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Press Release

Bureaucratic Insecurity vs. Homeland Security


With elections just around the corner, Washington is providing a prime example of how politics rather than policy drives legislation. Beleaguered efforts to create the new Homeland Security Department have bogged down in partisan disputes over labor relations in the federal government, with terrorism taking a back seat to old-fashioned special interest politics. President Bush has vowed to veto any bill that hamstrings the new agency. On the other hand, Senate Democrats, who face a tight race to maintain control of the Senate, are seeking opportunities to shore up union support in the Homeland Security bill.

The current spate of fighting raises important questions about creating a new government agency. The administration’s proposal was a major restructuring of the federal government. The new agency will include components taken from 22 different federal agencies and comprise a workforce of 170,000 government employees. In addition to combining these disparate pieces into a functioning organization, the new plan must also create a management structure for all the new employees. This is where the trouble begins. The different federal agencies were unionized to varying degrees in the past, and they have all negotiated various benefits over time. Maintaining these perquisites has become a major sticking point, and key senators are working to ensure unions have a say in approving any new management structure.

President Bush, citing national security concerns, has called for greater flexibility in management, which means some deals struck in the past may eventually fall by the wayside. In particular, the president wants the department to have the ability to hire and fire employees at will. Additionally, the president wants to adopt policies such as merit pay, where salaries are determined by performance rather than seniority and civil service pay scales. The president’s position is based on the need for expediency in times of crisis and is supported by existing practices, which exempt national security functions from some union agreements and civil service requirements. The FBI, and CIA for example, are exempt, as are the FAA’s air marshals.

Unions view these attempts at flexibility as a power grab that will harm public sector employees, who comprise the fastest growing portion of their membership. In fact, the unionization rate in the public sector was over 37 percent in 2001, compared to a private sector unionization rate of 9 percent. Determined to protect an important source of membership, unions have been pressuring Congress to address a broad array of issues in the legislation. Not surprisingly, these issues include policies that increase the rigidities in the public sector labor market.

In addition to management questions, the Senate version of the bill, sponsored by Sen. Joe Lieberman (D-Conn.) includes provisions to expand Davis-Bacon provisions, an archaic labor law that raises the costs of projects by forcing contractors to pay “local prevailing wages” as established by the Department of Labor. These wages tend to be higher than market wages and raise the costs of federal contracts. In fact, the Congressional Budget Office noted that Davis-Bacon provisions cost the federal government $10.5 billion over ten years. Expanding Davis-Bacon through the Homeland Security act needlessly raises the costs of government while imposing new burdens on taxpayers that have nothing to do with national security.

Ultimately, the nation as a whole bears the costs of the bureaucratic infighting that is moving forward. This new agency is supposed to enhance homeland security, and inefficiencies in the administration of this agency will be amplified across the economy. If the safety of the nation’s airports, ports, and borders are not secure, the only alternative is to avoid activities in these areas. This means less economic activity at a higher cost and potentially slower economic growth.

Homeland security is an important issue that should not be left to politics. From the farm bill, to the energy bill, to the appropriations now under consideration, Congress views legislation as vehicles of opportunity. Special interests congregate in the halls of Congress, hoping for a chance to press their cause into legislation. Clause by clause, government grows as taxpayers bear the burden of subsidies and favored treatment for special interests. Bickering over homeland security may pose a double duty tax on Americans: bigger government and a new agency that is ill suited for the challenges of today’s world.