There is indeed plenty of waste and inefficiency in government. And there has not been a full-scale efficiency review at the federal level since Vice President Al Gore’s National Performance Review 30 years ago. By contrast, states and localities nationwide have launched similar efforts during that time, many of which I have had the honor to oversee. Now, with many jurisdictions projecting revenue shortfalls, COVID-era federal funding coming to an end and likely further reductions in federal aid in the next year, renewed state and local efforts to trim spending should be on the table just about everywhere.
Musk and Ramaswamy have promised a 30 percent cut in the federal government. Roughly 60 percent or so of federal spending, however, consists of interest payments on the national debt, Social Security, Medicare and national defense — largely (though not entirely) untouchable. The projected savings therefore purport to come mostly from wiping out everything else: cutting government regulation, eliminating large numbers of government programs and firing even larger numbers of employees.
Gutting regulation does little to reduce government spending, however, while employee compensation makes up only 4 percent of the federal budget. Firing every single federal employee would barely make a ripple. Whatever the merits of all this as policy, in reality it has little to do with efficiency.
In fact, in many ways, the proposed DOGE approach illustrates how not to pursue actual efficiency in government. (Pro tip: Putting two co-heads with similar duties in charge of just about anything is generally not considered a first step toward efficiency.)
It’s one thing to recognize that a government efficiency effort doesn’t require forming a new government department. In fact, one of the first items on one of the first government efficiency plans I ever drafted was to eliminate that state’s Governor’s Office of Government Efficiency, which cost taxpayers $1.5 million a year in patronage staffing to produce reports that had never resulted in any savings whatsoever. But creating a private bureaucracy isn’t an improvement.
Besides its very name amounting to an advertisement for one of Musk’s pet investments (the cryptocurrency dogecoin), DOGE is requiring its potential employees to subscribe to X — a part of Musk’s business plan that hasn’t attracted enough people voluntarily — simply to be able to apply. “GOUGE” thus might be a better name. Turning government into a privatized profit stream for favored oligarchs, a phenomenon of which we’re likely to see more, amounts to neither efficient nor good government.
For those interested in actually delivering the improvements in government efficiency the public deserves, here’s some advice from countless such undertakings:
- Be honest and realistic. Thirty years ago, the massive National Performance Review
produced recommendations shaving nearly 7 percent off federal
operations. The scores of efficiency reviews I’ve been involved with at
the state and local levels have consistently produced annually recurring
savings of 5 percent, sometimes slightly higher. My experience has
convinced me that it’s possible to reduce spending by as much as 10
percent annually — although not without severe political repercussions —
if the chief executive makes rooting out every last dollar of
inefficiency the highest priority.
- The “annually recurring”
part is important. It’s easy to fake savings through accounting gimmicks
and one-time assets sales. Sure, you can close a budget hole by raiding
dedicated funds, postponing needed infrastructure repairs or
construction, or even doing a sale-leaseback of the state capitol or all of a city’s parking meters.
The next year, however, the hole recurs but the revenues for papering
over the gap (and perhaps even your capitol) are gone. Real, meaningful
“efficiency” recurs year after year. In fact, so should the search for
efficiency. Texas, which instituted the original comprehensive statewide
efficiency review — which provided the model for the National
Performance Review — carried out such a review every year for more than two decades, and kept finding new ways to save money, year after year after year.
- Can
you cut more? Yes, it would be easy to cut government spending by 30
percent by eliminating all health and welfare spending. That may be the
goal under DOGE. Unfortunately,
about six months later, emergency rooms will be crammed, hospital
systems will be incurring massive debts through charity care, workforce
productivity will plummet, and communicable diseases will proliferate.
Cutting just to cut generally costs more in the long term.
- “Physician heal thyself.” Very little government spending consists of actual fraud and abuse, and less still by beneficiaries
filing claims for, say, medical care they never received. It is mostly
committed, rather, by providers seeking reimbursements for care they
never delivered, or by big-dollar private contractors (particularly in
defense: know anyone who fits that description?). Start there.
- Sometimes,
spending saves money. That may sound counterintuitive, but you wouldn’t
fire your accounts receivable department, would you? Hiring more
revenue collectors is good “business,” even in government. And believe
it or not, people want and would pay good money for plenty of government
services, if government were enabled to compete on quality. The best
example at the federal level of services people will pay for comes at
the Postal Service — where efforts to offer ancillary products like
photocopying, gift-wrapping, money transfers and even banking have been
stymied by Congress because they proved too successful. At the state and local levels, possibilities could range from California’s entry into the generic drug market and Delaware’s long-standing provision of stable and expert corporate-law adjudication, to “special service districts” that provide extra street cleaning and garbage pickup, or the cutting-edge public housing provided by the Housing Opportunities Commission in Montgomery County, Md.
- It’s
processes, not programs. Most governments try to cut budgets by cutting
budget items. But waste and inefficiency don’t appear in the budget.
(No one budgets for "waste"). Instead, it occurs largely in what’s not
budgeted. For example, we found that one state had never properly
calibrated its snowplows to deposit the correct amount of salt on the roads when it snowed,
resulting in about $3 million a year in wasted salt. There was, of
course, no budget line-item for road salt. Similarly, another state was
squandering money on multiple services (one internal, two private) to deliver interoffice mail between buildings of the capitol complex.
One could literally stand at the capitol and watch three trucks driving
around in a circle behind each other. If it’s not measured, it’s not
being managed. While you’re at it, don’t simply look at agencies and
organizational charts. Cutting or combining departments rarely saves
much money. Rather, the inefficiencies arise largely in functions that
cut across agency lines — or fall between them.
- The best way
to save money is improving service. Performative gestures like slashing
huge programs may make politicians happy. But if you are serious, do
the hard and inglorious work of identifying hundreds of small ways to
improve performance that collectively cut billions of dollars.
- Cutting
inefficiency doesn’t require attacking the people who carry out the
processes — it requires attacking, and streamlining, the processes
themselves. One study found that the average permit application passed
through 14 hands, when only three steps were really necessary.
Streamline these, and appropriate staffing levels will follow.
- Finally,
finding hundreds of ways to eliminate waste and inefficiency does not
entail asking a bunch of Washington think tankers or AI chatbots but
rather the people who work in the government. Why? Because those are the
folks who actually know. A model for this is the employee at a package
delivery service, who, on his own, figured out a more efficient way to
pack boxes in his delivery truck, dramatically increasing his
efficiency. Corporate leadership had the good sense to recognize the
employee’s discovery and spread it throughout the company. I’ve met
hundreds of public employees who fit this mold, as well.
Governing’s opinion columns reflect the views of their authors and not necessarily those of Governing’s editors or management.