The American Spectator : How to Save $11.4 Billion This Year

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The Public Policy

How to Save $11.4 Billion This Year

The President is right that many tough choices need to be made to lower federal spending -- and here's an easy one.

Spending is out of control in Washington, and even liberals who have long supported Keynesian economics are starting to talk about reducing the national debt. President Obama recognized this sentiment last month when he created a bipartisan National Commission on Fiscal Responsibility and Reform.

This commission is tasked with making recommendations to Congress on how to fully cover the cost of the federal government's operations and programs by 2015. In announcing the details and members of his commission, the President stated: "For far too long, Washington has avoided the tough choices necessary to solve our fiscal problems."

The President is right that many tough choices need to be made to lower federal spending, balance the budget and bring down the national debt. But before these tough choices are considered, why not start out with an easy one?

Right now, Congress can make a singe change to current law that will save taxpayers $11.4 billion this year. According to recent Heritage Foundation research, in 2010 the Davis-Bacon Act will cost taxpayers $11.4 billion in expensive, artificially inflated wages that benefit a select group of workers.

The Davis-Bacon Act, a Depression-era wage subsidy law that is the last remnant of the old racist Jim Crow laws, was designed to block American blacks from construction jobs in the northeast. It requires that each public works contract over $2,000 contain a clause that mandates "prevailing" wages be paid. Contractors and subcontractors are forced to pay a "prevailing wage" set by the federal government. However, a recent government study showed that "prevailing wages," as determined by the federal government, were in error 100% of the time.

In fact, these wages rarely resemble local market conditions. In practice, Davis-Bacon wage scales are inflated union wages imposed on even the smallest of start-up companies.

Davis-Bacon wage rates are on average 22% higher than the standard wage rate in an area. Similar Heritage research revealed that, under Davis-Bacon law, the government pays four workers artificially inflated wages the same price it could pay five workers the local market rate.

This law disproportionately impacts small companies and rural businesses. Davis-Bacon law discourages small businesses from bidding on public projects because of the difficulty of meeting the complex and archaic reporting rules it requires. And, because it requires the payment of inflated union-scale wages, most small businesses are often priced out of competition -- leaving large, unionized firms to divvy up the work to be done under taxpayer funded federal construction contracts.

Requirements in Davis-Bacon law that workers be paid inflated wages increase the cost of completing federal construction projects. President Obama's "stimulus" bill required the payment of Davis-Bacon wages for all of the construction projects it funded, thus inflating the cost of these projects to taxpayers by $13 billion.

Davis-Bacon laws also impact small towns across America. Some communities decide to forgo federal dollars because a Davis-Bacon project would inflate the cost of their project by 8-35%, often by an amount that is more than the federal dollars involved. Davis-Bacon law results in fewer projects being built and fewer jobs created. The result is only four miles of highway built rather than five or only four bridges constructed when we could build five with the same money.

While union bosses may love Davis-Bacon law, it is wrong for the federal government to impose a union wage scale. Some Members of Congress have long made the argument that the federal government has no business interfering in the relationship between two consenting adults. But Davis-Bacon wage laws will not allow me to operate one of my son's excavators for $20 per hour, even if he and I agree that $20/hr is a reasonable amount.

Young construction workers need an opportunity to develop their skills. A law requiring that every machine operator earns only the highest wage locks young workers out of the trades.

As the President seeks bipartisan solutions to reduce the deficit and increase America's competitiveness, he should start by championing a repeal of Davis-Bacon law. Changing this law will save taxpayers $11.4 billion this year and even more in years to come. It will also increase employment in the construction trades by 22%.

With 20 million Americans looking for work and a crumbling infrastructure, it does not take a Harvard lawyer to make this decision. But then again, it does.

About the Author

Rep. Steve King is a Republican member of the U.S. House of Representatives from Iowa. He is a member of the House Judiciary, Agriculture, and Small Business committees.

Letter to the Editor View all comments (23) | Leave a comment

Busbar Processor Machine| 3.4.10 @ 8:14AM

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Shamus| 3.4.10 @ 8:37AM

Obama licks the boots of the union bosses.

WorkingStiff| 3.4.10 @ 8:59AM

Our socialist president would look at terminating Davis-Bacon right after giving up his pursuit of government control of medical care. The task is up to we the people.

Copyleft| 3.4.10 @ 9:01AM

I'd be happy to see a repeal of the minimum wage-scale law of Davis-Bacon...

If we can replace it with a salary cap for CEOs and Wall Street execs.

It'll never happen, of course, because Obama is a corporate-interest lackey like everyone else in Washington. Concern for the working class is all talk, no action--as usual. A "union boss" bootlicker? What a laugh! Obama hasn't done a THING for unions.

Ken (Old Texican)| 3.4.10 @ 9:36AM

Ahhh, Copyleft, but he HAS done a THING for Union BOSSES.

As usual, your comment is a shallow puddle.

Copyleft| 3.4.10 @ 11:31AM

Thank you for acknowledging that Obama is far from a "leftist."

See, folks? Even the most diehard of fascists (pardon the shorthand) can learn something if you make it obvious enough! Obama's about as "liberal" as Ann Coulter.

Ryan| 3.4.10 @ 1:58PM

What does "well-regulated" mean?

Copyleft| 3.4.10 @ 2:33PM

Is this going to be your "gotcha" routine, Ryan? Because it only works if I dodge the question; I haven't.

Well-regulated means exactly what the Supreme Court says it means--at all times, nothing more or less.

Try to keep up, will you?

JimE| 3.4.10 @ 10:10PM

Answer the question moron. Like you obama grovels at the anus of his masters, Soros and the unions.

mzk| 3.4.10 @ 3:16PM

Well, the right generally agree with you about Obama. But you seem to miss the distinction between freeing the market and controlling it.

There is a word for an economic system based on private corporations controlled by the govenment, which you appear to be advocating. It's called "fascism".

Copyleft| 3.4.10 @ 4:12PM

Incorrect. The definition of "fascism" means "a coprorate state," one where corporate power is merged with government such that all policies and actions are designed to promote corporate power and protect corporate profit (among other things).

No liberal would support that--even though it's dangerously close to what we have now.

No, public ownership of corporations is called socialism, which is very far indeed from fascism (and communism, for that matter). And even the salary-cap and minimum-wage laws we're discussing here don't come anywhere CLOSE to socialism in any form.

Do some reading. Learn the terms you're trying to throw around.

David T.| 3.4.10 @ 7:26PM

Copyleft

Who do you think takes the profits in a fascist system? It's the state, which the corporations serve. Fascism, socialism, communism--in the end they're all the same. They destroy the freedom and incentive of the individual in the name of the collective.

Ralph Novy| 3.6.10 @ 9:53PM

David T.:

Yeah. Good point. We need to not lose sight of the point: "Does the system (whatever you CALL it) exist for the sake of individuals' self-determined goals, or do individuals exist for the sake of that system's bureacratically generated objectives?"

JimE| 3.4.10 @ 10:11PM

But you aren't liberal, you are a useful idiot statist.

BA Cyclone| 3.6.10 @ 9:15AM

It is sad to see someone try so hard to pretend to be intelligent, yet willfully mischaracterize fascism...and in effect socialism as well.

gypsie| 3.4.10 @ 5:21PM

what the fuck would you know about the working class? You obviously don't work for a living. all you do is come on and rant like a fucking mommas boy

Ralph Novy| 3.6.10 @ 9:48PM

95% agree with you, Copyleft....EXCEPT.....

I wouldn't repeal Davis-Bacon.....I'd impose it on Congress. And strip their health benefits as fast as Larry Craig could tap his toes in a bathroom stall.

Would Obama WERE a true union guy.
Maybe if he'd been hired to clean up "Harvard Yard" instead of bithely strolling across it, he'd have a different take on things, eh?

dcd| 3.4.10 @ 9:22AM

eliminating crop subsidies would save another 8 billion a year

Oldefarte| 3.4.10 @ 11:34AM

The critical TRUTH of Rep. King's artical is that inflated union wage scales will be demanded/required by construction contracts by our government ["......In fact, these wages rarely resemble local market conditions. In practice, Davis-Bacon wage scales are inflated union wages imposed on even the smallest of start-up companies....."]; and that is the intent of the current partisaned, union supported policies and practices of this corrupt administration. It's noting but POLITICAL PAYBACK, and hopefully it is obvious to the American voters!!!!!

blackwatch| 3.4.10 @ 11:41AM

every department should be cut atleast 12%. I mean every department. The intergenerational theft that is occurring is criminal. My unborn grandchildren (if I ever have any) will be paying off this debt.

All of you big spender statists should think about that. How can you live with yourself?

fundamentalist| 3.4.10 @ 1:34PM

Cutting Davis Bacon is a good idea. (Cutting CEO salaries will not cut expenses for the feds, but it would cut revenue.) Here's some more:

Cut all federal wages 10%. On average, federal workers make far more than comparable workers in the private sector.

Sell gold. Why are we hanging onto it? Use the gold to pay off debt and reduce interest expense.

Sell land. The feds own about 80% of western states. Use the proceeds to pay down debt and cut interest expense.

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