[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]





                   RIGHTSIZING THE FEDERAL WORKFORCE

=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON FEDERAL WORKFORCE,
                  U.S. POSTAL SERVICE AND LABOR POLICY

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 26, 2011

                               __________

                           Serial No. 112-38

                               __________

Printed for the use of the Committee on Oversight and Government Reform









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                      http://www.house.gov/reform





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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana                  ELIJAH E. CUMMINGS, Maryland, 
JOHN L. MICA, Florida                    Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania    EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio              CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York          GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona               MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho              DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania         BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee          PETER WELCH, Vermont
JOE WALSH, Illinois                  JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina           CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida              JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

                   Lawrence J. Brady, Staff Director
                John D. Cuaderes, Deputy Staff Director
                     Robert Borden, General Counsel
                       Linda A. Good, Chief Clerk
                 David Rapallo, Minority Staff Director

Subcommittee on Federal Workforce, U.S. Postal Service and Labor Policy

                   DENNIS A. ROSS, Florida, Chairman
JUSTIN AMASH, Michigan, Vice         STEPHEN F. LYNCH, Massachusetts, 
    Chairman                             Ranking Minority Member
JIM JORDAN, Ohio                     ELEANOR HOLMES NORTON, District of 
JASON CHAFFETZ, Utah                     Columbia
CONNIE MACK, Florida                 GERALD E. CONNOLLY, Virginia
TIM WALBERG, Michigan                DANNY K. DAVIS, Illinois
TREY GOWDY, South Carolina















                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 26, 2011.....................................     1
Statement of:
    Biggs, Andrew G., resident scholar, American Enterprise 
      Institute for Public Policy Research; and William R. 
      Dougan, national president, National Federation of Federal 
      Employees, chairman of the Federal Workers Alliance........    20
        Biggs, Andrew G..........................................    20
        Dougan, William R........................................    29
    Lummis, Hon. Cynthia M., a Representative in Congress from 
      the State of Wyoming.......................................     8
    Marino, Hon. Thomas, a Representative in Congress from the 
      State of Pennsylvania......................................    14
Letters, statements, etc., submitted for the record by:
    Biggs, Andrew G., resident scholar, American Enterprise 
      Institute for Public Policy Research, prepared statement of    22
    Connolly, Hon. Gerald E., a Representative in Congress from 
      the State of Virginia, prepared statement of...............    66
    Dougan, William R., national president, National Federation 
      of Federal Employees, chairman of the Federal Workers 
      Alliance, prepared statement of............................    31
    Lummis, Hon. Cynthia M., a Representative in Congress from 
      the State of Wyoming, prepared statement of................    10
    Lynch, Hon. Stephen F., a Representative in Congress from the 
      State of Massachusetts, various prepared statements........    50
    Marino, Hon. Thomas, a Representative in Congress from the 
      State of Pennsylvania, prepared statement of...............    16
    Ross, Hon. Dennis A., a Representative in Congress from the 
      State of Florida, prepared statement of....................     3

 
                   RIGHTSIZING THE FEDERAL WORKFORCE

                              ----------                              


                         THURSDAY, MAY 26, 2011

                  House of Representatives,
    Subcommittee on Federal Workforce, U.S. Postal 
                          Service and Labor Policy,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:39 a.m., in 
room 2154, Rayburn House Office Building, Hon. Dennis A. Ross 
(chairman of the subcommittee) presiding.
    Present: Representatives Ross, Amash, Jordan, Chaffetz, 
Gowdy, Issa (ex officio), Lynch, Norton, Connolly, Davis, and 
Cummings (ex officio).
    Staff present: Ali Ahmad, communications director; Robert 
Borden, general counsel; Molly Boyl, parliamentarian; Lawrence 
J. Brady, staff director; John Cuaderes, deputy staff director; 
Linda Good, chief clerk; Jennifer Hemingway, senior 
professional staff member; Ryan Little and James Robertson, 
professional staff members; Justin LoFranco, deputy director of 
digital strategy; Laura L. Rush, deputy chief clerk; Rebecca 
Watkins, press secretary; Peter Warren, legislative policy 
director; Nadia A. Zahran, staff assistant; Ronald Allen, 
minority staff assistant; Jennifer Hoffman, minority press 
secretary; Lucinda Lessley, minority policy director; William 
Miles, minority professional staff member; and Mark Stephenson, 
minority senior policy advisor/legislative director.
    Mr. Ross. Good morning. I would like to call the 
Subcommittee on Federal Workforce, U.S. Postal Service and 
Labor Policy to order. As we do in every subcommittee and full 
committee, we read the mission statement of the Oversight 
Committee.
    We exist to secure two fundamental principles. First, 
Americans have a right to know that the money Washington takes 
from them is well spent; and, second, Americans deserve an 
efficient, effective government that works for them. Our duty 
on the Oversight and Government Reform Committee is to protect 
these rights. Our solemn responsibility is to hold government 
accountable to taxpayers because taxpayers have a right to know 
what they get from their government. We will work tirelessly in 
partnership with citizen watchdogs to deliver the facts to the 
American people and bring genuine reform to the Federal 
bureaucracy. This is the mission of the Oversight and 
Government Reform Committee.
    I will move into my opening statement.
    Last December, the White House's deficit commission 
outlined a plan of action to address our Nation's fiscal woes. 
Included in the report was a recommendation to reduce the size 
of the Federal work force by 200,000. Recently, the House 
budget resolution adopted a similar policy, in assuming a 10 
percent reduction--via attrition--in the size of the Federal 
work force.
    White House officials have repeatedly stated that they 
would implement many of the commission's ideas, but they did 
not incorporate a Federal work force reduction proposal into 
the President's February budget release, or his recently issued 
deficit reduction plan. In fact, the President's budget, while 
acknowledging that the Federal work force has actually grown by 
325,000 since President Obama took office, requests an 
additional 15,000 new Federal workers for fiscal year 2012.
    The size of the Federal work force now stands at over 2.1 
million, the largest Federal work force in modern history. At 
the same time, our economy has lost over 4 million private 
sector jobs and the unemployment rate hovers around 9 percent. 
According to the Office of Personnel Management, the average 
pay and benefits of a Federal employee in 2010 was $101,751, a 
rate of compensation the Nation can no longer afford.
    The members of this subcommittee appreciate our talented 
Federal work force and the critically essential services it 
provides. However, the current size of the Federal work force 
is fiscally unsustainable. Congress has an obligation to 
consider all policy reforms that halt the sprawl of government 
and force agency heads to make government more efficient.
    Several Republican Members have offered bills to shrink the 
size of the Federal work force. I, myself, have introduced H.R. 
821, the Zero Based Budget Act of 2011. This legislation would 
require all departments and agencies in the Federal Government 
to provide a funding justification each year, as well as a 
summary of their cost-effectiveness and efficiency.
    Today's witnesses include two distinguished Members of 
Congress, Representative Lummis and Representative Marino, who 
have both introduced legislation that would institute tough 
measures to halt government growth and produce a smaller, 
leaner Federal work force.
    At a time when our economy is in a recession and budget 
deficits are at staggering record levels, taxpayers can no 
longer be asked to foot the bill for a bloated Federal work 
force. This hearing presents an opportunity for lawmakers on 
this committee to hear important testimony on how best to 
rightsize the Federal work force.
    I thank the witnesses for appearing here today and I look 
forward to their testimony.
    [The prepared statement of Hon. Dennis A. Ross follows:]



    
    Mr. Ross. I now recognize the distinguished Member from 
Massachusetts, the ranking member, Mr. Lynch, for an opening.
    Mr. Lynch. Thank you, Mr. Chairman. It is an honor to be 
here.
    Let me just try to reset the discussion that has been put 
forward here in terms of rightsizing the Federal work force. 
Let me just put some numbers out there that I think are 
striking.
    We have two types of Federal employees that work for our 
government, or two types of Federal workers. We have the 
traditional Federal employees who are the target of this 
hearing, and then we have a group called private contractors. 
Now, in common parlance people think of contractors as 
companies, but in this U.S. Government contractors are people. 
So rather than hiring under the Bush administration employees, 
they simply hired contractors.
    Now, not only do we have the largest number of Federal 
employees, 2\1/2\ million people, but if you look at the number 
of folks that we have added to government, the government 
payroll, by the Bush administration, it comes not to 2\1/2\ 
million, but to 10\1/2\ million contractors, people who are 
working under government contract, instead of employees. So 
what we are doing in this hearing is we are ignoring 80 percent 
of the cost. We are completely ignoring the contractor side of 
this equation, 10\1/2\ million people, and we are instead 
focusing on 2\1/2\ million Federal employees.
    It strains the limits of credibility to ignore 80 percent 
of our costs and instead to point the finger of blame on 
Federal employees. It continues to mystify me in the midst of 
this recession that while we all are in agreement that it was 
the folks on Wall Street who caused this mess, we don't have 
hearings on Wall Street up here. The finger of blame has gone 
around and around, and where does it fall? It falls on Federal 
employees. It falls on teachers. It falls on firefighters. It 
falls on police officers. It falls on their right to bargain 
over terms and conditions of employment. It is obscene that we 
are focusing today on the 2\1/2\ million employees of the 
Federal Government while we are completely ignoring the 10\1/2\ 
million contractors and grantees that work for this government.
    Bear in mind that there is great need to reduce the costs 
within our government. There is no question about it. We have 
to reduce spending. But you have to ask whether we are really 
serious about it when we choose to ignore 80 percent of the 
cost. There is not a word in here about reducing the number of 
contractors.
    I have traveled to Iraq and Afghanistan many, many times, 
14 times I think in Iraq. I have seen the troop levels go down 
from 170,000 to 45,000 today. But I still see 100,000 
contractors in Iraq. And when you compare what an Army private 
or a private first class for the U.S. Marine Corps is making 
per month with what the private contractor costs, or if you 
compare what the State Department employees are making overseas 
compared to what these private contractors are making, it is 
astounding. It is really astounding.
    So if we are serious about reducing costs, then we need to 
look at the contracting community, the 10\1/2\ million people 
out there that are on the government payroll. Just because 
President Bush decided to hire them as private contractors 
instead of Federal employees, it doesn't mean the cost isn't 
there.
    In fact, think about this: If we are seeking to reduce 
costs, if you force a Federal employee out, they are going out, 
and they are going to collect their pension and probably get 
health care benefits. If you cut a contractor lose, that is all 
savings. That is all savings. So why aren't we looking at that?
    This will be a great hearing. I have a lot of figures, a 
lot of data, and hopefully we will get the complete picture out 
there. But, Mr. Chairman, I am delighted that you held this 
hearing, I really am.
    I yield back the balance of my time.
    Mr. Ross. Thank you, Mr. Lynch.
    The chair now recognizes the chairman of the full 
committee, the distinguished gentleman from California, 
Chairman Issa, for an opening.
    Mr. Issa. Thank you, Chairman, and thank you, Congressman 
Lynch, for giving me the opportunity to come after you, and I 
don't mean come after you personally.
    Mr. Lynch. Have at it. Bring it on.
    Mr. Issa. No, no.
    We have two congressional colleagues here and they both 
have business backgrounds. Congress Marino, like you, I spent 
decades on the factory floor.
    One thing we understand in the private sector, and I think 
you are going to hear it in their testimony and in any Q and A, 
we understand in the private sector that you are probably 
absolutely right on some portion of what you just said; two 
million people, 10\1/2\ million full or part-time contractors, 
all or part. We are not debating that. They all fall under this 
committee's jurisdiction.
    The real question is, how are we getting the best value? 
And the one thing I believe that this committee has seen in 
hearing after hearing after hearing, and we will continue to 
see until we make real fundamental change is, there is no cost 
accounting.
    Now, in the previous time under President Bush I sat on 
this committee and other committees and, rightfully so, I saw 
them not do cost accounting, they simply hired a bunch of 
people to get us through the early days of the war. And on this 
side of the aisle and on your side of the aisle we started 
complaining that, well, where is the cost justification for 
this and that? Why does it cost hundreds of dollars a gallon to 
bring a gallon of fuel out to the combat and into the line?
    The real question is not is there waste in government. We 
exist because there is a tremendous amount of waste and we have 
done very little to deal with it.
    Now, as we look at attrition or changes in the Federal work 
force, including an end to arbitrary insourcing, which is what 
has been happening under the Bush administration, arbitrary 
insourcing. They tap contractors on the shoulder, tell them 
their contract is going to be ending, and we say we will give 
you a pay raise if you come work for us now. Felony, stupid 
behavior for anyone to do. And we have business people here who 
will explain exactly how stupid it is to arbitrarily pay more 
than you need to.
    What this committee needs to do, and, Mr. Lynch, I want to 
be very much in partnership with you on this committee, we need 
to cost-benefit both outsourced and insourced costs. We need to 
move this government toward making a genuine decision about 
what makes long-term and short-term sense and to do the kind of 
analysis.
    Additionally, and Chairman Ross I think did a very good job 
in his opening statement, we need to go to a system in which we 
justify the individual pay of individual members of the Federal 
work force, dynamically understanding that some people in the 
Federal work force are underpaid and their jobs go unfilled and 
it is difficult. We have seen this before. Some, their jobs 
become less valuable, but the scale of the system has no 
flexibility even for new hiring. We need to change that.
    The private sector understands that supply and demand 
varies, that what you have to pay to hire a software 
programming in 1999 in Silicon Valley is very different than 
2001. It was a radical change between you hired people from 
anywhere and stole them from your competitors to, oh, there was 
an abundance. That abundance disappears, the price goes up.
    I look forward to this committee having an honest dialog, 
not about what was wrong in outsourcing under the Bush 
administration or wrong necessarily in insourcing under this 
administration. We have an obligation to get it right, to 
figure out how sensible government accounting can in fact put, 
using your numbers, 12\1/2\ million full or part-time jobs to 
better use at better value for the American people.
    I believe this is a good start today. I believe we have the 
right witnesses to help us set the tone for why it is not about 
how many workers we have in-house or how many contractors we 
have out-house. The question is, are we getting our best value. 
And until we have a system that we can all be confident on a 
regular and constant basis makes those decisions, those, if you 
will, dynamic scoring so that we get the best value, we are not 
going to rightsize the Federal work force in-house or get the 
best value from our contractors out of the house.
    I look forward to working with this entire committee. This 
is the most legitimately bipartisan issue we will have on this 
committee.
    I yield back.
    Mr. Ross. Thank you, Mr. Chairman.
    I now recognize the ranking member of the full committee, 
the distinguished gentleman from Maryland, Mr. Cummings, for an 
opening.
    Mr. Cummings. I want to thank you, Mr. Chairman, and I 
certainly thank our ranking member and want to associate my 
comments with those of the ranking member.
    You know, in listening to all of this, and I am glad we are 
doing this hearing, but at a time when Congress is looking for 
ways to cut spending, I certainly appreciate that everything 
should be on the table. However, I believe that Federal 
employment in particular has gotten more scrutiny from the 
majority than it deserves.
    While I agree that serious changes must be made to improve 
our financial footing, I disagree with the viewpoint that 
Federal employees should shoulder a disproportionate amount of 
that burden.
    As I have mentioned previously before this committee over 
the past several months, I have been meeting with Federal 
workers who are rightly dismayed that their jobs and benefits 
are being used as a political football on Capitol Hill. Federal 
employees saw their 2011 pay raises blocked by the recently 
enacted 2-year pay freeze. They are deeply concerned with the 
daily barrage of news about the possibility of further 
congressional action affecting their benefits.
    My office has been deluged with inquiries from Federal 
workers and their families concerned about agency furloughs and 
reductions in force, wondering how they will keep paying their 
mortgages and feeding their children if their paychecks are 
suddenly stopped. These are the same employees that on this 
side of the aisle took a 5 percent cut and probably will not 
get another pay raise for the next 4 years. But at the same 
time, they work on the Hill and they hear our Republican 
colleagues say that in a fragile economy, we cannot afford to 
tax the rich, but yet and still they are being cut in pay and, 
again, their wages are being frozen and they are not making the 
money that the rich folks are making. Give me a break.
    Despite assertions to the contrary, the Federal work force 
has decreased significantly since the 1960's when measured in 
terms of the number of workers per capita. According to the 
Office of Management and Budget, in 1962 there were 13.3 
executive branch employees for every 1,000 Americans, while as 
of 2010 there were 8.4, the lowest level in the past 50 years. 
Furthermore, we have seen decreases in the Federal work force 
are often met with increases to the contractor work force, as 
Mr. Lynch stated.
    On this point, I would like to be very clear: Cutting the 
Federal work force is not a magic solution to our financial 
troubles. Cutting the Federal work force does not diminish the 
demand for taxpayer services. For that reason, proposed 
indiscriminate cuts stand to have two effects: One, increasing 
the more costly contractor work force; or, two, reducing the 
efficiency and effectiveness of the services delivered to 
taxpayers.
    Recently in response to Representative Lummis' proposed 
legislation, Max Stier, the CEO of the nonpartisan Partnership 
for Public Service, had these simple words to stay. ``History 
has shown that governmentwide hiring freezes result in neither 
smaller nor more effective government. Indeed, downsizing the 
Federal work force without strategic work force planning will 
result in skill gaps and increased reliance on contractors and 
ultimately a government that is less efficient and effective 
than the American people deserve.'' None of the proposals we 
will consider today have adequately addressed Mr. 
Stier'sconcerns over blanket cuts.
    So I do look forward to the hearing today. I look forward 
to hearing our witnesses. And I agree with the chairman of the 
full committee, Mr. Issa. This is a problem that should have 
bipartisan solutions. These are issues that affect the very 
people that we work with every day, the very people that we go 
back to our offices and see in the next hour or so, the ones 
that get the early bus, the ones that work hard and give their 
blood, their sweat, their tears, their compassion, to us 
Americans. And I do want us to stop beating up on our public 
employees because they play an integral role in all of our 
society, and I want them to come to work knowing that we 
appreciate every single thing they do.
    With that, Mr. Chairman, I yield back.
    Mr. Ross. Thank you, Mr. Cummings.
    Members may have 7 days to submit opening statements and 
extraneous material for the record.
    As you know, we do have two panels today. Based on 
agreement that I have with our presenters now, we are going to 
limit their testimony to 5 minutes each with regard to their 
respective legislation.
    I will now recognize the distinguished gentlewoman from 
Wyoming, Mrs. Lummis.

 STATEMENT OF THE HON. CYNTHIA M. LUMMIS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF WYOMING

    Mrs. Lummis. Well, thank you, Chairman Ross and Ranking 
Member Lynch and members of the committee. It is an honor to 
appear before your subcommittee.
    I want to assure the ranking member of the full committee 
of my deep regard for public employees. I was the State 
Treasurer in my State. I had a loyal, hard-working work force 
that contributed mightily to converting our portfolios of 
savings from $6 billion to over $8 billion during my 8 years as 
State Treasurer. They are hard-working, dedicated employees, 
and I see similar skills, abilities, and dedication every day 
here in the Federal Government. I am proud of public workers. I 
am proud to be a public worker.
    My bill is not designed as an attack or an indictment of 
their skills. It is recognition of where we are in 2011 with 
regard to the size of our Federal Government and what we need 
to do to address the impending unsustainable shortfalls, our 
debts, our deficits. If we wiped out every single Federal 
agency that is not interest on the debt and an entitlement 
program mandatory spending, we still would not have enough 
money collected in revenues to cover the expenditures of this 
country.
    It is going to take every single program, every single 
person, every single branch of government, every entitlement, 
every mandatory spending program in order to solve the problems 
we have today. So this is a small component of the problem, and 
I bring it to you because of my experience in Wyoming State 
Government.
    Wyoming has the smallest population in the Nation. We also 
have per capita the largest cadre of State, local and county 
government workers. Now, in order to maintain a level of 
service, but nevertheless adjust to Wyoming's boom and bust 
economy, since our economy really is just entirely based on 
minerals, the revenues of the State of Wyoming go up and down 
as mineral production and mineral prices go up and down. So I 
have learned to adjust to a growing government and a declining 
government over the course of my political life as a Wyoming 
legislator, as director of a State government agency and then 
as State Treasurer.
    Among the tools that we believe works well is the 
opportunity to up and downsize the State work force in a way 
that does not hurt the employee, and you do it by attrition. 
This bill, the bill that I am sponsoring, the Federal Workforce 
Reduction Act of 2011, H.R. 657, does reduce the Federal work 
force by attrition.
    Under my bill, the Federal Government could hire one 
employee for every two that retire or separate, for whatever 
reason. So nobody loses their job. Nobody loses their benefits. 
These are people that are leaving voluntarily through 
retirement or separating from government for whatever reason. 
And the notion is, of course, is the government could hire one 
employee for every two that retire or separate.
    This notion of attrition has been replicated by the House 
Republican budget resolution, which assumes a more aggressive 
three to one replacement rate. It was also proposed, as has 
been pointed out, by the President's deficit commission which 
called for a less aggressive three to two replacement rate, and 
I prefer attrition to rigid firing or hiring freezes. I don't 
just want smaller government, I want a more efficient and 
responsive government.
    Now, let me give you some of the details of my bill. I did 
decide to exempt the Department of Defense, Homeland Security, 
and Veterans Affairs from the new attrition policy. I also 
included a general national security waiver of the bill's 
hiring limitations, and I did so to acknowledge the preeminent 
importance of national security, our constitutional obligations 
versus our statutory obligations.
    Working with Republican staff on the House Budget 
Committee, we estimate the Federal Workforce Reduction Act 
would save something in the ballpark of $35 billion over 10 
years. The more aggressive attrition policy in the House 
Republican budget combined with a Federal pay freeze would save 
$248 billion over 10 years.
    I am on the Appropriations Committee, and we talk 
repeatedly about how we are having to cut programs, and 
Democrats and Republicans on the committee alike are saying, 
but we need to know that when we cut programs, we are not just 
retaining middle and higher administrative positions. We need 
to know that the people who are actually doing the work in the 
bowels of government, those workers who are less highly paid, 
are the ones who are retained and not just the mid-managers and 
higher level managers in the Federal Government who are highly 
compensated.
    One closing comment, Mr. Chairman: In my home State of 
Wyoming, if you look at the pay between Federal employees, 
State employees, county employees, the Federal Government is 
compensating their employees by far, by far more than State 
employees and other government workers. So what we are seeing 
here is an opportunity to return some normalcy as we downsize 
the Federal Government in order to save our country, and in 
doing so not inflict pain on people by RIFs and other policies 
that really do hurt a family's well-being.
    Mr. Chairman, I again thank you so much for the opportunity 
to testify before you today.
    [The prepared statement of Hon. Cynthia M. Lummis follows:]



    
    Mr. Ross. Thank you, Mrs. Lummis.
    I now recognize the distinguished gentleman from the 
Commonwealth of Pennsylvania, Mr. Marino.

   STATEMENT OF THE HON. THOMAS MARINO, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF PENNSYLVANIA

    Mr. Marino. Chairman Ross, Ranking Member Lynch, and 
members of the subcommittee, thank you for holding this hearing 
today and giving me the opportunity to testify, and I also want 
to pay my respects to Chairman Issa. Thank you.
    Our Nation is more than $14.3 trillion in debt, a record 
high and the equivalent of approximately $46,000 owed by every 
child born today. It is estimated that in 2011 we will have a 
Federal budget deficit of more than $1.6 trillion. 2011 will 
represent the third straight year in which revenues to the 
Federal Government have fallen below spending by more than $1 
trillion. We are borrowing approximately 42 cents for every 
dollar we spend.
    Our current fiscal course is unsustainable and disastrous. 
The American people have sent a clear message to Washington, 
and the American people deserve more. We must cut spending, 
reduce the size and scope of the government, and keep taxes low 
to grow the economy and create jobs.
    Earlier this month I introduced H.R. 1779, the Federal 
Hiring Freeze Act of 2011, because the time for talk has ended 
and the time for action is now. We cannot continue down this 
road of big government and deficit spending.
    The general framework for my legislation and the concept 
that we must put a freeze on Federal spending is not a new 
idea. President Reagan's first official act upon being sworn in 
as our Nation's 40th President on January 20, 1981, was signing 
a Presidential memorandum calling for an immediate freeze on 
the hiring of civilian employees in the executive branch. In a 
statement at the signing of the memorandum, he stated that the 
freeze was a first step toward controlling the growth and size 
of the government and reducing the drain on the economy for the 
public sector.
    My legislation builds on Reagan's plan by imposing a hiring 
freeze on Federal employees until the budget deficit is 
eliminated, and I want to add into this, this includes also 
contract individuals.
    The bill contains specific limited exceptions in which 
hiring would be permitted, such as time when our Nation is at 
war, vital national security interests, Federal law enforcement 
purposes, to honor prior contractual obligations, reassignment 
of personnel within agencies to fill needed positions, 
positions to facilitate the orderly transition and operation of 
a new Presidential administration, and the U.S. Postal Service. 
These commonsense exemptions assure that the most critical and 
basic functions of our Federal Government remain unaffected by 
the freeze. The fact is, we need to manage the government more 
like we manage our businesses.
    I am perplexed that people are opposed to this idea. I 
recently was informed that we do not need to operate the 
government like a business because the government can print 
money at any time. This argument does not resonate with me or 
my constituents in the 10th District of Pennsylvania.
    I worked in a factory until I was 30 years old. I worked my 
way up into management from sweeping floors. When the revenues 
weren't coming in, we cut our costs. One of the ways we cut our 
costs was by not replacing people when they left and asking the 
remaining employees to produce a little more. And they did. And 
this isn't about firing or laying off either.
    This approach is what we need to do in Washington with 
Federal employees. My legislation is not an attack on Federal 
employees or the work that they do. I have the utmost respect 
for the Federal work force. I am and I was one. As a U.S. 
attorney, I had the best and the brightest attorneys and staff 
working for me. This is why I know that Federal workers are 
willing and able to step up to be a part of the solution to our 
Nation's problems.
    According to the Congressional Research Service, the total 
cost of the Federal work force in 2010 was $590 billion, with a 
``B.'' This accounted for nearly 30 percent of total Federal 
receipts for that year. We cannot and should not allow the cost 
of the Federal work force to grow while millions of Americans 
are struggling.
    This legislation calls on the Federal work force to take a 
prominent role in the process of leading the country out of our 
current fiscal crisis. Obviously a hiring freeze is not, I 
repeat, is not the silver bullet that will unilaterally lead us 
out of this crisis. It is a part, but also it is a start. It is 
in combination with other efforts that we have started to 
enact; for example, the step that we took in slashing our own 
office budgets by 5 percent.
    Just because this legislation is not the cure-all for the 
Nation's ills does not mean that we cannot begin deliberately 
addressing an issue that is important to most Americans. This 
bill would be a good faith step toward reducing the size of 
government, in addressing the out-of-control government 
spending.
    And, again, I want to emphasize, this is a start. This 
includes not only the permanent employees, but contracting 
employees, and any other budgeted payout to an individual or an 
entity. It is not a layoff program. Please don't twist this 
into a layoff or getting rid of Federal employees. It is by 
attrition. When they retire, when they leave, for whatever 
reason, pass away, you name it, that is the position that we do 
not fill.
    The time for action is now.
    Once again I would like to thank the chairman and ranking 
member for giving me the opportunity to provide my thoughts on 
this important issue. I stand ready and willing to work with 
the committee and my colleague from Wyoming on any issues or 
any amendments or any editing of this bill that I submit.
    Thank you very much.
    [The prepared statement of Hon. Thomas Marino follows:]



    
    Mr. Ross. Thank you, Mr. Marino. Mrs. Lummis, thank you as 
well.
    We will now take a short recess as we prepare for our 
second panel. Thank you.
    We will now reconvene and welcome our second panel of 
witnesses. We have Dr. Andrew Biggs, who is a resident scholar 
at the American Enterprise Institute for Public Policy 
Research, and Mr. Bill Dougan, national president of the 
National Federation of Federal Employees and chairman of the 
Federal Workers Alliance. Welcome.
    Pursuant to committee rules, all witnesses will be sworn in 
before they testify. If you wouldn't mind, please stand up and 
raise your right hands.
    [Witnesses sworn.]
    Mr. Ross. Let the record reflect that all the witnesses 
have answered in the affirmative. Please be seated.
    In order to allow time for discussion, which we should have 
plenty of time, please limit your testimony to 5 minutes, and 
please note that your entire written testimony has been entered 
into the record and made part of the record.
    Mr. Biggs, you are recognized. Thank you.

   STATEMENTS OF ANDREW G. BIGGS, RESIDENT SCHOLAR, AMERICAN 
ENTERPRISE INSTITUTE FOR PUBLIC POLICY RESEARCH; AND WILLIAM R. 
  DOUGAN, NATIONAL PRESIDENT, NATIONAL FEDERATION OF FEDERAL 
      EMPLOYEES, CHAIRMAN OF THE FEDERAL WORKERS ALLIANCE

                  STATEMENT OF ANDREW G. BIGGS

    Mr. Biggs. Thank you very much. Chairman Ross, Ranking 
Member Lynch, and members of the committee, thank you for the 
opportunity to discuss efforts to rightsize Federal employment 
going into the future.
    Academic economists agree that Federal employees receive 
higher salaries and benefits than private workers with similar 
education and skills. Much less is known, however, regarding 
the appropriate number of Federal employees. Is the Federal 
work force larger than necessary to provide the services 
Americans require? There are no definitive answers, but several 
points may be helpful in considering these issues.
    First, how does today's Federal civilian work force compare 
to that of the past? In 1969, there were 67 Americans for each 
Federal employee, while in 2009 there were 111 Americans per 
Federal worker. However, this does not necessarily imply that 
today's Federal work force is too small. If the productivity of 
the Federal work force followed that of the economy as a whole, 
each Federal employee today would be capable of serving around 
135 Americans, just as each private sector employee today 
provides more goods and services than he did in 1969.
    Moreover, there is a large shadow work force of Federal 
contractors who are not included in work force statistics. 
Indeed, there are few good estimates of the total number of 
Federal contractors, nor is it easy to say whether overall they 
offer better or worse value to the taxpayer than career civil 
service employees. However, the rise of the contracting work 
force does imply that the total number of Federal employees may 
be significantly higher than official statistics indicate.
    Second, how do Federal staffing levels compare to those in 
the private sector? The answer is that we simply do not know, 
principally because Federal activities often do not have clear 
private sector analogs. At the State and local level, such 
comparisons are easier to make. We know, for instance, that 
private schools often have less administrative overhead than 
public schools, allowing them to focus more resources on 
teachers in the classroom. If overstaffing is most likely to 
occur in places where it is most difficult to detect, then it 
could occur at the Federal level. We cannot know for certain 
without further analysis.
    Third, we can compare the United States to other countries, 
although because countries differ in how they delegate 
responsibilities along levels of government, only measures of 
the total public sector work force are truly meaningful.
    Compared to other OECD countries, the U.S. Federal, State 
and local work force is slightly above the median. However, 
most OECD countries spend more than the United States, making 
raw comparisons potentially misleading. Compared to governments 
that spend around the same as the U.S. Government, which is 
around 36 percent of gross domestic product, the United States 
does have an unusually large public sector work force. Of the 
seven OECD countries of similar economic size to the United 
States, public employment averaged 11 percent of the total work 
force versus 14 percent in the United States.
    Policymakers hoping to reduce the size of the Federal work 
force have focused on attrition, which seems a fair and less 
disruptive way to reduce the labor force if desired. Ordinary 
Federal turnover is very low compared to the private sector. 
However, the Federal work force is around 5 years older than 
the private sector average and is generally eligible to retire 
at younger ages. Thus, there is the potential to reduce the 
size of the Federal work force without firings and layoffs 
through the gradual process of retirement.
    When we think of rightsizing the Federal work force, we 
need a clearer idea of what the right size will be. A 10-
percent reduction in the Federal work force, as recommended by 
the President's Fiscal Commission, is not a hard number. The 
appropriate number could be higher or lower. On the other hand, 
given the State of the Federal budget, there is also the danger 
of studying the issue to death without doing anything to 
address it.
    Gradually reducing the size of the Federal work force while 
commissioning further analysis of the best size of total 
Federal employment and the best allocation of employees between 
agencies has the potential to shift staffing levels in the 
right direction without the danger of dramatically overshooting 
in the short term. Along the way, policymakers should monitor 
the effects of work force reductions on the productivity of the 
Federal Government.
    I am confident that we can do more with less, but lawmakers 
should work together to find ways in which to do so.
    Thank you very much.
    [The prepared statement of Mr. Biggs follows:]



    
    Mr. Ross. Thank you, Mr. Biggs.
    Mr. Dougan, you are recognized for 5 minutes for an 
opening.

                 STATEMENT OF WILLIAM R. DOUGAN

    Mr. Dougan. Thank you, Chairman Ross and Ranking Member 
Lynch, for inviting me to testify today. I am here on behalf of 
the National Federation of Federal Employees and the 110,000 
Federal workers we represent, as well as nine member unions of 
the Federal Worker Alliance on which I serve as chairman.
    If I can leave you with only one message today, let it be 
this: You do not measure the size of government by the number 
of Federal workers; you measure the size of government in 
dollars and cents.
    This hearing is called ``Rightsizing the Federal 
Workforce.'' Implicit in the hearing's title is the insinuation 
that the Federal work force is too big. While it may seem 
logical that if you reduce the Federal work force you have also 
reduced the size of the Federal Government, I can assure you 
that arbitrary reductions in Federal agency staff do not truly 
reduce the size of government at all. Reducing an agency's work 
force without a corresponding reduction in the agency's mandate 
actually tends to increase the size of government because 
arbitrary staffing limitations tend to cost Federal agencies 
more than they save.
    How is that possible? Federal work force reductions without 
corresponding decreases in the work expected of agencies force 
agencies to rely on contractor employees to meet their work 
force needs. However, relying on contractors in this way 
generally costs taxpayers more than simply maintaining and 
properly staffing an in-house agency work force.
    Contracting, though useful and economical in many cases, 
has some characteristics that make it expensive for agencies. 
Contracting out requires the government to conduct contractor 
oversight, which adds costs if done properly, but is sure to be 
expensive if not done properly. Private firms have to pay 
executive salaries, which make private firms more expensive 
than in-house staff. On top of that, contractors have to make a 
profit. All these factors make it difficult to deliver 
contractor services at the same value to the American taxpayers 
that the civilian Federal work force can.
    This is particularly true for work that is has not already 
been contracted out. The contractor work force is currently 
about five times the size of the civilian Federal work force. 
What is left in government is here for a reason. That is 
precisely why during the Bush administration's competitive 
sourcing initiative, in-house Federal workers won the vast 
majority of public-private competitions, 100 percent of them in 
some agencies.
    In the end, there are generally no savings derived from 
arbitrary staff reductions. Rather, a cost shift moves 
resources away from the Federal work force to contractors. This 
is a pointless exercise that reduces government efficiency, 
hurts the services that Federal agencies provide, and sticks 
taxpayers with a bigger bill. Of course, a bigger bill for 
taxpayers means bigger government, regardless of the impact on 
the size of the Federal work force.
    As I said before, you do not measure the size of government 
by the number of Federal employees. You measure the size of 
government in dollars and cents. This is precisely why we are 
opposed to proposals that take a non-strategic, broad-brushed 
approach to cutting Federal jobs.
    Here are just a few we have seen recently. The Federal 
Workforce Reduction Act, H.R. 657, aims to reduce the size of 
the Federal work force by allowing Federal agencies to hire 
just one employee for every two that leave the Federal service. 
The Federal Hiring Freeze Act, H.R. 1779, would abruptly freeze 
practically all hiring in Federal agencies with very few 
exceptions. The Bowles-Simpson proposal included a provision to 
arbitrarily reduce the Federal work force by 200,000 FTEs by 
2020 through allowing agencies to hire two new employees for 
every three that leave Federal service. Finally, the U.S. House 
of Representatives passed their fiscal year 2012 budget 
resolution which called for an attrition policy in the Federal 
Government that permits Federal agencies to hire only one new 
employee for every three workers who leave Federal service.
    We strongly oppose all of these proposals to arbitrarily 
and non-strategically reduce the Federal work force while 
showing little regard for the impact it will have on the 
services that the American people will lose as a result or the 
net budget impact when all costs are considered. However well-
intentioned these proposals may be, they do not save taxpayers 
money and therefore they do not shrink the size of government.
    That is not to say that we are opposed to all Federal 
Government downsizing. The realities of our Federal budget 
situation are such that downsizing in some Federal agencies is 
appropriate. We understand that. However, if Congress is 
serious about truly reducing the size of government, then 
lawmakers are going to have to make the tough choices about 
which programs to reshape, scale back or discontinue 
altogether.
    A non-strategic, broad-brushed approach to cost cutting 
that simply mandates significant personnel reductions in 
Federal agencies will fail to achieve savings and will cause 
wastefulness and disarray in numerous agencies throughout the 
government. Again, you do not measure the size of government by 
the number of Federal employees; you measure the size of 
government in dollars and cents.
    I appreciate the subcommittee's decision to hold a hearing 
on this matter, and I thank the subcommittee for the 
opportunity to provide testimony.
    [The prepared statement of Mr. Dougan follows:]



    
    Mr. Ross. Thank you, Mr. Dougan. I will now recognize 
myself for 5 minutes for questions.
    The National Commission on Fiscal Responsibility's report 
states ``Although the Nation's economy continues to struggle, 
there is no recession in Washington.''
    Mr. Biggs, would you agree with that?
    Mr. Biggs. Sure. The Federal Government has grown during a 
time of recession, and there is some understandable reasons for 
that. Federal outlays on things like unemployment benefits are 
countercyclical, and there has also been an increase in 
employment due to the Census. At the same time, though, it is 
difficult on taxpayers and a burden on the economy if the 
Federal Government is growing in size and the Federal work 
force is growing in size at a time when the rest of the economy 
is least able to support that. So the burden is difficult for 
the private economy when that economy is in recession and they 
have to support a larger government.
    Mr. Ross. Mr. Dougan, would you agree?
    Mr. Dougan. If you could restate it?
    Mr. Ross. No problem. The National Commission on Fiscal 
Responsibility's report states ``Although the Nation's economy 
continues to struggle, there is no recession in Washington.'' 
Would you agree with that statement?
    Mr. Dougan. I am not an economist, but I can tell you for 
purposes of the Federal works force, about 85 percent of the 
Federal work force lives and works outside of Washington, DC.
    Mr. Ross. Let me ask you this: The quit rate for Federal 
employees is about 1.57 percent, meaning that about 1\1/2\ 
percent of all Federal employees quit, which is by way of 
attrition. Would you not agree then that attrition is a good 
start in terms of trying to reduce the size of the Federal work 
force?
    Mr. Dougan. I think if your goal is strictly to downsize 
the work force, then certainly attrition is a good tool. But, 
again, if you are downsizing the work force without looking at 
the work that is going to be left or that you expect the 
remaining work force to do, I am not sure that it makes sense 
to reduce a work force until we have a discussion and an 
agreement on what the work is that is to be done and let the 
work dictate the size of the work force that you need to 
accomplish that.
    Mr. Ross. On that point, Mr. Biggs, Mr. Dougan stated in 
his testimony, and I kind agree with this, that you don't 
assess the Federal work force by its numbers but rather by 
dollars and cents. And in light of the fact that our national 
debt has reached $14.3 trillion, the fact that we have spent 
$400 billion last year in interest payments alone, we face 
difficult tradeoffs in trying to balance our budget. Can, or 
let me ask you this, should the Federal Government do more with 
less?
    Mr. Biggs. Sure. I think the Federal Government has no 
choice but to do more with less because we are facing an 
increasing burden in the future. And if you look at the Federal 
budget today, we are borrowing something like 35 cents out of 
every dollar we spend. So we have to fix that and deal with the 
challenges of entitlements and other issues going forward. I 
think the size of the public sector work force is something 
that needs to be addressed. It will not by itself fix these 
problems. I think we all recognize that.
    Mr. Ross. And reducing the size of the Federal work force 
through attrition, would it disrupt critical functions of the 
government services?
    Mr. Biggs. Well, obviously that depends on what your view 
of critical functions is. I remember that when the President 
took office, he said he was going to go through the Federal 
budget line by line and eliminate wasteful or non-critical 
spending. Obviously in their point of view there wasn't very 
much there. My opinion would differ on that.
    I think we can maintain staffing and maintain effectiveness 
for the programs and the agencies that people clearly see as 
the most important. We have to make difficult decisions going 
forward about certain activities. Are these things the Federal 
Government is no longer going to do or no longer needs to do. 
Those are the tough choices we face.
    Mr. Ross. Do you have any examples of the jobs that could 
be better performed by the private sector at a cost savings to 
the taxpayers?
    Mr. Biggs. Well, I would think things like say computer 
service support, things like that, activities where you have 
clear private sector analogs to what the Federal Government 
does. I fully acknowledge that many Federal workers have a 
skill set which is unique and which differs from what private 
sector workers do. Those are hard to outsource. At the same 
time, though, the Federal Government runs computer systems, it 
has upkeep and maintenance just as private sector plans do. And 
I strongly suspect from my work on Federal pay issues that the 
Federal employees in many of those areas may be overpaid 
relative to what private sector workers receive.
    Mr. Ross. Thank you.
    Mr. Dougan, on April 8, 2011, you wrote a letter to the 
White House asking them to hold firm against Federal pay cuts 
in fiscal year 2011 budget negotiations. In the letter you 
stated, ``Federal workers are in fact severely underpaid.''
    Given the fact that as of December 2010 the average Federal 
compensation, according to OPM, including benefits, was 
$101,751, is it still your contention that they are underpaid?
    Mr. Dougan. Well, I think there obviously has been a lot of 
debate on this issue, both on Capitol Hill as well as in the 
media, and I think the question begs or the answer begs what 
data sets you are looking at. When you look at the Department 
of Labor's Bureau of Labor Statistics data, they show a pay gap 
of approximately 24 to 26 percent, I believe, with respect to 
the compensation for private sector workers versus the 
compensation that Federal workers make in similar types of 
jobs. So, again, the data is going to lead you to different 
conclusions depending on where you get your data.
    Mr. Ross. Thank you. I see my time has expired.
    I now recognize the ranking member of the subcommittee, the 
gentleman from Massachusetts, Mr. Lynch, for 5 minutes.
    Mr. Lynch. Thank you, Mr. Chairman. Just following up on 
that note on the cost of Federal employees, I looked at those 
numbers and what they have done is they have basically double 
counted. If you look at the cost figure, $101,000, that is the 
pay. That is also unemployment. You can't get your pay and 
unemployment at the same time. It is hospitalization benefit. 
You can't get your pay and unemployment and hospitalization 
benefit at the same time. And a death benefit. And you can't 
get your pay and your health benefits and unemployment and a 
death benefit, obviously, if you are dead, at the same time. So 
they have multiplied the costs.
    Now, the employee does not get those all at one time, but 
they have lumped those together to reflect what the cost would 
be for the Federal employee. I agree that is an expenditure for 
the Federal Government, each one of those, but that doesn't go 
to overpayment of the Federal employee. They don't get all that 
at once. They cannot. It is physically impossible.
    I do want to ask you, Mr. Dougan, the President--well, we 
have a couple of bills up here before us today that are the 
focus of this hearing. Mrs. Lummis' bill I think is the more 
aggressive one, and it purports to save $13 billion over 5 
years.
    The President's proposal, now that focuses just on, 
``Federal employees,'' the people that you represent. The 
President's proposal looks at the other 80 percent of the work 
force, the contractor work force, and it proposes cutting 
contractors from the payroll, and that is a savings of $40 
billion per year; not $13 billion over 5 years, but $40 billion 
per year. That is the President's proposal by cutting loose 
contractors.
    Help me with this. If we are interested in saving money, 
and, Mr. Biggs, I would open this up to you as well, wouldn't 
that seem to be the more impactful approach to take, given the 
fact that we have 10\1/2\ million Federal contractors and 
grantees and you have only 2\1/2\ million Federal employees.
    Mr. Biggs. What the Congressional Budget Office calls the 
fiscal gap, which is the change we have to make between our 
revenues and our outlays, is around 20 times higher than the 
$40 billion figure you cite. We would have to make up around 
$800 billion.
    Mr. Lynch. How much multiples is it of the $13 billion?
    Mr. Biggs. I am bad at math.
    Mr. Lynch. It is a lot more.
    Mr. Biggs. But the point is if you pose this as an either/
or, my point is it has to be both and then a lot more. Put 
those two together, multiply by 10 or so, and you are still not 
there. The point is we have to look at both of these.
    I would not be opposed at all to looking at contractors. I 
think not enough is known about how the contract work force 
functions, whether we are getting good value for our money. My 
point is the fiscal gap we face is huge. So if we think we can 
look at one group of employees or another group of employees, 
we are just kind of kidding ourselves.
    Mr. Lynch. I think you raise a great point about the little 
we know about value on the contractor side. I remember one of 
our earlier hearings when I was new to this committee asking 
the Defense Department audit agency how many auditors we had in 
Iraq. We were spending $10 billion a month. And they said 
actually zero. And I said, give me that again? They said, well, 
we don't actually have auditors in Iraq. We have them in 
Virginia and we are auditing Iraq from Virginia. That is what 
led to my repeated travels to Iraq. So it is very difficult to 
do the oversight of these contractors and we are not really set 
up to do that.
    Mr. Dougan, any comments on that?
    Mr. Dougan. Yes. I mean, I think both the contracting work 
force and the Federal work force need to be on the table with 
respect to looking for places to save money. There is no 
question about that.
    But the biggest concern with that is if all we are 
interested in doing is saving money and we are not looking at 
the consequences of slashing budgets or doing away with a 
certain percentage of the work force and not accounting for the 
work that is not going to be done or the reduced delivery of 
services to the taxpayers, I mean, that doesn't ever seem to be 
a part of any discussion when we talk about, you know, either 
cutting the salaries or freezing wages or, you know, 
rightsizing or downsizing the work force through attrition or 
whatever other means.
    There is no accountability for what is the impact to the 
services, what is it that we are not going to do or we are 
going to do less of, and nobody seems willing to make decisions 
on that. That is the concern that I have.
    Mr. Lynch. Thank you.
    Mr. Chairman, if I could, our friends, the National 
Treasury Employees Union and the National Active and Retired 
Federal Employees Association have submitted comments in 
opposition to reducing the size of the Federal work force in a 
haphazard fashion, and I would like those reports, those 
comments to be entered into the record, if you would.
    Mr. Ross. Without objection, they are entered.
    [The information referred to follows:]



    Mr. Lynch. Thank you.
    Mr. Ross. I now recognize the distinguished gentleman from 
Virginia, Mr. Connolly, for 5 minutes.
    Mr. Connolly. Thank you, Mr. Chairman, and thank you for 
having this hearing.
    I would note that I represent the third largest number of 
Federal employees in the United States. I also probably 
represent the largest number of Federal contractors in the 
United States, and I think they are both doing a wonderful job. 
But I also believe, as does Chairman Issa, based on his 
statement today, that this ought not to be a matter of 
theology.
    The idea that somehow platonically there is some ideal size 
for Federal employees, the number of Federal employees and/or 
the number of Federal contractors, gets us into the realm of 
theology rather than analysis, and I think Congress needs to 
insist on rigorous analysis, not arbitrary goal setting that 
has no basis in any kind of analysis that tells us what our 
needs are or what value we get for our dollars.
    If I understood the testimony of our colleague, Mrs. 
Lummis, she would exempt civilian employees from her attrition 
plan in DOD, Veterans Administration, and DHS. If that is a 
correct understanding, that exempts 66 percent of the entire 
civilian work force, meaning that the attrition she talks about 
to achieve the goals she wishes falls disproportionately on 
those remaining civilian agencies, many of which, by the way, 
operate in her home State of Wyoming. And I would--I thought, 
Mr. Dougan, you made a very telling point. The title of this 
hearing, a very biased title, is Rightsizing the Federal 
Workforce, as if there apparently is some right size all of us 
subscribe to. I would like to know what that is.
    Mr. Biggs, do you have some idea about what the right size 
the Federal Government ought to be in the 21st century?
    Mr. Biggs. Well, the technically economist answer would be 
you hire Federal employees until the gain produced by the 
additional Federal employee equals the cost of the Federal 
employee. The marginal benefit equals the marginal cost. And 
when we think about the productivity effects of downsizing the 
Federal Government, we think if we lose that employee, are we 
losing services to the public sector for the cost of that 
employee.
    Mr. Connolly. Fair enough. But would you not agree, though, 
frankly in the public sector--in the private sector, we have to 
do some differentiation. For example, how you measure 
productivity of border security guards is different than how 
you measure the productivity of some lab scientist in FDA 
trying to protect public safety. There is health, foodborne 
illnesses and pharmaceuticals.
    Mr. Biggs. You are exactly right. It is far, far easier to 
measure productivity and output in the private sector because 
you have dollars and cents attached. If somebody is not willing 
to pay for a good and service, you say it is not worth what is 
being charged. I think that is one reason, though, why we want 
to have more activities conducted in the private sector where 
you do have a much more rigorous cost-benefit analysis.
    Mr. Connolly. So you would actually like to increase 
outsourcing with Federal contractors?
    Mr. Biggs. In theory, yes.
    Mr. Connolly. You don't think we have done enough of it in 
the last 10 years?
    Mr. Biggs. The raw numbers are troubling. If outsourcing is 
done in essence to cover up Federal hiring, you don't want to 
admit you are hiring Federal employees and you say, well, let's 
just do contracting instead, that is a wrong thing. But if you 
say that a contractor provides better value for money on a 
year-to-year basis, but also provides, which I think is 
extremely valuable, the ability to recast the Federal work 
force according to changing needs, then it may make sense. A 
contractor can be let go and you can hire new contractors in 
different areas. We want fewer people in Iraq and more people 
working in health care, we can't do that with the current 
Federal----
    Mr. Connolly. Well, what percentage of the current work 
force is eligible for retirement in the near future?
    Mr. Biggs. I think over the next 10 years or so a 
majority--I believe the number is around 60 percent.
    Mr. Connolly. Do you think it is reasonable to say that if 
60 percent of the entire Federal work force is eligible for 
retirement--of course, this Congress seems to be doing 
everything in its power to want to incentivize and accelerate 
retirements where possible--and we are going to have attrition 
at the rate of two to one, do you think the Federal work force 
can actually do its job, especially when we are exempting 66 
percent of it. With that kind of attrition rate, given the 
pending retirements we are looking at?
    Mr. Biggs. I don't believe the proposals are to replace all 
retiring people forever at a one-to-two or one-to-three ratio. 
I believe the proposals are to do it until you reach some 
level, say 10 percent, below the current work force.
    Mr. Connolly. Would it surprise you to learn that one of 
the major employers in Congresswoman Lummis' home State, 
Wyoming, is the Federal Government?
    Mr. Biggs. Not at all.
    Mr. Connolly. And would it surprise you to know in fact it 
is the dominant employer in many small rural places because of 
the Forest Service putting out fires, attending to the 
protection of federally protected land?
    Mr. Biggs. That wouldn't surprise me at. In many ways, 
particularly out West, the Federal Government is a larger 
presence in many ways than it is on the East Coast.
    Mr. Connolly. Thank you. I see my time is up, Mr. Chairman.
    Mr. Ross. Thank you, Mr. Connolly. I now recognize the 
distinguished gentleman from Illinois, Mr. Davis, for 5 
minutes.
    Mr. Davis. Thank you very much, Mr. Chairman. I thank the 
witnesses for coming. I admit that I must be put in the column 
of those who are trying to figure out what is right. I am 
trying to be as rational as I can.
    I remember my mother used to tell us that right is right if 
nobody is right, and wrong is wrong if everybody is wrong. And 
so trying to figure out what would be the right size of 
government it seems to me begs the question, because the first 
question that has to be answered is what do you view as the 
role and function of government? What is the purpose? What is 
the mission? What are you trying to accomplish? And I guess if 
we can answer those questions, then it gets easier to decide 
what the right size would be.
    It seems to me that the purpose of living, quite frankly, 
is to try and improve the quality of life and to make living 
more qualitative than what it is. And it has always been my 
opinion that if we are not doing that, then we are just kind of 
taking up space and perpetuating a world that we accept.
    But let me ask you, Mr. Biggs. You state in your testimony 
that the U.S. public sector work force is around the middle of 
the pack--and I am quoting--when compared to other developed 
countries, that 14.1 percent of total employment. In making 
these comparisons you include State and local governments. Of 
course, we here in Congress cannot control what goes on in 
State and local government size. Many other comparisons, when 
you talk about other countries, are not necessarily including 
State and local government, though if one was to exclude State 
and local governments and make it a straight comparison with 
other developed countries, where would we then rank?
    Mr. Biggs. The figures I cited were total government. And 
the reason I cited those figures, one, is that is the only data 
available. But second, the United States is different from 
other countries--and all countries differ in the activities and 
responsibilities they allocate to the central government versus 
state versus local governments. So because of those difference 
in how we allocate different activities, looking at one sector 
of government between countries could give you a very, very 
misleading point of view. We could look very big, we could look 
very large. It doesn't stand up analytically.
    So the point I made is a limited point where I can look 
only at combined State, Federal, and local work forces relative 
to other countries. And compared to countries that spend around 
the same share of their economies as us, our total public 
sector work force is somewhere around 30 percent larger. Some 
of that is accounted for by the military, but I don't believe 
very much of it.
    Mr. Davis. Mr. Dougan, let me ask you. If in fact our work 
force is larger than other countries' public work forces, what 
difference do you see that making in terms of the economy of 
the countries?
    Mr. Dougan. Well, again, I think the focus needs to be on 
coming up with an answer to the question that you posed at the 
beginning of your statement, what is the work that we are 
about? And I don't believe that we have a definite answer to 
that. I think we have some notion of what all of the Federal 
agencies currently do in terms of the work that they provide 
and the goods and services that they provide to taxpayers. But 
the question on the table is, do we want and expect all of 
those agencies to continue to provide those goods and services? 
Or is there some different mix of goods and services that we 
are looking for? Until you answer that question, I don't see 
any utility in talking about the numbers of Federal employees, 
because we have to decide what work it is that they are going 
to do and what the cost of that work is, and then ask ourselves 
can we afford that? And if we can't, then we are going to have 
to decide what work it is we are not doing. And that is the 
conversation that hasn't been taking place in this country. And 
from my perspective, if we are going to get serious about 
reforming our financial house, that is the first piece of 
business that needs to be done.
    Mr. Davis. I see my time is up. Thank you very much, Mr. 
Chairman.
    Mr. Ross. Thank you. I wish to thank the witnesses for 
testifying today and taking time from your busy schedules to do 
so.
    That being all, this committee stands adjourned. Thank you.
    [Whereupon, at 10:50 a.m., the subcommittee was adjourned.]
    [The prepared statement of Hon. Gerald E. Connolly 
follows:]




                                 
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