Early last year, I wrote an article titled “Considering Your Options – Should You Stay the Course?” I referred to the apparent dilemma for some employees seeking to leave federal service and whether the grass is greener on the other side.
Today, many federal employees may not have the option to remain in their current positions as agencies undergo one of the most significant reorganizations in decades. It’s not a matter of choice for hundreds of thousands of employees over the next few years.
THE FINANCIAL CRISIS
The country’s gross federal debt now stands at approximately 120% of its gross domestic product (GDP). The only time in history that our national debt exceeded our GDP before 2016 was during World War II. The debt has been growing rapidly over the past decade, and the problem shows no signs of abating unless the paradigm shifts.
According to the Congressional Budget Office,” the government ran a budget deficit of $1.8 trillion in 2024, which is equal to 6.4 percent of gross domestic product (GDP)—much larger than the average of 3.8 percent over the past 50 years. The government’s net interest costs totaled $881 billion in 2024, approximately two and a half times the amount in 2021.”
Our government took in $4.9 trillion in 2024 yet spent $6.8 trillion, $1.9 trillion more than the revenue it collected. If this trend continues, it appears that there is no end in sight to balancing the books and getting things back on track.
WHY RIFs & EARLY RETIREMENTS?
A significant portion of an agency’s operating costs are attributed to payroll, compensation, benefits, and travel (PCB&T). The average 2024 salary for all federal employees was $106,382, which increases to $143,643 when benefits are included.
When I worked with the FAA, the agency would typically hold off on hiring full-time equivalent (FTE) positions until the end of the fiscal year. It would use the funds saved during the year for special end-of-year projects, travel, awards, and other purposes. I would receive an allocation in late August that had to be spent by the end of September without fail. We then fast-tracked recruiting to fill the vacant slots, ensuring our budget wouldn’t suffer the following year. It was a never-ending cycle throughout my 35-year federal career.
The FAA’s total 2024 employment was 46,170; multiplying this by $146,643, the salary and benefits alone equal $6.7 billion, or 28% of its $23.6 billion budget. Adding travel, the percentage could easily exceed a third of an agency’s budget.
These figures could be low for the FAA since many of their employees, such as air traffic controllers, pay exceeds the average. According to the Occupational Outlook Handbook, the median annual wage for air traffic controllers was $137,380 in May 2023. When you add another $37,000 in benefits, the total salary plus benefits equals or exceeds $174,380.
Even though reorganizations and downsizing the workforce are inevitable and necessary in times like these, I mentioned in a previous article that the administration must lower the temperature and recognize that its actions disrupt many lives. Federal employees aren’t the root of the problem; it’s out-of-control spending, mismanagement, and the lack of oversight by Congress.
WHERE DOES THE MONEY GO?
Last year, mandatory spending for Medicare, Social Security, Medicaid, and other programs totaled $ 4.1 trillion. We only took in $ 4.9 trillion, and this doesn’t nearly cover the $ 2.6 trillion needed to fund discretionary spending and interest on the national debt. Governments cannot spend their way out of this death spiral; they must economize and raise revenue wherever possible.
Since the country’s annual revenue barely covers mandatory spending, the government must seek out fraud, waste, and abuse wherever it may reside, including within mandatory spending programs. The U.S. Government Accountability Office (GAO) reported that federal agencies made trillions of dollars in improper payments over the past two decades. They go on to report that between $233 billion and $521 billion is lost to fraud annually within the federal government! This is the Government Accountability Office (GAO) report!
WHERE TO FROM HERE?
Regardless of who’s in office, this issue had to be addressed. The following chart illustrates the scope of the debt problem and, unfortunately, the predicament in which we currently find ourselves. This chart compares the United States 2024 budget and spending to that of an average American family.
Government Budget Statistics for 2024
- United States Tax Revenue: $4,900,000,000,000
- Federal Spending: $6,800,000,000,000
- New Debt: $1,900,000,000,000 (Spending – Revenue)
- National Debt: $36,637,000,000,000 (Doesn’t include long term unfunded liabilities)
Now, remove eight (8) zeros and imagine it’s a household budget, as noted below. The title for each entry was changed to a related household category:
- Annual family income: $49,000
- Money the family spent: $68,000
- New debts: $19,000 (Borrowed in the Current Year)
- Outstanding debt: $363,700
The interest would be prohibitive. For example, consider the average total interest paid on the debt at a rate of 7%. Credit card and auto loan interest can be much higher than the current 6.73% home mortgage rate. The yearly interest would consume $25,459, or 51.9% of their annual family income, before household expenses are deducted!
THE END GAME
Agency RIFs and Reorganization Plans (ARRPs) are being fast-tracked through the end of this year and began with Phase One in March. Agencies must identify impacted positions and send out notices in Phase Two.
The government must improve its financial position by eliminating wasteful spending, rooting out fraud wherever it exists, and developing efficient ways to reorganize with minimal disruption. Additionally, it must develop strategies to boost GDP while mitigating inflation and lowering interest rates. A tall order for anyone in office.
