doesn’t manufacture goods.  

And the effect on national security: a boon to private military contractors, while a bane to their oversight.

Image: C-Span

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About the Author

University Professor in Law and Philosophy at Georgetown