How Would McCain Manage the Federal Bureaucracy?

Having already hit my fill of “Babygate” as just the latest example of the substance void in the media’s election coverage, I was pleasantly surprised to see something sufficiently wonky in my inbox this morning. Today’s Government Executive offers an insightful preview of Senator McCain’s approach to managing the federal bureaucracy, should he be elected in November. It’s safe to say at this point that, while we may see some continuity/refinement of current management tools, McCain’s approach would likely look significantly different from what we have today under President Bush’s management agenda:

McCain’s penchant for reform likely would influence his management style, perhaps even leading to a shift in the role of key agencies, such as the Office of Management and Budget. “He’s probably not moved by any kind of particular theory of management or organization, but is moved by a kind of outrage at the abuse of power or wasting of federal money,” [Ethics and Public Policy Center fellow Yuval] Levin says. “So I think there is a way that he might unleash OMB in certain respects to police the federal bureaucracy in ways they’ve probably wanted to and haven’t in the past few administrations.” [. . .] McCain likely would turn away from the “Jack Welch-General Electric-Harvard Business School management style” that the Bush administration followed with checklists and score cards, says Jon Desenberg, senior policy director at the Performance Institute, a think tank and training center devoted to government workforce issues. “I don’t see any evidence that that’s his style. I think he’ll be a little more hands-on, which may mean a little less structure, a little less of a checklist kind of approach on these issues. There are some people who would tell you that’s not necessarily a bad thing . . . some say they’re doing the management things they’re doing just to satisfy OMB’s checklists.” McCain has said repeatedly that, if elected president, he would freeze discretionary spending until the administration performed “top-to-bottom reviews of all federal programs to weed out failing ones.” To some, this sounds very similar to a certain Bush administration initiative: the Program Assessment Rating Tool. And while McCain has attempted to distance himself from Bush on the campaign trail, Desenberg and [IBM Center for The Business of Government exec director Jonathan] Breul note that McCain might benefit from incorporating elements of PART into any program reviews he undertakes, especially early in his administration. “We’re expecting that there would be something in place a la PART,” Desenberg says. “It won’t be called PART, and we think there needs to be some changes, but something along those lines.” Breul agrees, saying he would expect a McCain administration to capitalize on the mechanisms that have been put in place. “They certainly wouldn’t start from scratch, there’s too much data and experience [with PART] to discard it,” he says. “It gives you an enormous head start.” Douglas Holtz-Eakin, McCain’s top economic policy adviser, says the program review absolutely would build off the rating tool. “The PART, even given its relatively short track record, provides a lot of useful information. . . . You’ve got to start somewhere, [and] that’s a good place.” The top-to-bottom review could be conducted in six to nine months, Holtz-Eakin says. “You certainly would want to do it in as rapid a fashion as possible so you could get back to the business of passing appropriations bills in regular order, on time, and not the continued spectacle we’re seeing, for example, this year.” As a senator serving his fourth term in office, McCain might be better positioned than Bush was to ensure Congress values his management reviews as budgetary tools. “PART and the [President’s Management Agenda] were kind of rolled out and Congress was just kind of told, ‘This is the tool we’re going to use and this is how we’re going to use it,’ ” Desenberg says. “Today that’s not going to work; you need upfront cooperation and to design some kind of review mechanism with Congress that would bring them into the process.” Breul, who was instrumental in implementing the President’s Management Agenda, says he doesn’t expect to see a McCain version of the initiative – and wouldn’t want to. “You can’t talk about, as some have, PMA 44 as if the 44th president is going to have their own management agenda,” Breul says. “That was too within the government, too within the old problems and, arguably – thank goodness because we had those kinds of classic problems – front and center when the administration came in eight years ago. Those are not the front and center problems right now. It’s a different set.” While the fate of many Bush administration priorities is up in the air, Desenberg is confident about at least one. “You can expect the complete end of competitive sourcing, at least for the next few years,” he says. “The tide has completely turned on that one.” The Bush administration pushed competitive sourcing – conducting public-private competitions for government activities – as part of the President’s Management Agenda, but the initiative has faced major congressional resistance in the past few years. Several House and Senate committees have passed moratoriums on the competitions as provisions included in fiscal 2009 appropriations bills.

On the PART front, the direction makes sense to me. PART’s been a useful tool, and to hear McCain’s adviser mention it as a “start” is a good sign. And the suggestion that a McCain administration work on bringing Congress into the PART feedback loop is certainly something that could bear some valuable fruit (could go south too, but I’m a glass-half-full guy). That’s where the major disconnect on PART is today: the lack of any meaningful budget-performance integration. Sure, the President can use PART develop a budget that prioritizes funding for high-performing programs (which he has), but over the last 8 years, Congress seems quite unwilling to play along. Given the candidate’s resume, I could see a McCain administration making significant inroads to Congress on these issues and perhaps taking performance-based budgeting to another level in Federal government. The outlook thus far for competitive sourcing is extremely discouraging, however. Here you actually have a program that’s already working pretty well today, despite the many attempts in Congress to kowtow to union pressure and put the kibosh on the program through various moratoria proposals. My hope would be that McCain finds a way to repackage it (and remember, it’s also recently been repackaged as “commercial services management”), not abandon it altogether. Why would you abandon a management tool that’s had consistent, tangible results? Because a bunch of pro-union, privatization opponents have mounted an all-out assault in Congress? Well, yes, unfortunately. At least that appears to be the thinking of the expert interviewed for the article–the thinking being, if you catch a hot potato, drop it fast. But on the merits, it makes no sense to ditch competitive sourcing. Here’s why. There are two major ways to reform the spending side. PART addresses the first–let’s not just throw money away, but instead rate and rank programs on their performance. Activities and programs would then be funded from the top of the list (highest performance) down until all available revenues have been used up. The lowest-performing programs that don’t justify funding could then be consolidated, tweaked, or eliminated altogether. However, just because government may be doing something “efficiently” doesn’t mean that government should be doing that thing in the first place, or that the private sector may not do it even MORE efficiently (which experience shows is typically the case). Bush’s competitive sourcing push was premised on this idea, as was the FAIR Act under Bill Clinton, which requires federal agencies to annually categorize all of the services and activities they perform as either “inherently governmental” (something only government can do) or “commercial” (something widely available in private sector, see “Yellow Pages test“) in nature. If you want to cut taxes and control spending, you need to demand performance and budget accountability AND find cheaper and more effective ways of doing what you’re already doing, which privatization offers. Let’s hope that a McCain administration would recognize that these things are both sides of the same coin. For the latest update on PART and competitive sourcing in the Bush administration, see the “Federal Update” section of Reason’s Annual Privatization Report 2008. For more, see Reason’s privatization research and commentary here.