Clinton-era government downsizing offers lessons for current crisis

The political leadership should offer an overarching vision of how the federal government can operate more efficiently with fewer resources to help guide agencies during the current budget crisis, according to interviews with dozens of current and former public officials and observers compiled in a new report.

President Obama also should appoint a high-level official to lead a major governmentwide cost-savings effort, while Congress needs to give agencies flexibility in meeting their deficit reduction targets, according to the report from the nonprofit Partnership for Public Service and consulting firm Booz Allen Hamilton.

The report recommends that agency leaders, along with the Office of Personnel Management and the Office of Management and Budget, regularly provide guidance and information to employees about cost-savings efforts, as well as how to use the best data available to determine budget priorities. The report offers a roadmap for the administration and Congress based on lessons learned from the Clinton-era reinventing government initiative and massive downsizing at agencies during the 1990s.

"We are going to be going through a period of difficult budget cuts," Office of Management and Budget Director Jack Lew said during an event Tuesday releasing the report.

Lew said the administration wants to give agency leaders the flexibility to make strategic cuts during the upcoming budget cycles to come up with a package that is right for every agency. He said he envisions OMB providing more counsel and less direction to agencies as they go through the difficult task of crafting lean budgets. Nevertheless, the burden for where and how agencies make those cuts will fall on agency leaders, Lew acknowledged.

Overall, four ingredients for success emerged from interviews with government officials and academics in the report:

• Leadership: The president and Congress must clearly communicate to agency leaders and the public the results they expect to achieve by streamlining government and how they plan to do it, observers said. "Overall, [President Clinton's] vision was about improving government and using federal resources to do more for the American people," the report said. "It was not solely about cutting government and services." Federal employees should have clear goals to follow and the flexibility to consider factors unique to their agencies when making budget cuts.
• Planning: The most successful agencies planned ahead and were prepared for cuts, the report noted. Often, those agencies were able to avoid across-the-board reductions that do not always produce the best results. "Agencies that wait to see what lawmakers do may have little time to plan where and how to absorb spending cuts, which could be draconian for some of them, particularly those not involved in national or homeland security," the report stated.
• Diversity: Multiple belt-tightening strategies are more effective than a single approach, officials told the report's authors. Agencies should consider the skills and abilities of their workforce and prioritize their programs and services when calculating where to make the most effective spending cuts. Agencies that use various methods to grapple with budget cuts -- such as automating processes, decreasing administrative costs, outsourcing, offering targeted buyouts to employees or as a last resort, implementing reductions in force -- typically are more successful than those that stick to one approach, senior executives advised.
• Communication: Agency leaders should prepare employees for budget cuts and provide them with the tools, technology and training that will help make their jobs more efficient. "Expect and plan for a demoralized workforce as the government undertakes major cuts," the report warned. OPM also should offer guidance to agencies on downsizing, while ensuring they have the flexibility to restructure their workforce in the most efficient way and retain employees in mission-critical positions.

A tough budget environment also can be a blessing in disguise, pushing government leaders to make positive changes that might not have been politically possible otherwise, the report said. "The situation presents a chance to rethink and restructure agency operations to serve the public more efficiently."

Lew said during his 30 years in government he has not witnessed the kind of political brinkmanship occurring in the current climate. And it's having a deleterious effect on public confidence in government. "There is a growing sense that government does not know how to do things right," he said.

The Partnership and Booz Allen Hamilton will hold four half-day workshops for agency leaders and senior managers beginning in December on the recommendations in the report.