Re-Re-Reinventing Government. Again

Obama, like his predecessors, can’t resist trying to remake Washington

In the spring of 1936, Franklin Roosevelt put two dozen fresh-from-school PhDs in a room in Washington, with orders to find ways to bring a rapidly growing federal government to heel. The idea was to make the bureaucracy run more efficiently—which is to say, to make it answer more directly to the President. Roosevelt wasn’t worried about runaway government spending but about losing control. “We have got to get over the notion that the purpose of reorganization is economy,” the President told Louis Brownlow, the man in charge of the PhDs. “The reason for reorganization is good management.”

On Jan. 13, Barack Obama became the latest in a long line of Presidents to try his hand at bringing good management to the capital. In a speech announcing his desire to streamline and reform the government, he said he would begin by merging a collection of six agencies and offices into one yet unnamed cabinet-level department dedicated to trade and competitiveness. Obama promises modest savings—$3 billion over a decade—and great leaps in efficiency. Merging bureaucracies, he says, will make the government more responsive to business. He opened his speech by noting in the audience “all sorts of small business people,” the most desirable of constituents this campaign season. Certainly the timing—January of an election year—is not an accident. But if Obama’s plan works, it will do more than help the President. It will increase the power of the Presidency, no matter who wins in November.

That power would come at Congress’s expense. Even the smallest federal office offers oversight authority to the chair of a congressional subcommittee (not to mention campaign contributions) and a foothold for interest groups. Academics refer to these relationships among agencies, Congress, and lobbies as the “iron triangle.” For decades, Presidents have tried to bend it. Congress granted Franklin Roosevelt “reorganization authority” to issue executive orders spelling out the changes he wanted to make. Congress could reject the orders within 60 days, or do nothing and they would become law. But in 1983 the Supreme Court knocked down the idea of a congressional veto as an unconstitutional extension of its power.

To avoid that problem, Obama is asking Congress for the authority to get a single up or down vote on his plans, without the usual haggling and amendments. He has stipulated that it not be invoked unless it finds savings, and has given it a new name: consolidation authority. “We really want to differentiate ourselves from the historical,” says Jeffrey Zients, the former corporate management consultant who is leading Obama’s government shuffle.

That won’t be easy. No matter what new language he uses to describe the problem or how meticulously Zients and his team have studied it, Obama is asking for the same power that every President has sought since the beginning of the 20th century. And Congress is already expressing wariness. The day of Obama’s announcement, a joint statement from Senator Max Baucus (D-Mont.), the chair of the Senate Finance Committee, and the head of the House Ways and Means Committee, Representative Dave Camp (R-Mich.), warned of a “new bureaucratic behemoth.”

Where Franklin Roosevelt relied on bright young academics, Barack Obama has turned to seasoned management consultants. Zients, who also serves as America’s first chief performance officer and this week was elevated to acting director of the Office of Management and Budget, worked at Bain and chaired the Advisory Board and the Corporate Executive Board, both consulting firms. Zients employs phrases familiar to anyone who’s engaged a consultant: His process employed deep dives to develop customer analytics, which were shared with the President at pull-up meetings—some of which took place, improbably, in the Situation Room, one of the few spaces in the West Wing equipped for PowerPoint.

The deep diving began last February, with interviews of current and former department secretaries, small businesses, executives from such companies as GE, DuPont, and Caterpillar, corporate reorganization specialists at McKinsey and Boston Consulting Group, Washington think tanks, and members of Congress.

Zients’s team also studied the uneven results of past reorganization efforts. Theodore Roosevelt, who followed the emerging discipline of “scientific management,” asked in 1903 for the authority to apply it to government. Congress declined, and he responded in 1905 by setting a precedent for the many Presidents who have followed him: He established a commission to study the effectiveness of the federal government.

Ronald C. Moe, who spent three decades at the Congressional Research Service studying federal management, describes Presidents who undertake a reorganization effort as either “constitutionalists” or “entrepreneurs.” Constitutionalists move boxes around, shifting civil servants among departments to rationalize reporting lines and, ultimately, increase Presidential power. Entrepreneurs look for ways to make buying pencils cheaper, finding administrative efficiencies without attempting to change the structure of Washington. Constitutionalists ask Congress for reorganization authority. When they get it, they move boxes. When they don’t, they lower their ambitions and focus on pencils.

Franklin Roosevelt, checked by an uncooperative Congress, moved a few boxes and couldn’t be bothered with pencils. Harry Truman moved boxes by the truckload, carrying out more reorganization plans in 1949 and 1950 than any President before or since. He unified the military under the Defense Dept., created the Government Services Administration, and reorganized the Postal Service and Interior, State, Commerce, and Labor Depts.

Then Congress reasserted itself. Not interested in attempting major reforms, Eisenhower, Kennedy, and Johnson went ahead and created task forces. Nixon submitted an ambitious plan to Congress to combine much of the federal government into four new “super-departments.” Congress declined. Carter created three new departments—Education, Energy, and Health and Human Services—personally sweated the details, and received political scorn in return.

After that the entrepreneurs began to avoid the Hill and tried to make what changes they could without congressional approval. Al Gore’s Reinventing Government campaign, launched with great fanfare, wound up filing the edges of the bureaucracy. In George W. Bush’s White House, the President’s old friend Clay Johnson quietly and successfully focused on administrative improvements, such as quicker financial reporting.

From the looks of his plans, Obama is the most ambitious constitutionalist since Truman. In addition to creating the new cabinet department, he has asked for the authority to reorganize his way through the rest of the federal government. Zients points to McKinsey data that show an ever-increasing gap between public and private sector productivity. “[Closing] that gap,” he says, “is our job.”

It’s hard to see how this could be bad for anyone other than a committee chairman about to be reorganized out of a fiefdom. Unfortunately, those are just the people—Democrat and Republican—Zients and Obama must convince. America’s founders were suspicious of efficiency and limited the ability of the President to remake the world in his image. Candidates for President, in this and all election years, like to talk about running the federal government like a chief executive officer. If the American President is a CEO, he has in Congress the world’s most obstreperous corporate board.

The President has at least one booster. Zients “has done a great job,” says Senator Tom Coburn (R-Okla.). “Congress is supposed to provide oversight, but the government is so much larger than our Constitution ever thought.” Coburn, a conservative Republican, believes Congress lacks the skill and often the desire to manage the agencies it funds and oversees. Few of his colleagues, protective of their power regardless of their party, are likely to agree. Obama’s request to embark on yet another attempt to overhaul Washington won’t start a fight between partisans. It will continue one between institutions.


    The bottom line: Obama’s ambitious plan to streamline the bureaucracy, saving $3 billion over a decade, has many precedents—and few successes.

    Before it's here, it's on the Bloomberg Terminal.