Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, December 13, 1994                   TAG: 9412130064
SECTION: VIRGINIA                    PAGE: C1   EDITION: METRO 
SOURCE: RAY REED
DATELINE:                                 LENGTH: Medium

YES, FEDERAL PAYROLL REALLY HAS SHRUNK

A: Non-postal employment in the executive branch dropped 70,909 from March 1993 through this September, according to the federal Office of Personnel Management.

The executive-branch work force totaled 2,085,266 on Sept. 30, six months into the plan formally called National Performance Review (and informally, reinventing government).

About 15,000 middle managers, most of them in their 50s, took early-retirement buyouts during those six months. Other reductions came through normal attrition.

Here are some raw numbers for federal employment from 1991 through the present: Executive-branch work force, nationwide, excluding postal workers: 2,238,917 in September '91; 2,227,766 in September '92; 2,156,175 in September '93; 2,085,266 in September '94.

Legislative-branch employees, including Congress, staff and aides, totaled about 38,500 from 1991-93, but dropped to 35,357 this year. The judicial branch employs 28,000.

Private organizations that represent government employees and retirees generally agree with these numbers.

Debt and confidence

Q: What happens to a country that keeps spending more than it takes in? We know what happens to an individual or a family, but what does a country do? D.K., Roanoke

A: Nothing, as long as that country can continue to make payments on its debt, and investors are willing to lend it money.

Richard Sorensen, dean of the Pamplin College of Business at Virginia Tech, said investor confidence is the key. As long as they're assured of being repaid with interest, investors will keep buying, for instance, U.S. government debt in the form of Treasury bills and government bonds.

But if a nation gets so far in debt that it can't pay what it owes or looks like a bad risk, no one will be willing to lend it more money - much the same as an individual who's in too deep. Defaults can spell big trouble, as the Third World debt crisis did in the 1980s.

Hit hard by rising interest rates and recession, a series of heavily indebted nations defaulted on billions of dollars in loans, beginning with Mexico in 1981. The effects were wide-ranging: economic distress and political instability in many of the indebted nations, huge losses by major U.S. and European banks, and a devastating decline in U.S. exports to Latin America.

Protracted international negotiations, loan guarantees, and drastic austerity measures and economic restructuring by the borrower nations were required to get the cash flowing again.

In less-drastic cases, one option countries have for reducing their debt is manipulating international currency exchange rates. A lower exchange rate decreases the value of a nation's debt to international investors while boosting exports.

The United States is in no danger of having to devalue the dollar, even though the national debt is $4 trillion and climbing.

Got a question about something that might affect other people, too? Something you've come across and wondered about? Give us a call at 981-3118. Maybe we can find the answer.|