Government, Inc.: the cost of government competition with private enterprise

Recent studies show the astonishing cost of government employees’ above-market salaries and their impact on the debt and deficit. The Heritage Foundation estimates that the Yellow Pages test would save taxpayers $27 billion per year. Heritage also reports that federal workers in the aggregate receive pay and benefits of $47 billion per year more than private sector employees.  Americans for Tax Reform calculates that the typical federal worker costs taxpayers $4.27 million over the course of his or her career.

What has been Washington’s answer?  Congress has imposed a moratorium on any public-private competition, effectively saying “no” to the $27 billion in annual savings.  And the Obama administration has ordered “insourcing,” actually canceling contracts with the private sector and moving the work to federal employees in government agencies.  Claims that such a move is only directed at “inherently governmental” activities, functions that must be performed by government workers and never should have been contracted in the first place, haven proven false.  Contracts for food service, flight simulation training, mapping, meteorological services and audio visual services have been recent victims of insourcing.  Moreover, any assertion that insourcing saves money has been debunked, by no less that Defense Secretary Robert Gates, who on August 9 admitted, “We weren’t seeing the savings we had hoped from insourcing.”

As early as 1932, a special committee of the House of Representatives expressed concern over the extent to which the government engaged in activities which might be more appropriately performed by the private sector. The first and second Hoover Commissions expressed similar concern and recommended legislation to prohibit government competition with private enterprise. Unfair government-sponsored competition has been a top issue at every White House Conference on Small Business, with the 1980 small business platform saying “The Federal Government shall be required by statute to contract out to small business those supplies and services that the private sector can provide.  The government should not compete with the private sector by accomplishing these efforts with its own or non-profit personnel and facilities.”

With government unfunded pension liabilities estimated as high as $1 trillion, the cost of big government better left to the private sector will burden the economy for years to come.

John M. Palatiello is President of the Business Coalition for Fair Competition (www.governmentcompetition.org), a national coalition of businesses, associations, taxpayer organizations and think tanks that are committed to reducing all forms of unfair government created, sponsored and provided competition with the private sector. BCFC believes the free enterprise system is the most productive and efficient provider of goods and services and strongly supports the Federal government utilizing the private sector for commercially available products and services to the maximum extent possible.