THE VOLCKER REPORT, AND HOW IT IGNORES THE REAL PROBLEM WITH ATTEMPTS TO REVITALIZE GOVERNMENT

By JOHN W. DEAN
Friday, Jan. 17, 2003

A few days ago, the National Commission on The Public Service released a report entitled "Urgent Business For America: Revitalizing the Federal Government for the 21st Century." It is a dire document.

In the report, a distinguished non-partisan panel of knowledgeable former government officials - led by their chairman, former Federal Reserve head Paul A. Volcker - call for major changes in the organization of the federal government. The panel expresses its "deep and growing concern" about government "disarray," and contends there is an urgent need for these changes to be made as soon as possible.

Reports like this are so easily ignored - which is one of the reasons our government is in trouble. This one is very much worth paying attention to. In the end, though, the Volcker Commission's study has brushed over the real problem in finding a solution to the problems with the Executive Branch of our government.

Sounding An Alarm: Government's Organizational Problems

Perhaps the most serious problem for the federal government is its loss of citizens' trust. The Commission's report notes that trust in government, which, according to polls, was expressed favorably at around sixty percent by the citizenry in 1966-67, dropped to a low of twenty-eight percent in 1980. Following the September 11 attacks, it rose instantly to fifty-seven percent. But today it is back down to forty percent.

Why? The Commission found that one of the reasons is the public's negative perception of the federal government's ability to effectively perform. That leads, then, to another question: Why doesn't the federal government perform effectively?

The Commission's answer is this: It is operating with yesterday's structure. Government has grown by patchwork additions, resulting in organizations that follow no logical pattern. Their "logic" is that of history, and accident, not that of common sense and practicality.

As an example of a sign of the chaos of the federal government's functioning , the Commission cites the President's and Congress's decision to create a Department of Homeland Security. To do so will involve the reorganization of twenty-two federal agencies, and the reassignment of 170,000 federal employees with relevant missions and responsibilities.

The sheer scope of the change, the Commission notes, underlines the dysfunctional nature of existing government operations. And even despite this dramatic change, the FBI and CIA will not be included in the reorganization. Nor will comparable intelligence-gathering functions be placed within the new department. Thus, two of the most crucial government departments, post-9/11, will be left out of this broad structural reform.

A Commission Finding: Bad Organization Results In Poor Public Service

The Commission's central finding is this: The federal government is not structured to handle its business, for departments and agencies have confused, overlapping and often competing missions. This, in turn, has produced bad management. "Federal public servants are constrained by their organizational environment," the report notes. When the organizational environment is in a state of chaos, no wonder public servants cannot work effectively.

But disorganization is only part of the problem. Public service has lost its appeal. The federal work force is not as attractive as the private sector for most people with the skills and experience the government needs.

Young people are no longer attracted to what appear to be second-rate jobs with the government - jobs that, compared to those in the private sector, pay less money; often enjoy less prestige; and bring with them a large amount of bureaucracy and frustration. Given the impending retirement of a significant number of current federal employees, this inability to attract the best and the brightest will only make the national government's performance even worse in the future, the Commission projects.

The Commission reports that personnel systems designed for the workforce of the 1950s are simply not going to work when it comes to the workforce of the Twenty-first Century. To improve the ability to recruit talented people, the Commission says, the government must be totally reorganized.

The Volcker Commission's Recommendations

The thirteen-member commission spent eleven months studying these problems, with their efforts coordinated by the Brookings Institution, the Washington-based think tank. Their recommendations call for Congress and the President to take "immediate action" in a number of areas..

First, the Commission prescribes, there must be a "radical" reorganization of the federal government, much like that which has resulted in the new homeland security department. The reorganized government should consolidate all the agencies, bureaus, and divisions with similar missions and activities into a few large departments. To accomplish this, the Commission urges Congress to grant the reorganizational authority to the President - and make it his responsibility.

Second, the Commission calls for a reduction in the number of political appointees. When President Kennedy assumed office in 1961, there were 286 such positions; when President George W. Bush took office in 2001, there were a whopping 3,361 .

Most of the work of the political appointees, the Commission counsels, should be handled by career people who now would enjoy the possibility of reaching the top (another incentive for them to join the government in the first place). Meanwhile, for the few political appointees who are left the Senate confirmation process must be streamlined. Today this process is both too partisan and too slow, according to the Commission.

Third, Congress must increase the salaries of federal employees at the senior executive level, and of life-tenured federal judges. Chief Justice Rehnquist recently made the same argument in his own Annual Report, as I discussed in a prior column, and his points have found a receptive forum. The Commission agrees with Rehnquist that higher salaries are needed to recruit and retain high-quality judges, who will otherwise be lost to the private sector. And these salaries should not be tied, as they are now, to the salaries of members of Congress; they should be allowed to increase more rapidly if necessary.

Finally, to keep the federal government effectively functioning, the Commission advises, there must be a "concerted" drive to recruit and retain federal employees. Unnecessary "ethics" regulations must be cleaned up, and federal jobs must be made as attractive as those offered by private enterprise.

A Huge Stumbling Block for the Commission's Recommendations

As Paul Volcker said, no doubt wryly, when announcing his Commission's findings and recommendations, "This is not a subject that is ordinarily associated with making the blood run hot, but it is an important subject that needs attention." Disinterest, in fact, will be one of the most difficult problems for those who want to implement the Report's recommendations, and to do so as quickly as possible.

Because there is no actual crisis, the Report, despite its proclaimed "urgency" is not likely to get serious attention. It is urgent, but the government won't necessarily see it that way - and that, in itself, is a major problem.

Consider the past history of attempts to reform and modernize the federal government's operations. It is a slow process, with quick changes usually provoked by crisis, not merely by the insistence on the urgency of reform.

The Lessons of History: Rapid Reform Is Only Spurred by True Crisis

For almost a century and a half, the executive branch operated without a centralized budget - every department and agency simply got what it could from Congress, when it could get it. Only after World War I, did Congress realize this was no way to run a country. And the pattern by which serious problems persisting until crisis intervened, only continued thereafter.

Not until 1939, when the presidency was so short-handed it could barely function and war was on the horizon, did Congress adopt the Brownlow Committee's recommendation to create the Executive Office of the President. Not until 1949, after World War II had offered the ultimate test for the Executive Branch, did President Truman ask former President Herbert Hoover to assist him in reorganizing and improving the Executive Branch. And even then, Congress was in no rush to adopt these reforms; after all, there wasn't a war on.

Later, Presidents Nixon, Carter and Reagan all worked at making the executive branch more efficient and effective - all with limited success. During the Clinton presidency it was almost the full time work of Vice President Gore to "reinvent" the federal government. While this was most the sustained effort in history to reform the federal government, it too accomplished little.

Regrettably, most fail at the task of governmental reform. Take Paul Volcker himself: This is the second such government reform commission he has bravely headed. If more evidence is necessary to make clear this is unending, thankless work, I don't know what it would be.

For understandable reasons, the Volcker Commission has pointed no fingers, and avoiding the "blame game," has only suggested reforms. Unfortunately, with the main reform the Commission has suggested - in urging Congress to give the President authority to reorganize - it has only brushed over the true problem its report was meant to address.

The problem lies with Congress.

Congress Is To Blame For An Inefficient Executive Branch

When all is said and done, the efficiency and effectiveness of the executive branch is really Congress's task. It bears responsibility for, over many years, creating the existing hodgepodge of departments and agencies - adding a program here and another one there, and turning the whole mess over to the president to run.

And Congress, in the end, is also to blame for the political appointments problem the Volcker Commission's Report has isolated. There are over 3000 presidential appointees, sitting at the top of the departments and agencies, because every president wants to control the massive federal bureaucracy Congress has created. The President does so by placing his appointee, whom he hopes will be his proxy, in each of those policy-making jobs. Accordingly, to ask the Executive Branch to reduce the number of political appointees before reorganization is accomplished, is unfair. Nor is it going to happen.

Congress, As Disorganized as the Executive, Is Hardly the Branch to Reorganize It

Meanwhile, Congress itself is so disorganized it is no wonder it is the progenitor of this Executive Branch mess. Granted, Congress has added the General Accounting Office and a Congressional Budget Office, and expanded the research capabilities of the Legislative Reference Service. But putting these limited reforms aside, the Congress is operating today much as it did when the nation was founded. It is an archaic institution, governed by a body of Nineteenth Century procedures ill suited for the Twenty-first Century.

Theoretically, Congress reorganizes every other year, when each new Congress begins (although the Senate claims itself a continuous body). In practice, it merely rolls over the old rules and procedures, Congress after Congress. Repetition, not "progress," is the order of the day.

And here's another problem: Congress is not only static, it is heavily invested in the status quo. Members of Congress gain power from their influence over the Executive Branch. Both House and Senate are composed of countless fiefdoms of committees and subcommittees that oversee the Executive Branch. Each fiefdom is a heavily guarded source of power, and with fewer (or even different) Executive Branch entities to oversee, that power will never be changed in ways members of Congress won't like.

Consider, for instance, the question of who will have the greatest influence over the Department of Homeland Security. That has yet to be resolved, and the uncertainty doubtless makes many members of Congress nervous. Only an emergency - the tragic 9/11 attacks - could have prompted the reorganization. And sadly, until another emergency, little additional reform is likely to occur. Congress likes things just the way they are, and will keep them that way as long as possible. After all, change brings with it a risk of the loss of power.

All this works nicely for special interests: The more dysfunctional the organization of the federal system is, the easier it is for them to manipulate it to their benefit. If they fail to persuade one decisionmaker, they can always go to another with overlapping jurisdiction, and try to start a power fight, turning their "No" into a debate, and then perhaps eventually into a "Yes."

Notwithstanding efforts like the Volcker Commission's Report, I suspect nothing is going to change. It seems Machiavelli was correct when he told the Prince, "There is nothing more difficult to carry out, nor more dangerous to handle, than to initiate a new order of things."

Still, Mr. Volcker, his Commission, and the Brookings Institute are to be thanked for their sincere efforts. They have ably delineated the current problems with the federal government, and correctly gauged their seriousness.


John Dean, a FindLaw columnist, is a former Counsel to the President of the United States.

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