Woke and Bloated Bureaucracy

House Budget: Exposing the Woke, Wasteful, and Bloated Bureaucracy, May 11, 2023 

These comments reflect my experience as a federal employee in finance and budgeting, as a contracted grants office technical representative, a contracted contract specialist, an onsite contractor providing direct services,  a proposal manager and coordinator in the private sector, a legislative intern and a political appointee in state and local government, as well as a Master of Public Administration graduate. Unlike your invited witnesses, I have actually been a bureaucrat.

Our first question is how do we define a bureaucrat? In the populist conservative imagination, in other words, that of your witnesses, the government is full of career employees who binge on writing regulations to choke off freedom. The reality is that civil servants hate doing rulemaking. It is a major time commitment to deal with the Office of Management and Budget, publish draft rules and requests for public comment, coordinate drafts with the Office of the Solicitor and congressional correspondence (not to mention any environmental impacts and cost-benefit analysis).

The main reason rulemaking must occur is because Congress mandates that it be done by statute.

From the Senior Executive Service to new college graduates - as well as an army of on-site contractors who would be civil servants save for A-76 requirements - the purpose of the civil service is to implement policies mandated by law and in accordance with guidance from political appointees who actually have the last say on any regulations enacted, the budget priorities of the agency and major contract awards.

The real bureaucrats that people love to hate are actually political appointees who are often former members of Congress, congressional staff, former local government officials  or members of the policy community associated with the president’s party and the industry or issue related to the work of the agency. 

It takes a few years for these officials to learn their jobs - just in time for them to leave. In some administrations, like the last one, many appointees never learn their jobs or are so ideological that they do them badly - sometimes contrary to both the Administrative Procedures Act and the relevant authorizing legislation for the agency or department. In most administrations, there is not so much hostility to the rule of law - especially among senior appointees who may have served in a prior administration (in either party).

Compared to the last administration, the current one is rather woke, if woke means not actively racist - especially in the area of immigration. The question is, for purposes of government service, what is woke? For most of the permanent government, it means having been trained in the laws and regulations guaranteeing equal employment opportunity. Not every manager takes this training to heart, which is why these rules are necessary.

As far as the caricature of a woke, liberal, bureaucracy, this does not exist. Civil servants, as well as military officers, come from all ideological perspectives. There are a good many Republicans in the government - and not just in the Department of Defense. Most know enough to leave their politics at the office door and do their assigned work. If the Hatch Act is violated, this usually comes from the political appointee side of things.

The next question is whether the government is wasteful and bloated. There are legendary stories of contract officers ordering golf balls to use up budget authority. These are old stories, almost old wives’ tales and, because of them, there are procedures in place to finish most procurements a month before the end of the current fiscal year. 

Sometimes, year M money is spent at the last moment on such items as computer hardware (I have walked such procurements through the system myself in program control), but it was vital to have this hardware, considering we were doing budget analysis. This is back in 1988, when getting hardware was hard to do. IT is now ordered on a regular basis, given adequate budget authority - such as the funding increases for the IRS for badly needed equipment. These would not have been necessary but for incompetence in the political sector which thinks that starving the IRS will help service to taxpayers. It does not.

That being said, the government is bloated, especially on the budget and contracting side, because procurements that should be made throughout the fiscal year can only be begun in February of most years. This also applies to program office activities - because the job of most such offices is to propose work to be contracted out. Program ideas can come from inside government (either from appointees or civil servants), from Congress, from industry and individuals or associations of these - usually accompanied by political action committees whose purpose is to buy access.

The bloat  is due to the fact that the budget process is broken - and has been badly broken for the last 49 years - since the passage of the Budget and Impoundment Control Act of 1974, which created the Budget Committees.

The sad truth is that the more hands are in the kitchen, the more opportunities multiply for members of Congress and the Senate to grandstand and stop the process. Exhibit A is this hearing. Were it not for the budget process, the Appropriations Committee could set its own spending targets for the various Subcommittees to hit, with the House going low and the Senate restoring cuts made by the House. 

Tax and entitlement policy can be made by the revenue committees without help, especially since Reconciliation has been used to bypass normal procedure and cut taxes in a manner that can only be regarded as reckless. Prior to the Pandemic, the Tax Cuts and Jobs Act had reduced revenues and increased speculation on Wall Street, which resulted in a reduction in economic growth by one percent in the fiscal year following the passage of the Act. 

Funds that had been going to households through pay went to the CEO/donor sector and its “financial innovations,” i.e. garbage such as mortgage backed securities for single family home rentals and crypto currency, all conveniently buried in Exchange Traded Funds. Now that the pandemic is over, such flawed paper is coming due and may just lead us into a recession yet. COVID bailouts to the financial sector by the Federal Reserve hid the damage - but it will not stay hidden.

Luckily for the nation,  the TCJA cuts for individuals will expire in 2025. This will take money out of the speculative investment sector and, because of greater consumption, will result in more real investment in plant and equipment. Any tax reform (and I am in favor of reforms such as the Fair Tax - but in the form of a value added tax and a net business receipts tax, as well as an asset value added tax) should be pegged to the 2025 revenue laws, not those of the current year.

Aside from nature taking its course, how do we solve the problem of a dysfunctional budget process which results in a bloated bureaucracy? There are a few options. One is to do another Budget Control Act, which will include spending caps that can also function as a budget resolution should no resolution be enacted on schedule. This time, however, the caps should be realistic rather than punitive. 

Realistic caps will result in lower spending. The recent caps simply forced compromises which drove spending up. The second part of this reform is for either a budget resolution (which should be joint rather than concurrent) or the new budget act levels lead to automatic appropriations derived from the Current Services Budget at the start of the new fiscal year should they not pass by October First. While Congress could still pass supplemental appropriations, it could not withhold money for either pet projects or to grandstand about cutting spending.

Another option is to replace both budget committees with an ex officio joint committee made up of the chairs of Ways and Means, Finance and Appropriations in each house who would agree to budget allocations and any tax and entitlement changes, inviting ranking members only when the chambers are controlled by different parties. In other words, turn back the clock to when the system actually worked. 

The final option is for the Budget Committees to do their jobs, which in this case would be for members and staff from this committee to sit down with their opposite numbers in the Senate to work out a realistic compromise. It is the only way the House Budget Committee can really be relevant and allow the bloat to be taken out of government procurement in all sectors (including government contractors whose workloads are held hostage to the congressional calendar).

Would the Appropriations Committee allow the Budget Committees to actually do this? I am doubtful. It is why Budget Committee leadership is always given to the most partisan members. These committees are expected to fail, which preserves the power of the older committees.

Hyper-partisanship is not a good career move. Members of the House generally run for leadership, seek state office or run for the Senate. It used to be that leadership would compromise. Now, not so much. Serving in the Senate, as Governor or working on K Street require the ability to reach across the aisle.  Grandstanding on wokeness is not a good resume item.

The issue of wokeness is not the winner the party expects it to be. Everyone thinks that Glenn Youngkin, who ran on the issue - especially in regard to Trans Youth - won the governorship because of it. The reality is that Terry MacAuliffe tried to run a base election is a purple state. Glenn did not win - Terry lost (also why Gore lost in 2000 with Terry as his chair).

There is a lot for the Budget Committee to do if it gave up grandstanding. I have already suggested some of these options.

It could remedy inflation in the public sector by awarding COLAs on an equal dollar basis rather than as a percentage of current salary. It could even do so based on a lower average percentage than inflation. This would still make most civil servants better off. Only the overpaid would suffer. This limit should also apply in Congress.

Cut back on federal leave entitlements, but balance this with closing the government between Christmas and New Years, as many other professional offices - especially government contractors, do.

Cut the budget by one percent under the inflation adjustment, rather than one percent over current spending (which is a huge cut).

Cut Defense spending, but increase spending by some lesser amount for NASA, with the Defense Appropriations Subcommittee responsible for the agency. This would keep funds in the same sector (aerospace) rather than having NASA fight with the National Science Foundation, the Department of Commerce and the Department of Justice for funding.

Make the Affordable Care Act actually work using a public option, but ending pre-existing condition reforms and subsidizing the public option with an employer-paid subtraction value added tax (which it could offset partially by providing insurance or direct health services to employees - including those who now function as contractors).

Lead a serious discussion of the Fair Tax (but as a series of consumption taxes as I suggest - including an employer paid subtraction VAT designed to be offset by a generous child tax credit and health insurance coverage of employees. The option of having the IRS distribute the Child Tax Credit as it did under the American Recovery Plan Act or through Social Security as currently proposed turns the federal government into a paymaster for too many people.

There is not much time for the current budget committee to make its mark. It is an open secret that members of the Freedom Caucus were involved with Roger Stone in planning the events of January 6th. Jack Smith has prosecuted the level below Stone and the Willard Hotel crew. Anyone Stone was in communication with will either receive a subpoena - or worse will not because they are targets of the investigation. 

Most Freedom Caucus seats are safe, meaning that if certain members must resign at the behest of the Ethics Committee, they may be replaced by Republicans. Or they may not be. If playing with the debt limit or the collapse of Exchange Traded Funds brings about a recession this year, rather than the next, it could coincide with the necessary special elections.

If this happens, the reforms suggested here may happen anyway, but with Democratic Majorities in both Chambers (especially tax legislation and a new Budget Control Act).