The Carousel of Political Appointees

February 9, 2025

by Stephen Stofka

This Super Bowl weekend, I’ll take a short break from the debate series and take a brief look at the Federal workforce. Next week I hope to have a debate on the Central Power of the Federal Government.

Since Donald Trump took the oath of office on January 20th, he has enlisted Elon Musk to head an effort to trim the civilian federal workforce (CFW). These employees do not include the men and women serving in the Armed Forces. Musk leads an unofficial department called the Department of Government Efficiency (DOGE) designated by President Trump to root out “waste, fraud and abuse.” Several lawsuits have challenged the authority and methods of DOGE to make personnel decisions. Several DOGE employees have access to personal credit and medical information but have not passed a background check (Source). This is a fluid situation sparking controversies each day. I wanted to understand the structure of the CFW as a context for this evolving story.

CFW employees fall into one of two categories: competitive service workers who must pass examinations to be hired and advance within the organization, and political appointees who are excepted from such requirements. The former are permanent or career employees and serve under several Presidential administrations regardless of the party of the President. This system promotes stability within a shifting political environment and was a response to the former system of patronage. The latter are temporary employees and leave the CFW when a new President takes office. Within each classification, there are several subcategories. For interested readers, I will list the various classes of employees in the notes.

Last summer the Partnership for Public Service published an analysis of 2023 data from the Office of Personnel and Management (OPM), the HR agency of the of the federal government (Source). There were over two million permanent full-time employees in the CFW, an increase of 140,000, or 7% from 2019 levels. OPM lists the current level of the CFW at 2.2 million (Source). The majority of the increase was in response to the Bipartisan Infrastructure Law passed in 2021, the first year of the Biden administration, when the Democrats held a “trifecta,” all three branches of government. The law benefited both red and blue states but has been criticized for the embarrassing flaws in its implementation.

The bill contained $42 billion to expand internet access, particularly to rural areas. Nothing has been connected yet. Over $7 billion was earmarked for electric vehicle charging stations but fewer than fifty have been built. To provide some comparison, consider the case of a Denver suburb that hired HDR, a private company, to complete a full renovation of a county library, expand the building and construct four charging stations (Source). HDR completed the project in three years, roughly the same time period since the passage of the 2021 law. Federal projects are plagued with a cumbersome process that makes delays inevitable and diminishes public confidence in the competence of the federal government. When President Trump and Elon Musk claim that they can fix the problem, their supporters believe them.

President Trump would like to undo much of what his predecessor, President Biden, accomplished. Trump could argue that he is simply resizing the CFW to pre-pandemic levels. According to the Partnership for Public Service, 71% of the CFW is defense or national security related. Twenty-one percent of federal employees are in the Department of Veterans Affairs (Source). Cuts to those programs will be unpopular with MAGA supporters and Republican lawmakers. Fifteen percent are medical personnel, some hired during the Covid crisis, and might become a target for dismissal. Many of those provide medical service to active military and veterans. USAID and the EPA have long been targets of Republican condemnation. Trump says he wants to close USAID. The EPA could be next. In response to several lawsuits, the courts will have to decide whether the executive branch has any authority to eliminate a department or agency created by Congress.

Excluding Postal Service workers, there are 2.2 million employees in the CFW (Source). Only 9000 are political appointees and listed in the OPM’s Plum Book (Source). President Trump wants to follow through on an executive order he signed just before the 2020 election that was rescinded by Biden (Source). That order envisioned a plan to convert 50,000 federal employees into a new type of political appointee called Schedule F that would be loyal to Trump’s policies (Source).  

In his first term, Trump became convinced that career civil service employees were sabotaging the policies of his administration. Political appointees carrying out the policies of then President Trump were frustrated by the delaying tactics of career employees who may not have agreed with those policies (Source). Many career employees have done their jobs for both Democratic and Republican administrations. They would claim that they are loyal to the law, not to any one President. Although Trump took an oath to uphold and faithfully execute the laws, his loyalty is to his opinion and vision, not the law. He follows the tradition of President Nixon, who believed that the three branches of government are not co-equal. Nixon regarded his interpretation of the law as the law.

The appointment system is bit complicated but is designed to balance power and interests. President Trump is used to running a family business and does not like checks and balances because they diminish his power. On the other hand, voters elected the President, and he should be able to have some confidence in the personnel who execute public policy. Career civil service employees are a welcome alternative to the patronage system that existed in the 19th and early part of the 20th century. However, a large class of employees with virtual tenure can become insulated from the public will. Those employees can develop a culture that is resistant to policy changes. Within the context of a CFW of more than two million employees, shifting the status of 50,000 employees can seem modest to some. Does the executive have the authority? Will the courts and Congress stand by while the executive alters a workforce structure constructed by Congress?

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Image by ChatGPT

The first type of position are presidential appointees with Senate confirmation (PAS). These positions promote a balance of power between Senators and the President.

The second type of position are Presidential appointees that do not need Senate confirmation. This gives the President the autonomy to build an executive team that will implement the policies he wants. These make up 5% of appointees.

The Senior Executive SES-NA and SES-GEN appointees make up half of the SES class and almost half of all 9000 appointees. The other half of SES employees are filled by career appointees on a competitive basis to ensure some impartiality.

The Schedule C (SC or SL) positions allow agency heads to place key policymakers with some expertise in an agency but only after approval by the Office of Personnel Management, a check on political discretion (Source).

The Schedule C (XS) statutory positions legislated by Congress strike a balance of Presidential discretion and Congressional policymaking. Most of these positions are in agencies with financial functions or international jurisdictions like USAID. They are GS-15 or lower and Congress has exempted them from competitive hiring (Source).

New Technology, New Laws

July 16, 2023

by Stephen Stofka

This week’s letter is about the impact of the internet and digital technologies on our laws. New technologies introduce new connections between people and institutions. What was once separate when a law was written becomes joined under the new technology. Advocacy groups emerge to pressure policymakers to shape new laws and regulations that incorporate a recent technology.

Over twenty years ago, the increasing volume of internet sales not subject to sales tax challenged the meaning of tax nexus. This was a retailer’s physical presence within a state that required it to collect sales tax on purchases and remit those collections to the state. The Sales Tax Institute has a nice explainer on the various types of nexus and the history of court decisions on the topic. Several characteristics of cryptocurrency have challenged policymakers and legal interpretations.

On Thursday, the stock of the Coinbase exchange shot up 25% on the hope that it will prevail in its attempt to operate outside SEC regulations, those that govern conventional market exchanges and securities brokers. A month ago the agency had charged Coinbase for operating as an unregistered securities exchange. On Thursday, a district court judge in a case involving another blockchain ruled that crypto assets were not securities in many cases. The judge cited the Howey test, a 1946 Supreme Court decision that set forth characteristics that defined a security. This past March an article at Coin Telegraph explained the history of the Howey test.  The key phrase in the Howey decision is that an investment contract is “an investment of money in a common enterprise with profits to come solely from the efforts of others.” Is crypto a “common enterprise” whose profits come “solely” from the efforts of others?

The judge’s ruling strengthens the argument by some that crypto has many characteristics of a collectible, which is not considered a security. Classifications rely on shared as well as distinguishing characteristics. Anomalies challenge classification the way that the platypus challenged biologists’ definition of a mammal. Advocates of crypto claim that it is a trustless system of exchange but let’s examine that claim.

A barter transaction between two people is the only exchange that does not involve a third party in some way. Trust is an implied intermediary in an exchange between two parties. Crypto or cash, there is some third party involved in a transaction. Our cash money may read “In God We Trust” but our trust is really in the Federal Reserve, an agency of the U.S. Government. Crypto exchanges have a fiduciary duty to the owners of the crypto coin the exchange holds. That fiduciary duty invites government regulation and it will be a battle of advocacy groups to shape the laws that create those regulations. This week Coinbase may be confident that it will prevail against SEC regulation but there will be an ongoing effort to impose some regulation to protect owners of crypto. As policy is shaped over the coming years, crypto owners can expect that crypto exchanges will experience similar abrupt reevaluations.  

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Photo by Earl Wilcox on Unsplash

Conservatism

Modern day conservatism and liberalism have several contradictions which make it difficult to forge pragmatic policy based logically on either theory.  Today I’ll look at the contradictions of the conservative philosophy.

Conservatism emphasizes individual freedom in a pro-forma manner but the philosophy particularly targets individual economic freedom.  Conservatism professes a support for moral freedom but herein lies one of many contradictions in the philosophy.  Advocating for tradition and the nuclear family, conservatives all too often prescribe moral values as part of their philosophy.  Politicians in the social conservative camp thus propose laws which aim to enforce certain moral choices – in effect, curtailing moral freedom.

Conservatism champions free market capitalism as the economic structure which will give the most individual economic freedom.  The haphazard to and fro of the marketplace does not promote social equality or deliver restorative justice and conservatives contend that government has no business intruding on an individual’s economic freedom in order to accomplish either of these goals.  Thus conservatism maintains that all government income redistribution schemes are baseless.  Here conservatism reveals its utopian roots.  While liberal philosophy has utopian aims, conservatism has utopian means.  In principle, free market capitalism is a sum of individual choices.  In practice, the participants in a free market try to gain an economic advantage through legal or political access, thus compromising the freedom of other individuals to make choices in their own self interest.  This inevitable contamination of the pure utopian model of capitalism transforms it to some degree into an income redistribution scheme.

Conservatives argue for limited government at the federal level but steadfastly propose a strong national defense, which requires more spending, more taxes and an increased intrusion by the federal government on both individuals and the separate states.  Despite their professed support for individual freedom, many conservatives have supported a military draft during the past century.  In addition to government’s role to protect its citizens from external threats, conservatism advocates a strong role for government to maintain an internal order.  Thus, conservatives support a strong police presence, a well funded judicial administration and penal system to dissuade and punish those who make moral choices which threaten the moral and social order.  Conservatives deny that any social benefits programs help maintain an internal civil order and so argue that the federal government should have no role in social welfare programs. 

Who shall determine the proper moral and social order?  Conservatism’s answer is majority rule but there lies another contradiction – a support for a populism which is antithetical to the founding principles of this country.  Conservatives hold a well deserved regard for the original text of the Constitution as they interpret it.  Yet the politicians who wrote the Constitution of this country were afraid of majority rule, regarding it as mob rule, and one of the most dangerous threats to a free people.  Accordingly, they enacted political institutions and processes designed to mitigate the danger of majority rule, creating a republican form of democracy. 

As an economic and political philosophy, conservatism is pro-forma anti-statist.  However, the practice of conservatism requires an intrusive statist framework to enforce traditional values.  In the U.S., these traditional values are based on Christian moral values as set forth in the Bible.  Since the Bible contains a set of rich, all-encompassing and deeply contradictory values subject to centuries of competing interpretations, it is not surprising that any politico-economic philosophy that embraces the Bible should embody contradictory aims.

These contradictions ensure disagreement not only between conservatives and liberals but also within the ranks of conservatives.