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Brooks Wilson's Economics Blog: Congressional Raises

Saturday, December 20, 2008

Congressional Raises

Jordy Yager of The Hill reports that lawmakers are set to receive a 2.8% automatic raise, half of what social security recipients are set to receive.  The increase amounts to $4,700 annually.  The system of automatic pay increases was established by Congress to avoid the periodic spectacle of granting themselves a raise. 

Like the Wizard of Oz, Congress would tells us to "pay no attention to the 'formula' behind the screen," advice which Dorothy and her companions promptly ignored.  Daniel O’Connell, chairman of The Senior Citizens League (TSCL), a legally non-partisan, but fiercely pro-senior group observed,

As lawmakers make a big show of forcing auto executives to accept just $1 a year in salary, they are quietly raiding the vault for their own personal gain.  This money would be much better spent helping the millions of seniors who are living below the poverty line and struggling to keep their heat on this winter.

I do like the irony of Congress taking heat over their raises after humiliating auto and bank executives over their salaries as if Congress knows what they should make, but otherwise I support the pay increase for two reasons.  Given the importance of their jobs, they are not overpaid, and if we do not give them raises, they are likely to find other ways to pad their wallets, some legal and some not.

Gary Becker, the winner of the 1992 Nobel Prize winner in economics writes in his blog

I do believe the evidence is that better paid officials are less corrupt. Rank both corruption and the pay of officials (relative to the average in their countries). I believe the correlation between these ranks would be strongly negative, although I have not seen such an approach carefully done.

I agree with Becker.  Of course, another way to limit corruption is limit what Congress has to sell.

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