A Note On DC "Wealth"

Instapundit notes how the seat of government, not some private industry-based burb, is the fastest growing area of America in terms of income. As I now live in Fairfax, Virginia - from a few social function, I can point out at least part of the reason and people likely don't realize it goes on as much as it does. And believe me, it is a part of the jargon down here now it is so common.

Double dipping.

Many areas of government, not just Defense, rely on contractors. I'd wager it was even proposed as a way to save money at some point. But government also has a twenty and out ability. Engineers, scientists, even administrators can join the government out of college and retire after 20 years. They have also developed genuine expertise in their areas after so much time. So what do they do?

It is by no means unheard of for someone to retire on a Friday and begin work the next Monday at the very same desk they "cleaned out" on Friday. Actually, they don't even clean them out and their new hourly wage is often considerably more than they made as employees. They don't get benefits, you see.

But they don't need them. Everything is covered through their government retirement. I've been amazed at how many of these folks I have met down here. They get to work another 10 - 20 years in the very same career without ever missing a beat. And the combination of retirement pay and benefits with their new earnings puts them off the charts in terms of annual income for the average private sector employee, who will likely never see the type of retirement package they enjoy in the first place.

It irks the hell out of me as a fiscal conservative. But I'd start losing friends and friends of friends if I said anything about how it really makes me feel. Frankly, they think it's quite a hoot and it's considered a real fun point to chat about during informal social get togethers - the neighborhood type of thing, for example.

That and how many millions, if not billions, got wasted because of this or that new directive or policy always make for much laughter.

From the rehab or retirement of old ships, to the administration of any new "cost cutting" government plan or program, it's all but assumed it will cost several times the initial price tag and end up costing taxpayers as much - and often more - then the thing it was intended to replace. And whatever policy, plan or item it was meant to replace usually doesn't go anywhere, either. Someone always comes up with "another" use for it in process of doing away with it.

They just expand the budget and justify it more often than not - sometimes as even more "new" cost cutting.

The operation down here would go out of business within a year or two if it even tried to adhere to anything like what are the "bottom line" requirements the private sector must.

Comments

[Peg C.]

I'm in IT and this is rampant (employees retiring and becoming contractors and earning more), but it's not the double-dipping obscenity that it is in government, because gov. workers do not generate wealth, they are parasites that consume it. This rampant urge to gorge at the government trough is out of control and why I believe (after I'm gone) there will be a true revolution. Yes, with violence and everything. I don't yet see Americans as good, socialist sheep. There is fury and outrage out here. Something will bring it to fruition.

Good post.

[WAHOO WILLIE]

Wow, it's almost as if I never discussed this issue here before. Thank-you Jimmy the C for cutting government costs by "contracting". And Thank-you Ronnie Raygun for taking away CSRS and replacing it w/ FERS so that govt retirement isn't near as lucrative as it once was. Under CSRS retirees could get up to 80%, under FERS 50% if he's lucky. Geeze, if John Q Public had any idea you'd all revolt. Thank goodness you're happy being told that your government is tightening the purse strings and believe in smoke and mirrors. Here's one y'all will love. There's no money to build a new 2.5 million dollar building but there is 5 million for renovations to what you have. Yup, just dont dig up the slab and viola, Taj Mahal and John Q is so happy that his tax dollars aren't being spent on new infrastructure..........

[torabora]

I've been railing against contractors, analysts, and insultants forever. Government workers do just fine at their jobs and should not be allowed to leverage a 20 year career into feeding at the same trough that provides them with a retirement. This is an incestuous symbiotic relationship where the government worker gets hooked up by private contractors for skills that the taxpayer has already paid for.If the newly retired people had to wait 5 years to work for a government contractor much of this would end.

[miltary retiree]

so you dislike government contractors. like to ask you ask a question of all of you here. let's say i am the hro for a government manufacturer and i need to hire someone for a weapons sytem. do i go down to the unemployment office and post the job their? who do you think is going to repond? what are his or her qualifications? better still, what are the qualifications that i require? am i going to hire somebody right off the street who has no idea what the job is about? i sure as heck am not, i am going to look for that former or retired service man or woman who has those qualifications. what if they took off the uniform on friday and came back to the same desk on monday. i need someone and i need him now, beats having to drop company dollars on a new trainee. obtw, the government contractor world is not a good as it looks, yes some of them get to "retire" again and collect some more dough. but considering that their is no guarantee of a job lasting forever for a contractor you could have a job today and it could be gone tomorrow. i saw it happen, i was a government contractor, that is why i walked away from that kind of job. "feeding at the trough" torabora you'd do it you could, could it be that you are jealous of government workers. sure some of them are lazy as all get out and they should not have a job. but considering I am now working in the "civilian" world I have to say i have run into some very worthless and incompetent civilians. some of them i swear would not know the south bound end of a mule if you put their face in it.

[Donald Wright]

You're blog is pretty dumb eh?

[Fred Beloit]

Mark Styne adds this concerning the misbehavior of the DC government in not properly preparing for the coronation of our first king, even though they had plenty of warning:

"Eventually, you reach a tipping point: At some point in the next four years, we will reach a situation where the majority of Americans pay no federal income tax but are able to vote themselves more goodies from those who do. The most basic of conservative principles is that if you reward bad behavior you get more of it. We now have a government offering trillion-dollar rewards for bad behavior to the financial system, to the housing market, to the auto unions and to individual voters. And the heirs to those Connecticut town meetings that Tocqueville regarded as the best form of government ever devised by man now underbudget their snow-removal costs, secure in the knowledge that the Feds will pick up the tab."

http://www.ocregister.com/articles/federal-emergency-fema-2283617-new-government

[Fred Beloit]

Steyn, that is.

[Dagpotter]

First, Federal civil servants under the current system retire at 55 and 30. Active military can retire after 20, although right now most officers are staying in past that not always by choice. Enlisted work on contracts and unless stop-lossed can get out when the contract ends. You need twenty years to get benefits. If they are under 55 and have over 30 they cannot retire. The retirement age is going up based on when they are hired, to 57 and so on. Since 1982 when the Federal retirement system was changed the cash benefits have got worse. Second, as to hiring contractors it is done because the Feds cannot hire anybody to do the work. It really took off in the Eighties and Nineties when tens of thousands of Federal workers were cut from the Defense Department and BRAC went into effect. There is nothing wrong with using contractors, and believe me, they are cheaper. Yes, many Feds retire and become contractors. That is because they have a lot of experience and expertise. On the financial side of government that I work we need the retired people as our computer systems haven't changed in forty years. The Feds also don't really like to train people on those systems. You would not believe how many archaic Unix database systems we use to move money around.

[Todd]

I think this blog entry speaks volumes on a major part of what is wrong with the US government and the way this country is run. I hope you stay on this subject like a laser, Dan. All this gaming of the system needs to be exposed to the light of day.

I am most interested to know what departments of government are the most outrageous culprits allowing contractors to feed at the trough of waste, at taxpayer expense. What do you wanna bet that military outsourcing amounts to quite a majority of it, and many of those contractors are based in the DC/Virginia area.

This article details how in 2007 there were 40,000 more military contractors employed in Iraq than US military troops - 200,000 contractors compared to 160,000 troops! Those contractors make multiple time the pay scale of a soldier, maybe what 5x more, often times doing much of the same functions as the soldiers? Congressional estimates run as high as 40% of Iraqi military expenditures are for private military contractors. And, there's been virtually no oversight. Back in the 1991 Gulf War, there were 60 American troops for each private contractor. http://www.alternet.org/waroniraq/59571/

The retirement terms for public servants are just ridiculous. How is it that people can get better pensions and retirement benefits at age 50 by working in the public sector than in the private sector?!?!?! And, why are pubic service pensions derived from defined benefits (government paid pensions) vs defined contribution (401k's)? Most people working in the private sector now have seen their 401k's drastically shrink, while public servants enjoy stable pensions and retirement benefits. It makes no sense that taxes can go up, and services decline but those pensions remain at the same levels. Shouldn't the pain be shared by those who work(ed) in the public sector, too?

The gaming of the system doesn't stop with the Federal Government, either. What about the case of police officers being allowed to work vast amount of overtime in their last year on the job to inflate their pension benefits to absurd proportion? How is it possible that a public servant's pension is based on the amount they made in their last year of work vs an average of their salary the last 10 years of service?

[Lala]

Just wait until Obama creates 600,000 government jobs - and they'll all be in a union

"Vallejo's plight stems from rising pay for police and firefighters under current labor contracts, including minimum staffing requirements, which have caused overtime compensation to increase. The problems were compounded by plunging home values, declining retail sales, and a slowdown in new housing development that cut $5 million from the city's revenue projections between June and February. The closure of the local Wal-Mart store also pinched the city's sales tax receipts.

Police and firefighting salaries, pension and overtime consume almost 80 percent of Vallejo's $89 million general fund budget. Cities in California on average spend about 60 percent of their budgets on firefighter and police salaries, according to the League of California Cities.

http://www.bloomberg.com/apps/news?pid=20601103&sid=atl3yFmV508A&refer=news

[Lala]

Here's the salaries in Vallejo, Calif.

"Its financial demise was brought about partly by the real estate crash, which decimated home prices in the area and put a major dent in the city's tax revenues. But the real nail in Vallejo's coffin was the city's labor costs.

Under the current labor agreement, the average police officer walking the beat in Vallejo will be paid $122,000 this year before overtime... An average sergeant will make $151,000; a captain, $231,000. The average firefighter, meanwhile, will bring in $130,000 before overtime.

http://forums.officer.com/showthread.php?p=1410641

That's just the salaries, though. The final budget-crusher was the city's pension plan. Thanks to retroactive benefit enhancements approved by the city council in 2000, police officers and firefighters can now retire at age 50 and receive an annual pension equal to 90% of their final pay (assuming 30 years on the job), an amount that gets increased every year to help keep pace with inflation. The old plan had given the workers a pension equal to 60% of their final pay at age 50.

"So a Vallejo police sergeant making $150,000 a year can now retire at age 50 and receive an annual pension of $135,000, increased each year for inflation. To put that amount in context, you would need to amass a retirement nest egg equal to about $3.5 million to produce a similar retirement income on your own.

It wasn't just police and firefighters who benefited from the city's largess. The annual pensions for rank-and-file city employees were jacked up from 60% of final pay at age 55 (after a 30-year career) to a whopping 80% of pay, increased each year for inflation.

Here's the scary part: What's going on in Vallejo isn't unique." Now, you might say, "Why did the city do this?" Well, to get reelected. The city council and all these people wanted to get reelected, so they promised all of the public employees, "Yeah, you can retire at 50 and get 90% of what you made for the reset of your life with inflation every year," and then all of a sudden the housing bubble, and the debt crisis and property taxes down, and they can't pay it. So they just said (blowing a raspberry) to the city employees, and filed bankruptcy.

[Todd]

"So a Vallejo police sergeant making $150,000 a year can now retire at age 50 and receive an annual pension of $135,000, increased each year for inflation. To put that amount in context, you would need to amass a retirement nest egg equal to about $3.5 million to produce a similar retirement income on your own.

It wasn't just police and firefighters who benefited from the city's largess. The annual pensions for rank-and-file city employees were jacked up from 60% of final pay at age 55 (after a 30-year career) to a whopping 80% of pay, increased each year for inflation.
-----------------------
Those are staggering numbers. Obviously, greed in this country is not confined to Wall Street. It's alive and thriving on Main Street, too.

Why isn't anyone talking about this????

[Lala]

Todd, Glenn Reynolds www.instapundit.com has had link after link on his site about public pension plans going bust. He's a good source for what people are talking about.

[WAHOO WILLIE]

"If they are under 55 and have over 30 they cannot retire. The retirement age is going up based on when they are hired, to 57 and so on."

Dogeater you might want check with OPM on that. GS employees can retire at any age with 30 years, you must have 20 to retire at age 50.....at least under FERS. I went into CS the year CSRS went away. BUt was in Jimmy C's military when we began "saving money" by contracting. Now in fairness there are areas where it at least makes things easier, but it is never cheaper sir. Unless of course, (lets use Walter Reed's recent problems as an example) you consider it money savings to do no real maintenance until roofs leak and rats take over. How about the money we saved paying contractoers to maintain the reserve cargo fleet......yeah, the one that had to be towed and repaired enroute to desert whatever. Eight soldiers in a radio repair shop who aren't allowed to do their jobs because 5 overpaid KBR employees have to have a job....... Sell it to these civilians dude, I've got some out of office experience.

[Lark]

I followed some of Glenn's links. There sure are a lot of gov't employees arguing that they are just barely keeping their heads above water, and making less than they could in the private sector.

Cato looked at the stats. Average federal compensation (i.e., wages plus benefits) has passed 200% of the average private compensation and state and local gov't is over 150%.
I don't believe this corrects for dissimilar jobs. OTOH, I don't think the Cato study mentions that A) gov't employees are less productive and B) much gov't work is useless or counterproductive.

It's depressing. The US could just grow its way out the current recession if left alone, but all these cronies and overpaid tax-eaters are coming out of the woodwork -- they think they are entitled to a bigger slice of pork than they're getting now.
--It's not corruption, it's just the way things are done in Mexico Norte.

[cubanbob]

This crap is never going to end until the taxpayers revolt. I don't mind them getting vested for full retirement after 30 years of service however they should only start getting their checks at the same age they would have for social security. To expect to get 30 years of retirement pay for for working 30 years is outrageous. Why should the taxpayer support this when they themselves will never be able to get this. The liability is unsustainable and sooner or later and if the economy stays like this for a few years it will be sooner than later, the haircut will come. The government cannot borrow enough to cover this never mind raise taxes high enough to do so. The truly wealthy who pay the largest chunk of income taxes will move their cash overseas to a safe haven and no amount of pressure from Washington will sway those governments when the tsunami of money flows out to never return. The wealthy are not going to bankrupt themselves for your benefit. And don't forget, a lot of the members of congress are among the wealthy. Taxes for thee but not for me is their motto. So civil servants enjoy while it lasts because when the binge ends, your retirement is going to be cut and more than you think it would be possible.

So the unions and government workers will have a binge for a few years, but the hangover and the drying out will be brutal. Obama will be the high water mark of liberalism, after him will come the counter revolution when the slashing of the welfare state will start in full swing.