Arkansas Gov. Asa Hutchinson, a Republican presidential candidate struggling in the polls, has proposed cutting the federal civilian workforce by 10%, a proposition that could save taxpayers billions and bring new challenges to the federal government.
Hutchinson’s 10% federal civilian workforce cut isn’t new – the Congressional Budget Office studied it in 2018 – but it could result in savings for taxpayers, depending on how such cuts were implemented, according to an analysis from the nonpartisan Committee for a Responsible Federal Budget.
The Committee for a Responsible Federal Budget estimated Hutchinson’s 10% cut could save between $50 and $350 billion over a decade. The details on how it gets done matter here.
“We estimate this proposal could save the federal government as much as $350 billion over ten years if workers were laid off immediately, $150 billion if the policy was implemented through attrition of workers, and about $50 billion if exemptions were added to the policy,” according to the report from the Committee for a Responsible Federal Budget. “Realization of these savings would be contingent on reduced appropriations levels to account for the lower costs.”
The federal government employs about 2.25 million military personnel and about 2.25 million civilian personnel, excluding postal workers. Nearly 60% of the civilian personnel work for the Departments of Defense, Veterans Affairs and Homeland Security. About 43% worked in the Department of Defense or Department of Homeland Security, and about 17% were employed by the Department of Veterans Affairs, according to a 2018 analysis from the Congressional Budget Office.
The Committee for a Responsible Federal Budget estimated that the federal government spent about $350 billion on civilian workers last year (at a cost of more than $150,000 per worker, including wages and benefits).
An immediate 10% cut, which would save taxpayers the most money, is unlikely.
“Laying off that many current employees all at once would require substantial changes to laws surrounding federal workers and could be highly disruptive,” according to the Committee for a Responsible Federal Budget. “More likely, lawmakers would implement this policy by shrinking the federal workforce through attrition – for example, by hiring no more than one new employee for every two employees that leave or retire.”
The Congressional Budget Office studied the attrition budget option in 2018. That proposed reducing the workforce at each federal agency by 10% through attrition while allowing the President to exempt certain agencies for national security reasons or emergency needs. The CBO estimated at the time that this option would reduce the deficit by $5.3 billion to $35 billion from 2019 through 2028.
But again, the details matter.
“A large source of uncertainty in this option’s estimate of savings over the next 10 years is CBO’s estimate of the portion of workers who would be exempt from this requirement,” according to the CBO report. “To determine that number, CBO examined data from the two most recent government shutdowns. On the basis of the number of employees who continued working during those shutdowns, CBO estimates that about two-thirds of the federal civilian workforce would be exempt from this requirement.”
That’s not the end of the uncertainty.
“Importantly, the actual savings from this proposal are uncertain. It depends not only on how the workforce is reduced and who is exempted, but also on the pace of reduction, the cost of the employees the policy applies to, and the contribution of those employees to the federal government’s bottom line,” according to the Committee for a Responsible Federal Budget report. “Reduction in the size of the federal workforce could also affect the quality, accuracy, and timeliness of government benefits and services.”
The Committee for a Responsible Federal Budget also noted that “savings from reducing the federal workforce would accrue on the discretionary side of the budget and therefore would only translate to lower federal spending if policymakers reduced discretionary agency budgets as well. Without a reduction in funding, there may be little to no savings generated from the smaller workforce, especially if it resulted in more work being contracted out at higher costs.”
