Fiscal horrors will force feds to rethink old models

This transformation won’t be the result of a new management agenda by the next administration or changes in the makeup of Congress. It will happen because the extreme pressures on the federal budget from Social Security, Medicare and Medicaid, and other “implicit exposures” will impact agency programs in unexpected ways, said Christopher Mihm, the Government Accountability Office’s managing director for strategic issues.

“Decisions are being made today that will fundamentally constrain the way we work in the future,” Mihm said at a recent lunch in Washington sponsored by the Association for Federal Information Managers. “We believe the government needs to engage in a zero-based review of what it does, how it does its business and how will it finance its efforts.”

In recent years, GAO officials have warned that the government faces financial catastrophe unless it changes course. Mihm pointed to spending statistics to drive the point home.

For example, the estimated long-term financial liabilities for Social Security, Medicare and similar benefits rose to $35.6 trillion in 2005 from $13 trillion in 2000, a trend that is expected to continue, he said.

“We need to take prudent action today,” Mihm said. “We have to make decisions because we are in a fiscal crisis [due to] rising health care costs and demographics.”

The problem, Mihm said, is that the government is stuck in a bygone era in terms of how it does business and develops programs.

He said immediate action has to be taken on three fronts to help stave off fiscal disaster:

Cultural transformation: Agencies and Congress need to be less hierarchical, less stovepiped and less inwardly focused. The government must work better with nongovernmental organizations and industry to achieve results, and achieve a better balance between customer and employee results.

Cross-cutting management reforms: Mihm repeated GAO’s long-standing recommendation of having a term-appointed, nonpolitical chief management officer to oversee agency transformational changes. “The average political appointee’s time in [his or her] position is 24 months to 28 months, but large-scale major change takes five to seven years,” Mihm said. He added that Congress needs to review the effectiveness of statutory reform frameworks, including the Chief Financial Officers Act, the Clinger-Cohen Act and the Government Performance and Results Act.

Modernize the human-capital system: This is the only rational thing to do, Mihm said. GAO, for instance, has instituted pay for performance and pay banding, turning it into a high-performing organization, he said.

Mihm said Congress also must change its old ways to become part of the solution to the fiscal crisis.

“Congress needs to devise mechanisms to look across traditional committees,” he said. It needs “to ask what are the implications and do oversight on problems and outcomes, not just on individual agencies.”