OMBlog

  • 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.

  • 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.