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How Bureaucrats Captured Government

Thursday, June 20, 2013

Like reforming the spoils system of the 19th century, dealing with today’s incompetent, lazy, and corrupt public employees is a good deal easier said than done. As always with human affairs, self-interest rules.

In government, last year’s reform has a bad habit of causing this year’s problem.

For instance, take the federal civil service, that vast army of government workers (in 2011 there were 2,756,000 employees in the executive branch). It has been much in the news lately, thanks to burgeoning scandals at the IRS and elsewhere.

The civil service has been around since the Constitution took effect in 1789, when there were 40 employees in the Treasury Department and only five in the State Department. But there were no rules regarding the hiring and firing of civil servants at that time. They all served at the pleasure of the president.

When Thomas Jefferson became president in 1801, he discovered that most federal employees, having been appointed by presidents Washington and Adams, were members of the opposition Federalist Party. In the last two weeks of the Adams administration, Congress — still in Federalist hands until Inauguration Day on March 4 — had taken advantage of that fact to pursue Federalist self-interest. It had passed the Judiciary Act of 1801, establishing 10 new district courts, 3 new circuit courts, and 42 new justices of the peace, who were to serve 5-year terms. On March 3, Adams filled the newly created posts and the Senate confirmed them en masse. But the acting Secretary of State John Marshall (who had already been appointed chief justice) was simply unable to issue all the commissions before his power to do so evaporated at noon the next day. This gave rise to one of the most important cases in Supreme Court history.

Upon becoming president, Jefferson immediately ordered the State Department to withhold the remaining commissions. One of those thus deprived of office, William Marbury, sued, asking the court for a writ of mandamus compelling the State Department to issue the commission. In 1803, the case reached the Supreme Court. Chief Justice Marshall wrote the opinion in Marbury v. Madison. It sympathized with Marbury but denied him the writ, stating that the power of the Court to issue such a writ, given the Court by the original Judiciary Act of 1789, contravened the Constitution.

So, by denying Marbury his federal office and denying the power of the Court to issue writs of mandamus, Marshall established the vastly greater power of the Supreme Court to review acts of Congress.

Jefferson immediately began to replace Federalist workers with Democratic-Republicans, as his political allies were coming to be called. Andrew Jackson, creator of the modern Democratic Party, greatly expanded the practice of placing party loyalists in federal jobs, often firing the previous holders of the positions in order to do so. In 1832, one of Jackson’s allies, Senator William L. Marcy of New York, justified the practice by saying, “To the victor belongs the spoils” — the origin of the term “spoils system.”

The party men who were rewarded with federal jobs were expected to kick back a portion of their salaries to the party.

From then on, every time there was a change of party in the White House, there was a wholesale turnover of federal employees. This ensured that there would be little continuity in the federal bureaucracy and also little competence, as employees were chosen for their political loyalty, not their skills. And, protected by party affiliation, the members of the civil service did not work hard or, in many cases, work at all.

A reporter visiting New York’s City Hall in 1866 wrote: “We pass many open doors ... through which we see idle men with their feet upon tables smoking cigars. There are few buildings in the world, probably, wherein the consumption of tobacco in all its forms goes on more vigorously during business hours than the City Hall of New York. Smoke comes in clouds from many rooms, and the vessel which Mr. Thackeray used to call the ‘expectoratoon’ is everywhere seen.”

It was the same in city, state, and federal offices across the country.

Good government types began calling for reforming the spoils system that was so obviously a major cause of government inefficiency and corruption. But politicians, being human beings, tend to put their self-interest first. And they were deeply invested in the status quo. The reason was simple enough: the party men who were rewarded with federal jobs were expected to kick back a portion of their salaries to the party, and these “assessments,” as they were called, constituted a major percentage of party funds.

As cries for reform mounted, presidents tended to favor reform. Having climbed the greasy pole to the top, they had less need of patronage than did those who were still climbing. They also had more interest in efficient government, in order to make themselves, as chief magistrate, look good. In 1872, Ulysses S. Grant convinced Congress to establish the U.S. Civil Service Commission, which was supposed to set standards and qualifications for various federal jobs. But Congress was so unhappy with this threat to the spoils system that, after two years, it refused to fund the commission anymore.

Rutherford B. Hayes tried to reform the civil service through executive orders, banning, for instance, the practice of assessments, and forbidding political activities by federal office holders.

Protected by party affiliation, the members of the civil service did not work hard or, in many cases, work at all.

James Garfield also favored civil service reform, but nothing was done until Garfield was assassinated by a disappointed office-seeker. With a president as a martyr to the spoils system, reform at last became possible. Garfield’s successor, Chester Arthur, was an ardent advocate of civil service reform. This was, at the least, ironic, as Arthur had risen to political prominence through the agency of Roscoe Conkling’s Republican political machine in New York. He had held the extremely lucrative patronage plum of collector of the port of New York.

In 1883, Arthur managed to get Congress to pass the Pendleton Act, named for its principal Senate champion, George H. Pendleton, Democrat of Ohio. It outlawed assessments and required filling some federal positions through competitive examinations. It also forbade the firing or demotion of federal employees for political reasons and revived the U.S. Civil Service Commission, defunct since 1874. The three civil service commissioners were appointed for fixed terms to give them independence.

The Pendleton Act also allowed the president to enlarge the scope of the act, to cover more and more of the federal workforce. As the White House changed parties frequently in the late 19th century (in 1884, 1888, 1892, and 1896), departing presidents had an incentive to lock in the previously unprotected employees whom they had appointed, and so the spoils system gradually faded away.

The Civil Service Commission was abolished in 1978 and replaced with a number of often-overlapping successor agencies, such as the Federal Labor Relations Authority, the United States Merit Systems Protection Board, and the Office of Personnel Management.

But by taking away from politicians the power to hire and fire federal employees and giving it to a commission, a different set of self-interests — those of federal employees — began to cause new problems.

It was, after all, the employees of that Civil Service Commission who had to write the specific rules and regulations regarding hiring and firing. Being themselves bureaucrats, they naturally protected the interests of bureaucrats with ever-more elaborate procedures for termination. Under President Kennedy, many federal employees were allowed to unionize, adding still another layer of protection against being fired.

In 2011, only about one-half of 1 percent of federal employees were fired, about one-fifth the private-sector rate.

The number of procedures and appeals in place today means that it can take 18 months to fire a federal employee for cause, if it is possible to fire him at all. Thus, in 2011, only about one-half of 1 percent of federal employees were fired, about one-fifth the private-sector rate.

And the higher up the civil service ladder the employee is, the less likely he or she is to be fired. Of the government’s 35,000 lawyers, for instance, only 27 got canned in 2011, less than one-tenth of 1 percent. Thirty-three federal lawyers died on the job that year, six more than got fired.

Often it is a lot easier for managers to simply transfer an employee or even promote him so that he becomes someone else’s problem.

The inevitable result of employees who cannot be fired is, of course, a federal workforce that, feeling safe in their jobs, is not likely to overexert itself and is more prone to fall into corruption — as some employees of the IRS clearly have. More than a few master the art of skirting the edge of trouble. Senator Tom Coburn of Oklahoma estimates that over a seven-year period, the federal government lost 9,000 man-years of work due to employees who simply failed to show up to the office some days. That is not very different from the situation under the spoils system — although smoking, at least, has been banned from federal office buildings.

The solution, obviously, is a much reformed, simplified, and faster process for dealing with incompetent, lazy, and corrupt employees. But like reforming the spoils system of the 19th century, that is a good deal easier said than done. As always with human affairs, self-interest rules.

John Steele Gordon has written several books on business and financial history, the latest of which is the revised edition of Hamilton's Blessing: The Extraordinary Life and Times of Our National Debt.

FURTHER READING: Gordon also writes “Reforming the Law,” “Congratulations! You Have Arrived at the Greatest City on Earth,” “The Personal Income Tax at 100,” and “What’s in a Name?” Roger Bate discusses “Combating Corruption,” Arthur C. Brooks says “Dodd-Frank Is the Poster Child for Crony Capitalism,” Mark J. Perry points out “Red Tape Facts: Regulatory Costs Are Now The Second-Largest Item in a Family’s Budget,” John R. Bolton argues “Let’s Take Bureaucracy Out of Intelligence,” and Michael Auslin adds that “Washington Corruption Is like the Ancien Regime.”

Image by Dianna Ingram/Bergman Group

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