Tag: office of management and budget

Cost Overrun Incompetence at Energy

OMB director Peter Orszag is blaming the inefficiencies of the federal government on outdated personal computers. That is hard to understand given that federal IT spending amounted to $200 million a day last year.

A new GAO report on cost overruns at the Department of Energy undercuts Orszag’s argument that the solution to government incompetence is new computers. DOE cost overruns are nothing new. As far back as 1982 the GAO was reporting that “DOE lacked sufficient guidance to provide to its contractors for developing cost estimates.” A 2007 GAO report found that eight of 12 DOE projects it examined had exceeded their initial cost estimate by almost $14 billion due to “ineffective DOE project oversight and poor contractor management.” In 2008, GAO reported that nine out of 10 environmental cleanup projects it examined had cost overruns that DOE estimated would require an additional $25 to $42 billion.

For the new report, the GAO looked at DOE’s contract management procedures and here are some of the highlights:

  • “DOE has not had a policy that establishes standards for cost estimating in place for over a decade, and its guidance is outdated and incomplete, making it difficult for the department to oversee the development of high-quality cost estimates by its contractors.”
  • “DOE’s only cost-estimating direction resides in its project management policy that does not indicate how cost estimates should be developed.” (This statement has to be read several times to actually be believed.)
  • “DOE’s outdated cost-estimating guide assigns responsibilities to offices that no longer exist.”
  • “DOE does not have appropriate internal controls in place that would allow its project managers to provide contractors a standard method for building high-quality cost estimates.”
  • “DOE has drafted a new cost-estimating policy and guide but the department expects to miss its deadline for issuing them by more than a year.”

There’s nothing here that a supercomputer is going to change. Cost overruns in government programs will continue to occur for the simple reason that policymakers and administrators are playing with other people’s money. Moreover, the market forces that compel private firms to manage resources effectively or risk going out of business (unless they are in the auto or finance industries) are absent. DOE won’t be put of business for its cost overruns (although it should be); it’ll just go ask Congress for more taxpayer money.

See this Cato essay for more on cost overruns at the Department of Energy and other government agencies.

Federal Job Creation

The board game Monopoly first took off during the Great Depression. A different game has become popular during today’s Great Recession. In this game, politicians race against high unemployment to create jobs in order to save their own. The players (politicians) have unlimited tax and borrowing authority, and can call upon friendly economists to help them maneuver. The players even get to keep score, although the media can penalize shoddy scorekeeping. Ultimately, voters will decide which players win and lose in the fall elections.

Okay, I’m being facetious. But as politicians continue to throw trillions of dollars at the economy in a vain effort to create jobs, and the media continues to go along with it by obsessing over meaningless job counts, the entire spectacle has become surreal. If government job creation is a game, the losers have been the taxpayers underwriting it, as well as the employers (and their employees) who are closing shop, laying off workers, or not hiring because of uncertainty over what big government schemes will be next.

Two news articles point to this “regime uncertainty” being generated by Washington.

First, the government’s chief technology officer, Aneesh Chopra, received a somewhat hostile reception at the recent Consumer Electronics Show in Las Vegas according to the BBC:

“The government doesn’t spur innovation or entrepreneurship. The government often gets in the way,” said Mr. [Gary] Shapiro, president of the Consumer Electronics Association (CEA) which stages CES.

It [CEA] also had little support for President Obama’s $787 billion stimulus act calling it “panic spending” and warned of the growing federal deficit.

“The government is often a barrier,” said Mr. Shapiro. “High taxes and regulatory bureaucracy are barriers.”

Mr. Chopra’s response was typical of the political-bureaucratic mindset:

He said the US government was planning a summit with a number of chief executives from the “most innovative companies in the country to directly advise us to make government more efficient and more effective”.

Ah, another summit.

In the other article, the CNBC headline says it all: “Many Reluctant to Hire Because of New Taxes, Rules.” The article makes it clear that what businesses don’t need is another orchestrated summit:

The prospect of increased federal and state regulation and taxes has been particularly disruptive to the hiring plans of small- and medium-sized businesses, which have historically generated about two-thirds of the nation’s jobs. “I don’t really see the private sector hiring much in the next few months,” says Brian Bethune, an economist at Global Insight. “For the small-business sector there is just too much uncertainty about what happens beyond 2010.”

In reporting that its small business optimism index fell for the second straight month in December, the National Federation of Independent Business Tuesday said members’ No. 2 reason for not expanding payrolls was the prospect of government policy initiatives…”We’re hearing it more and more from our membership,” says Bill Rys, the NFIB’s tax counsel. “At the federal level, there’s uncertainty about tax rates, health care costs, energy costs. You also have what’s going on at the state and local levels, with new fees and taxes. They’re reluctant to jump back in.”

Unfortunately, instead of heeding the business community’s message, the Obama administration is focusing its energies on tinkering with the game’s scorekeeping. From ABC News:

The Obama administration has taken some heat and mockery for using the nebulous and non-economic term of jobs being “saved or created” by the $787 billion stimulus program.

So it’s gotten rid of it.

In a little-noticed December 18, 2009 memo from Office of Management and Budget director Peter Orszag the Obama administration is changing the way stimulus jobs are counted.

The memo, first noted by ProPublica, says that those receiving stimulus funds no longer have to say whether a job has been saved or created.

“Instead, recipients will more easily and objectively report on jobs funded with Recovery Act dollars,” Orszag wrote.

In other words, if the project is being funded with stimulus dollars – even if the person worked at that company or organization before and will work the same place afterward – that’s a stimulus job.

The American people are rightly growing tired of this nonsense. But it’s important that they understand that the idea of government job creation was flawed from the get-go. The government cannot simply wave a magic wand and create jobs without making private sector jobs disappear at the same time because of higher taxing and borrowing. There is no free lunch with government.

Deficits, Spending, and Taxes

The White House and the CBO announced this week that:

The nation’s fiscal outlook is even bleaker than the government forecast earlier this year because the recession turned out to be deeper than widely expected, the budget offices of the White House and Congress agreed in separate updates on Tuesday.

The Obama administration’s Office of Management and Budget raised its 10-year tally of deficits expected through 2019 to $9.05 trillion, nearly $2 trillion more than it projected in February. That would represent 5.1 percent of the economy’s estimated gross domestic product for the decade, a higher level than is generally considered healthy.

What is the right response to these deficits?

One view holds that most current expenditure is desirable — indeed, that expenditure should ideally be much higher — so the United States should raise taxes to balance the budget. Taxes are a drag on economic growth, however, and unpopular with many voters, so this view presents politicians with an unhappy tradeoff.

The alternative view holds that a substantial fraction of current expenditure is undesirable and should be eliminated, even if the revenue to pay for it could be manufactured out of thin air. To be concrete:

  • Medicare and Medicaid encourage excessive spending on health care.
  • The invasions of Iraq and Afghanistan encourage hostility to the U.S. and thereby increase the risk of terrorism.
  • Drug prohibition generates crime and corruption.
  • Agricultural subsidies distort decisions about which crops to grow, and where.
  • And much, much more.

So, under this view, the United States can have its cake and eat it too: improve the economy and reduce the deficit without the need to raise taxes.

This approach is not, of course, politically trivial, since existing expenditure programs have constituencies that will fight their elimination.

But thinking about these two views of the deficits is nevertheless useful: it shows that discussion should really be about which aspects of government are truly beneficial, not just about the deficits per se.

C/P Libertarianism, A to Z

Transparency: Good News / Bad News

Last week was an interesting week for transparency, with some good news and some bad news.

On the “good” side of the ledger, the administration rolled out “Data.gov,” a growing set of data feeds provided by U.S. government agencies. These will permit the public to do direct oversight of the kind I discussed at our “Just Give Us the Data!” policy forum back in December.

My metric of whether Data.gov is a success will be when independent users and Web sites use government data to produce new and interesting information and applications. The Sunlight Foundation has a contest underway to promote just that. Get ready for really interesting, cool, direct public oversight of the government.

Also under the White House’s new “Open Government Initiative,” an Open Government Dialogue “brainstorming session” began last week. The public can submit ideas for making the government more transparent, participatory, and collaborative. This is important stuff, an outgrowth of President Obama’s open government directive, issued on his first full day in office.

That directive called for the Office of Management and Budget to require specific actions of agencies “within 120 days,” which meant the final product was due last week. And that missed deadline is where we start to slide into the “bad” on the transparency ledger.

Last week, President Obama gave an important speech on national security (which I blogged about here and here). But you couldn’t find the speech in the “Speeches” section of the Whitehouse.gov Web site. It’s buried elsewhere. That’s “basic Web site malpractice,” I told NextGov.com. And I cautioned my friends in the transparency community not to forget Government 1.0 for all the whiz-bang Gov 2.0 projects flashing before our eyes. Whitehouse.gov should be a useful, informative resource for average Americans.

The current top proposal on the “brainstorming” site referred to above is to require a 72-hour mandatory public review period on major spending bills. This is reminiscent of President Obama’s promise to hold bills five days before signing them. But, as Stephen Dinan reports in the Washington Times, the president signed several more bills last week without holding them the requisite time.

The White House protests that they posted links to bills on the Thomas Web site at the Whitehouse.gov blog. But that does not give the public meaningful review of the bills in their final form, as they have come to the president from Congress. “Posting a link from WhiteHouse.gov to THOMAS of a conference report that is expected to pass doesn’t cut it,” says John Wonderlich at Sunlight.

President Obama signed nine new laws since we last reviewed his record on the “Sunlight Before Signing” promise. Alas, it’s been a case study in pulling defeat from the jaws of victory.

Five of the bills were held by the White House more than five days before the president signed them, but they weren’t posted! Simply posting them on Whitehouse.gov in final form would have satisfied “Sunlight Before Signing.”

President Obama’s average drops to .043, and that’s crediting him one win for the DTV Delay Act, which was posted at Whitehouse.gov in its final form for five days after Congress passed it, but before presentment, which is the logical time to start the five-day clock.

Here is the latest tally of bills passed by Congress, including the date presented, date signed, whether they’ve been posted or linked to at Whitehouse.gov, and whether they’ve been posted for the full five days after presentment. (Corrections welcome - there is no uniform way that the White House is posting bills or links, so I may have missed something.)

Public Law Date Presented Date Signed Posted (Linked) for Comment? Five Days?
P.L. 111-2, The Lilly Ledbetter Fair Pay Act of 2009
1/28/2009
1/29/2009
1/29/2009
No
P.L. 111-3, The Children’s Health Insurance Program Reauthorization Act of 2009
2/4/2009
2/4/2009
2/1/2009
No
P.L. 111-4, The DTV Delay Act
2/9/2009
2/11/2009
2/5/2009
Yes and No
P.L. 111-5, The American Recovery and Reinvestment Act of 2009
2/16/2009
2/17/2009
2/13/2009
No
P.L. 111-6, Making further continuing appropriations for fiscal year 2009, and for other purposes
3/6/2009
3/6/2009
No
n/a
P.L. 111-7, A bill to designate the facility of the United States Postal Service located at 2105 East Cook Street in Springfield, Illinois, as the “Colonel John H. Wilson, Jr. Post Office Building”
2/26/09
3/9/2009
No
n/a
P.L. 111-8, The Omnibus Appropriations Act, 2009
3/11/2009
3/11/2009
3/6/2009
No
P.L. 111-9, To extend certain immigration programs
3/18/2009
3/20/2009
No
n/a
P.L. 111-10, To provide for an additional temporary extension of programs under the Small Business Act and the Small Business Investment Act of 1958, and for other purposes
3/19/2009
3/20/2009
No
n/a
P.L. 111-11, The Omnibus Public Land Management Act of 2009
3/30/2009
3/30/2009
3/30/2009
No
P.L. 111-12, The Federal Aviation Administration Extension Act of 2009
3/24/2009
3/30/2009
No
n/a
P.L. 111-13, The Generations Invigorating Volunteerism and Education Act
4/20/2009
4/21/2009
No
n/a
P.L. 111-14, To designate the United States courthouse under construction at 327 South Church Street, Rockford, Illinois, as the “Stanley J. Roszkowski United States Courthouse”
4/14/2009
4/23/2009
No
n/a
P.L. 111-15, The Special Inspector General for the Troubled Asset Relief Program Act of 2009
4/14/2009
4/24/2009
No
n/a
P.L. 111-16, The Statutory Time-Periods Technical Amendments Act of 2009
4/30/2009
5/7/2009
No
n/a
P.L. 111-17, A joint resolution providing for the appointment of David M. Rubenstein as a citizen regent of the Board of Regents of the Smithsonian Institution
4/28/2009
5/7/2009
No
n/a
P.L. 111-18, A bill to repeal section 10(f) of Public Law 93-531, commonly known as the “Bennett Freeze”
4/28/2009
5/8/2009
No
n/a
P.L. 111-19, The Civil Rights History Project Act of 2009
4/30/2009
5/12/2009
No
n/a
P.L. 111-20, The Protecting Incentives for the Adoption of Children with Special Needs Act of 2009
5/5/2009
5/15/2009
No
n/a
P.L. 111-21, The FERA
5/19/2009
5/22/2009
No
n/a
P.L. 111-22, The Helping Families Save Their Homes Act of 2009
5/20/2009
5/22/2009
No
n/a
P.L. 111-23, The Weapon Systems Acquisition Reform Act of 2009
5/21/2009
5/22/2009
5/14/2009
No
P.L. 111-24, The Credit Cardholders’ Bill of Rights Act of 2009
5/20/2009
5/22/2009
5/14/2009
No