OMBlog

Security Spending in the Deficit Agreement

A key part of the recent deficit reduction agreement is that the approximately $1 trillion in discretionary cuts are spread across the security and non-security parts of the budget. Since this is a complex agreement with many moving parts, I want to drill down on part important part of this deal -- security spending -- to explain what will be and could be cut.

To start, it’s important to understand the Administration’s approach to security spending. As the President has made clear on numerous occasions, as Commander-in-Chief, he has no greater responsibility than protecting our national security, and he will never accept cuts that compromise our ability to defend our homeland or America’s interests around the world.  In the President’s view, security encompasses not only the Department of Defense, but also funding that is used to protect America at the Departments of Homeland Security, Veterans Affairs, State and other international programs, and parts of the Department of Energy. In fact, “security” is a category that has been used in all the Administration’s budgets because it is important when allocating resources to recognize the roles that civilian and military agencies play and to be able to assess and balance all the national security tools they provide through one lens.

Thousands of Ways to SAVE

Last Friday marked the end of the submission period for the President’s 2011 SAVE Award competition, and the final tallies are in.  

This year, federal workers submitted an incredible 19,559 ideas about how to make government more efficient and effective, besting last year’s submissions by more than 1,000.  We want to thank everyone who participated in this year’s contest – both for your ideas and your commitment to cutting waste across the federal government.

A New Step in Accountability and Fighting Fraud

For too long the federal government allowed billions of taxpayer dollars to be wasted on things that are inefficient, unnecessary, or just plain dumb.  That’s why from day one, President Obama has been steadfast in his commitment to creating a government that is fully accountable to the citizens that it serves.  Through efforts such as the Campaign to Cut Waste, OMB and the federal agencies are changing the way Washington does business and aggressively hunting down and eliminating misspent tax dollars across the federal government.

Today marks another important step in this pursuit, as we are announcing the launch of the new Government Accountability and Transparency Board (GATB). The President has named a group of the federal government’s top waste, fraud, and abuse watchdogs and other agency leaders to this Board. Starting with the first meeting this morning, these leaders are developing plans to enhance transparency in federal spending and root out and stop waste, fraud, and abuse in federal programs.  
 
This new Board, established in last month’s Executive Order on “Delivering an Efficient, Effective and Accountable Government,” will draw on the lessons learned from our work to track stimulus spending under the Recovery Act.  The GATB will provide the strategic direction necessary to make the President’s vision for transparency and accountability in all Federal spending a reality.
 
Under the tireless leadership of the Vice President, the Administration took this vision for transparency and accountability and applied it to the Recovery Act.  We got stimulus money out the door quickly yet responsibly.  We made sure that Recovery Act recipients reported back to the American people on how projects were progressing, and put this information up for all to see and scrutinize on Recovery.gov.  And we worked with the Recovery Accountability and Transparency Board  to keep fraud and waste at historically low levels and make sure that funds went to the right people and for right purposes.  In doing so, we learned a number of indispensable lessons about how government should conduct its business in the 21st century.
 
Our challenge now is to put these lessons to use across the federal government, and that is where the GATB comes in.  The Board will recommend a broad range of strategies to make spending data more reliable and accessible to the American people.  They will also make recommendations to broaden the Administration’s use of cutting edge technology to crack down on fraud, and focus on integrating data systems and using data for better decision-making.  In doing so, the Board will offer a comprehensive vision for the management of federal spending that will fundamentally change how government works.  And it will ensure that this vision is executed in the most cost-effective, efficient and logical manner.
 
To make sure we get it right from day one, the President has tapped Earl Devaney, a driving force behind the success of the Recovery Act through his leadership at the Recovery Board, to be the interim chair of this new effort.  Today, Chairman Devaney and the members of the GATB sat down and began strategizing how to reform the way we collect, display and analyze government spending data.  This Administration has already made tremendous strides in making government more open and cracking down on wasteful or fraudulent spending, and now we’re kicking it into high gear.
 
The President has designated the following individuals to serve on the GATB:
•           Earl E. Devaney – Chairman, Recovery Accountability and Transparency Board

•           Ashton B. Carter – Under Secretary of Defense for Acquisition, Technology & Logistics, Department of Defense

•           W. Scott Gould – Deputy Secretary of Veterans Affairs, Department of Veterans Affairs

•           Allison C. Lerner – Inspector General, National Science Foundation

•           Daniel R. Levinson – Inspector General, Department of Health and Human Services

•           Ellen Murray – Assistant Secretary for Financial Resources and Chief Financial Officer, Department of Health and Human Services

•           Calvin L. Scovel III – Inspector General, Department of Transportation

•           Kathleen S. Tighe – Inspector General, Department of Education

•           Daniel I. Werfel – Controller, Office of Management and Budget

•           David C. Williams – Inspector General, United States Postal Service

•           Neal S. Wolin – Deputy Secretary of the Treasury, Department of the Treasury

Jeff Zients is the Deputy Director for Management and Chief Performance Officer.

Baseline Basics

The CBO just released its analysis of the debt ceiling extension and deficit reduction plan that the House of Representatives is considering. We have been clear in our opposition to this bill, and the President explained why last night.

While we disagree with the approach that Speaker Boehner chose to take in this bill, there is one thing that we all still agree on, and that is the size of the problem. Both the House Republican budget proposal unveiled by Congressman Ryan on April 5 and the President’s fiscal framework that he introduced on April 13, set as our goal deficit reduction of $4 trillion. Since both of these plans were introduced before the agreement on appropriations for FY 2011, the baseline used for them did not reflect the spending cuts enacted this year in that legislation. Indeed, throughout our weeks of talks, all parties have worked off a January baseline because we all recognized that we needed to start from the same place.

Cutting Waste in Contracting

Over the last two years, this Administration has focused on reducing waste in government spending in an effort to ensure that every tax dollar is spent wisely. One critical area of focus has been on contracting. During the last Administration, spending on contracting doubled—too often resulting in waste, fraud, and abuse.  The Obama Administration is committed to cracking down on this waste and strengthening accountability by both reducing and improving the use of contracts. As a result of an aggressive effort led by President Obama, contracting decreased for the first time in 13 years last year. In fact, agencies spent nearly $80 billion less than they would have spent had contract spending continued to grow at the same rate it had under the prior Administration.

We are continuing our efforts to strengthen accountability in contracting as part of the Campaign to Cut Waste, the Administration’s effort to root out misspent tax dollars. During the recent White House Forum on Accountability in Federal Contracting, OMB announced a goal of reducing spending on management support service contracts by 15 percent by the end of FY 2012 – a reduction of $6 billion.

Where the services are really needed and cuts might harm program or project performance, agencies must find ways to buy smarter, such as by negotiating lower rates or converting to fixed-price arrangements.

Why the focus on management support services─ which include activities as varied as engineering and technical services, acquisition planning, information technology systems development, and program management? 

First, these services are frequently cited as creating a potential risk of overreliance on contractors for critical activities related to agencies’ missions and operations.  That overreliance has long been a concern, and the President called for addressing it and rebalancing our relationship with contractors as early as his March 4, 2009 Memorandum on Government Contracting.

@OMBPress

We deal with a lot of big numbers in our daily work here at OMB, but now we will start focusing on a small one: 140.

Yes, OMB’s communications shop is joining the Twitterverse to give the American people insight into the work we do in 140 characters or less.

We hope to use this outlet to bring attention both to the important budget and fiscal issues before us and to the full range of initiatives that OMB is involved with including regulations, information technology, Executive Orders and Presidential Memoranda, federal contracting, the management of the federal government, the President’s Campaign to Cut Waste, statements of Administration policy, and statistical standards and practices.

I'll be the main person behind the account for now, and others from the OMB communications team will pitch in too.

We look forward to joining the conversation about all these topics, and urge all OMBlog readers to follow us @OMBPress.

Kenneth Baer is Senior Advisor and Associate Director for Communications and Strategic Planning at the White House Office of Management and Budget.

Homecoming

On Friday, I had the honor of speaking in New York at the Forest Hills High School 2011 graduation.

A lot has changed since I graduated in 1972 from this high school in Queens, New York, but one thing has not: a stellar, public school education gave these graduates the opportunity of a lifetime.  To read the full remarks, click here.

New Ideas to Cut Improper Payments

For many years, the federal government has erroneously cut checks to the wrong person for the wrong amount and for the wrong reason – sometimes these misdirected payments even go to dead people or prisoners.  These mistakes, though often inadvertent, contributed to the $125 billion in improper payments made in 2010.  Cutting waste and combating these kinds of erroneous payments has been a priority [http://www.whitehouse.gov/blog/2010/11/16/improper-payment-progress] for President Obama. Today, the Administration is taking another step to tackle these improper payments.
 

As part of the President’s committment to crack down on improper payments he created the Partnership Fund for Program Integrity Innovation, to help States and localities find ways to save taxpayer dollars and deliver benefits more efficiently and effectively.  The “Collaborative Forum,” a group of 200+ state and local administrators and other stakeholders involved in the benefit delivery process, has been working to generate ideas for innovative pilot projects to reduce errors, fraud, and waste.  As a result of their efforts, OMB is announcing four exciting new pilot projects focused on reducing improper payments.

These pilot investments could lead to at least $100 million in annual savings if the pilots are successfully scaled up and will provide hard data about how Federal agencies as well as States and localities can save money and significantly improve program integrity, service delivery and efficiency.

Here’s a summary of the four new pilots:

1. Through the Centers for Medicare and Medicaid Services (CMS), States will test how sharing a Medicaid provider enrollment system among a group of states may help Federal and State governments strengthen their abilities to detect and prevent provider fraud, while increasing administrative efficiencies.
2. The Department of Labor will lead a project to test new ways to reduce overpayments in the unemployment insurance program by helping States access new data sources to more quickly identify beneficiaries who are most likely to be newly employed.
3. Through the Food and Nutrition Service at the Department of Agriculture, States will test sharing benefits information, which could reduce duplicate payments, make it easier and quicker for a participant to find out whether they are eligible, and allow people in need to continue to receive benefits in the event of a disaster.
4. The Department of the Treasury will test how they can apply their existing debt collection systems to help States collect outstanding debt that includes Federal dollars.

These pilots will help lay the groundwork for government to achieve better results at lower cost and improve service delivery for people who receive government services, whether in Washington or in communities across the country. We are thankful to the participants in the Collaborative Forum, who have lent their collective experience and expertise to explore new opportunities to improve stewardship of taxpayer dollars.

These new pilots build on the three Presidential directives on preventing and recapturing improper payments over the last year and a half, our use of cutting edge forensic technology and tools, the new accountability measures implemented with PaymentAccuracy.gov, the Improper Payments Elimination and Recovery Act of 2010, and the Administration’s early progress avoiding nearly $4 billion in improper payments and tripling the amount of improper payments to contractors recaptured last year. The President’s 2012 Budget proposes even more aggressive tools that will help drive down this waste.  Specifically, the Budget includes a number of legislative and administrative reforms on improper payments and debt collection, which if enacted will result in over $160 billion in savingsto the Federal Government over ten years. 

As the President said in his last State of the Union address, “We shouldn’t just give our people a government that’s more affordable.  We should give them a government that’s more competent and more efficient.  We can’t win the future with a government of the past.” Over the last two years, we have streamlined operations to save taxpayer dollars, curbed the decade long rise in contracting costs, proposed an aggressive plan to get rid of excess federal property, and saved billions by leveraging technology to make government work smarter and more efficiently for the American people.  Cutting waste and changing the way Washington does business are critical priorities for the Obama Administration and we’ll continue to update you on our progress.

To learn more about the Collaborative Forum, visit www.collaborativeforumonline.com. You can also submit pilot ideas to the Partnership Fund online at www.partner4solutions.gov.

Hammer Misses the Mark

In today’s Washington Post, Charles Krauthammer calls into question the integrity of the Social Security trust fund and the integrity of statements I have made recently about the program. Let’s examine his charges.

First, Krauthammer says that I am making a “preposterous claim that Social Security is solvent for 26 years.” This is not a “claim.” This is the projection of the independent Social Security Trustees, who report that even though Social Security began collecting less in taxes than it paid in benefits in 2010, the trust fund surplus will continue grow until 2025, and will have adequate resources make full and timely benefit payments through 2037.

Second, Krauthammer argues that the White House believes that there is “no need to fix it because there is no problem [italics his].” But in the State of the Union, the President explained that “To put us on solid ground,” the President said, “we should also find a bipartisan solution to strengthen Social Security for future generations.” And in my recent USA Today op-ed that Krauthammer cites in his column, I stated: “Strengthening Social Security is an important, but parallel, issue that needs to be addressed as quickly as possible [italics mine].”

Third, Krauthammer’s explanation of the Social Security trust fund and its interaction with the rest of the budget is off base.

Social Security benefits are self-financing, paid for with payroll taxes collected from workers and their employers throughout their careers. To prepare for the retirement of the Baby Boom and to keep Social Security solvent, I was part of the bipartisan effort in 1983 that built up trust fund balances to pay benefits owed to current and future beneficiaries.

Krauthammer is correct when he writes that there is no “lockbox” that keeps the money sent in by workers for until they retire. By design, when more taxes are collected than are needed to pay benefits, funds are invested in Treasury bonds and are held in reserve for when revenue collected is not enough to pay the benefits due. Yet these Treasury bonds are backed by the full faith and credit of the U.S. government in the same way that all other U.S. Treasury bonds are, making them anything but ”worthless IOUs” as Krauthammer suggests. The government has just as much obligation to pay back the bonds in the Social Security trust fund as we do to any other bondholders.

Responsibly honoring that obligation – one that we planned for and always knew was there –entails undertaking fiscal policies that would make it easier, not harder, to meet these obligations. When I last was OMB Director at the end of the Clinton Administration, the Congressional Budget Office estimated $5.6 trillion in budget surpluses over the next decade because of fiscally responsible measures that Democrats and Republicans, working together, had taken.

We are now in a very different fiscal position. When I returned to government at the start of the Obama Administration, the country faced projected deficits of more than $8 trillion over the next decade. These deficits primarily were the result of specific decisions made by the previous Administration and Congress to spend money on initiatives without finding a way to pay for them, notably the tax cuts of 2001 and 2003 and the Medicare prescription drug benefit.

This is the most important point: the problem is not with Social Security, but in the near term the mismatch between what we take in and what we spend in the rest of the budget. Working people had payroll taxes taken from their salaries to pay for future benefits, and instead the money was used to pay for tax cuts and other initiatives. It is hardly fair now to say that those working people caused the problem just when they are ready to collect benefits.

Krauthammer’s argument is inside out. We should not blame Social Security for our current fiscal problems when it is the irresponsible fiscal behavior of the past that has presented the country with future challenges to fund our commitments, including Social Security over the next two decades.

That is why in the short term, we have to honor the legal and moral obligation to keep the promises made to Social Security to repay those surpluses. Doing that entails getting our fiscal house in order. That is why the 2012 budget the President proposed includes more than $1 trillion in deficit reduction over the next decade and makes tough choices that will put the country on a sustainable fiscal path by the middle of the decade.

Looking to the long term past 2037, we have a pressing need to replenish the trust funds and make sure Social Security is on sound footing for generations of workers. The sooner we act the better as it is always easier to give people many years to adapt to any changes in the program (as we saw with the reforms made in 1983 that are still being implemented today).  That is why I have repeatedly called for quick action, and have spent most of the last 30 years helping to make the tough decisions to do so.

Jack Lew is the Director of the Office of Management and Budget