THE WHITE HOUSE
Office of the Press Secretary
PRESS BRIEFING BY LEON PANETTA, DIRECTOR OF OFFICE OF MANAGEMENT AND BUDGET, AND ELAINE KAMARCK, SENIOR POLICY ADVISER TO THE VICE PRESIDENT The Briefing Room
1:07 P.M. EST
DIRECTOR PANETTA: Thank you very much. Let me basically get right into the main briefing itself, which is a followup on the event of the President and the Vice President this morning recognizing the anniversary of the whole effort at reinventing government.
And let me just say that the whole thrust of this has been basically to not just simply have this report sit on a shelf but in fact to take the report and implement it. And that has really, I think, been -- the historic part of this effort is really to take reports like that, as we've had in the past, and to make them real. And the reason we've been able to do that -- there are really two main reasons.
One is that there really is a greater emphasis on the management issues and the ability to try to do what we can to restore some trust to the American people in the fact that government can, in fact, improve the way it does business. And so from the President, from the Vice President, we have had a major emphasis on the management issues; and that has helped us a great deal in trying to move these issues through.
The second thing, and I think this has to be recognized, that one the driving forces here is just a very tight budget. When you have a hard freeze on discretionary spending for the next five years, and you're trying to find ways to meet that cap, which is very difficult to do, and try to find ways to achieve savings so you can redirect them at other initiatives, you've got to look to every source of possible savings that you can. And that's essentially one of the driving forces for why so much of this report on the National Performance Review is, in fact, being implemented as part of the budget process.
We've gotten off, I believe, to a very good start. If you look at the numbers -- there are something like 384 recommendations that were in the National Performance Review. We have implemented 80 percent of those total recommendations at this point as part of either proposals that we've submitted in the budgets or as part of executive orders issued by the President.
Let me summarize where we're at right now with regards to the savings that we've achieved for this year, 1995. The chart here basically reflects where NPR said we would be with regards to savings. Those are the blue bars. And the red reflects where we are with our budget and where we are with what we think will be the savings that we can actually achieve in both areas.
The first bar represents agency savings. These are the agency-specific savings. And I'll talk about some of those. But these are the ones where you're talking about in each department and each program, specific savings -- either in consolidating programs or eliminating programs, or revising programs. The target for NPR was about $7 billion; we are at $6.8 billion in terms of the proposals.
The streamlining bureaucracy, which is the personnel reductions -- we're right on target with what we had projected for savings for '95 -- basically 100,000 that we had targeted for reduction in '95; we're actually in the budget doing about 118,000 that are included in the budget. So we're right on track with regards to the streamlining of the bureaucracy.
On procurement reform, actually NPR did not indicate we would achieve any savings on procurement reform for '95. We did not think we would be able to put it in place that quick. But the reality is that both with administrative action that we've taken as well as the procurement legislation that is now before the Congress, we think we can get a good chunk of that in savings. And as a matter of fact, CBO confirms that we're looking at about $712 million in savings that will result from procurement reform itself.
Let me talk a little bit about the agency-specific changes. The agency-specific changes obviously impacted on almost every department. And when we went through the budget, when we went through the budget review of every department, as we looked at areas for savings, we basically had in hand the National Performance Review recommendations. Many of these agencies had already begun to implement many of the recommendations. We reminded them of other recommendations. So it was that kind of process that produced a lot of the agency-specific savings.
Let me just give you some examples. Obviously, in agriculture, the most obvious one that both Congress and the administration worked on was the elimination of the wool and mohair subsidy program as well as the honey program. Both of those, incidentally, produced savings for '94 and '95 of almost $58 million.
In the defense area we are closing the Uniformed Services University of Health Sciences. The main reason for that is because we felt that that was a school that was no longer necessary. It had been identified as one of those areas that we could achieve savings. We're going to achieve for '95 about $16 million savings. And over the five-year period close to about $286 million in savings.
In education we'd identified about 34 education department programs that we thought can be consolidated or eliminated. Seven of those programs that were funded for about $13 million in '93 have already been terminated by the Congress this year. The remaining 27 programs were funded for close to $500 million in '94, and we're proposing them for termination in '95. Over the five years, these terminations alone could produce about $2 billion in savings.
In the energy department, as you remember, about seven of the 14 departments have less in the '95 budget than they had in '94 -- either in budget authority or outlays. Energy is one of those. It reflects in part the savings from the end of the Cold War. We have DOE, both defense facilities and laboratories, are either being consolidated or eliminated. And as a consequence, we are getting those savings produced in energy almost $1 billion in savings just from the reduction in those facilities and laboratories.
We also are looking at some additional user fees that were recommended as part of NPR. The one I would point out to you most specifically is the licensing fee for firearms dealers, which is increasing from $200 for three years to $600 per year. It's a
significant increase in the user fee. That's a proposal that now goes with the Congress with our budget.
The Veterans Affairs administration phased out and closed out a number of supply depos. There was no reason why they had to maintain the large number of supply depos that they had across the country. It was identified as one area that could be centralized. They have done that. And the savings from that, just for '95 alone, is about $11 million.
So that just gives you a sample of some of the agencyspecific savings. If you want further review of those, on page 77 of the budget, there is a full outline of all of the specific agency savings that we drew from the National Performance Review that were included.
Incidentally, let me just mention, on those agencyspecific savings, 85 percent -- 85 percent of those agency-specific recommendations were in fact incorporated in the budgets. And in dollar terms we're achieving almost 97 percent of the savings that were targeted in those savings as part of this proposal.
Again, it just emphasizes that when you're in a tight budget, you're looking for savings, this was a very good area to turn to in terms of achieving those savings.
With regards to government-wide reforms -- and these really relate to -- again, the processes within government that we are making a real effort to try to reform as part of the reinventing government effort. The first area -- let me just summarize the key areas that I want to talk about, and I'll do this briefly. Personnel procurement reforms, regulatory reforms, and the performance measurements that we're now going to be putting into the budget.
On personnel issues, I basically summarized the streamlining that we're going through. We are going to be doing 118,000 by the end of FY '95. We want to make a real effort. We're still pushing to get the buyout legislation in the Congress. There is some movement on that. We are a little more encouraged that we're going to be able to get that legislation out. But it is absolutely essential to be able to accomplish this streamlining in a way that in fact improves management in government. But one way or the other, we will achieve these savings.
Secondly, we are also in the process of looking at civil service reform. The President established through executive order a National Partnership Council that is bringing together the agencies and the various unions that represent the civil servants. And they are working together now to develop recommendations for legislative reforms. We have -- the President's Management Council, which was also established; it's headed by Alice Rivlin, who is Deputy at the Office of Management and Budget. They, too, are looking at recommendations for legislative changes as well in the civil service system so that, working together, both streamlining with civil service reform, we can indeed improve our personnel operations in government.
Streamlining is extremely important. As I pointed every corporation, every major business has gone through streamlining. Part of our problem is to be able to do streamlining in a way that in effect does improve management. To do that, we need things like buyout. We need the ability to do some civil service reform so we can target what individuals, in fact, ought to be streamlined out of government.
Procurement reforms is another big area for savings. We are really, I think, for the first time -- this has been talked about for a long time. For 16 years I was in the Congress, we talked about
procurement reform; never happened because it was one of those areas where you had a lot of conflicting political forces at play. Through the efforts of people like Steve Kelman, Elaine Kamarck, the Vice President, we have been able to pull some of those forces together and I think there's a real chance we can get procurement reform through this session of the Congress.
Procurement reform itself will basically improve, expedite the way we do procurement business without the huge amount of red tape that's involved in that area right now. We've also established the ability to do some purchase of small ticket items rather than having to go through the bureaucracy of procurement offices. The President identified that, as did the Vice President, with regards to those cards.
Thirdly, we've found that in reviewing government contracts, the government never took into consideration past performance on these contracts; which is a little incredible to believe when we found that out. They never asked the question, how did these contractors perform in the past? And even if they did a lousy job, they still were able to get contracts. We now have identified 62 contracts where they will in fact look at suppliers' past performance as a major factor in deciding whether to award contracts. So we're beginning to move in that area as well.
On regulatory reforms, the President issued an executive order with regards to the whole area of regulatory reforms. Incidentally, this is done through the Office of Information and Regulatory Affairs in the Office of Management and Budget, more familiarly known as OIRA. That office basically does all of the review of the regulations that flow through government. As a result of that executive order, we were able to reduce the number of regulations that flow through that office, because a large number of them are basically technical regulations that do not demand the kind of oversight that others do. So we've been able to reduce the number that have gone through the Office of Management and Budget, and we have been able to stick to a very tight schedule -- to the 90-day timeframe -- in order to get the ones that do come through OIRA out so that there would not be this huge backlog that we saw develop in the past. So we've made some real progress in the regulatory area.
On information technology, this is an area that has also been identified by both the President and the Vice President in particular as an area where we can improve the way government does business. On government printing, we're working with Congress on legislation to improve the cost-effectiveness of government printing; to allow some of these agencies to have the independence to do some of their own printing, rather than having to go through the Government Printing Office; and to try to strengthen the dissemination of government information to the public in both paper and electronic form. Information technology recommendations -- we have a working group now to try to implement those recommendations that were in the NPR. We're improving electronic information dissemination, as well; as well as electronics benefits transfer.
You know, we're moving into a new century. Everybody recognizes that. The government still is operating almost in the dark ages when it comes to technology. We have made some real progress to try to move government agencies into the electronic era. And that's being done both through the electronic benefits transfer as well as electronic mail.
On customer service, NPR stressed the importance of listening to the people -- what are their concerns; what are their complaints; and trying to improve the operation by doing that. We are seeing federal programs from Social Security to Small Business Administration, from food stamps to education loans, beginning to improve the way they provide services. We are asking that these
departments review constantly their customer surveys to ensure that they, in fact, are improving.
And, lastly, on performance measurement, let me tell you one of the things we're going to be doing as a result of the passage of legislation in the Congress. In future budgets, we are going to be looking at a set of performance standards in each program. In other words, we're not just going to simply ask the question: What's your sense about how this program is performing? We are going to establish standards of performance in each program so that we can measure whether they're doing the job or not, whether they're performing well or not so that we, in fact, can test their performance. We are going to do this -- incidentally, the legislation called for a pilot program of about 10 agencies, 10 pilot projects for '95. We have 53 agencies who are willing to move forward even more rapidly to establish these performance standards. So we have 53 pilot projects that are going to be involved in performance implementation.
Lastly, let me just conclude by saying, it isn't enough for OMB to tell other departments what needs to be done. OMB went through the same process internally ourselves. We conducted what was called an OMB 2000 process. It was a six-month process basically asking how we, too, can improve the operations at the Office of Management and Budget. We are now taking steps to implement those recommendations.
The primary recommendation is to take both the management side of OMB and the budget side and implement both of those areas at the agency level through one operating tool, which is the resource management offices. We had a problem where, very frankly, on the management side, although they did government-wide policies, they had a difficult time implementing those policies on a program-by-program basis, because they were working through their side of OMB. On the budget side, while it didn't have the sensitivity to management issues, has a lot of leverage by virtue of dealing with the budget. So our feeling was, let us combine -- at the agency level -- those recommendations so that we, in fact, can implement both management and budget issues with the same tool. I think everybody recognizes that will make OMB much more effective in implementing both management reforms as well as resource decisions at the programmatic level.
That concludes my remarks. Elaine.
MS. KAMARCK: Good afternoon. One of the reasons that we wanted to celebrate the anniversary of reinventing government is that, as you can imagine from what you've heard so far, reinventing government is unlike other initiatives that you may be more familiar with from various presidencies. The reason is, there will never be a point in time when it is finished. There will never be one bill that encapsulates all of it; and there's a nice, clean up or down vote; and we can say, okay, the administration succeeded or failed.
In fact, reinventing government in the first instance was a set of 384 specific recommendations. And you've heard today from Director Panetta, from the President and the Vice President about our progress in implementing those specific recommendations. More importantly, however, than those recommendations is the fact that reinventing government is about culture change in the federal bureaucracy. And that we are pursuing vigorously and we are very happy that the individual workers -- federal workers -- are responding positively.
I know you heard a lot of stories this morning, but let me give you one final story. I have here an actual SBA loan application for a $30,000 loan, okay? And you can all look at it -- we've crossed out the name of the person -- but this is a loan
application. SBA, in an effort to become more customer friendly, to implement the spirit of the National Performance Review, has taken this loan application in a pilot project in Texas and reduced it to this piece of paper. This is the new SBA small loan application. The reaction has been overwhelming. Since they started using it in San Antonio in December, SBA has approved 147 loans, for a total of $7.3 million. The program has brought many small lenders back to the small business market. It is a splendid example of how this government can provide quality, user-friendly service to its customers. The average loan size to date has been under $50,000, 18 percent of those loans going to women, 23 percent to minorities. Very shortly, SBA hopes to roll out this program nationwide. What we're most excited about, in addition to the actual legislative progress and the budget progress, is the fact that all over the government people are responding with this kind of reinvention.
And let me talk about a couple of particular things we are doing to push this forward. First of all, this morning the President signed the first of five -- the first five performance agreements with agency heads. Performance agreements have been a valuable private sector management tool for a long time. These agreements signed between the President and the three Cabinet Secretaries and two agency heads -- and there's copies of the agreements in this box over here right behind me -- these agreements, the Cabinet Secretaries and the agency heads will now turn around and execute their own agreements with their senior staff on through the bureaucracy so that people understand what the mission is.
Secondly, we have designated over 130 reinvention laboratories. These are places where NPR, OMB, GSA and OPM, in particular, are working to expedite waivers to find them consultants who are willing to work with them for free through the Federal Quality Institute to push along the reinvention, try to get some real progress. For instance, at the Veterans Administration in Baltimore, the old procedure basically resembled a Ford plant assembly line. Patients got passed from specialist to specialist and room to room to receive care. They have completely re-engineered that process. The new procedure at the Veterans Hospital is focused around the customer with specialists working in teams to take care of patients. And the team is responsible for an individual patient throughout the time that the patient is in care.
Finally, we are going to be talking a lot in the coming months about customer service because one of the most important goals of the National Performance Review was not simply to save some money -- we're doing that -- was not simply to cut red tape, but it was to make sure that the individual American citizen, when confronting their government, felt like they were the valued customer of a successful business. And we have been using the customer service model in training throughout the government, trying to make sure that the government in fact reacts to the citizens as if it were not the monopoly that it often is, but as if it really needed their business. And we hope to see that and to illustrate that to you in areas as diverse as the Customs Service, the Veterans Administration, Social Security Administration, and even the IRS.
Thank you very much. We'll take some questions.
Q I want to ask you a question about performance budgeting. I seen the memo that you distributed to staff on Tuesday about OMB 2000. It describes what agencies are going to be required to give OMB as part to a budget and management system. But can you describe how the budget document itself will be different and how it will impact not just the decision-making that goes into the budget, but the presentation of that to Congress, to the public?
SECRETARY PANETTA: Well, I think ultimately -- don't forget the performance legislation was supposed to be implemented
over a five-year period, and we're beginning the process now with the '95 budget. But I think, eventually, what we're hoping to do is that we would in fact reflect in the budget the performance standards that each program has established for itself; and then be able to, within the budget documents, reflect whether those agencies or programs are meeting those performance standards so that the public can see, A, what the agency or program established for itself as a performance standard; and, B, how did it -- whether it failed or succeeded in achieving those standards; and then, C, how was it funded pursuant to that. So, it's a good presentation.
Q So now, when you talk about eliminating, for instance, 115 programs outright, you're talking about offering additional justification not just rely -- how this would be eliminated, but why it would be eliminated -- and why it's not performing?
SECRETARY PANETTA: Exactly. I think, the one question we ever -- I mean, in the budget process, you basically -- it's one of the things that I testified to the other day on the Hill -- you basically on the year-to-year budgeting, you basically kind of have an approach whereby you work around the edges and you kind of just get by from year to year. We need to ask major questions about these programs. And a lot of times we don't do the oversight or look at their performance per se in that process. I think we need the time. We need the effort to do that in the performance. The performance area really does give us a handle on that so that we can test each program, not just in terms of how much did we give them last year, but how did they perform last year? How many customers did they serve? How many claims did they process? You know, what is their standard for how they should serve the public. And then be able to basically fund them pursuant to that performance standard.
Q Is this going to be in the '95 budget or do you think --
SECRETARY PANETTA: There will be about 53 pilot projects. We are beginning with 53 pilot projects. And that'll be reflected.
Q When you started you said that part of the point of doing this is to do what we can to restore trust to the American people. What did you mean by that?
SECRETARY PANETTA: I think that what we've seen happen over the last few years is that people have lost trust in the ability of government to really serve them, that they became increasingly skeptical about the ability of government to respond; they saw the bureaucracy. They saw the lack of attention, the lack of concern. And it impacted across the board. And, you know, for a Democratic administration, I think it goes to the very heart of what we're about. If we can't restore people's trust in how government operates, then we have a difficult time trying to say to the American people that there is in fact a legitimate role for government to play in our society when it comes to meeting the needs of people. We believe that. We believe there is a role of government in our society. Our forefathers believed that. But, unless we can show that in fact we are sensitive to how people are being treated and how government performs, very frankly, we are not being true, then, to the heritage that our forefathers gave us. So, that's the purpose here. It's to try to make an across-the-board effort by improving the way government does business to, hopefully, then restore some trust of the American people in government.
Q Mr. Panetta, on that issue of trust, several members of Congress today said that the Clinton administration has undermined people's trust of government through these meetings with Nussbaum and Altman and other people on the RTC investigation. Do
you think that, as a high-level official of the Clinton administration, those meetings were proper? That they should have taken place?
DIRECTOR PANETTA: I think the President spoke to the issue earlier at the press conference, and I'm going to leave it with his comments.
Q I want to ask you about trust -- vis a vis the way you answered Tom's question a moment ago. That's a very striking example there of the difference from however many pages that is to one sheet, front and back.
DIRECTOR PANETTA: Yeah, most of these people usually wind up in my congressional office complaining about what they were going through, by the way. I mean, it was something I saw on the other side, as a representative, in our field offices, and I guess that's why I'm particularly sensitive to that; because when people were frustrated with the way government was doing business, they usually wound up in a congressional office complaining. And often times, when they had to go through this kind of bureaucracy in order to get a small business loan -- even when it was a disaster sometimes, I mean, even the disaster loans required that kind of process -- it is tremendously disconcerting to that individual.
Q Right, but I wanted to ask you, for someone who is a potential beneficiary, that may be quite a relief and actually it may be impressive to the rest of us who see that; but then comes the question, where are the safeguards or whatever other factors that were built in? Obviously there's something more when you have this much and end up with a thin sheet of paper. How do you reassure the American people that their money is now not going to be squandered, perhaps, because there aren't enough checks and balances?
DIRECTOR PANETTA: Well, I'll let Elaine speak to that, but let me give you my impression. My impression is that what happens too often in government is that we overload the system to sometimes go after a particular problem. And in the process of doing that, we basically overload the whole program so that it doesn't serve anybody.
I think we've got to take an approach -- it's a little bit like your department store. I mean, they're concerned about the shoplifter, and they're going to prosecute the shoplifter. But they don't put all the customers through a huge bureaucracy just to make sure that everybody's clean. I mean, you just don't do that. And we can't do that. I mean, we have to be concerned about the people who break the law. And we have to be concerned about our ability to enforce the law. But we ought to be prosecuting those people; we ought not to burden the innocent with a huge set of bureaucratic tangle in order to somehow make the case.
And that's what's happened in government, that's what's happened. Again, I view this from having served in the Congress for 16 years. The sexy story is always what happens when you find some kind of fraud someplace in the federal government. But in response to that, what is never tracked is when we try to then prevent that thing from happening, we create a whole set of regulations and bureaucracy on top of that which makes it very difficult then for the ordinary citizen who really wants the benefit of it to go through the process.
So, I think you can do both. I really do believe you can both. And this makes sense -- this does make sense -- in the way we do business. Elaine.
MS. KAMARCK: Yes, I would just add to that that we are focusing on particularly processes which do not seem to add any value
to the effort, including not add any particular value in the prevention of fraud. We're not looking to streamline away the processes and the autoprocesses that actually look for fraud and investigate fraud. We're trying to make a very clear distinction, does this add value in preventing fraud, or not? And to a certain extent, that's a judgement call, but that's the prism through which it should be viewed.
I used to be a journalist before I came here. Imagine if your newspapers -- every time you wanted to take someone out to lunch, a source out to lunch; if your newspaper decided that in order to prevent you from really taking your mother-in-law out to lunch on the paper's money, you had a manual like this and a whole set of forms that you had to fill out, okay? I don't think your newspaper would save a great deal more money, and it probably wouldn't prevent a lot of fraud, and you probably would be significantly impaired in your ability to do your job. So that's where we're trying to encourage agency by agency to make those judgments.
Q In the area of improving customer service, your recent report with respect to the IRS said that if a taxpayer were to seek information from the IRS and if they were given the wrong advice, the IRS would drop all penalties and interest. And I just wonder, do you have any figure on how much you would lose in implementing that recommendation, and how much this has happened, how often this has occurred?
MS. KAMARCK: You'll have to ask the IRS for the specific data on that. That has actually been in the law for quite a number of years now. The big difference is we are now telling the public on the 10-40 forms that that is the law and that they expect -- and IRS has agreed to do this as part of the customer service standards that we negotiated with them -- that we are now saying to the customer, you have the right to expect correct answers from the IRS. And the IRS feels that they have improved their processes. It's quite a -- you've probably read a little bit about this -- but the IRS has gone through quite a major reengineering and they feel confident that they can, in fact, meet that customer standard and not lose an awful lot of money.
Q Wouldn't the change in the loan application cost a lot of money? Because if you get more loan applications, you probably get more loans and a certain amount has to be put aside on the government budget. And if you get more loan applications and a reduced number of staffers at OMB, and you get kind of more things going through a smaller funnel, doesn't that mean more fraud? Things aren't caught.
MS. KAMARCK: No, I don't think so. I mean, I think that SBA has a certain amount of loans that it can give out, okay? And this is a question of encouraging more people to actually apply for those loans. And maybe some people who were put off, who were perfectly good credit risks, should have been applying for those loans and might have been a little bit put off by this book, and are not so put off by this. So I think it increases the pool.
Q You don't expect more loans? Do you expect more loan applications?
MS. KAMARCK: Of course we expect more loan applications, that's the point.
Q Are there fewer people dealing with those loan applications?
MS. KAMARCK: Well, remember, this has just started to be used in Texas since December. So let's give it a little bit of time to see actually how it pans out.
Q Do you have projections?
MS. KAMARCK: No, I don't, but you could call SBA and ask them.
END1:40 P.M. EST