Mass Federal Firings Will Hurt State And Local Budgets In Maryland. Is This Anyway To Run A Business?

This column appears in the March issue of The Business Monthly serving Howard and Anne Arundel counties.

A half century ago, I spent a year in the belly of the federal bureaucracy at the Social Security Administration. I was a GS-7 in the Health Insurance Inquiries Branch of the Bureau of Health Insurance. That’s the peoplewho ran Medicare before it became a separate agency.

I analyzed letters sent by important people like U.S. senators and congressmen to the top dogs in the government about Medicare and I drafted responses to these important people to be sent out by the top dogs like the Social Security commissioner and the secretary of what was then HEW, Health, Education and Welfare.

It was not hard work compared to the folks at Social Security who deal with the public in local offices or handle the huge amount of records and money associated with the program. I remember spending a lot of time in the library up near the commissioner’s office.

This was back in the inefficient days before personal computers and sophisticated copy machines. We had IBM Selectric typewriters, dictation equipment and lots of carbon paper. For our younger readers, do I need to explain what carbon paper is?

All the cutting and pasting of standard responses so easy to do today had to be done by hand and retyped by women in the typing pool.

Responding for the president 

I especially remember the day when I was sitting at my recently repainted metal government desk in my gray government swivel chair, picking up the Dictaphone and starting the letter to some poor soul who had written to President Ford. The man’s letter had trickled down the bureaucracy to my desk for a response by the head of Social Security. I began to dictate: “The President has asked me to respond to your letter.”

If the letter writer had been an important someone to which the White House itself would need to respond, an analyst of a higher grade than me would prepare a “White House draft” that required 17 carbon copies – a copy for every bureaucrat up the chain of command who would need to sign off.

The whole idea was to make sure the government was speaking with one voice about the Medicare program. Does this sound wasteful? Were my unproductive visits to the library fraud or abuse? If there was work to be done, I did it. If I finished early, I couldn’t very well go home.

Is there waste fraud and abuse in the federal government? Of course there is. I had two close relatives who were health providers at Veterans Affairs, the nation’s largest health system and the second largest federal employer after the Defense Department. Did they ever encounter incompetent managers and providers? Did they see employees who abused sick leave and who did the least amount of work required? Stupid rules and regs that wasted time and money? Of course they did.

Eliminating waste, fraud and abuse in federal agencies can’t be achieved by the sort of indiscriminate mass firings that have been occurring. Good workers get thrown out with the bad, and ultimately the work doesn’t get done. For some ideologues, that’s the point. Cut enough people and money, and the work doesn’t get done, proving once again that the federal government can’t do anything right.

Let’s run government like a business, they say. So let’s cut those awful people at the Internal Revenue Service. But, what business looking to cut expenses and raise profits would make cuts in its billing department that brings in the revenue?

Losing taxpayers, revenue

The actions in Washington will have an immediate impact on state and local budgets in the form of lost revenue.

Those fired federal employees are also Maryland taxpayers who won’t be paying taxes. The people being laid off at the headquarters of Catholic Relief Services in Baltimore because of the elimination of the U.S. Agency for International Development, which supplied the bulk of its funding, are Maryland taxpayers too.

It’s long been known that Maryland is heavily dependent on the federal government for its economy tax base.

At least 8% of Maryland taxpayers work directly for the feds. Then there is the $42 billion in contract spending by the federal government here, about half of that from the Defense Department to places like Johns Hopkins Applied Physics Laboratory.

Almost 30% of Maryland’s $67 billion state budget comes directly from the federal government, primarily for Medicaid health insurance – $10.3 billion – and food aid – $1.9 billion. And that doesn’t count federal dollars that go directly to county governments for education and law enforcement.

The state was already facing a $2.7 billion deficit that Gov. Wes Moore was filling with a combination of reduced spending and higher taxes. But the size and scope of the potential cuts by the Trump administration may require even steeper budget adjustments. At this point, no one knows for sure.

Those tax hikes were billed as a “reform” that lowered taxes for the majority of taxpayers and raised them primarily for the rich. But a deeper analysis by the Comptroller’s office paints a different picture of a plan that shifts brackets and eliminates itemized deductions.

“Most taxpayers will be impacted by the changes,” says the report from the Board of Revenue Estimates. “About six in 10 will have a modest decrease (average of $173) while two in 10 will have a larger (average of $1,458) tax increase. In general, the proposal will reduce tax liabilities for most lower-income taxpayers and increase liabilities for higher-income taxpayers, particularly for taxpayers with the most income, who would have paid $20,800 more in taxes, but many taxpayers with modest income who itemize would have paid more taxes.”

In Anne Arundel and Howard counties, for instance, about a third of households making $100,000 to $200,000 per year would pay more in taxes.