OMBlog

  • A New Step in Accountability and Fighting Fraud

    For too long the federal government allowed billions of taxpayer dollars to be wasted on things that are inefficient, unnecessary, or just plain dumb.  That’s why from day one, President Obama has been steadfast in his commitment to creating a government that is fully accountable to the citizens that it serves.  Through efforts such as the Campaign to Cut Waste, OMB and the federal agencies are changing the way Washington does business and aggressively hunting down and eliminating misspent tax dollars across the federal government.

    Today marks another important step in this pursuit, as we are announcing the launch of the new Government Accountability and Transparency Board (GATB). The President has named a group of the federal government’s top waste, fraud, and abuse watchdogs and other agency leaders to this Board. Starting with the first meeting this morning, these leaders are developing plans to enhance transparency in federal spending and root out and stop waste, fraud, and abuse in federal programs.  
     
    This new Board, established in last month’s Executive Order on “Delivering an Efficient, Effective and Accountable Government,” will draw on the lessons learned from our work to track stimulus spending under the Recovery Act.  The GATB will provide the strategic direction necessary to make the President’s vision for transparency and accountability in all Federal spending a reality.
     
    Under the tireless leadership of the Vice President, the Administration took this vision for transparency and accountability and applied it to the Recovery Act.  We got stimulus money out the door quickly yet responsibly.  We made sure that Recovery Act recipients reported back to the American people on how projects were progressing, and put this information up for all to see and scrutinize on Recovery.gov.  And we worked with the Recovery Accountability and Transparency Board  to keep fraud and waste at historically low levels and make sure that funds went to the right people and for right purposes.  In doing so, we learned a number of indispensable lessons about how government should conduct its business in the 21st century.
     
    Our challenge now is to put these lessons to use across the federal government, and that is where the GATB comes in.  The Board will recommend a broad range of strategies to make spending data more reliable and accessible to the American people.  They will also make recommendations to broaden the Administration’s use of cutting edge technology to crack down on fraud, and focus on integrating data systems and using data for better decision-making.  In doing so, the Board will offer a comprehensive vision for the management of federal spending that will fundamentally change how government works.  And it will ensure that this vision is executed in the most cost-effective, efficient and logical manner.
     
    To make sure we get it right from day one, the President has tapped Earl Devaney, a driving force behind the success of the Recovery Act through his leadership at the Recovery Board, to be the interim chair of this new effort.  Today, Chairman Devaney and the members of the GATB sat down and began strategizing how to reform the way we collect, display and analyze government spending data.  This Administration has already made tremendous strides in making government more open and cracking down on wasteful or fraudulent spending, and now we’re kicking it into high gear.
     
    The President has designated the following individuals to serve on the GATB:
    •           Earl E. Devaney – Chairman, Recovery Accountability and Transparency Board

    •           Ashton B. Carter – Under Secretary of Defense for Acquisition, Technology & Logistics, Department of Defense

    •           W. Scott Gould – Deputy Secretary of Veterans Affairs, Department of Veterans Affairs

    •           Allison C. Lerner – Inspector General, National Science Foundation

    •           Daniel R. Levinson – Inspector General, Department of Health and Human Services

    •           Ellen Murray – Assistant Secretary for Financial Resources and Chief Financial Officer, Department of Health and Human Services

    •           Calvin L. Scovel III – Inspector General, Department of Transportation

    •           Kathleen S. Tighe – Inspector General, Department of Education

    •           Daniel I. Werfel – Controller, Office of Management and Budget

    •           David C. Williams – Inspector General, United States Postal Service

    •           Neal S. Wolin – Deputy Secretary of the Treasury, Department of the Treasury

    Jeff Zients is the Deputy Director for Management and Chief Performance Officer.

  • Three Days Left for the SAVE Award

    With just three days left for federal employees to submit their cost-saving ideas as part of the third annual SAVE Award, White House Chief of Staff William Daley, sent the email below to all federal employees who've participated in the SAVE Award in previous years.

    If you're a federal employee, we want to hear from you!  Submit your cost saving ideas or tell us what you think of ideas submitted by your colleagues.  Get Started at WhiteHouse.gov/Save-Award.

  • Baseline Basics

    The CBO just released its analysis of the debt ceiling extension and deficit reduction plan that the House of Representatives is considering. We have been clear in our opposition to this bill, and the President explained why last night.

    While we disagree with the approach that Speaker Boehner chose to take in this bill, there is one thing that we all still agree on, and that is the size of the problem. Both the House Republican budget proposal unveiled by Congressman Ryan on April 5 and the President’s fiscal framework that he introduced on April 13, set as our goal deficit reduction of $4 trillion. Since both of these plans were introduced before the agreement on appropriations for FY 2011, the baseline used for them did not reflect the spending cuts enacted this year in that legislation. Indeed, throughout our weeks of talks, all parties have worked off a January baseline because we all recognized that we needed to start from the same place.

  • Next Step in Looking Back

    To promote economic growth and job creation, we are placing a high priority on streamlining our regulatory system and eliminating unnecessary regulatory costs. To that end, we’ve taken some big steps recently to ensure that Federal agencies revisit their existing rules and remove those that are out-of-date, too costly, or just plain dumb.

    In January, President Obama initiated an unprecedented and historic process for streamlining and eliminating outdated and unnecessary regulations. In a short time, a lot has happened. We have already undertaken reforms to remove tens of millions of hours in annual paperwork burdens for large and small businesses and over $1 billion in annual regulatory costs.

    Just last week, the President took this burden-reducing initiative a large step further by calling on independent regulatory agencies to follow the same requirements that other agencies now follow. This new Executive Order to independent agencies calls for retrospective regulatory review, reducing costs and streamlining requirements. More than that, it asks independent agencies to follow key principles for smart regulation going forward, including public participation and stakeholder engagement, simplification and harmonization of rules, flexibility, and burden reduction. This move has been strongly advocated by the business community and the President’s Council on Jobs and Competitiveness – and it has been met with enthusiasm from inside and outside of government (including the independent agencies themselves).

  • Cutting Waste in Contracting

    Over the last two years, this Administration has focused on reducing waste in government spending in an effort to ensure that every tax dollar is spent wisely. One critical area of focus has been on contracting. During the last Administration, spending on contracting doubled—too often resulting in waste, fraud, and abuse.  The Obama Administration is committed to cracking down on this waste and strengthening accountability by both reducing and improving the use of contracts. As a result of an aggressive effort led by President Obama, contracting decreased for the first time in 13 years last year. In fact, 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.

    We are continuing our efforts to strengthen accountability in contracting as part of the Campaign to Cut Waste, the Administration’s effort to root out misspent tax dollars. During the recent White House Forum on Accountability in Federal Contracting, OMB announced a goal of reducing spending on management support service contracts by 15 percent by the end of FY 2012 – a reduction of $6 billion.

    Where the services are really needed and cuts might harm program or project performance, agencies must find ways to buy smarter, such as by negotiating lower rates or converting to fixed-price arrangements.

    Why the focus on management support services─ which include activities as varied as engineering and technical services, acquisition planning, information technology systems development, and program management? 

    First, these services are frequently cited as creating a potential risk of overreliance on contractors for critical activities related to agencies’ missions and operations.  That overreliance has long been a concern, and the President called for addressing it and rebalancing our relationship with contractors as early as his March 4, 2009 Memorandum on Government Contracting.

  • Shutting Down Duplicative Data Centers

    Just as our cell phones and computers have gotten progressively more efficient over the past decade, so too have data servers. However, the government has not taken advantage of the increasing efficiency of data storage. Rather than follow the private sector's lead of shrinking the size and number of the facilities used to house the computers that store their data, agencies have gone in the opposite direction.

    Between 1998 and 2010, the Federal government quadrupled the number of data centers we operate.  Moreover, on average these centers have been using only 27 percent of their computer power even though taxpayers are footing the bill for the entire infrastructure, real estate and energy costs. The need for backup power supplies, environmental controls (air conditioning, fire suppression, etc.) and special security devices mean that data centers can consume 200 times as much electricity as standard office spaces.

    While such inefficiency is unacceptable at anytime, cracking down on waste is particularly important in these challenging budgetary times. By shrinking our data center footprint we will save taxpayer dollars, cutting costs for infrastructure, real estate and energy. At the same time, moving to a more nimble 21st century model will strengthen our security and the ability to deliver services for less.

  • @OMBPress

    We deal with a lot of big numbers in our daily work here at OMB, but now we will start focusing on a small one: 140.

    Yes, OMB’s communications shop is joining the Twitterverse to give the American people insight into the work we do in 140 characters or less.

    We hope to use this outlet to bring attention both to the important budget and fiscal issues before us and to the full range of initiatives that OMB is involved with including regulations, information technology, Executive Orders and Presidential Memoranda, federal contracting, the management of the federal government, the President’s Campaign to Cut Waste, statements of Administration policy, and statistical standards and practices.

    I'll be the main person behind the account for now, and others from the OMB communications team will pitch in too.

    We look forward to joining the conversation about all these topics, and urge all OMBlog readers to follow us @OMBPress.

    Kenneth Baer is Senior Advisor and Associate Director for Communications and Strategic Planning at the White House Office of Management and Budget.

  • Cut Waste and SAVE

    Watch the video announcing the third annual SAVE Award here.

    Today, we launched the third annual SAVE Award (Securing Americans Value and Efficiency) – a contest for federal employees to submit ideas about how to cut waste, save taxpayer dollars, and make government more effective and efficient. 

    Over the past two years, OMB has received more than 56,000 cost-cutting ideas through the SAVE Award from federal employees from across the country. The ideas range from stopping the overnight, express delivery of empty containers to allowing people to make appointments with their Social Security office online and ending the printing and shipping to employees across the country of thousands of Federal Register volumes that could be read online.

    These ideas have made a difference. The President’s last two budgets each included approximately 20 SAVE Award ideas.  Already, those submissions are saving hundreds of millions of dollars, rooting out redundancy and waste, and giving the American people a more accountable government. 

    Wasting taxpayer dollars is unacceptable at anytime, but particularly when we face huge budget deficits.  That’s why this year’s SAVE Award is a critical part of the recently launched Campaign to Cut Waste – an Administration-wide initiative to hunt down and eliminate wasted tax dollars in every agency and department across the federal government. 

    The idea behind the SAVE Award is the belief that federal employees on the front lines know better than anyone where there is waste to cut and how to make government more effective and efficient.  If you’re a federal employee, please take a minute and send us your idea. You will help your government, your fellow citizens, and if you win, will get to present your idea directly to the President. 

    Make no mistake: these ideas alone aren’t going to close the deficit of fix our fiscal situation, but they are critical to making sure that the American people can trust their government to treat every tax dollar with the same care and attention they do.

    So, if you’re a member of the federal workforce, please send us your idea, and for everyone else, stay tuned as we will ask your help in picking the winner.

    As Vice President Biden wrote in an Op-Ed today, “This effort involves more than just eliminating fraud and waste; it means instilling a new culture of efficiency, of responsiveness, of accountability. We're changing the way government does business. We're working to give the American people the government they expect - and deserve.”

    Kenneth Baer is Senior Advisor and Associate Director for Communications and Strategic Planning at the White House Office of Management and Budget.

  • Homecoming

    On Friday, I had the honor of speaking in New York at the Forest Hills High School 2011 graduation.

    A lot has changed since I graduated in 1972 from this high school in Queens, New York, but one thing has not: a stellar, public school education gave these graduates the opportunity of a lifetime.  To read the full remarks, click here.

  • Our Nation’s First Federal CIO

    Today, Vivek Kundra, our nation’s first federal Chief Information Officer (CIO) announced that later this summer he will be leaving the post for a fellowship at Harvard University.

     

    When President Obama appointed Vivek Kundra as the first U.S. CIO, he said, "Vivek Kundra will bring a depth of experience in the technology arena and a commitment to lowering the cost of government operations to this position. As Chief Information Officer, he will play a key role in making sure our government is running in the most secure, open, and efficient way possible."

     

    When he began at the White House, he brought with him the promise of good ideas and a hard-charging style focused on getting things done, necessary qualities to tackle the difficult issues facing Federal IT – an aging infrastructure with rising operating costs, too many major projects failing to deliver, and increasing vulnerability to outside threats. Two and a half years after joining the Administration, Vivek has delivered on that promise.  He has cracked down on wasteful IT spending, saved $3 billion in taxpayer dollars; moved the government to the cloud; strengthened the cybersecurity posture of the nation while making it more open, transparent, and participatory.  His work has been replicated across the world from 16 countries that have deployed the data.gov model to tap into the ingenuity of their people to multiple countries that have deployed the IT dashboard to save money.

     

    I want to congratulate him on his move to Harvard in mid-August to serve as a joint fellow at the Kennedy School and the Berkman Center for Internet and Society.  We are planning for a smooth transition, continuing these remarkable gains in changing the way the Federal government manages IT and Vivek’s impact on cutting waste and making government work better for the American people will continue to be felt well beyond his departure from Federal service.

  • New Ideas to Cut Improper Payments

    For many years, the federal government has erroneously cut checks to the wrong person for the wrong amount and for the wrong reason – sometimes these misdirected payments even go to dead people or prisoners.  These mistakes, though often inadvertent, contributed to the $125 billion in improper payments made in 2010.  Cutting waste and combating these kinds of erroneous payments has been a priority [http://www.whitehouse.gov/blog/2010/11/16/improper-payment-progress] for President Obama. Today, the Administration is taking another step to tackle these improper payments.
     

    As part of the President’s committment to crack down on improper payments he created the Partnership Fund for Program Integrity Innovation, to help States and localities find ways to save taxpayer dollars and deliver benefits more efficiently and effectively.  The “Collaborative Forum,” a group of 200+ state and local administrators and other stakeholders involved in the benefit delivery process, has been working to generate ideas for innovative pilot projects to reduce errors, fraud, and waste.  As a result of their efforts, OMB is announcing four exciting new pilot projects focused on reducing improper payments.

    These pilot investments could lead to at least $100 million in annual savings if the pilots are successfully scaled up and will provide hard data about how Federal agencies as well as States and localities can save money and significantly improve program integrity, service delivery and efficiency.

    Here’s a summary of the four new pilots:

    1. Through the Centers for Medicare and Medicaid Services (CMS), States will test how sharing a Medicaid provider enrollment system among a group of states may help Federal and State governments strengthen their abilities to detect and prevent provider fraud, while increasing administrative efficiencies.
    2. The Department of Labor will lead a project to test new ways to reduce overpayments in the unemployment insurance program by helping States access new data sources to more quickly identify beneficiaries who are most likely to be newly employed.
    3. Through the Food and Nutrition Service at the Department of Agriculture, States will test sharing benefits information, which could reduce duplicate payments, make it easier and quicker for a participant to find out whether they are eligible, and allow people in need to continue to receive benefits in the event of a disaster.
    4. The Department of the Treasury will test how they can apply their existing debt collection systems to help States collect outstanding debt that includes Federal dollars.

    These pilots will help lay the groundwork for government to achieve better results at lower cost and improve service delivery for people who receive government services, whether in Washington or in communities across the country. We are thankful to the participants in the Collaborative Forum, who have lent their collective experience and expertise to explore new opportunities to improve stewardship of taxpayer dollars.

     

    These new pilots build on the three Presidential directives on preventing and recapturing improper payments over the last year and a half, our use of cutting edge forensic technology and tools, the new accountability measures implemented with PaymentAccuracy.gov, the Improper Payments Elimination and Recovery Act of 2010, and the Administration’s early progress avoiding nearly $4 billion in improper payments and tripling the amount of improper payments to contractors recaptured last year. The President’s 2012 Budget proposes even more aggressive tools that will help drive down this waste.  Specifically, the Budget includes a number of legislative and administrative reforms on improper payments and debt collection, which if enacted will result in over $160 billion in savingsto the Federal Government over ten years. 

     

    As the President said in his last State of the Union address, “We shouldn’t just give our people a government that’s more affordable.  We should give them a government that’s more competent and more efficient.  We can’t win the future with a government of the past.” Over the last two years, we have streamlined operations to save taxpayer dollars, curbed the decade long rise in contracting costs, proposed an aggressive plan to get rid of excess federal property, and saved billions by leveraging technology to make government work smarter and more efficiently for the American people.  Cutting waste and changing the way Washington does business are critical priorities for the Obama Administration and we’ll continue to update you on our progress.

     

    To learn more about the Collaborative Forum, visit www.collaborativeforumonline.com. You can also submit pilot ideas to the Partnership Fund online at www.partner4solutions.gov.

     

     

     

  • CBO and the 2012 Budget

    Today, the Congressional Budget Office (CBO) released its preliminary analysis of the President’s FY 2012 budget.

    Their analysis leads them to a different projection of the deficit picture, and it’s worth understanding our analytical differences.

    There are two main reasons why our projections differ. First, is that the CBO re-estimate does not reflect two important budget policies. In the budget, the President laid out a plan to make a historic investment in our transportation infrastructure in order that our country can keep pace with our competitors in the global economy. We were crystal clear that this spending had to be paid for with a bipartisan funding source and that if one was not identified, that the Administration would not support making these investments. This way there would be no risk that this spending would add to the deficit. CBO chose to treat this spending as a free-standing initiative, not in tandem with our commitment to pay for it – which is not the policy we proposed.

    Similarly, the budget proposes that we fully pay for the cost of fixing the Medicare physician payment formula so that reimbursement rates are not cut dramatically which could lead to doctors refusing to treat Medicare beneficiaries. In past years, this fix was not paid for, but last year, the President signed into law a fully paid for fix for one year, and our budget identified tens of billions of dollars in specific health care savings that will pay for another two years. With three years of the fix paid for, we believe that this establishes a pattern of practice – critically important in scoring policies -- that strengthens our commitment to work with Congress on a permanent solution. Again, CBO chooses not to make this assumption.

    The second main difference between our and CBO’s analysis is that our economic assumptions differ. The economic forecast in our 2012 Budget, which was prepared in November 2010, is actually more cautious than the consensus forecast for 2011, and is well within the range of the Federal Reserve’s assumptions in all years. Beyond the short-term, we believe that the economy will fully recover after this recession as it has after previous ones. It is our view that the economy will return to full strength, and that is a view shared by the Federal Reserve as well.

    There is large uncertainty in economic projections and differences of opinion when it comes to assessing individual policies. But regardless of our differences, CBO confirms what we already know: current deficits are unacceptably high, and if we stay on our current course and do nothing, the fiscal situation will hurt our recovery and hamstring future growth. That is why the President’s 2012 Budget puts forward more than $1 trillion of deficit reduction including a five-year freeze in annual domestic spending that will save more than $400 billion over the next decade, and puts the nation on a sustainable fiscal course. And that is why we are committed to making real progress on our fiscal situation this year and not put off action any longer. As this debate continues, we look forward to working with people from across the spectrum to rein in our deficits, grow our economy, and win the future.

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

  • Hammer Misses the Mark

    In today’s Washington Post, Charles Krauthammer calls into question the integrity of the Social Security trust fund and the integrity of statements I have made recently about the program. Let’s examine his charges.

    First, Krauthammer says that I am making a “preposterous claim that Social Security is solvent for 26 years.” This is not a “claim.” This is the projection of the independent Social Security Trustees, who report that even though Social Security began collecting less in taxes than it paid in benefits in 2010, the trust fund surplus will continue grow until 2025, and will have adequate resources make full and timely benefit payments through 2037.

    Second, Krauthammer argues that the White House believes that there is “no need to fix it because there is no problem [italics his].” But in the State of the Union, the President explained that “To put us on solid ground,” the President said, “we should also find a bipartisan solution to strengthen Social Security for future generations.” And in my recent USA Today op-ed that Krauthammer cites in his column, I stated: “Strengthening Social Security is an important, but parallel, issue that needs to be addressed as quickly as possible [italics mine].”

    Third, Krauthammer’s explanation of the Social Security trust fund and its interaction with the rest of the budget is off base.

    Social Security benefits are self-financing, paid for with payroll taxes collected from workers and their employers throughout their careers. To prepare for the retirement of the Baby Boom and to keep Social Security solvent, I was part of the bipartisan effort in 1983 that built up trust fund balances to pay benefits owed to current and future beneficiaries.

    Krauthammer is correct when he writes that there is no “lockbox” that keeps the money sent in by workers for until they retire. By design, when more taxes are collected than are needed to pay benefits, funds are invested in Treasury bonds and are held in reserve for when revenue collected is not enough to pay the benefits due. Yet these Treasury bonds are backed by the full faith and credit of the U.S. government in the same way that all other U.S. Treasury bonds are, making them anything but ”worthless IOUs” as Krauthammer suggests. The government has just as much obligation to pay back the bonds in the Social Security trust fund as we do to any other bondholders.

    Responsibly honoring that obligation – one that we planned for and always knew was there –entails undertaking fiscal policies that would make it easier, not harder, to meet these obligations. When I last was OMB Director at the end of the Clinton Administration, the Congressional Budget Office estimated $5.6 trillion in budget surpluses over the next decade because of fiscally responsible measures that Democrats and Republicans, working together, had taken.

    We are now in a very different fiscal position. When I returned to government at the start of the Obama Administration, the country faced projected deficits of more than $8 trillion over the next decade. These deficits primarily were the result of specific decisions made by the previous Administration and Congress to spend money on initiatives without finding a way to pay for them, notably the tax cuts of 2001 and 2003 and the Medicare prescription drug benefit.

    This is the most important point: the problem is not with Social Security, but in the near term the mismatch between what we take in and what we spend in the rest of the budget. Working people had payroll taxes taken from their salaries to pay for future benefits, and instead the money was used to pay for tax cuts and other initiatives. It is hardly fair now to say that those working people caused the problem just when they are ready to collect benefits.

    Krauthammer’s argument is inside out. We should not blame Social Security for our current fiscal problems when it is the irresponsible fiscal behavior of the past that has presented the country with future challenges to fund our commitments, including Social Security over the next two decades.

    That is why in the short term, we have to honor the legal and moral obligation to keep the promises made to Social Security to repay those surpluses. Doing that entails getting our fiscal house in order. That is why the 2012 budget the President proposed includes more than $1 trillion in deficit reduction over the next decade and makes tough choices that will put the country on a sustainable fiscal path by the middle of the decade.

    Looking to the long term past 2037, we have a pressing need to replenish the trust funds and make sure Social Security is on sound footing for generations of workers. The sooner we act the better as it is always easier to give people many years to adapt to any changes in the program (as we saw with the reforms made in 1983 that are still being implemented today).  That is why I have repeatedly called for quick action, and have spent most of the last 30 years helping to make the tough decisions to do so.

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

  • Women in America: Investing in What Works

    At a time when the Government is striving to do more with less, it is more important than ever to ensure we are investing in what works.

    This week, the White House released a new report entitled Women in America: Indicators of Social and Economic Well-Being, receiving well-deserved and wide attention. Women in America compiles statistics from across the Federal government that indicate how women are faring in the United States today and how their lives have changed over time.  This is the first comprehensive federal report on women since 1963, when the Commission on the Status of Women, established by President Kennedy and chaired by Eleanor Roosevelt, produced a report on the conditions of women.

    One of the Office of Management and Budget’s roles is to oversee the Federal statistical system—a range of agencies that produce the data that drive what we do as a government. In that role, we initiated this data project and worked with the Economics and Statistics Administration within the Department of Commerce and the Federal statistical agencies to create Women in America in support of the White House Council on Women and Girls (CWG).

    Of course, the report only touches upon a few of the many indicators collected by the federal government concerning the lives of women.  In order to facilitate public access to these broader resources, we have compiled on the CWG website links to many other reports, and sections of reports, related to women produced by the federal statistical agencies, making it easier than ever for policymakers, journalists, researchers, and interested members of the public to get the facts.

    The project is consistent with the Obama Administration’s commitments to pursuing evidence-based policymaking; to partnering with the private sector - including academic researchers - to analyze data and formulate policy; and to pursuing a comprehensive, cross-agency approach to addressing special issues affecting Americans.

    The tough fiscal situation necessitates doing more with less, not only to reduce budget deficits, but ensure that taxpayers are receiving maximum value for their hard-earned dollars. By gathering and consolidating the data gathered across the Administration, we can learn more about how services and programs are impacting lives. Armed with the facts, we can target our resources to deliver the best results for women, families, and all Americans.

     

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

  • Progress for the Partnership

    Making sure that taxpayer dollars are not wasted lies at the heart of the stewardship obligations we have as public servants. When the country is facing serious fiscal challenges as it is now, it becomes even more important that we take aggressive action to make sure government is effective and efficient. That is the thinking behind the President’s Accountable Government Initiative , and it is what is behind OMB’s Partnership Fund for Program Integrity Innovation. The Fund supports projects that bring all levels of government together to test creative ways to reduce red tape, cut improper payments, and improve how eligible beneficiaries receive services.

    I am pleased to announce that we have funded our first pilot project: an effort at the Department of the Treasury to test new methods of working with states to significantly improve the integrity of payments made under the Earned Income Tax Credit (EITC), reduce errors and provide assistance to those in need.

    Tackling the long standing problem of improper payments is a top priority for the President and his Administration and we are aggressively exploring new technologies and analytics to significantly reduce errors and crack down on fraud.  The EITC program provides needed financial support to low and moderate income workers and helps directly reward work.  However, the program is also challenged by an unacceptably high error rate that both wastes money and leaves many individuals underserved.  If successful, this new innovation could help the government avoid more than $100 million per year in improper payments.

    This is just the first of many grants the Partnership Fund plans to make. In the past year, the Partnership Fund has received more than 100 ideas from stakeholders including Federal, state, and local government agencies; nonprofits; the private sector; academics; and engaged citizens. 
    In addition, the Partnership Fund is taking steps to get the best ideas from those on the frontlines since stakeholders, whether state administrators or community partners, often have the best ideas about how to streamline and strengthen programs.  To draw on this expertise, an open, self-directed group called the Collaborative Forum holds regular virtual meetings to design the most effective pilots from the most promising ideas. In addition, the newly redesigned Partnership Fund web site, partner4solutions.gov, makes it easier to learn about the program, submit an idea, or become more involved. The Partnership Fund has an important role to play in defining the most efficient and effective practices for 21st century government.

    The Partnership Fund is just one of many ways we are working to get government to work better for the American people. We will highlight other efforts in the months ahead.
     

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

  • 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.