Bureaucrats not only make twice as much as normal people; the more fuss and bother they make for us, the more they're paid

By now, most Americans are familiar with the newly revealed statistics concerning federal pay. As we slept, as it were, our federal minders awarded themselves impressive pay/benefits increases that average out to $123,000 per year, compared with $61,000 in the private sector.

This is remarkable on its face considering that those of us in the private sector produce goods and services to earn our wages, while a federal government that lacks resources must expropriate our wealth in order to fund its own activities. To put it simply, federal employees have enjoyed larger average pay and benefits increases for nine straight years, and their benefactor has been us.

To say things are presently upside down is to describe the present situation very mildly. Most of us in the private sector have naively believed for a long time that in return for job security and the ability to work free of the profit-and-loss worries, that government workers have accepted reduced compensation. It's apparent now that all the benefits of "public service" apply, plus the pay trumps by far what one could hope to command in the private economy, recession or no recession.

Sadly, however, that's not even the bad news.

Indeed, as the defenders of federal pay would no doubt tell us, the comparison between federal and private workers isn't an apples to apples comparison. To hear them say it, federal workers have on average higher skill sets and are often advanced when it comes to education.

This should in no way appease us. If it's true that government workers are more educated and in possession of greater skills, then it's also true that a still-difficult economic situation has been made more difficult by virtue of some of our best and brightest offering their skills to the inefficient government sector over the private economy. Their gain is the recessed economy's loss.

I was under erroneous impression then that only public, health and education sectors showed growth. Rahm, David, we need to correct that! -- Growing public sector is central to our succes

It should also be remembered the perverse incentives that exist among federal workers. Not able to advance based on profits, and doing more with less, workers in the government succeed the more the bureaucracy they work for grows, the more lawsuits they win against private actors, the more regulations they impose, and the more fines/fees they lift from the increasingly empty hands of the average American taxpayer.

Not only are we fleeced to cover the rising pay and gold-plated benefits of federal workers, we're essentially paying them to make our lives more difficult. The more they're able to do so, the more they advance.

Despite the feeble economy, workers often come and go, and extending jobless benefits would discourage work-seeking

Congressman John Boehner recently suggested that President Obama replace his top economic advisers. I think he may have a point. The economic "recovery" has been disappointing, to put it mildly, and it has become increasingly clear that the blame lies with the policies of the Obama administration, not with those of its predecessor.

In general, the current administration has been too focused on expanding government, redistributing more from rich to poor, and stimulating aggregate demand. I have previously criticized the stimulus package as cost-ineffective. In particular, whatever tax reductions were in the package did not involve the cuts in marginal income tax rates that encourage investment, work effort and productivity growth.

Now the administration wants to kill the 2003 income-tax cuts, at least the parts that reduced marginal income tax rates for high-income earners and for all recipients of dividend income. This proposal is particularly disturbing because the 2003 law was George W. Bush's main economic achievement; unlike most of Mr. Bush's policies, this one was well-conceived and effective.

I want to focus here on another dimension of the Obama administration's policies: the expansion of unemployment-insurance eligibility to as much as 99 weeks from the standard 26 weeks.

The unemployment-insurance program involves a balance between compassion—providing for persons temporarily without work—and efficiency. The loss in efficiency results partly because the program subsidizes unemployment, causing insufficient job-search, job-acceptance and levels of employment. A further inefficiency concerns the distortions from the increases in taxes required to pay for the program.

In a recession, it is more likely that individual unemployment reflects weak economic conditions, rather than individual decisions to choose leisure over work. Therefore, it is reasonable during a recession to adopt a more generous unemployment-insurance program. In the past, this change entailed extensions to perhaps 39 weeks of eligibility from 26 weeks, though sometimes a bit more and typically conditioned on the employment situation in a person's state of residence. However, we have never experienced anything close to the blanket extension of eligibility to nearly two years. We have shifted toward a welfare program that resembles those in many Western European countries.

The administration has argued that the more generous unemployment-insurance program could not have had much impact on the unemployment rate because the recession is so severe that jobs are unavailable for many people. This perspective is odd on its face because, even at the worst of the downturn, the U.S. labor market featured a tremendous amount of turnover in the form of large numbers of persons hired and separated every month.

For example, the Bureau of Labor Statistics reports that, near the worst of the recession in March 2009, 3.9 million people were hired and 4.7 million were separated from jobs. This net loss of 800,000 jobs in one month indicates a very weak economy—but nevertheless one in which 3.9 million people were hired. A program that reduced incentives for people to search for and accept jobs could surely matter a lot here.