OMBlog

  • A Primer on Primary Balance

    After two days of hearings on Capitol Hill and reading scores of articles, commentaries, and blogposts about the President’s Budget, there seems to be some confusion about a key accomplishment of this plan: putting the Budget into primary balance by the middle of the decade.

    “Primary balance” does not mean that a budget is balanced. It is a technical term that describes something that is actually quite easy to understand. For a moment, put national finances aside and think about the finances of a family.

    Imagine a family – already living beyond its means -- where one of the parents is laid off at the same time that the roof of their house needs repair and they are hit by unexpected health expenses. With less money coming in and more money needed to go out, they are forced to charge more and more on their credit card. The result is that they sink deeper in to debt.

    The first thing that this family would need to do on the way to getting their finances in order is to stop charging new items onto their credit card. Once they do that, the income they have coming in would be enough to cover their current household expenses. Of course, they would still have the overhang of the debts they incurred, and those debts would grow as the interest payments did. But, the rate at which their debts would grow would slow. They would have reached an important milestone toward being fiscally sound.

    While the federal budget is enormously more complex, it works in a similar way. In the years leading up to the Obama Administration, the government was not living within its means, notably, taking on two large tax cuts and a new prescription drug benefit for Medicare without paying for it. Once the economic crisis hit, revenues plummeted just as outlays – including automatic stabilizers such as unemployment insurance and one-time emergency measures needed to jump-start the economy – increased. As a result, our deficits – already large – grew even larger, reaching 10.9 percent of the economy this year.

    Like our hypothetical family, what we need to do now that a recovery is underway is to get to the point where our current spending on programs is no longer adding to our debts by increasing the principal that we owe. The 2012 Budget does that: it includes more than $1 trillion in deficit reduction – two-thirds from lower spending -- and puts the nation on a path toward fiscal sustainability.  

    Specifically, by the middle of the decade, we will be able to pay our current bills and remain in primary balance for the remainder of the decade (for those of you so inclined, go to this table in the Budget and look at the last line on page 176). This does not mean that the federal government is debt-free. It means that the government will be in a place where it is paying for all of its programs—in other words, where spending on government programs will not be adding to our debt, and debt is growing no faster than the economy. Just as no longer charging new purchases to a credit card is a crucial first step for a family to start living within its means, reaching primary balance is an important first step for a nation on the road back from high deficits. That is why one of the charges to the Fiscal Commission was to find a path to primary balance because policymakers on both sides of the aisle saw how important reaching this milestone was.

    Reaching primary balance will mean implementing the most deficit reduction since the end of World War II as we go from our current historic deficit of more than 10 percent of GDP to around 3 percent of GDP, the level at which we will reach primary balance and be paying for the government’s programs.

    To be sure, reaching this milestone is not enough. The debt is still there, and it is still accumulating interest—just like a credit card bill. And we are going to have to start paying that debt down too. That is why the President has called this budget a down payment, because we will still have work to do to pay down the debt and address our long-term fiscal challenges.

    Doing that work will take all sides being clear about our goals, finding areas of agreement, and then exploring where we can work together. The Administration is committed to doing that because what we need now is not more partisanship, but more problem-solving.

     

    Jack Lew is the Director of the Office of Management and Budget.

  • The 2012 Budget

    Today, the President sent to Congress his budget  for the 2012 fiscal year. This document is built around the simple idea that we have to live within our means so we can invest in the future. Only by making tough choices to both cut spending and deficits and invest in what we need to win the future can we out-educate, out-build, and out-innovate the rest of the world.

    This is the seventh Budget that I have worked on at OMB, and it may be the most difficult. It includes more than $1 trillion in deficit reduction – two-thirds from spending cuts -- and puts the nation on a path toward fiscal sustainability so that by the middle of the decade, the government will no longer be adding to our national debt as a share of the economy and will be paying for what it spends – and will be able to sustain that for many years afterwards.  

    The President has called this budget a down payment because we will still have work to do to pay down the debt and address our long-term challenges. But it is a necessary and critical step for we cannot start to move toward balance and to cutting into the size of our debt until we first stop adding to it – and that is what this Budget does. 

  • A Tribute to Bob Ball

    Last Friday, I had the honor to deliver remarks at the dedication of the Robert M. Ball Federal Building in Baltimore. Bob Ball and I first met when, as a young staffer for House Speaker Thomas P. O’Neill, Jr.,  I was assigned to work on the bipartisan effort to reform and strengthen Social Security that culminated in the 1983 Social Security Reforms.  He was the object lesson of how one person – dedicated to learning as much as he could and working as hard as he can – can make a difference, not just in the lives of millions of people, but in the life of the country. For his entire career, across six decades, Bob Ball gave so much of himself -- deep into his own retirement – in order to make sure that millions of Americans could have a dignified retirement.

    My full remarks are here and I hope they reflect my great respect for this examplar of public service who represented the best of both career and political leadership in government.  

     Jack Lew is the Director of the Office of Management and Budget.

  • Turning the Tide on Contract Spending

    “Buying less” and “buying smarter” are simple ideas to understand, but history tells us that these basic principles of fiscal responsibility are not as easy to implement as one might think.  Since 1997, and in 18 of the past 20 years, total spending by the federal government on contracts has increased – and at a near break-neck pace of 12 percent per year between 2000 and 2008.  During this eight-year period, annual procurement budgets grew from $200 billion a year to more than $500 billion a year. 

    This Administration is doing what has been so elusive in the past:  cutting wasteful spending on contracts and getting better value for the taxpayer dollar.  For the first time in 13 years, we have reduced spending on contracting and agencies have stopped the costly upward spiral in contract growth.  In FY 2010, agencies spent nearly $80 billion less than they would have spent had contract spending continued to grow at the same rate it had under the prior Administration. 

    A new sense of fiscal responsibility is taking hold.  Agencies are thinking more carefully about what they buy and how they buy it. They are ending contracts they cannot afford or no longer need.  They are taking greater advantage of buying strategies that are more appropriate for the world’s largest purchaser – pooling their buying power to negotiate better prices and deeper discounts.  And, after years of inattention, they are rebuilding the capacity and capability of the acquisition workforce to achieve and sustain better acquisition outcomes and improved government performance. 

    In his State of the Union address, President Obama said that, “we can’t win the future with the government of the past.” Instead, he said we must reform the way we do business in Washington and give the American people a government that’s not only more affordable, but also more effective and more efficient. This principle has been the cornerstone of our work on contracting and across the Accountable Government Initiative. From reforming and cutting costly IT systems, implementing unprecedented transparency and reporting efforts, buying in bulk, establishing a government-wide Do Not Pay list, or moving toward electronic government payments, we’re making real progress in changing the way government does business.

    Here is more information about how we are saving money, cutting waste, and getting better results from our acquisitions. We are turning the tide, but there is still more to be done. OMB’s Office of Federal Procurement Policy will continue to work closely with agencies to build on their accomplishments to date and explore new opportunities for saving so that every taxpayer dollar is spent wisely.

    Jack Lew is the Director of the Office of Management and Budget.

  • Welcoming our 2010 SAVE Award Winner

    On Tuesday night, President Obama spoke about giving the American people a government that’s not only more affordable, but also more effective and more efficient. Federal employees are important partners in that effort. From inspecting the food heading to our tables and making sure Social Security checks go out on time to treating wounded troops and helping returning Veterans pursue higher education, Federal employees are working day in and day out to serve the American people. The President believes these frontline workers are essential to any effort to improve government.

    That’s why he launched the first ever SAVE Award in 2009 to gather ideas from employees across the country about how to cut waste and make government work smarter for the American people. Today, the President met with the employee who the public voted this year’s winner: Trudy Givens of Portage, Wisconsin.

    Trudy is a 19-year employee of the Bureau of Prisons, currently serving as a Business Administrator at the Federal Correctional Institution in Oxford, Wisconsin. Over the course of her career, Trudy noticed that several copies of the Federal Register — the federal government’s official daily publication for rules, proposed rules, and notices from Federal agencies and organizations, as well as executive orders and other presidential documents– were delivered to her workplace several times per week, but employees rarely referenced the documents. The Federal Register was made available online years ago, and most members of the interested public reference that online version now. Trudy thought that in keeping with the President’s spirit of cutting out waste and going green, the government should cease the printing and mailing of thousands of Federal Registers to employees who don’t need them.

    Even ideas that sound small can add up. Printing just one page of the Federal Register costs a little more than a penny, but when you amplify that across the whole of government, suddenly your talking millions of dollars. We expect to save the vast majority of those dollars – at current costs that could be up to $4 million dollars per year-- by limiting print distribution to those who need it.

    And Trudy’s not alone. Employees across the government are contributing ideas to make their agency work more effectively and efficiently. Through the SAVE competition, we are starting to see a cultural shift where employees are really becoming engaged in rooting out waste. Several agencies including the Departments of Housing and Urban Development, Interior, and Defense have launched their own internal competitions or online engagement tools to encourage employees to submit their ideas to save money and make government work more efficiently and effectively all year round.

    It is incumbent upon all of us in public service to be conscientious stewards of your taxpayer dollars. But it is particularly important to do so when the fiscal times are tough. Congratulations, Trudy, for winning this year’s award, and thank you for your contribution to making the government more effective and efficient.

  • Health Care Reform Check-Up

    Today, the House Budget Committee is holding a hearing about the fiscal impacts of the Affordable Care Act (ACA), which the President signed into law last year and has already given Americans new freedoms and protections. It’s important to get the facts straight about what impact the Affordable Care Act has on our deficits and long-range fiscal situation.

    Rising health care costs are the biggest driver of our long-term deficits, and getting them under control is crucial if we want to grow the economy, create jobs, compete in the world economy and win the future. The Affordable Care Act helps us achieve that goal.

    As the Congressional Budget Office (CBO) made clear in a letter sent earlier this month to the Speaker of the House, repealing the Affordable Care Act would increase the budget deficit by hundreds of billions of dollars over the next decade. The CBO letter notes that “over the 2012–2021 period, the effect of H.R. 2 [the repeal of ACA] on federal deficits … is likely to be an increase in the vicinity of $230 billion.”  And in the decade after that, we will save more than $1 trillion thanks to the new law.

  • Regulatory Strategy

    OMB plays a central role in implementing a President’s regulatory agenda. Through our Office of Information and Regulatory Affairs (OIRA), OMB acts as a clearinghouse for the most significant regulations and rules, making sure that policies are consistent across the federal government and with the agenda of the President.  OMB also ensures that analysis of rules is done properly, according to one set of standards.

    With that in mind, I want to point readers to the op-ed that President Obama wrote in today’s Wall Street Journal, detailing his approach to regulation and the strategy that has guided his Administration from the start.  As the President wrote, our aim is to “strike the right balance” between what is needed to protect the safety and health of all Americans, and what we need to foster economic growth, job creation, and competitiveness. The Administration has followed this balanced approach since taking office, and this executive order formally details our basic operating principles.

    With this EO, there should be no confusion about what guides this Administration when crafting regulations. The basic tenets are: to consider costs and how best to reduce burdens for American businesses and consumers; to expand opportunities for public participation and stakeholder involvement; to seek the most flexible, least burdensome approaches; to ensure that regulations are scientifically-driven; and to review old regulations so that rules which are no longer needed can be modified or withdrawn. This smarter approach builds on the best practices of the past, while adapting to serious economic challenges the country faces today.

  • Celebrating MLK Day with City Year

    Today, I am joining hundreds of volunteers at Intermediate School 292 in Brooklyn as part of City Year’s celebration of the Martin Luther King, Jr. holiday. I look forward to seeing the hundreds of energetic and idealistic City Year corps members who are always an inspiration.

    I helped to launch City Year New York after September 11 as part of our City's healing, and was honored to chair its board. MLK day at City Year always brings together hundreds of people eager and excited to give something of themselves, not just to honor Dr. King, but also to improve their community.

    Advancing the idea that MLK day should be a "day on" doing service rather than just another "day off", more than 20 members of the Cabinet are at schools, homeless shelters, and other community service organizations pitching in.

  • A New Deputy Director

    Earlier today, the President announced that he intends to nominate Heather Higginbottom as the Deputy Director of OMB.

    Many of us at OMB know Heather from her work as Deputy Director of the Domestic Policy Council. In that position, she has played an integral role on issues ranging from education to poverty to food safety. Before she joined the Administration, Heather was the Policy Director for Obama for America. She came to that job after eight years working in the US Senate for Senator John Kerry, culminating in serving as his Legislative Director. Heather also founded and served as Executive Director of the American Security Project, a national security think tank. A Binghamton, New York native, Heather holds a bachelors degree in Political Science from the University of Rochester and a Masters degree in Public Policy from the George Washington University.

    Heather has a passion for her work and has demonstrated throughout her career a dedication to sound public policy that makes a difference in people’s lives.

    Heather is replacing a trusted colleague and a good friend, Rob Nabors. Rob’s willingness to take a leave from his new job in the West Wing to help steward OMB through this recent period of transition demonstrates the depth of his commitment to what OMB does and to the institution itself, and his own commitment to serve. I am personally grateful to him for once again being part of my team as we produce the 2012 Budget.

    I am confident that Heather will be an outstanding addition to the OMB team, and I look forward to her joining OMB as soon as possible.

     Jack Lew is the Director of the Office of Management and Budget

  • New Year, New Estimate, Same Result

    The new year starts with a renewed focus on the Affordable Care Act (ACA), which the President signed into law last year and has already delivered a host of consumer protections and benefits to millions of Americans.

    Yesterday, the House Republican leadership introduced a bill to repeal the ACA. Today, the Congressional Budget Office (CBO) sent a letter to the Speaker of the House giving its assessment of the budgetary effects of a repeal: it would increase the budget deficit by hundreds of billions of dollars over the next decade. The CBO letter notes that “over the 2012–2021 period, the effect of H.R. 2 [the repeal of ACA] on federal deficits … is likely to be an increase in the vicinity of $230 billion.”  This result is not surprising since CBO scored the ACA as reducing the deficit by more than $100 billion through 2019 and by more than $1 trillion in the decade after that.

    To be fair, CBO is clear that this is a preliminary estimate that does not take into account a host of changes in the economy, technical matters, and the effects of the implementation to date. But even after a more comprehensive analysis, we should expect the same outcome: the deficit would increase substantially if ACA were repealed. As CBO Director Elmendorf wrote in his blog today, “those developments will probably not have a major effect on the overall budgetary impact of repealing the legislation.”

    For those in both parties who care about the deficit and our future fiscal course, the repeal of the ACA should concern them deeply. Rising health care costs are the biggest driver of our long-term deficits, and getting them under control is crucial for the fiscal health of the nation and to keep our economy growing, creating jobs, and competing in the world economy. Beyond that, we need to keep in mind that repealing the ACA also would roll back what the bill already has done to help millions of Americans -- from the families benefitting from the end to lifetime dollar limits on essential benefits to the young people now able to join their parents’ policies and the seniors who now are able to afford their prescription drugs. And repeal would deny an estimated 32 million American citizens health insurance in years to come.

    Jack Lew is the Director of the Office of Management and Budget

  • More on USASpending

    A cornerstone of the President’s Accountable Government Initiative and Open Government Initiative is the belief that transparency leads to more oversight, less waste, and more accountability, resulting in a more effective government. For too long, many government resources have been difficult to navigate or inaccessible.

    This fall, we have taken another important step toward making government more open and accountable to the American people with a major addition to the type of data available on USASpending.gov.

    For the first time on USAspending.gov, you will be able to track payments made by federal agencies not only to direct recipients, but also those made by those recipients to other entities – such as by a prime contractor to a sub-contractor.   Leveraging the lessons learned from previous transparency efforts, such as those associated with the American Recovery and Reinvestment Act, we have worked hard with stakeholders to reduce the burden of reporting, while ensuring that the information provided to the public is useful.

    This was not an easy task.

    The prior Administration made little headway on this issue, so the team at OMB already was running behind the schedule for implementation set by the Federal Funding Accountability and Transparency Act (Transparency Act).   In addition, they needed to change regulations and reporting guidance; develop, test, and deploy a new IT solution to capture data; and undertake extensive outreach to contractors and grantees so that they would be ready for the change.

    Last month, sub-award information on contracts began to appear on USAspending.gov for the first time.  And beginning last week, USAspending.gov is displaying sub-award information associated with new prime grant awards (made on or after October 1, 2010) over $25,000.  So far this week, we reported 930 sub-awards, related to a variety of grants in areas such as health, food and nutrition, and transportation.  In total, these 930 sub-awards account for $750 million in Federal funding.  We expect this number to increase significantly over-time, but it represents a critical milestone in our efforts providing the public with unprecedented transparency into how and where tax dollars are spent.

    Improving the data available on USAspending.gov is part of a larger effort to use transparency to boost government accountability. Already, we launched the IT Dashboard to provide the American people with unfiltered access to Federal technology spending information and progress made on IT projects across the government. And earlier this year, we stood up PaymentAccuracy.gov which allows the public to track progress in preventing improper payments.

     

    Jack Lew is the Director of the Office of Management and Budget.

  • Tightening Our Belts

    As I wrote last week upon my return to the Office of Management and Budget, the fiscal and economic situation we face today is very different than the projected surpluses we left behind the last time I served as OMB Director in the 1990's. After years of fiscal irresponsibility, President Obama inherited a $1.3 trillion projected deficit and the worst economic downturn since the Great Depression.

    The President and his economic team worked quickly to address the crisis, and we are seeing our economy recover – albeit more slowly than anyone would like. Families and businesses are still hurting, and too many who want to work are not able to find a job. Our top priority must be to do what we can to help boost economic growth and spur private sector job creation.

    But to lay the foundation for long-term economic growth and to make our nation competitive for years to come, we must put the United States back on a sustainable fiscal course. And that’s going to require some tough choices.

    Today, the President made one of those: proposing a two-year pay freeze for all civilian federal workers. This will save  $2 billion over the remainder of this fiscal year, $28 billion in cumulative savings over the next five years, and more than $60 billion over the next 10 years. The freeze will apply to all civilian federal employees, including those in various alternative pay plans and those working at the Department of Defense – but not military personnel.

    We are announcing this move today because tomorrow is the legal deadline to submit to Congress the President’s decision about locality pay, a key component of overall federal worker pay.  In addition, we are in the midst of the 2012 budget process, and need to make a decision about pay to develop the 2012 budget. Simply, the time to decide about pay for those two years is now.

    Make no mistake: this decision was not made lightly.

    Like everyone honored to serve in the White House or the Cabinet, we work with extraordinarily talented public servants every day. Throughout my career in the Congress, at  the State department, and here at OMB, I have met federal workers who have sacrificed more lucrative jobs and hours with their families - -and, in some cases, put their lives in harm’s way -- in order to serve their fellow Americans.  Indeed, anyone who has flown safely, enjoyed our national parks, received a Pell grant to go to college, or relied on a Social Security check to retire in dignity has benefited from the service of federal workers.

    This pay freeze is not a reflection on their fine work. It is a reflection of the fiscal reality that we face: just as families and businesses across the nation have tightened their belts, so must the federal government.

    Already, the Administration has taken a number of steps in this regard  as part of its Accountable Government Initiative from the President freezing the salaries for all senior White House officials and other top political appointees upon taking office to his efforts to get rid of $8 billion of excess federal real property over the next two years, reduce improper payments by $50 billion by the end of 2012, and freeze non-security spending for three years – which will bring non-security discretionary spending to its lowest level as a share of the economy in 50 years.

    Moving forward, we will need to make many more tough choices to construct a plan to pay down these deficits and put our nation on sound fiscal footing. Later this week, the Fiscal Commission will release its report laying out its approach, and I look forward to working with people from across the spectrum on this challenge in the weeks to come.

     

    Jack Lew is the Director of the Office of Management and Budget.

  • Happy to be Back

    On Thursday night, the Senate confirmed my nomination to be the Director of OMB, and yesterday was the start of my first week in the job.

    I wanted to take a minute to say how great it is to back at OMB and to join the talented team here that is already hard at work producing a Budget for 2012. Many of the people I am working with are old friends from my previous time spent at OMB, and many more are new colleagues. I look forward to getting to know everyone in the busy weeks and months ahead. I also want to thank everyone at OMB for their support during the confirmation process, and in particular, I am grateful to Jeff Zients and Rob Nabors for their leadership during the transition period.

    The fiscal and economic situation we face today is very different than what we faced the last time I served as OMB Director. A series of policy choices and the worst economic downturn since the Great Depression present us with a very different set of challenges than those posed by the forecast of surpluses at the end of the 1990’s.  Now, we must put our nation back on a sustainable fiscal course in the medium-term and shore up our fiscal position for decades to come while spurring job creation and boosting the competitiveness of the US in the global economy. And while we should aspire not to waste taxpayer dollars regardless of whether the budget is in surplus or deficit, the management of the federal government is particularly important during lean times. That is why we must make sure every dollar we spend has the desired impact and makes a difference.

    As the President has said, it will take tough choices – and putting partisan differences aside -- in order to do what is right for our country today and for our children and grandchildren in the years ahead. I look forward to working – as I have throughout my career -- collaboratively across partisan and ideological divides with all those committed to taking constructive steps to rejuvenating our nation’s economy and its fiscal standing.

    Finally, I am new to blogging, but I recognize how OMBlog has become an important tool to communicate directly with the public about what the Administration is doing across a wide range of issues – and to dive deeply into some matters that may be only of interest to real budget wonks. So as I get settled, I look forward to using this platform as a way to keep you informed and share details about our continued progress. 

    Jack Lew is the Director of the Office of Management and Budget

  • Driving IT Reform: An Update

    Tackling the information technology gap  between the public and private sectors is one of most effective ways we can make government work more effectively and efficiently for the American people. IT has been at the center of the private sector’s productivity gains, but for too long Federal IT projects have run over budget, behind schedule, or failed to deliver what on their promise. That’s why fixing IT is a cornerstone of the President’s Accountable Government initiative.

    This effort began in earnest  this summer when we undertook a three-part strategy to reform how the federal government purchases and uses IT – cutting waste and saving money.

    First, Chief Information Officer Vivek Kundra launched detailed reviews of the highest priority IT projects across the Federal Government; these are critically important IT modernization projects that have not yet delivered. Since then, we’ve held dozens of TechStat review sessions, resulting in faster deliverables, terminations of projects that didn’t work, and most importantly turned around projects that were in trouble.

    Second, since far too many financial system modernization projects were running behind schedule and over budget, we halted all new work on those projects pending review and approval by OMB. Across the government, over 30 financial systems projects, with budgets totaling $20 billion, were affected by this policy.  

    Our review of 20 agencies’ projects is now complete, and I am proud to report that we have taken steps to save $1.6 billion on these projects.
     
    Through our reviews, we determined that half the projects were basically on track. Of the half that were not, we took the following actions:

    • At two agencies – the Department of Housing and Urban Development and the Environmental Protection Agency  -- we pulled forward meaningful functionality, resulting in almost $230 million in budget reductions.

    • At two agencies – the Department of Veterans Affairs and the Small Business Administration –  we canceled their projects as a result of the review, resulting in over $500 million in budget reductions.

    • At three agencies – the Departments of Homeland Security, Justice, and Health and Human Services, we are moving forward with plans to decrease the scope of and improve their financial system projects, resulting in reduced costs and a greater focus on critical business needs.  This revaluation of these projects resulted in over $680 million in budget reductions. 

    • An additional $200 million in budget reductions was identified in various agencies, with more to come.

    While this is great progress toward getting these IT systems online and working for the American people, we also recognize that it’s better to get them right from the get-go. 

    Third, we were tasked with developing a new strategy to fundamentally change how the federal government purchases and uses IT, which I discussed in a speech to the Northern Virginia Technology Council today: 

    • Aligning the Budget and Acquisition Process with the Technology Cycle. Between increasing budget flexibility and speeding up acquisitions, we’re going to eliminate the structural disconnect between the government’s process and the technology cycle. To start, we’ll work with Congress to identify a dozen pilot projects where we can develop a framework for increased budget flexibility and greater oversight.

    • Strengthening Program Management. We’re creating a formal career track for professional program managers and we’ll only green light IT projects with effective program management teams hardwired into the agency’s organizational structure.

    • Streamlining Governance and Increase Accountability. We’re going to revamp the Investment Review Boards along the TechStat model – bringing senior executives to the table armed with the right information and expertise to provide meaningful oversight and drive interventions and decision making on specific projects.

    • Increasing Engagement with the IT Community. We’ll be launching a “myth busters” campaign to promote greater engagement with industry and remove barriers to communication that are hurting our productivity. We’ll also develop mechanisms for sharing best practices and solutions between agencies and IT community on a regular basis.

    • Adopt Light Technologies and Shared Solutions. We are reducing our data center footprint by 40 percent by 2015 and shifting the agency default approach to IT to a cloud-first policy as part of the 2012 budget process.  Consolidating more than 2,000 government data centers will save money, increase security and improve performance.

    Changing how we invest the $80 billion we spend each year on IT and making sure what we buy is helping us deliver better results at a cheaper price is a big challenge. But the hard work of many people throughout the agencies shows that it can be done, and we will work with our colleagues across the government and partners in the tech and business communities to build on these successes in the months to come.

  • Improper Payment Progress

    Readers of OMBlog are now quite familiar with the Administration’s determined effort to cut the billions of dollars wasted each year in improper payments -- payments made by the government to the wrong person, at the wrong time, or in the wrong amount. These include payments made in error by a government agency sending a benefit check, inadequate documentation by a local provider, or outright fraud by a contractor or other recipient.

    As part of the President’s Accountable Government Initiative, we’ve worked hard to bring down the rate of improper payments, recapture misallocated funds, and meet the President’s goal of reducing improper payments by $50 billion by the end of 2012. Yesterday, federal agencies finished their year-end financial statements, and I’m pleased to report that we have made significant progress on these fronts.

    For 2010, the government-wide improper payment rate declined to 5.49 percent, a decrease from the 5.65 percent reported in 2009. This means that we prevented an additional $3.8 billion in improper payments from being made in 2010, and are headed in the right direction as we work to meet the President’s goal.

    In fact, eight of the 10 high-priority programs (programs which account for the majority of government-wide improper payments) reported lower improper payment rates in 2010 compared to 2009. It’s worth noting that Medicare and Medicaid both achieved lower error rates in 2010, avoiding approximately $8 billion in improper payments if those declines had not been achieved.

    Agencies also reported that they recaptured almost $687 million in improper payments in 2010, a significant amount of payment recaptures. This total includes approximately $611 million recaptured through payment recapture audit reviews of agency contract payments – a specialized audit in which auditors are given an incentive to find more misspent money. This was the highest recaptured amount reported in the seven years that agencies have conducted payment recapture audits, and more than doubled from 2009. All told, the $687 million recaptured in 2010 puts us on track to achieve the Administration’s goal of recapturing at least $2 billion between 2010 and 2012.

    Now, because many of the targeted programs – such as Unemployment Insurance and Medicaid – are paying out more benefits as the economic downturn creates more demand for these benefits, the total number paid out in improper payments increased to $125 billion last fiscal year even though the overall error rate declined. This is an unfortunate result of the recession and of basic math: the more that is paid out, the more paid out in error even if the overall rate declines.

    Looking ahead, we are not stopping in our efforts to reduce improper payments. Today, we are releasing guidance to agencies on steps that they should take to comply with the Presidential memorandum on intensifying and expanding payment recapture audits, and steps on how agencies can begin to implement the new recapture authorities contained within the Improper Payments Elimination and Recovery Act (IPERA). We also are launching a partnership with the Department of Veterans Affairs (VA) to pilot www.VerifyPayment.Gov, a new portal for the new Do Not Pay List that will create a central clearinghouse of information to prevent payments to ineligible recipients.

    And because, ultimately, it’s your money at stake, information about agencies’ improper payments will be available later today at www.PaymentAccuracy.gov.

    The results today demonstrate that we can cut waste, boost effectiveness, and create a government where tax dollars are respected. As the steps we have taken over the past several months continue to take root, I am confident that with the continued hard work of folks across the federal government and with the leadership of President Obama, we will see continued progress in reducing improper payments and toward a more efficient federal government.

  • And the Top SAVER is...

    Over 57,000 of you have spoken, and the winner of the 2010 SAVE Award is Trudy Givens of Portage, Wisconsin.

    Trudy is a 19-year veteran of the US Bureau of Prisons, working now as a Business Administrator in the Federal Correctional Institution in Oxford, Wisconsin. Over the course of her career, Trudy noticed that copies from the Federal Register -- the federal government’s official daily publication for rules, proposed rules, and notices of Federal agencies and organizations, as well as executive orders and other presidential documents-- were delivered to her workplace several times per week, but employees rarely referenced the documents. The Federal Register was made available online years ago, and most members of the interested public reference that online version now. Trudy thought that in keeping with the President’s spirit of cutting out waste and going green, the government should end the printing and mailing of thousands of Federal Registers to employees.

  • Every Vote Counts to SAVE

    More than 45,000 people have made their voices heard in selecting this year’s winner of the President’s SAVE Award – and there is still time for you to vote too. Just go to www.SAVEAward.gov, take a few seconds, and help select the best idea from our Final Four on how government can cut waste and improve performance.

    As I’ve written about before,  President Obama launched the second annual SAVE Award earlier this year— a program that offers every federal employee the chance to submit ideas about how government can be more efficient and effective in its work. Over the course of three weeks, federal employees submitted more than 18,000 ideas.

    Voting began on Monday, and as of the close of business yesterday, we had 45,000 votes. Voting is open until 8:00 PM ET on Friday. So, cast your vote – and the person whose idea is voted the best will get to meet the President, present the winning idea directly to him, and will have that idea included in the FY2012 Budget.

    Once again, vote  – and spread the word about how everyone can help choose this year’s winner.

  • Vote Now: The President's 2010 SAVE Award Finalists

    President Obama and this Administration have taken steady steps to change the way business is done in Washington and make government more effective and efficient for the American people – for today and for years to come. That’s what is driving our Accountable Government Initiative  and all its parts from our effort to stop huge cost overruns in IT projects  to getting rid of unneeded federal properties  and bringing more competition to contracting.

    One of the most important changes that the President has brought to Washington is the belief that the best ideas usually come from outside of Washington.  That’s why he launched the first ever SAVE Award last year to get ideas from federal employees on the frontlines to make government work smarter for the American people and to make sure taxpayer dollars are spent wisely. And it’s why we are now asking the American people to help us select this year’s winner.

    As they did for the first award, federal employees across America and stationed around the globe answered in droves the President’s call for ideas on how to cut waste, save money, and boost performance.
    More than 18,000 ideas were submitted this year, and federal employees weighed in with more than 164,000 votes to help the Administration identify promising ideas to save. Our budget team then went through the ideas to see what we were already in the process of fixing, what needed a closer look, and which where worthy of being our four finalists.

    Today, we’re announcing our Final Four -- and asking you to weigh in and vote for your favorite idea on www.SAVEAward.gov.

    The winner will get to present his or her idea directly to President Obama at the White House. Others will be sent to the responsible agencies for potential action. Last year, 20 SAVE Award ideas made their way directly into the President’s 2011 Budget, and others helped identify cost-savings across an array of areas.
    Most importantly, the idea that each employee has both the ability and responsibility for making every taxpayer dollar count is becoming part of the culture in the federal government – not just each year with the SAVE Award, but all year round.

    Here are the 2010 finalists:

    Stop the Express Delivery of Empty Containers. Marjorie Cook from Gobles, Michigan is a food inspector in USDA’s Food Safety and Inspection Service (FSIS). FSIS inspectors ship 125,000 samples to labs each year using “Express Next Day” service. Those labs use the same costly shipping method to send empty containers back. As Marjorie put it, “We could save a bundle by having those boxes shipped back through regular ground service.”

    Require Mine Operators to Submit Reports Online. Thomas Koenning of Littleton, Colorado works in the Mine Safety and Health Administration’s Information Technology Center. Currently, mine operators are mailed paper forms in order to report quarterly data. Koenning suggests requiring mine operators to make these reports online to save money on costly form production and postage, reduce input errors, and decrease the time it takes to analyze this data which is important to MSHA’s efforts to protect the safety of America’s mine workers.

    Post Public Notice of Seized Property Online, Not in Newspapers.  Paul Behe is a Paralegal Specialist for the Department of Homeland Security in Cleveland, Ohio. He suggests advertising property seized by Customs and Border Protection – such as counterfeit watches and purses – online instead of in newspapers. As Paul notes, “In addition to the immense cost reduction for the ads, DHS would be able to save the cost of storage for the seized items that are at the contractors, awaiting adjudication.”

    End the Mailing of Thousands of Federal Registers to Government Employees. Trudy Givens from Portage, Wisconsin works for the Bureau of Prisons. The Federal Register is currently mailed to her workplace and nearly 10,000 Federal employees every workday.  Most of the interested public now accesses the Federal Register online. While statute requires that hard copies be available, allowing recipients to opt-in for hard copy delivery could yield savings associated with printing and postage. When a similar “opt-in” (with fee) option was offered to the public, the number of hard copies mailed was reduced from roughly 25,000 to 500 recipients. 

    Make no mistake: the SAVE Award will not balance the budget. But cutting waste and restoring accountability for taxpayer dollars is important if the budget is in surplus or in deficit. Pick your favorite from the list, and spread the word to all your family, friends, and colleagues to make their voices heard and help us pick this year’s SAVE Award winner.

  • Ceasing Checks to the Deceased

    Whether the budget is in surplus or in deficit, we cannot tolerate the wasting of taxpayer dollars – and there are few more egregious examples of waste than improper payments. These are payments made by the government to the wrong person, at the wrong time, or in the wrong amount, and last year, they totaled approximately $110 billion.

    This morning, Senator Tom Coburn released a report highlighting one aspect of improper payments: government benefits being sent to the deceased. Senator Coburn found that over the past decade, $1 billion has been sent improperly to individuals clearly ineligible for earthly benefits. While the vast bulk of these improper payments happened during the previous Administration, it’s critical that we move aggressively to curb them – and that’s what we have been doing since the early days of the Obama Administration. In fact, the President has set an aggressive goal: to eliminate $50 billion in improper payments between 2010 and the end of FY 2012.

    How are we going to do that?

    First, on November 19, 2009, the President issued an executive order laying out a strategy to reduce improper payments through boosting transparency, holding agencies accountable, and creating strong incentives for compliance. Specifically, the executive order required the identification of high-priority programs, the selection of accountable officials to coordinate agency program integrity efforts, the development of supplemental measures of payment error for high-priority programs, a public website to track progress in reducing improper payments (PaymentAccuracy.gov), and the pursuit of tough penalties on contractors for failing to timely disclose credible evidence of significant overpayments received on government contracts.

    Second, on March 10, 2010, the President signed a presidential memorandum directing all Federal departments and agencies to expand and intensify their use of payment recapture audits. These are audits which offer specialized private auditors financial incentives to root out improper payments, and have been demonstrated through pilot programs to be highly effective.

    Third, on June 8, the President announced that the Administration would cut the improper payment rate in the Medicare Fee for Service program in half by 2012. Doing so will eliminate more than $20 billion in payment errors by FY 2012.

    Fourth, on June 18, the President issued a memorandum directing that a Do Not Pay List be established to provide a single source through which all agencies can check the status of a potential contractor or individual. Too often, an agency does not check all the different databases the government has or finds it unnecessarily difficult to do so. This denies agencies essential information they need to determine, for example, if an individual is alive or dead or if a contractor had been debarred. The Do Not Pay List will allow Federal agencies to access this information in a more timely and cost effective manner and will help reduce improper payments made by the Government and help save taxpayer dollars. 

    That same day, the Vice President announced the expansion of a cutting-edge fraud mapping tool that the Recovery Accountability Transparency Board has deployed that gathers enormous quantities of information in real time and then analyzes the data and helps connect the dots to identify indicators of possible fraud or error. The Administration is piloting it first at the Centers for Medicare & Medicaid Services before expanding the use of this type of tool across government.

    Finally, in a ceremony in the State Dining Room on July 22, the President signed the bi-partisan Improper Payments Elimination and Recovery Act (IPERA) into law, which will strengthen and complement the efforts already undertaken to reduce improper payments. 

    There is still more work to be done as the team here works hard to implement these new strategies and the IPERA legislation. We welcome Senator Coburn’s highlighting of this important issue, and look forward to continue working with Congress to reduce improper payments, combat fraud, cut waste, and make government more effective and efficient.

  • Real Update on Real Property

    As I’ve written about before, as part of the President’s Accountable Government Initiative, we are taking aggressive steps to save taxpayer dollars while making government work better, harder and more efficiently for the American people.

    That’s why on June 10, 2010, President Obama issued a Presidential Memorandum titled “Disposing of Unneeded Federal Real Estate” directing agencies to accelerate efforts to remove excess and surplus property for a savings of $8 billion by the end of FY 2012. And as part of the President’s FY 2012 budget process, we are working closely with Federal agencies to achieve that goal.

    Federal agencies have detailed plans to cut excess property costs and implement cost cutting measures. To date, Federal agencies have identified $1.7 billion of the $3 billion in non-defense savings opportunities that the President has required us to achieve by the end of FY 2012. And we are off to a good start in converting these opportunities to bottom line savings for taxpayers. For instance, we are selling buildings such as one office building in Omaha, Nebraska for $1.3 million, one in Springfield, Massachusetts for $2.5 million, and one in Bethesda, Maryland for $12.4 million.

    The Department of Defense is also on track to achieve the $5 billion in real property cost savings through the Base Realignment and Closure (BRAC) process in the same time period.

    While there is still work to be done, we are pleased with the progress made thus far and we are working with the agencies to identify further opportunities for cost reductions.

    As the country’s largest property owner and energy user, it is critical that we remain vigilant about our operating costs. By selling buildings, reducing maintenance costs, cutting energy costs, consolidating and re-aligning existing space and reducing leases, we are saving taxpayer dollars and making government work better for everyone.