AFGE Tells Lawmakers to End Taxpayer Subsidies to Contractors

Capping subsidies to contract employees would offset significant fraction of sequestration

WASHINGTON, Jan. 29, 2013 /PRNewswire-USNewswire/ -- Lawmakers desperately looking for ways to offset the devastating budget cuts required under sequestration should consider capping taxpayer subsidies for contractor salaries, the head of the American Federation of Government Employees said today.

Allowing agencies to fall off the fiscal cliff by failing to stop sequestration would drastically hinder their ability to continue providing vital services to the American people, AFGE National President J. David Cox Sr. said.

Fortunately, almost 10% of each year's bill for the next 10 years of sequestration – more than $5 billion annually and $50 billion cumulatively – can be offset simply by capping taxpayer subsidies for contractors at $200,000 per year. In fact, the Army has officially estimated that the savings would be even greater. 

Contractor employees who could not bear to make the same sacrifices that federal employees have been making for years could always ask their employers to supplement their compensation out of corporate profits.

"Think about it – we can cut more than $50 billion from federal spending over the next decade with no impact on government services, simply by subsidizing these almost unimaginably wealthy contractor employees at a slightly less generous level," Cox said.

Currently, most Department of Defense contractor employees are capped at a whopping $763,000 per year in federal subsidies. And there is no cap at all for most non-DoD contractor employees.  

While salaries for contractor employees have ballooned in recent years, federal employees who often work side by side with contractors have had their salaries frozen for more than two years.

"Congress has had no problem freezing wages for one group of federal workers, yet many lawmakers have turned a blind eye to the outrageous salaries earned by another group," Cox said. "Both workforces are paid for by American taxpayers.  What's the difference?" 

Lavish compensation is not required to find and retain a talented workforce. David Wineland, an employee of the Commerce Department's National Institute of Standards and Technology, won the 2012 Nobel Prize for physics for his work to improve atomic clocks, a technology that underlies everything from smart phones to GPS mapping. Many other Nobel Laureates work at government labs while earning well below $200,000 a year. Rather than charge taxpayers excessive amounts for contractor compensation, agencies would be much better served by insourcing the work and having it performed by reliable and affordable federal employees.

The policy behind lavish and excessive taxpayer subsidies for contractor employees is egregious, but the politics are even worse, Cox said. One federal workforce of modestly paid nurses, food inspectors and correctional officers is scheduled to receive a mere 0.5% pay increase in late March, after a two-year pay freeze. Meanwhile, a shadow federal workforce where many employees routinely make hundreds of thousands of dollars per year received a 10% raise in 2012 and likely will receive a comparable raise again this year. 

Some House Republicans want to eliminate the 0.5% pay increase for the workforce made up of working and middle class federal employees, but do nothing about the double-digit raises being given to an exclusive group of employees in America's top 1% of income.

The Senate included more modest caps in its version of the National Defense Authorization Act in fiscal 2012 and fiscal 2013, as well as the fiscal 2013 Financial Services Appropriations Act. But the language in the two defense bills disappeared in conference behind closed doors, while the funding bill was not completed before the last Congress adjourned. House Republican leadership has ruled out of order repeated attempts to offer floor amendments to lower the cap. 

The American Federation of Government Employees (AFGE) is the largest federal employee union, representing 670,000 workers in the federal government and the government of the District of Columbia.

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SOURCE American Federation of Government Employees

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