For four years I was Ronald Reagan’s chief bureaucrat. I was the director of the Office of Personnel Management (OPM) and I ran the U.S. civil service which is responsible for over 2,000,000 employees. I remember when Ronald Reagan first called me in to discuss the appointment. He said, “Don, I’ve got a job for you. I want you to cut government jobs. I want you to reduce overgenerous benefits. And I want you to make government employees work.”
I said, “Thanks, I should make a lot of friends.”
But, I decided to do it and we made some pretty substantial gains. We reduced non-defense civil employment by over 100,000 positions. We saved more than $20 billion in benefits and we did institute performance standards to induce government employees to work more effectively. What was the result? The Washington Post ran my photograph on the cover of its weekly magazine with the headline: “Reagan’s Terrible Swift Sword of the Civil Service.” I was called “combative,” the “Grinch in the Pinstripe Suit,” and, my favorite: “the Rasputin of the Reduction-in-Force.” (I always remembered, however, what Harry Truman used to say about doing a tough job in Washington, “If you need a friend in Washington, buy a dog.”)
Washington is a very different world. In my opinion, there’s no tougher place to exhibit leadership. Its inhabitants have confused priorities and no one seems to be able to keep straight the billions and trillions spent there. They are the people who truly believe in the late Senator Everett Dirksen’s comment, “You spend a billion here, you spend a billion there, and pretty soon you’re talking about real money.” Only today, a billion is inflated to 10 billion. Too often, our government servants think only in terms of spending money, unconcerned about the negative effects of doing so. They do take care of the noisy special interests, but they ignore the quiet general public interest.
What was my reward for reducing the number of federal employees and benefits to reasonable levels saving the American people billions of dollars, and carrying out the president’s mandate? I was fired. Actually, I was not reappointed. My reconfirmation was not approved in the Senate due to what U.S. Chamber of Commerce President Richard Lesher called Washington’s “trench warfare.” The process was repeated with presidential appointees like William Bradford Reynolds in the Justice Department, Edward Curran with the Peace Corps, and many others. The message clearly broadcast by Congress was “Don’t make waves. Don’t promote change” in the bureaucracy.
Ronald Reagan was elected, however, on a platform which promised government reform in spite of the barriers this kind of sentiment poses. And he has been remarkably successful, even many of his opponents are willing to admit. The 1981 reduction in the budget was the first real reduction in government spending since the years prior to World War II. Controllable non-defense expenditures were reduced by 10 percent. In 1982, the growth of entitlements was cut in half, and as I mentioned earlier, we made substantial reductions in the federal work force. We bureaucrats were asked to do more with less. And the results were remarkable. Over 30 government departments were cut by six percent or more. Fifteen departments were down by 10 percent or more. The Departments of Education and Housing and Urban Development, the Office of Personnel Management, the General Services Administration, and others went down by 15 percent or more.
I witnessed the results of the reductions best in my own department, the Office of Personnel Management. We eliminated one out of every four positions on our staff and we saw an immediate rise in our productivity. Before the reduction, our people were literally bumping into each other, creating makework and inefficiency. By every index, our effectiveness increased. We also tried to make the federal establishment realize that less is more, and that good government need not depend upon ever-increasing budgets and personnel. We can take substantial cuts and offer better service.
The old Washington game has been that every year each department asks for more money—for twice as much money as they really desire—so that once the Office of Management and Budget and Congress have pared the figure down, it will still be a substantial increase over the previous year’s budget.
Most of the reforms I encouraged at OPM were based on ordinary common sense. Anyone could have instituted them, and they all ran contrary to the budget-inflating process I have just outlined. For example, during my tenure we continued the practice of offering to all federal agencies an early retirement program during lay-offs; elderly workers were permitted to retire, allowing younger staffers to stay on. The only trouble was that the layoffs often did not occur. I simply made it mandatory that the agencies prove that they were indeed going to lay off employees before they allowed early retirement. This decision saved $160 million. (If you calculate how those savings add up over the five-year budget cycle, you arrive at a figure of $964 million. You are almost talking about real money there, even in Washington.)
A second example involves the disability provision of the retirement plan. If a worker became disabled, he was eligible to retire. But one-third of our retirees were listed as disabled! We’re a predominantly white collar business; there are a couple of people who jump out of airplanes at 500 feet, but most of them sit behind desks shuffling paper. Any private sector businessman can testify that a mere 5 percent disability rate is too high. And in the federal government, 32 percent of its work force was retiring on disability. I discovered that our definition of disability dated back to the 1940s and it implied that you had to be healthier when you went back to work than you were before you were disabled. And, furthermore, we did not require proof of disability! I altered the definition of disability to conform to the standards set by the Rehabilitation Act (a definition, I might add, which was far too liberal according to a number of conservatives) and I stated that we would require proof. Disability retirements fell by 58 percent. At least 6 out of 10 of the earlier claims, we may assume, were without merit. This reform has already saved $1.2 billion. Over the budget cycle, that adds up to $4.3 billion.
One of the crises I walked into at OPM in my first two months as director occurred when one of my staff, the equivalent of a vice president in a private business, approached me one day and said that we were $440 billion short in our health insurance fund. I said, “That’s terrible! We’re almost a half billion dollars short.”
He said, “No problem. Don’t worry about it. Nobody’s ever heard of the program.”
Now, I think you’ll admit that he was right. You haven’t heard of the Federal Employees Health Benefits Program. Yet it costs six million of your dollars annually and it is the fifteenth-largest entitlement program in the whole government.
“What about the employees?” I said. “Aren’t they going to be upset?” The employees are responsible for 40 percent of the funds for the program, so their premiums had to increase by 20-25 percent to solve the financial crisis.
He said, “No. In fact, if you try to do anything about it, they’ll think you are trying to take something away from them. They expect premiums to go up.” He explained that the previous year had been an election year and that OPM had purposely kept premium prices low in order to gain votes. Federal employees consequently expected premiums to rise after an election.
“Isn’t Congress going to get upset?” I continued.
“Don’t worry about the Congressmen.” he said, “They’re covered by the health benefits program.”
In a nutshell then, this is what Washington is all about. So many interest groups which have reasons to spend money are intertwined. There is no one there to represent the general interest unless a political leader takes on the task—and if his job, like mine, is dependent on congressional favor, then he may not survive long in Washington.
As director of OPM, I helped to save more than $20 billion—more than the fiscal year 1985 budgets of the Departments of Housing and Urban Development and Commerce combined—and promoted new standards of efficiency. Yet, in the wacky world of Washington, the reward is losing your job.
Washington is a difficult place to exhibit leadership. But we need this type of tough leadership over the bureaucracy if citizens are to keep their government under control. Otherwise Americans will lose their freedoms. Tough leadership is that important.
