Politics & Policy

Unjust Enrichment

The whole idea of public service involves doing good works for one's countrymen, not lining one's pockets at taxpayer expense.

The House is considering language that would shift money from the pockets of taxpayers into the paychecks of federal bureaucrats while potentially filling the AFL-CIO’s coffers with fresh union dues. It deserves the House’s immediate defeat.

The Federal Bureaucrat Pay Hike and Union Enrichment Act of 2001, as I would dub it, is actually a small part of H.R. 1088, the Investor and Capital Markets Fee Relief Act. The broader legislation is a worthy effort to reduce the fees that the Securities and Exchange Commission charge to handle corporate buyouts and other high-level deals. Regulatory relief is a beautiful thing.

Section 8 of this bill, however, is a giant legislative boil. It would exempt the entire SEC’s staff from Title 5 of the Civil Service Code and allow them to achieve “pay parity” with employees at other federal financial oversight agencies such as the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS), and the National Credit Union Administration (NCUA). Those organizations have been allowed to offer more attractive salaries for certain positions to lure attorneys, accountants, and other experts to oversee major mergers and acquisitions. This sort of talent doesn’t come cheaply, especially when the private sector offers compensation so much more generous than does Uncle Sam.

However, rather than allow the SEC to boost pay for selected staffers on specific projects, this legislation would allow everyone at the SEC, including receptionists, cafeteria chefs, and janitors, to demand higher wages. How much higher?

“Top pay for employees at the FDIC and OTS is equivalent to the pay of the Vice President of the United States and the Speaker of the House of Representatives,” House Government Reform Committee chairman Dan Burton (R., Ind.) wrote speaker Dennis Hastert on May 24. Compare that sum of $186,000 to the $218,000 base pay for senior professionals at the OTS and NCUA.

The entire SEC soon could be clamoring for pay hikes in line with wages at these other agencies. Worse yet, the Commodity Futures Trading Commission (pop. 564) and the Patent and Trademark Office (6,401) already have expressed their wishes to exit Title 5 and scream for fatter paychecks. Ditto the Department of Veterans Affairs with its 220,993 employees.

As Rep. Burton puts it: “opening the floodgates and allowing a multitude of agencies to pay their employees unlimited salaries will bust the budget wide open.” He further warns that this provision also “means permitting collective bargaining over pay rates for this very narrow, specific group of federal employees without any pay cap whatsoever.”

The National Treasury Employees Union represents SEC workers. This bill would allow it to bargain collectively over wages. Experience shows that this could be a costly development. Pay for air-traffic controllers, for example, has risen 30 percent since the Federal Aviation Administration left Title 5 in 1996 and commenced collective bargaining. This sort of labor situation already afflicts America’s government schools where teachers are rewarded for seniority rather than merit.

Dues collected from better-paid, unionized federal workers could wind up in the hands of John Sweeney and the AFL-CIO, one of the American Left’s most stalwart organizations. While Treasury employees may join the non-AFL-CIO-affiliated NTEU, the American Federation of Government Employees covers civilians across the rest of Uncle Sam’s empire. The AFGE is a part of Team Sweeney. What an ironic gift this would be from the Republican House and the GOP Senate. (This language slipped past the ever-vigilant Trent Lott when the then-Republican Senate approved its version of the SEC fees measure.)

If the SEC has trouble attracting the professionals it needs, it should appeal to their patriotism. The whole idea of public service involves doing good works for one’s countrymen, not lining one’s pockets at taxpayer expense.

If that pitch fails, Congress might create a sort of private sector “guest worker” program in which the SEC and other agencies that need costly, highly specialized help could hire professionals from the private sector for two to three years. In exchange for their talents, their private employers could take tax credits equal to whatever pay those employees would receive, were they public officials.

The SEC, for instance, could get a hotshot accountant worth $250,000 annually while his employer would take a tax credit of, say, $100,000 that the accountant otherwise would make as a public employee.

This is a win-win situation. The SEC would get modern, private-sector minds to solve difficult problems while companies could reduce their taxes and expose their senior employees to government affairs. This would help businesses gain valuable experience in the way Washington works.

But unless this “pay parity” provision is struck from this bill, Americans will suffer a lose-lose proposition. Absurdly overpaid bureaucrats could join public-sector unions flush with fresh dues, and potentially strike against the citizenry. One word summarizes such a state of affairs: France.

Rep. Burton captured this matter’s importance in a hand-written note on his letter to Dennis Hastert. “P.S. Mr. Speaker — (Denny) — this is a real problem!!”

Deroy Murdock is a Manhattan-based Fox News contributor and a contributing editor of National Review Online, and a senior fellow with the London Center for Policy Research.


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