Tags: Financial Markets | Medicare | National Debt | debt-financed | federal | over-levereged | government contractors

Size of Gov't Obscured by Localized Admins, Private Contractors

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Monday, 27 Feb 2017 10:32 AM Current | Bio | Archive

In 1960, when John Kennedy was elected president, America's population was 180 million and it had approximately 1.8 million federal bureaucrats (not counting uniformed military personnel and postal workers). Fifty-seven years later, with seven new Cabinet agencies, and myriad new sub-Cabinet agencies (e.g., the Environmental Protection Agency), and a slew of matters on the federal policy agenda that were virtually absent in 1960 (healthcare insurance, primary and secondary school quality, crime, drug abuse, campaign finance, gun control, occupational safety, etc.), and with a population of 324 million, there are only about 2 million federal bureaucrats.

So, since 1960, federal spending, adjusted for inflation, has quintupled and federal undertakings have multiplied like dandelions, but the federal civilian workforce has expanded only negligibly, to approximately what it was when Dwight Eisenhower was elected in 1952.

Does this mean that "big government" is not really big?

And that by doing much more with not many more employees it has accomplished prodigies of per-worker productivity? John J. DiIulio Jr., of the University of Pennsylvania and the Brookings Institution, says: Hardly.

In his 2014 book "Bring Back the Bureaucrats," he argued that because the public is, at least philosophically, against "big government," government has prudently become stealthy about how it becomes ever bigger. In a new Brookings paper, he demonstrates that government expands by indirection, using three kinds of "administrative proxies" — state and local government, for-profit businesses, and nonprofit organizations.

Since 1960, the number of state and local government employees has tripled to more than 18 million, a growth driven by federal money: Between the early 1960s and early 2010s, the inflation-adjusted value of federal grants for the states increased more than tenfold. For example, the EPA has fewer than 20,000 employees, but 90 percent of EPA programs are completely administered by thousands of state government employees, largely funded by Washington.

A quarter of the federal budget is administered by the fewer than 5,000 employees of the Centers for Medicare and Medicaid Services (CMS) — and by the states, at least half of whose administrative costs are paid by CMS. Various  federal crime and homeland security bills help fund local police departments. "By conservative estimates," DiIulio writes, "there are about 3 million state and local government workers" — about 50 percent more than the number of federal workers — "funded via federal grants and contracts."

Then there are for-profit contractors, used, DiIulio says, "by every federal department, bureau and agency." For almost a decade, the Defense Department's full-time equivalent of 700,000 to 800,000 civilian workers were supplemented by the full-time equivalent of 620,000 to 770,000 for-profit contract employees. "During the first Gulf War in 1991," DiIulio says, "American soldiers outnumbered private contractors in the region by about 60-to-1; but, by 2006, there were nearly as many private contractors as soldiers in Iraq —about 100,000 contract employees, not counting subcontractor employees, versus 140,000 troops."

Today, the government spends more (about $350 billion) on defense contractors than on all official federal bureaucrats ($250 billion).

Finally, "employment in the tax-exempt or independent sector more than doubled between 1977 and 2012 to more than 11 million."

Approximately a third of the revenues to nonprofits (e.g., Planned Parenthood) flow in one way or another from government. "If," DiIulio calculates, "only one-fifth of the 11 million nonprofit sector employees owe their jobs to federal or intergovernmental grant, contract or fee funding, that's 2.2 million workers" — slightly more than the official federal workforce.

To which add the estimated 7.5 million for-profit contractors. Plus the conservative estimate of 3 million federally funded employees of state and local governments. To this total of more than 12 million, add the approximately 2 million actual federal employees. This 14 million is about 10 million more than the estimated 4 million federal employees and contractors during the Eisenhower administration.

So, today's government is indeed big (3.5 times bigger than five and a half decades ago), but dispersed to disguise its size. This government is, DiIulio says, "both debt-financed and proxy-administered."

It spends more just on Medicare benefits than on the official federal civilian workforce, and this is just a fraction of the de facto federal workforce.

Many Americans are rhetorically conservative but behaviorally liberal. So, they are given government that is not limited but overleveraged  — debt-financed, meaning partially paid for by future generations — and administered by proxies.

The government/for-profit contractor/non-profit complex consumes 40 percent of GDP.

Just don't upset anyone by calling it "big government."

George F. Will is one of today's most recognized writers, with more than 450 newspapers, a Newsweek column, and his appearances as a political commentator on Fox news. Read more reports from George Will — Click Here Now.

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The government/for-profit contractor/non-profit complex consumes 40 percent of GDP.
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2017-32-27
Monday, 27 Feb 2017 10:32 AM
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