Deficit Disorder

U.S. national debt counter in New York City, April 20, 2012. Credit: Wikipedia.

“We are heading for the fiscal cliff!” is the current warning in political circles. Unfortunately, Washington policymakers are like Wile-E-Coyote in the Road Runner cartoons. We are already over this fiscal cliff -- we just haven't looked down.

How did the federal government end up in this situation? How can we scramble back to solid ground?

Both answers are complex and long term.

How did we end up over the fiscal cliff?

Our reality check starts with the Progressive era (1877-1920). The definitive book on this era is Robert H. Wiebe’s brilliant The Search for Order. His masterful work reviewed how and why the Progressive movement began and then explains how this complex movement proceeded to shape the politics of the twentieth century.

Wiebe discusses how President Woodrow Wilson formulated the "New Freedom" to bring together all the diverse interests and agendas of the emerging factions within the Progressive movement:

Scarcely a significant question of the era did not fall somewhere within its scope, and no well-organized group was denied...the Democrats could take pride in a most dexterous management. The new majority had proved surprisingly sensitive to organized pressures from all sources, and the President had shown exceptional talent for administrative compromise, the essence of bureaucratic leadership.

Wiebe then writes:

In Washington and in the major cities, executive direction was an accomplished fact by the war years [1914-1918]. Although many of the bureaus and departments of the progressive era had yet to define their functions precisely, they were at least entrenched. Nineteen sixteen marked “the completion of the federal scientific establishment” covering industry, agriculture, and an assortment of public services, and much the same was true of the basic regulatory mechanisms in both Federal and state governments.

Wiebe summarizes the legacy of the era: "Progressivism contained an inherent expansive thrust, partly from its need for ever-broader legislation, partly from its all-conquering optimism, but even more from its faith in method. If the right technique guaranteed the right results, no problem, whatever the size and scope, could withstand its magic."

For those in the Tea Party who assert we must "reverse the last four years," they need to realize that lasting governmental change requires addressing core dogma from the last one hundred years.

The New Deal of the 1930s took the Progressives’ governmental expansionist concept even further. President Franklin Roosevelt instilled into the maturing Progressive movement his belief that "it was the permanent duty of modern government to exert its managerial hand in widespread places to regulate, compensate, and control, protecting the public interest and ensuring stability along with progress." Amity Shlaes’s comprehensive history of the New Deal goes into even more detail on how the political culture of America fundamentally shifted toward institutionalized statism.

This meant that Lyndon Johnson’s Great Society programs of the 1960s and Jimmy Carter’s domestic activism of the 1970s were simply logical outgrowths of an already solidly institutionalized core. Over the decades this righteous view for government activism was left in the hands of an ever larger and less accountable career bureaucracy. The idealism of the Progressives morphed into expanding governmental efforts regardless of results.

Johnson’s Great Society had one more legacy -- entitlements. Except for Social Security, which is arguably a pension program based on designated contributions, Congress had to annually appropriate funds for all government activities. The Social Security Act of 1965 created Medicare and Medicaid as entitlements. This meant that federal funds are automatically allocated without congressional action, based upon projected eligibility. This added a booster rocket to America’s journey over the fiscal cliff.

These stunning facts mean that the elements of the modern governmental culture had decades to grow, refine, and entrench themselves. To confront the reality of America’s modern bureaucratic state, now in its fourth generation, requires a long-term struggle.

No one election, or series of elections, will fully reverse this entrenched public sector culture. Conservatives and Republicans focus on tactical not strategic ends. These political players can achieve victories for or against various policies, but everything they do can be swept away with the next vote. Through it all the entrenched bureaucracy lives on. It was like a great ocean. The top may be turbulent and storms may churn the top few feet, but in the miles of water below these upper reaches, life goes on, unaffected. Few know what lies below these top few feet. Even less understand how institutionalized and embedded this core culture has become. Fewer still have the knowledge, or the stamina, to confront and vanquish it.

As a member of the Reagan transition team of 1980-81, I had a front-row seat for viewing this phenomenon. Hundreds of conservative activists poured into the transition and then fanned out into the agencies. Volumes of reports and recommendations lined the reference center at the transition headquarters. Major think tanks, like the Heritage Foundation, published comprehensive manifestos and circulated them to the new elected and appointed officials. Conservative-focused revolutionary fervor permeated the air at every Washington cocktail party and political strategy meeting.

The sad reality is that an overwhelming number of those great ideas died in someone’s in box. Either a gatekeeper for a powerful agency head or a career head of a program simply ignored the input and decided to not pass it on. Not a one of these nameless public servants was ever held accountable for their acts of unilateral veto. Great political and policy minds spent the eight years of the Reagan administration trying to figure out why their domestic revolution did not happen. To this day no one has fully analyzed how the failure to effectively plan and control administrative implementation contributed to its demise.

It will take a diverse group of committed revolutionaries to finally perfect methods of changing entrenched bureaucracies. Some of these successes were compiled by David Osborne in his groundbreaking book, Reinventing Government [6], and his follow-up book, Banishing Bureaucracy. Yet, while citizens and public officials outside the Washington beltway have finally begun to rethink the role of government in their lives, and actually make substantive changes, the federal government remains unchanged. In Washington, only the names of the top officials and their rhetoric change. In the miles of bureaucratic ocean beneath them, the cycle of life continues as unaffected as ever.

How do we get back on solid ground?

Hyper-partisanship has created a level of government gridlock not seen since the days before the American Civil War. Even facts are created and filtered through a partisan prism.

All sides in this hyper-partisan environment refuse to cede credibility or rational thought to those with whom they disagree. Even those who seek a middle ground remain oblivious to the structural challenges that need to be overcome if America is to pull back from the fiscal precipice.

Budgeting is only part of governing. This was clear from the debt battles of 2011 and those that lie ahead. Those in the budget policy arena think that macro-level spending targets and pronouncements will turn things around. They forget that the operation of the federal government is made up of minute to minute micro-decisions made by over four million functionaries. Winning their sincere commitment to reining in government spending and rationally managing public resources will only occur if they embrace a completely new approach to leading the executive branch.

The first step is to understand that most government workers want to be left alone. They will oppose any disruption of their daily routine in countless ways. The most insidious is "malicious compliance." This is when a functionary takes policy or management guidance to a logical extreme with the intention of creating failure. This happens all the time. Front-line service personnel are laid-off or deprived resources with the intention of causing the most pain for those directly impacted by government. This causes a public and/or media backlash against the cuts or reforms. The functionaries remain untouched and wait for their policy leaders in the executive and legislative branches to “come to their senses” and retreat from the initiative in question.

Recently, "malicious compliance" combined with "street theater" as the National Park Service staged a small crisis to convince the public that budget cuts were already harming operations. During a tour at a National Park, the grass was not mowed in the tour area. The ranger conducting the tour repeatedly explained that this unsightly unmowed grass was because of recent budget cuts. Three days later the grass was perfectly mowed. There was no real budget issue, but a vivid visual was intentionally embedded in those on that tour.

Senator Tom Coburn (R-OK) recently unearthed a government-wide effort at "malicious compliance":

In total, the federal government is projected to end 2012 with more than $2 trillion in unexpended funds that will be carried over to next year, according to the White House Office of Management and Budget. While more than two-thirds of this amount is obligated for specific purposes, $687 billion remains unobligated, meaning it is essentially money for nothing.

Remember that the next time congressional leaders anguish over how to cut just $60 billion a year from the federal budget.

In addition to unexpended balances there is nearly $500 billion a year in waste documented by the Government Accountability Office (GAO), and the 73 Inspector General offices. Few, if any, of these thousands of detailed findings and recommendations are ever acted upon.

Remember that the next time a pundit talks about how any cut from a given program, department, or agency will cripple America.

Another aspect of government managerial dysfunction borders on malfeasance. This is the amount of inefficiency built into every endeavor.

Back in 1978, my Master’s thesis analyzed social expenditures for Native Americans on three reservations in northern Minnesota for FY77. In that fiscal year, the federal government poured $70,384,937 into these reservations on behalf of their 8,153 inhabitants. When all those funds rattled through the labyrinth of administrative layers and duplicative offices the Native Americans benefited at only $991 per capita, 11.5 percent of the original value. The rest had disappeared in administrative overhead, duplication of effort, and basic mismanagement. In essence, $62.3 million taxpayer dollars, 88.5 percent of the total, went to benefit government workers and contractors, not the Native Americans. The tribal leaders I interviewed described this phenomenon as "White Tape."

While some federal programs may provide more than 11.5 percent of value for effort, it gives one pause about the stewardship of our public resources.

One would think that anyone truly supportive of a given program would be appalled that even one penny was squandered. The ugly truth is that politicians, across the ideological spectrum, would rather rally around sending good money after bad, than manage what they have.

Those who govern us need to be honest with us. Solving America’s fiscal problems is a matter of will, not way. Politicians and pundits need to admit that they really would rather have America wastefully spend itself into oblivion than to take on the unglamorous and very hard task of reforming government operations.

There is another way. A president could lead a top to bottom recreation of how government operates. This would not be another lengthy study that is ignored, but rather sending in fully empowered teams of skilled managers to immediately change things, real time, on an office by office, program by program, day by day, action-oriented basis. Their mandate would be the Government Performance and Results Act (GPRA), which has been around since 1993 and has been routinely ignored. If properly enforced, and by preventing "malicious compliance," GPRA can be the battering ram used by a president and his teams to fundamentally and permanently make over the federal government.

[Mr. Faulkner was Chief Administrative Officer for the U.S. House of Representatives and served as a federal executive during all eight years of the Reagan Administration.]

NOTES

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