November 6, 2012
After President Obama comes down from his reelection high and catches up on sleep, he will be plunged into the Washington-wide effort to avert the long-dreaded fiscal cliff. But if his team and the lame-duck Congress can come together on a deal that beats the end-of-year deadlines to head off mandatory tax hikes and spending cuts, he may find that his first-term agency management agenda has new life.
Claiming an electoral mandate is dicey after a close race. And it would hardly be convincing after a $2 billion-plus campaign fought over such far-afield issues as Bain Capital’s record on jobs and a vague concept called “trickle-down government.”
But Obama arguably won the upper hand on the key question of whether new revenues must be raised as part of a solution to the budget stalemate. As he said repeatedly during the campaign, the wealthy are apt to see a rise in their tax rates. And in winning four more years, his administration has guaranteed future historians an opportunity to evaluate a set of interagency accomplishments and program goals that had only partially taken root in the first term.
A select set of members of Congress and staff have been meeting confidentially to plot a rescue from the fiscal cliff and to maximize productivity during the short November and December time frame. They confront a perfect storm of some of history’s most daunting budget challenges.
Negotiators must deal with everything from the expiration of the 2001 and 2003 George W. Bush tax cuts, the alternative minimum tax, the estate tax and the payroll tax holiday, to the threat of automatic across-the-board cuts that would kick in on Jan. 2, 2013, under sequestration, to the need, probably in February, to again raise the debt ceiling. The disaster of October’s surprise Superstorm Sandy will complicate the bipartisan task of taming trillion-dollar deficits.
As Obama campaign policy director James Kvaal recently told CNN, the president is ready for a big bargain consisting of "a balanced plan that cuts the deficit by $4 trillion with $2.50 worth of spending cuts for every dollar in revenue and reduces spending on Medicare, Medicaid and other entitlements." Of prime interest to federal workers is the question of whether the grand deal includes continuation of the two-year-old pay freeze in effect until Congress passes a budget. Obama has proposed a 0.5 percent raise contingent upon congressional action, and the major federal employees unions are pushing to make that modest raise retroactive to Jan. 1, 2013.
The central drama this autumn will be whether the president’s Republican opponents sign on to the bargain. The havoc the alternative -- sequestration-- would wreak on agencies, programs, contractors and the general economy has been documented for months in detail. Prepare for a tense holiday season.
Flash-forward to Obama’s second inauguration. Assuming the fiscal cliff is avoided, then the administration can proceed on an agenda that both tackles issues placed on the back burner during the first term and consolidates first-term accomplishments.
New possibilities include an immigration reform initiative of an uncertain scale, a gesture toward confronting climate change, a long-discussed vehicle for pursuing bipartisan tax reform and a push to require greater disclosure of campaign donations.
With election uncertainty behind them, the Health and Human Services Department and the Internal Revenue Service will step up moves toward the concrete stages of implementing the 2010 Affordable Care Act, whose health insurance exchanges must be up and ready in 2014. Similarly, the Securities and Exchange Commission and the Commodity Futures Trading Commission will continue the drawn-out process of writing controversial regulations that affect investment firms and large banks as called for in the 2010 Dodd-Frank financial reform act.
But whatever the content of the new budget deal, agencies will remain under pressure to cut spending. Office of Management and Budget acting Director Jeffrey Zients in May asked all agencies to trim 5 percent in their fiscal 2014 budgets for the second year in a row.
Expect continued enforcement of the governmentwide directive to reduce spending on travel and conferences -- a repercussion of the scandal the erupted in April over extravagant budgets for a Las Vegas training conference by General Services Administration employees. (Charges of overspending on conferences have since been trained on the Veterans Affairs Department and the Army.)
At the budget-dominating Pentagon, planners relieved of the nightmare of sequestration could proceed with the strategic drawdown laid out in the administration’s January budget. It involves troop cuts for the Marines and Army and equipment cuts for the Navy and Air Force. The envisioned payoff is a more agile, flexible and modernized force that can execute against nonstate actors and shift focus to the Asia-Pacific region after the Defense Department spent more than a decade in protracted wars in Iraq and Afghanistan.
Contractors, who enjoy $320 billion in annual awards governmentwide, already are bracing themselves for an era of austerity and diminished procurement opportunities.
In the information technology realm, Obama’s second term will see continued rebalancing of power between technologists and other workers. Depending on the agency, the shift could involve concentrating authority -- including budget decisions -- in the hands of agency CIOs and more freedom for each agency to exploit its own strengths as mobile technology becomes more ubiquitous. Zients has tasked agencies with a 10 percent cut in IT.
Agency managers will confront a long-anticipated wave of retirements at all levels, occasioned both by the aging of the baby boom generation and the current tendency toward fed bashing in the political arena. By the Office of Personnel Management figures, 30 percent of the current workforce will be eligible to retire during this administration, including 58 percent of the Senior Executive Service. Managers coping with the wave will profit from planning flexibility under a new law giving agencies the option of phasing retiring employees into a part-time schedule while they collect a partial annuity.
One area ripe for cost savings is reorganization of offices and programs to curb duplication. The Government Accountability Office in a 2011 report identified 34 areas where programs were duplicative or fragmented, and more in subsequent reports. Obama since February has sought renewed congressional authority to consolidate agencies, a power he would use first on the Commerce Department and trade-related agencies. In October, the president offered the new detail that his new department would be run by a secretary of business.
Though mocked by Republican nominee Mitt Romney and the editorial page of The Wall Street Journal, Obama’s overall plan to reduce duplication in agencies originally piqued some interest among congressional Republicans. They later balked at the “vagueness” of the White House proposal and after business groups expressed worry about diluting the influence of the Cabinet-level Office of the U.S. Trade Representative. Sen. Mark Warner, D-Va., is hoping to push the plan through.
A prime example of an Obama project reaching fruition as the second term opens is the requirement, under the 2010 Government Performance and Results Act, that agencies set and meet cross-agency “priority goals.” Fourteen were spelled out in Obama’s fiscal 2013 budget in February, and Zients in an August memo laid out detailed instructions on program goal setting and evidence-based reasoning with an eye toward linking evaluations to the programs’ impact on job creation and the overall economy.
Data analytics will continue to gain currency in evaluating both programs and employee performance. The administration also is attempting, for the first time in U.S. history, to fulfill Congress’s desire for a full inventory of federal programs.
Though some in the administration are wary of overburdening agencies, Congress during the lame-duck session or in 2013 could pass the Digital Accountability and Transparency Act, which cleared the House this summer. Championed in the Senate by Warner, it would boost fiscal transparency and accountability by establishing a single Web-based platform to allow taxpayers and policymakers to more easily track all federal spending. The bill attempts to build on the success of Obama’s 2009 stimulus-tracking website Recovery.gov, which by law goes out of business on Sept. 30, 2013.
It’s too early to tell whether the bitterness of the 2012 elections have left Republican lawmakers in a mood to compromise with a victorious Obama or whether they will fight his ongoing and new initiatives.
There is at least one area where bipartisan concessions may grease the skids for action. Following years of watching hundreds of presidential nominees routinely stalled in the Senate over unrelated political bargaining, Congress this summer passed a law eliminating the need for floor votes on 170 executive branch positions and 3,000 military officer appointments.
It’s a small step, but for agency rank-and-file awaiting leaders to provide political direction, it should help make government work.
November 6, 2012