October 12, 2011
Tim Kauffman
[email protected]

Union Commends Lawmakers for Proposing Steep Reduction in Taxpayer-subsidized Contractor Compensation

WASHINGTON – The nation’s largest federal employee union today commended a bipartisan group of lawmakers for proposing a steep reduction in the compensation that government contractors can charge taxpayers.

The American Federation of Government Employees for years has been calling attention to runaway contractor payments. Government contractors currently can charge taxpayers $693,951 a year for each of their five most highly paid executives, a benchmark that has more than doubled during the past 12 years. Other contractor employees are not subject to the cap and can earn far larger salaries that are subsidized by taxpayers.

AFGE believes the reimbursement rate should be capped at $200,000, which is the maximum salary for a Cabinet secretary, and applied to all contractor employees. This would save the government $50 billion over 10 years. Lowering the cap would not limit how much these contractor employees can earn, only how much can be charged to the government.

“Federal employees have had their own salaries frozen for two years to help reduce the deficit, yet nothing is being done to trim out-of-control contractor spending,” AFGE National President John Gage said. “Taxpayers should not be on the hook for these outrageous salaries that no one in government earns – not federal employees, not members of Congress and not even the President of the United States.”

A trio of lawmakers – Sen. Barbara Boxer, D-Calif., Sen. Charles Grassley, R-Iowa, and Rep. Paul Tonko, D-N.Y. – sent a letter to the Joint Select Committee on Deficit Reduction on Oct. 12 urging the supercommittee to significantly lower the reimbursement rate and expand it to cover all contractor employees.

“We do not believe that taxpayers should fund government reimbursements for private contractor salaries that are more than three time higher than the pay earned by Cabinet secretaries,” the lawmakers wrote. “When salaries are paid on the taxpayer’s dime, a $700,000 price tag for an executive is simply unaffordable.”

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