Conservative Spending Hypocrisy: Frozen Pay For Federal Workers, Exorbitant Pay For Contractors

The upcoming presidential debate on foreign policy will undoubtedly feature warnings from Republican candidate Mitt Romney that defense spending cuts from the Obama administration will compromise the nation's ability to defend itself.

What you will not hear, at least from Romney, is any acknowledgement that billions of Defense Department dollars could be saved simply by paying defense contractors no more than what they would get if they were on the federal payroll.

That simple proposal is just one item in a long list of changes to our defense spending that could enable us to meet our defense needs while spending far less than we do today.

It is contained in a letter [1] sent to the leaders of the House and Senate armed services committees by several labor leaders and government watchdog groups. It's not common knowledge that a Defense Department contractor can be paid as much as $763,029, 90 percent more than the salary of the president of the United States and about four times the salary of a comparable government employee.

Sen.Joe Manchin, D-W.Va., has sponsored an amendment to the 2013 defense authorization bill that would cap the taxpayer-paid salaries of defense contractor workers at $230,700, in line with the cap on salaries of federal employees. The contractor could pay that employee a higher salary, but it couldn't do so out of federal funds.

As the letter points out, the compensation cap on government contracts has more than doubled since 1998, outpacing inflation by 53 percent. It has also outpaced the rate of federal employee salary growth by close to 50 percent.

In fact, defense contractors were authorized a 10 percent increase in allowable compensation even though soldiers were only allowed a 2 percent pay increase and the salaries of other federal employees have been under a two-year freeze that started October 2010.

Ross Eisenbrey at the Economic Policy Institute writes [2] that "capping allowable reimbursement of compensation at $200,000 per employee would result in savings of at least $5 billion a year, just in Department of the Army contracts, almost 10 percent of the entire $55 billion defense budget cut required in 2013 by the Budget Control Act."

After all, he adds, "the Secretary of Defense earns $200,000 to manage a military workforce of 1.4 million and a civilian workforce of 771,000 personnel. U.S. senators are paid $174,000 a year. An enlisted soldier’s starting pay is less than $20,000 a year. And the average salary of American workers is less than $43,000 a year. It is grossly unfair to expect working people to pay for the inflated salaries for defense contractor employees."

There is much more, of course, to be said about the insistence that the nation can't cut defense spending, even as Romney continues to propose an impossible mix of tax cuts and federal deficit reduction. As the Center for International Policy pointed out in July [3], "Nearly all of the purported ‘cuts’ to the Pentagon’s budget are actually reductions in the rate of growth, rather than true cuts in funding levels. In reality, even if sequestration is fully enacted as planned under the 2011 Budget Control Act, the Pentagon’s base budget would only return to 2006 levels (adjusted for inflation), which at the time was among the highest levels of spending since World War II."

Because of money authorized in previous budgets that have yet to be spent on various projects, contractors have plenty of money in the pipeline to keep workers on the payroll, even if the sequestration – the so-called "fiscal cliff" – takes effect. So the warnings that these possible cuts in the proposed defense budget must inevitably lead to a wave of industry layoffs is false [4].

It would be worth asking in the debate whether taxpayers should be footing the $26.2 million a year compensation bill for people like Wes Bush, the CEO of Northrop Grumman, which derives most of its business from the federal government and which, as Andre Francisco at the Project for Government Oversight writes [5], "is part of a bloated defense industry [6] that produces weapons so consistently behind schedule and over budget that an on-time, on-budget program would be cause for a parade."

We saw the costly absurdity of defense contracting run amok during the war in Iraq. That exercise in conservative outsourcing orthodoxy by the Bush administration resulted in as much as $60 billion in waste, according to the congressional Commission on Wartime Contracting [7]. That in itself should be a lesson to be wary of the fear-mongering from the right and the military-industrial complex that if we dramatically cut defense spending we will compromise our security and put hundreds of thousands of people out of work.