Posted 12 months ago on Dec. 23, 2013, 5:04 p.m. EST by LeoYo
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Private Federal Contractors Cost Taxpayers Twice as Much as Civil Servants
Monday, 23 December 2013 11:36 By Jessica Desvarieux, The Real News Network | Video Report
JESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I'm Jessica Desvarieux in Baltimore.
A recent article in Newsweek revealed that federal government pays twice as much for private domestic contractors compared to civil servants. Some on Capitol Hill have been bringing more attention to this glaring statistic, like Democratic senator Claire McCaskill. She chaired a hearing last year exploring the difference in cost between contractors and federal employees. Here's what the senator had to say.
Also see: Who're You Rootin' for - Team Public or Team Private?
CLAIRE MCCASKILL, U.S. SENATOR (D-MO): We have spent a lot of time in Congress talking about freezing the number of federal employees and freezing the pay of federal employees. There has not been enough talk about freezing the size of the contracting force and freezing the pay of contractors. And frankly, if people understand that we're spending more money on service-related contractors in many agencies than we're spending on federal employees--.
DESVARIEUX: Now joining us is the writer of the Newsweek article, David Cay Johnston. He's a Pulitzer prize-winning investigative reporter and bestselling author who writes columns for Al Jazeera America, NationalMemo.com, and Tax Analysis. And he's a contributing editor to Newsweek. He also teaches the business property tax law of the ancient world at Syracuse University College of Law.
Thanks for joining us, David.
DAVID CAY JOHNSTON, PULITZER PRIZE-WINNING INVESTIGATIVE REPORTER: Glad to be here.
DESVARIEUX: So, David, as the axiom goes--basically that in the U.S., for-profit companies provide services more efficiently and cheaper than the public sector. What does your research show?
JOHNSTON: Not at all. Private contractors provided by corporations, as opposed to nonprofits, cost the federal government on average twice as much as civil servants, and when they're hired by the Defense Department, three times as much as civil servants. Now, proponents of contractors will argue that they can hire them on a short-term basis, whereas we tend to hire employees long-term. But I don't think that's a significant defense to the fact that these costs are so high. Last year, contractors were able to charge the government as much a $763,029 per employee.
DESVARIEUX: And you also hear from those who are in favor of federal contractors saying that essentially the federal contractors fill a void. I mean, why is there a rise in federal employees if there's not this need? Can you speak a little bit about the history? How did this all come about?
JOHNSTON: Well, it traces back, I think, pretty much to the rise of the organizations prompted by the Lewis Powell Memo. In the 1960s, the consumer movement was doing quite well, and Ralph Nader came along with all of his research and insights. And you'll remember General Motors hired a prostitute in an effort to compromise him, something that wouldn't work with Ralph. And as a result of the rise of the consumer movement, the U.S. Chamber of Commerce hired a very prominent and brilliant lawyer in Richmond Virginia by the name of Lewis Powell, and he wrote a memo on how to bring the press to heel, how to stop the consumer movement, and how to make sure that America was remade in the image of big business. Powell, of course, later served on the U.S. Supreme Court after he was nominated by Richard Nixon.
And shortly after Powell's memo recommending that the right set up what I call ideological marketing organizations--they're just like advertising agencies, but instead of selling you shampoo or beauty products, they're selling you economic and political ideology--we got the Heritage Foundation, we got Cato, which, it turns out, you know, while it's a nonprofit, is actually owned by the Koch brothers, and ten other big pro-business right-wing organizations. And they began saying general workers efficient; federal workers lazy, stupid; federal workers can't do anything; we should be hiring business--they can do things. They have no factual support for this. It was ideological. Paul Light, a professor at New York University who holds the Paulette Goddard chair, named for the actress and genius Paulette Goddard, has spent years studying the costs of workers. And he has shown how we have a shadow federal workforce through these contractors of a couple of million people. And, of course, when ordinary federal employees go to a retreat, if they just engage in line dancing, as IRS employees did as a team-building exercise, this will be excoriated as an awful waste of the taxpayers' money. But corporate contractors, why, they have golf outings, they go to very expensive resorts for their meetings, and the government just pays the bills.