Peter Orszag: Putting the 'M' back in OMB
President Barack Obama's budget director, Peter Orszag, produced one of the least covered but most important stories of the week on Tuesday. Speaking at the Center for American Progress, a liberal Washington think tank, Orszag sketched out a broad agenda for attacking federal waste and improving employee productivity.
The Obama administration has already rolled out a number of initiatives to improve federal productivity, including a faster hiring process, greater government transparency, and an attack on wasteful contracts.
Drawing inspiration from Alexander Hamilton, Orszag upped the ante Tuesday, promising to eliminate duplication across the federal organization chart, increase efficiency through "cloud computing" and other IT investments and impose a permanent five-percent cut in the federal discretionary budget. He also promised to attack the $100 billion the federal government wastes each year through improper payments to the wrong person at the wrong time or in the wrong amount.
If he can get it all, the federal government could reap hundreds of billions in savings, if not a $1 trillion or more over the next 10 years. That would make a real dent in the federal debt, and it stands as a direct response to conservatives who are clamoring for pay and hiring freezes, personnel cuts, and random winnowing of key federal programs.
Orszag's most important proposal involves the so-called "IT gap." His favorite example is the Patent and Trademarks Office, which received more than 80 percent of applications electronically, but prints them all out for processing. His answer? Use electronic records to accelerate everything from collecting Census data to making benefit decisions at the Veterans Affairs Department.
Hopefully, Orszag's aggressive proposal is just the beginning of a sweeping overhaul of the federal bureaucracy. At least by my own back-of-the-envelope calculations, there is another $1 trillion waiting to be harvested through the long-overdue flattening and consolidation of the antiquated federal organization chart.
The president could reap $1 billion by cutting the number of presidential appointees, for example. Indeed, Senators Russ Feingold and John McCain have already introduced a proposal to cut the number by from 3,000 to 2,000. Add in the savings from improving the government's ability to connect the dots and move appointees into office faster, and the total might reach $100 billion over ten years.
The president could save another $100 billion by eliminating needless management layers throughout the federal hierarchy. The flattening of government should not be restricted to the just to the dozens of needless layers at the very top of the hierarchy. It should also target the middle- and lower-level layers that produce constant problems connecting the dots. Cut those layers in half, and the savings are obvious.
The president could save another $200 billion by eliminating many of the federal jobs about to be vacated by the baby boomers. Tempting though it will be to fill the roughly half million vacancies with the next federal employee in line for promotion, many of posts may turn out to be superfluous.
The president could save $200 billion by cutting the contracting workforce as its baby-boom employees retire, too. My estimates put the contractor workforce at 7.6 million in 2005, and it can only have grown sense. Alongside its plan to capture nearly $40 billion in contractor waste, a 20 percent cut in contractor employment would produce much more.
The president could save $200 billion by eliminating programs that do not produce what Hamilton called "extensive and arduous enterprise for the public benefit." These are not the programs on Orszag's proposed "do not work" list. Rather, they are the programs such as agriculture-price supports that provide private benefit at the expense of taxpayer burden.
Finally, throw in an effort to collect the $300 billion in delinquent taxes and the savings easily reach $1 trillion.
Orszag may already be considering these kinds of proposals, although they all carry huge political risks. The Tea Party would have a field day attacking the Obama administration for hiring enough Internal Revenue Service agents to get at the delinquent debt, for example.
One thing is certain, however. Orszag has already eclipsed his predecessors at OMB in leading government reform. He is well on his way to putting the "M" back in OMB by making management a core of his budget agenda. That is a signal accomplishment, a sign of courageous leadership, and a harbinger of a much more productive bureaucracy.
June 9, 2010; 10:33 AM ET |
Federal government leadership
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