13th annual Municipal Finance Conference


13th annual Municipal Finance Conference



Democracy on the Cheap

June 1, 2002

It has been two years since Congress mustered the courage to double the president’s annual salary to $400,000. It was the first presidential pay increase since 1969, restoring some of the purchasing power lost to more than 30 years of inflation. Now it’s time to do the same for the rest of the government’s leaders.

American democracy gets what it pays for. Absent a significant pay raise, government’s top posts will only appeal to the very wealthy, the hyperzealous or the easily corruptible. The wealthy couldn’t care less about money. President Bush made more money last year from outside sources than from Uncle Sam, and Vice President Dick Cheney paid roughly $1.7 million in taxes—10 times as much as he made from public service.

The hyperzealous don’t care about money either. The lower the paycheck, the greater the martyrdom for the cause.

In contrast, the easily corruptible care too much about money. They are willing to trade their honor for petty treasures of furniture and china. Rep. Doug Ose, R-Calif., brought this practice to light in an investigation of President Clinton’s highly successful campaign to collect farewell gifts at the end of his administration.

In most democracies, the presidential pay increase would have pulled up the rest of the federal government’s sagging salary structure. But the United States is no ordinary democracy. Congress sets the pay rates for government’s other two branches. Lawmakers long ago coupled their salaries with those of judges and presidential appointees, not the president’s. If congressional salaries don’t rise, neither does the pay of judges, presidential appointees or career executives. As a result of this de facto cap, 80 percent of federal executives now make the same pay regardless of their level in the hierarchy.

Congress decided not to raise its own salaries in 1999, so now the president makes more than twice as much as Supreme Court justices and members of Congress do, not to mention his vice president and his top appointees. Add in the value of free food and lodging, and the president’s compensation is completely out of line with what members of Congress and the federal judiciary are paid. In the Constitution’s finely tuned system of checks and balances, Congress and the judiciary should make as much as the president does.

This imbalance is just one of the arguments for reforming the way we pay our leaders. Far more important is the growing gap in pay between government leaders and civic and corporate executives. Federal district court judges barely earn as much as first-year associates at America’s largest law firms, while the nation’s egregiously overpaid corporate executives make 93 times as much, on average, as members of Congress do.

Presidential appointees trail in virtually every comparison. According to a recent report from the Brookings Institution’s Presidential Appointee Initiative, the commissioner of the Internal Revenue Service makes roughly one-tenth as much as an equity partner in one of New York’s largest financial firms and one-sixth as much as the general counsel for a Fortune 1000 firm. The head of the Food and Drug Administration makes roughly one-twentieth as much as the heads of the pharmaceutical companies the agency regulates.

The gaps are particularly hard on the federal judiciary, where Congress has gotten into the habit of denying federal judges the annual cost-of-living increases prescribed by law. As a result, federal district and circuit court judges have lost almost 25 percent in purchasing power to inflation since 1969, while Supreme Court justices have lost 38 percent (more than half of that since 1993).

Equally troublesome, Congress has refused to give judges the same local cost-of-living adjustments that help federal civil servants in high-cost cities such as New York, Boston, San Francisco and Los Angeles. Although the Constitution expressly prohibits Congress from cutting the salaries of judges, its inaction has done just that.

Members of Congress have also suffered from this penury. Inflation has cut the purchasing power of their salaries, even as the costs of keeping residences in Washington and back home have skyrocketed. As Supreme Court Justice Stephen Breyer wrote in February, Congress “has treated judges no worse than it has treated itself. It has cut its own salaries just as it has cut those of the judges. And its doing so may well work similar harm upon all federal government institutions.”

The pay gap is already working its will on democracy. It’s no surprise that early retirements are on the rise in the federal judiciary, or that potential presidential appointees might reject the president’s call.

George W. Bush is the best person to convince the nation to raise salaries for Congress, the judiciary and appointees. His credibility with the Republican right would silence their attacks, and he has enough support from signing the recent campaign finance bill to blunt the inevitable criticism from Ralph Nader and his followers.

Bush was close to opening the conversation last year, but he got sidetracked when Sen. Jim Jeffords, I-Vt., bolted from the Republican Party. It’s time to get the dialogue started. America cannot run its democracy on the cheap for long.