Federal Service Prize Honorees Critique State of Government

Former Federal Reserve Bank Chairman Paul Volcker Former Federal Reserve Bank Chairman Paul Volcker Matt Rourke/AP

The late statesman and four-time Cabinet secretary Eliot Richardson “would be distressed at the malfunction of today’s government with its ideological extremes and deadlock,” former Federal Reserve Chairman Paul Volcker said at an awards ceremony on Wednesday.

“The trust that is essential to democratic government, though not yet lost, is on the precipice,” he warned, calling on political leaders to recognize the value of professional public administrators in solving national problems.

Volcker was honored, alongside Sheila C. Bair, who chaired the Federal Deposit Insurance Corp. during the 2008 financial crisis, with the Eliot L. Richardson Prize for Excellence in Public Service, a cash award given by National Academy of Public Administration.

Both were critical of the rollout of the 2010 Affordable Care Act, the current structure of the financial regulatory agencies and the recruitment techniques of the civil service.

The Obama administration’s problems implementing Healthcare.gov, Bair said, are “an example of the need to simplify government, because complexity feeds into cynicism, and if we can’t explain programs, they become hard to execute.”

Describing herself as a “lifelong moderate Republican,” Bair, who formerly worked for Sen. Bob Dole, R-Kansas, lamented the fading of the World War II generation of leaders who “knew how to compromise” to win achievements such as Social Security and tax reform in the 1980s.

“The key to success at the FDIC was looking at things through the prism of the public interest,” she added. If an action “doesn’t help the people who use the banks, why do it? I always told young people to focus on what serves the public interest, not whether it helps a friend or your next career move or a lobbyist.”

Volcker, who has led several commissions on public service and now heads the nonprofit Volcker Alliance aimed at rebuilding trust in government, addressed the Obamacare situation by quoting inventor Thomas Edison saying, “Vision without execution is hallucination.”

He also blasted the current civil service, saying “The recruitment practices stink. With some exceptions, people may wait six or seven months to get a response, which means you lose a lot of people. The bureaucratic structure suffers from constipation,” he added. “It is not conducive to having the most active capable people moving in and quickly taking responsibility. Young people are better off applying to cities and states.”

Volcker acknowledged that many people’s “eyes glaze over when you say public administration,” and that he is asked far more often about interest rates. “But though the political fights are fought over high-policy issues such as war and peace with widely different opinions, public administration stays here year in and year out,” he said. “It simply hasn’t been recognized.

On policy issues, Bair said she is “disappointed in the pace” of financial reform since the crisis eased. On the plus side, the FDIC was “fast off the mark with new tools, and the Commodity Futures Trading Commission created more transparency” to crack down on such controversial tools as credit default swaps. But the downside, she said, includes the slowness of the five agencies still working after four years on the so-called Volcker Rule to limit proprietary trading by financial institutions “The structure is not conducive to efficient rulemaking and the lobbying is relentless,” she added, suggesting a merger of the Securities and Exchange Commission with the CTFC.

Volcker agreed that the multiple regulatory agencies “have different objectives and different constituents, and there are turf concerns.” He expressed hope that over the long term a new approach to public administration would provide a solution to such stalemates.

Both agreed that the Federal Reserve’s “well-intentioned” efforts at “quantitative easing” to use monetary policy to stimulate the economy are no substitute for effective fiscal policy that would embrace tax reform and greater spending on infrastructure and education. Bair, who is working on a new project to help young people navigate higher education and the job market, said, “We need to open the eyes of political leaders as to what’s going on in the country instead of playing the nonsensical games of the last two years in Washington.”

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