By Deborah D. Thornton
“You may fool all of the people some of the time, you can even fool some of the people all of the time, but you cannot fool all of the people all the time.” ~ Abraham Lincoln, 16th U.S. President (1809-1865)
“You can fool some of the people all the time, and those are the ones you want to concentrate on.” ~ George W. Bush, 43rd U.S. President (1946 - )
These quotes are both from U.S. Presidents, and although the current popular view of President Bush is very unfavorable and that of Lincoln iconic, each quote is applicable to the current economic and government situation. Our current President, though a Democrat, has claimed Republican Lincoln as his role model. In this year of the 200th Anniversary of Lincoln’s birth, this is understandable. However, both Barack Obama and Iowa Governor Chet Culver would do well to really read and learn the message of Lincoln, as they clearly understand the message of Bush.
The $1 trillion Federal government bailout has passed and been signed into law. The Iowa budget is still under discussion, but will eventually be passed. Obama and Culver are presiding over the biggest government expansion in American history, funded on loans and borrowing. These spending “stimulus” packages will most likely be followed by the largest tax increases in American history, because the loans must be paid off at some point. As a result the majority of Legislators in both Washington and Des Moines have placed themselves in the role of fools to both Obama and Culver.
And the economy is still not “recovering.”
According to Alan Reynolds, economist and Senior Fellow at the Cato Institute in Washington, D.C., the business and economy of the United States is being held back by not only the current tax burden, but the fear of the “expected tax burden” to pay for these stimulus packages.1 He has written extensively in opposition to the stimulus, documenting that most of the money will not go to create private sector jobs, but will instead be used to fund increased numbers of government employees. According to his analysis, each of the 300,000 or more government jobs created – while well paying – will cost over $646,000 to create.2 At a generous average of $50,000 per job in the private sector, that amount would create about 13 jobs, not one. Who’s being fooled here?
Approximately 39 percent of the money in the stimulus will go to state and local governments, something Governor Culver greatly appreciates as he deals with the Iowa budget and disaster recovery situation. It will help him keep workers on the government payroll. However, unemployment for government workers is only 2.3 percent, and for health care workers is only 3.8 percent, compared to over 15 percent in the construction industry.3 If the stimulus is supposed to create jobs, more jobs are needed in the construction industry, not government.
According to Iowa Workforce Development reports, federal, state, and local government workers in the first quarter of 2008 made up almost 250,000, or 18 percent, of the total 1.4 million workers in the state.4 This is almost 1 of every 5 employees. The Federal government workers are paid an average of $1,025 per week. State workers are paid even more, at $1,051 per week. In contrast, the 1.2 million private sector employees only receive an average of $702 per week. However, the “Local” government workers don’t fare as well, receiving only $634 per week.5
As we move closer to socialism, it becomes clear that the workers are being paid more than the owners. That is, government workers are being paid more than the taxpayers; who play the role of the owners. If the taxpayers do not make money, then the government cannot tax the money and pay the government workers, hence we are the “owners.” Though the owners take the risks, in this situation we are not receiving the rewards. As of 2003, it took 100 Iowans working in the private sector generating income, to pay for 6 state government workers.6 When you divide it further, each private sector person is paying for 6 days of each one hundred days a state employee works. Who is playing the fool here?
The most current U.S. Census data, for March 2007, revised as of November 2008, shows that the majority of full-time government workers in Iowa were in hospitals (6,000), K-12 education (17,000), and higher education (16,000). Another 41,900 people were employed part-time in these areas.8 According to Mr. Reynolds, 17 percent of the federal stimulus money will be going to health and education jobs, ensuring workers in these fields will not have to worry about layoffs for some time.9 University of Iowa doctors, nurses, and professors are certainly not playing the fool.
In addition to the actual paychecks received by government workers, we, the taxpayers, are also responsible for their retirement. According to the Census Bureau, the national public retirement benefit payments reached $168 billion in Fiscal Year 2007, an increase of $12 billion from FY 2006.10 As baby-boomers continue to age and retire, this number will go up, not down. The investment holdings supporting these retirement plans were 35 percent in corporate stocks, with 15 percent in international stocks, and 13 percent in corporate bonds.11 The effect of the stock market meltdown on these pension plans following the Federal stimulus passage has yet to be determined.
Fortunately, according to the Iowa State Department of Administrative Services, the state is curtailing the use of bonuses for state employees. Governor Culver suspended the “exceptional” job performance and “recruitment” bonuses last year. As recently as FY 2004, over $1.1 million in bonuses was paid to 357 State government employees, or over $3,000 each.12 In response, State Representative Clel Baudler, (R-Greenfield) recently submitted House File 27, which proposes a ban on incentive pay for state workers. Representative Baudler might also consider submitting legislation addressing the government’s efforts to fool all of the taxpayers all of the time. Hopefully, even without it we will eventually recognize that the fools they are concentrating on are not our neighbor, but us.
1 “$646,214 Per Government Job,” Alan Reynolds, The Wall Street Journal, Opinion section, January 28, 2009 and Cato Institute, podcast, Alan Reynolds, February 6, 2009.
4 Quarterly Census of Employment and Wages (QCEW) Summary Report: Iowa Statewide, Preliminary Data for 1st. Quarter 2008, January 2, 2009.
6 U.S. Department of Commerce, Bureau of the Census, “2003 Public Employment Data, State and Local Governments,” February 2, 2005.
8 2007 Census of Government Employment, State Government Employment Data: March 2007, Iowa State Government.
10 “Public retirement Benefit Payments Reach Record $168 Billion,” U.S. Census Bureau, December 29, 2008.
12 “Few state employees qualify for extra pay,” The Globe Gazette, February 4, 2009, p. A5.
Deborah D. Thornton is a Research Analyst with Public Interest Institute, Mt. Pleasant, Iowa.
Reprinted by permission from INSTITUTE BRIEF, a publication of Public Interest Institute.