Reducing federal employee compensation to market levels could save taxpayers roughly $77 billion per year.

A new CBO study shows that federal-government employees receive significantly higher compensation than private-sector workers with the same levels of education and experience. It confirms many of the findings of a 2011 study written by Andrew Biggs and Jason Richwine and helps rebut union claims that federal workers are underpaid.

Many public workers are overpaid relative to their private sector counterparts, especially in large, unionized states such as Wisconsin, Ohio and California. This may sound like a controversial claim, but it shouldn't. A consensus is building about the need for reform.

Nationwide, as governors and legislators seek to rein in labor costs, public-employee unions are protesting that their members are actually underpaid. But a growing body of evidence strongly suggests that their protests have no basis in fact.

Senator Carl Levin says that Facebook is exploiting a tax loophole in order to avoid paying taxes to the government. But Facebook is a textbook case of win-win-win: the company's creators get rich, society gets the benefit of an innovative communications platform, and the U.S. Treasury gets billions in new revenues.

Several studies have shown that public-sector workers receive higher compensation than their counterparts in the private sector. Although, federal contractors have some of the advantages of private sector workers, in that poor performers can be dismissed and the composition of the contractor workforce altered, it is possible that they are overcompensated just as federal employees are right now.

On April 13, 2012, the US Department of the Treasury released new cost estimates for the Troubled Asset Relief Program. Looking principally at actual and projected contractual cash flows, the document concludes that: "Overall, the government is now expected to at least break even on its financial stability programs and may realize a positive return." 

Are teachers paid too much? It's a question that would ignite heated debate at the most mellow of cocktail parties. But it's a question that AEI took head-on this year.