Politicians and newspapers talking about upcoming scheduled cuts in government spending are concentrating on the dire consequences from any cuts to the Federal Aviation Administration (FAA). The implication is that this is an agency with no fat and any cuts will go straight to the bone. (They probably felt that way in Spain when they couldn’t pay air traffic controllers $1.2 million per year anymore; in 2011 they started a process of competitive bidding for control tower operation and the results have been a roughly 50 percent cost saving (source).)
This gives me a chance to recycle my June 2011 posting about how three FAA employees came out to my house on two separate occasions and from as far away as Florida in order to make sure that I was surprising myself with random drug tests… of myself. Also to point out the 2004 Government Accounting Office report that says “Historically, the modernization program has experienced cost overruns, schedule delays, and performance shortfalls of large proportions and has been on our list of high-risk programs since 1995. To date, FAA has spent $41 billion and expects to spend an additional $7.6 billion through fiscal year 2007.” Have things improved since then? This fiscal year 2013 report says “Increasing airspace capacity and reducing flight delays depend on the successful implementation of the En Route Automation Modernization program (ERAM)—a $2.1 billion system to replace hardware and software at FAA’s facilities that manage high-altitude traffic. FAA originally planned to complete ERAM by the end of 2010. However, software problems have impacted the system’s ability to safely manage and separate aircraft and raised questions as to what capabilities ERAM will ultimately deliver. FAA rebaselined the program in 2011, which pushed its expected completion to 2014 and increased cost estimates by $330 million.” Four years and $330 million over budget… but actually “If software problems persist, the program’s cost growth could exceed $500 million, and delays could stretch out to 2016.”
It seems safe to assume that the FAA is representative of other federal agencies, neither dramatically worse or better in terms of efficiency.
If the unprecedented did occur and federal spending were to be cut it would be interesting to see what these agencies would do. Companies get more efficient when revenue falls but they have to worry about competitors. A government agency with no competition could simply cut back on services delivered. On the other hand, the agency could do that even without a budget cut if they were truly indifferent to output and productivity. Perhaps it is fear of being privatized or having responsibilities assumed by another agency that drives government agencies to try to deliver services. If so, in the event of a cut they should be motivated to do as much as possible with the available funds.
Did you happen to see this article in the Times from a couple of weeks ago? Airline Industry at Its Safest Since the Dawn of the Jet Age
Apparently, the FAA is doing something right.
Vince: Success has many fathers. If you’re a champion of government regulation you can attribute all of American success (“You didn’t build that” — Regulator in Chief Obama) to action by government employees.
Maybe the FAA should revisit the idea of following the Transport Canada (And other examples worldwide) of splitting off the air navigation service into a private-sector non-profit corporation.
In theory then you could eventually reduce the FAA funding by the amount it used to cost the Treasury to run the air navigation service.
http://onlinelibrary.wiley.com/doi/10.1111/j.1754-7121.2008.00004.x/full
David: I’m not sure that you’d have to do anything very radical at the FAA to absorb a 5-10 percent budget cut and continue the same level of service to the public. See http://www.downsizinggovernment.org/transportation/airports-atc for some statistics. In FY 2011 only $9.7 billion out of the total budget of $16.4 billion was for “operations”. I’ve interacted with a lot of FAA personnel over the years. The Tower controllers at Logan and JFK are certainly very busy when they are on duty but most FAA jobs, especially those outside of direct ATC operations, are quite a bit more relaxed than private sector aviation jobs and the pay is 2-4X higher.
[I guess it is kind of odd that the the pay is so high at the FAA. The workers don’t generally have skills that would be in high demand by some other employer here in the U.S. The government manages to retain lawyers, all of whom could in theory go work in the private sector, for between $50,000 and $130,000 per year. That’s a lot less than the FAA pays workers for jobs that don’t require a bachelor’s degree (admittedly these workers may have specialized training, but airlines manage to hire qualified jet pilots for $20,000 per year (I was one of them!) and gets those workers to show up for 16-hour days, 22 days per month).]
At some level, it really isn’t any more complex than going to McDonald’s and then to the Department of Motor Vehicles and comparing worker motivation and productivity. (Though I guess that supports your argument for privatization; if we cannot find any example of a government agency that is as productive as a typical private-sector enterprise then we should privatize more stuff (though in fact, government contractors who have been given a monopoly don’t seem to do any better than direct government agencies).)
[Separately, look at http://www.nytimes.com/2013/02/24/business/high-debt-and-falling-demand-trap-new-veterinarians.html for what happens in an industry that doesn’t have a fountain of taxpayer dollars as a revenue source. The average starting salary for a veterinarian, whose training is more or less the same as a medical doctor’s, is $45,575 per year. Over a full career this rises up to a median of $82,000 per year according to http://www.bls.gov/ooh/healthcare/veterinarians.htm ]
This is hilarious. Being a pilot I (mostly) love the ATC (Air traffic controllers). They are competent and helpful (at least in the western half of the US). BUT having spent a large portion of my life building buildings and leasing them to various federal agencies I can say from first hand observation that the FAA was by far the most useless, wasteful, dysfunctional agency we dealt with. Note that this was the bureaucrats and “managers” not the people who actually did the work out in the field.