TESTIMONY
OF JOSHUA B. BOLTEN
DIRECTOR
OFFICE OF MANAGEMENT AND BUDGET
BEFORE
SUBCOMMITTEE ON TRANSPORTATON, TREASURY,
POSTAL SERVICE AND GENERAL GOVERNMENT
COMMITTEE ON APPROPRIATIONS
U.S. HOUSE OF REPRESENTATIVES
March
24, 2004
Mr. Chairman, Representative Olver, Members of the Subcommittee, I am pleased
to be here this morning to discuss the President’s FY 2005 Budget
request for the Office of Management and Budget (OMB).
Winning the
War on Terror, Protecting the Homeland and Strengthening the Economy
I would like to begin with a brief review of the President’s overall
FY 2005 Budget. That Budget reflects his top priorities: winning the war
on terror, protecting the homeland, and strengthening the economy.
The President is committed to spending what is necessary to provide for
our security – and restraining spending elsewhere. Since September
11, 2001, more than three-quarters of the increase in the Federal Government’s
discretionary spending has been directly related to our response to the
attacks, enhanced homeland security, and the War on Terror. The President’s
2005 Budget continues this spending trend: significant increases in essential
funding for our security programs, combined with a dramatic reduction in
the growth of discretionary spending unrelated to security.
The President’s Budget is built on the sensible premise that Government
spending should grow no faster than the average increase in American family
incomes, which is approximately four percent. This Budget proposes to hold
the growth in total discretionary spending to 3.9 percent and to reduce
the growth in non-defense, non-homeland security spending to one-half of
one percent, below the rate of inflation.
The President’s Budget builds on the pro-growth economic policies
that have laid the foundation for the economic recovery now underway, and
for sustained economic growth and job creation in the years ahead. With
continuation of the President’s economic growth policies and sound
spending restraint as reflected in the Budget, our projections show the
deficit will be cut by more than half over the next five years.
The spending restraint reflected in this Budget is not automatic. So we
are also proposing new statutory budget enforcement mechanisms, establishing
limits in law on both discretionary and mandatory spending, and requiring
that any increases in spending be paid for by spending offsets.
Finally, the President is keeping his Administration focused on what the
American people care about – results. The measure of government’s
success is not how much we spend, but rather how much we accomplish.
Measuring
Performance and Delivering Results
Whatever we agree to spend, we want to make sure that our investments get
the results the American people expect. Our budget includes program assessments
designed to ascertain whether programs are working and, if not, how to fix
them. The program assessments in this year’s budget are based on the
rating tool we introduced last year – the Program Assessment Rating
Tool, or PART. The PART suggests to us what we need to do to improve program
performance and achieve greater results.
The President’s FY 2005 Budget includes PART assessments of 40 percent
of the government's programs. We will soon complete more assessments so
that by the end of this fiscal year, we will have evaluated the performance
of 60 percent of the government's programs. Within the next three years,
we plan to have assessed the programs that account for almost all of the
Federal Budget. These assessments do not drive funding recommendations automatically
up or down, but they do give more information about performance with which
to make more informed budget and management policy decisions.
The PART assessments are discussed in detail in the Analytical Perspectives
volume of the Budget. We believe the PART is an important step in changing
the way Federal managers think about their responsibilities. In addition,
it is our hope that the PART will provide meaningful information to this
Committee and others in Congress to help inform funding decisions and identify
and correct flaws that undermine the effectiveness of programs.
Another way we are working to get more value for the taxpayer is through
the President’s Competitive Sourcing Initiative. Before this initiative
was launched, too few agencies regularly assessed the efficiency of the
commercial activities they performed. Today, more and more agencies are
using the basic principle of competition to help reduce costs, improve customer
satisfaction, and generate results for the taxpayers.
Three years after launching the initiative, most agencies have established
and refined the processes necessary to conduct public-private competitions
in a transparent and fair manner. Employees are encouraged to think creatively
in developing the most efficient organization possible to perform commercial
work. By comparing the improved in-house organization to private sector
solutions, managers can determine which sector – public or private
– can provide the greatest results at the best value to the taxpayer.
It is a testament to the quality of our Federal workforce that in-house
employee groups win such competitions a majority of the time. Regardless
of who wins the competitions, agencies are able to reduce costs and increase
results when performing commercial activities. Demonstrating such results
not only conserves precious tax dollars, but it also instills in citizens
greater confidence in the effectiveness of their government.
We appreciate that the Subcommittee has focused on this important initiative.
Last year, we worked with you to craft a provision to document the costs
of and savings from competitive sourcing studies conducted by Federal agencies.
This report – due to be published on or before May 24th – will
provide facts about competitive sourcing that may be used to inform the
debate and maximize the potential of public-private competition. We look
forward to continuing to work with you on this issue. OMB’s
Budget
The FY 2005 Budget includes a request of $76.6 million for the Office of
Management and Budget (OMB), a 2.1 percent increase above FY 2004, which
is devoted solely to maintaining our current workforce. I want the Committee
to know that I reviewed this request before submitting it with particular
care, to assure myself that a 2.1 percent increase was warranted in light
of the more modest 0.5 percent increase requested for non-security related
discretionary spending overall. Because OMB’s budget has remained
nearly flat in real terms during this Administration, even as OMB’s
responsibilities have continued to expand, I believe this request is both
justified and appropriate.
OMB’s responsibilities have continued an expansion that has been underway
for more than two decades, beginning with regulatory review and more recently
including the area of electronic government. During the first three years
of the Bush Administration, we have demanded more from OMB: we’ve
launched the President’s Management Agenda; reinvigorated regulatory
analysis; and established an Information Technology office.
Despite continued growth in the scope of OMB’s responsibilities, OMB’s
authorized workforce has shrunk from its peak of 715 positions in the late
1970s, to 527 positions in fiscal year 2001, to 510 positions proposed in
this budget. OMB's FY 2005 budget includes no new funding initiatives, but
the 2.1 percent requested increase will permit OMB to continue current operations
and meet current challenges.
OMB is committed to producing the best work in support of both Executive
and Legislative branch decision makers. OMB's FY 2005 request reflects our
desire to continue supporting both branches effectively, while maintaining
budgetary restraint. Executive
Office of the President Appropriation
The Executive Office of the President (EOP) includes a number of organizations
dedicated to serving the President. As part of the 2005 Budget, the Administration
requests a three-part financial restructuring initiative, which would:
- consolidate
the annual appropriations for the White House Office (WHO), Office of
Policy Development (OPD), Executive Residence, White House Repair and
Restoration, Office of Administration (OA), National Security Council
(NSC), and the Council of Economic Advisers (CEA) into a single appropriation
called “The White House;”
- provide
a 10-percent transfer authority among the following eight accounts:
The White House (consolidated account), Special Assistant to the President
and Official Residence of the Vice President, Office of Management and
Budget, United States Trade Representative, Office of National Drug
Control Policy, Council on Environmental Quality, and the Office of
Science and Technology Policy; and,
- centralize
the telecommunications infrastructure costs for the Executive Office
of the President into the Office of Administration program.
I understand that Tim Campen, Director of the Office of Administration,
is testifying before you next week and will address these efforts in detail
at that time. Linking
Pay and Performance – the Human Capital Performance Fund
The government's most important assets are its 3.2 million employees and
service members. Our Federal pay policy should focus on developing that
workforce, effectively and responsibly recruiting, retaining, and motivating
the quality people we need to accomplish the government’s varied missions.
We do not have a government-wide problem with recruiting and retaining individuals
to serve in the Federal workforce. However, there may be particular skills
or localities where recruitment and/or retention are a problem. The President’s
Budget recommends that the Congress adopt a pay policy flexible enough to
address these circumstances.
Under the President’s proposal, Federal civilian employees would receive
approximately 2 percent in additional pay, composed of: an across-the-board
pay raise of 1.5 percent in 2005; an additional 0.2 percent spread across
the government that managers can use to reward performance or address particular
recruitment or retention needs they may have; and, $300 million for the
Human Capital Performance fund. The Human Capital Performance Fund will
allow managers to increase pay beyond annual raises for top employees and
address other critical personnel needs. The Fund is designed to spur the
move to performance-based pay by rewarding high-performing employees and
those with badly needed skills, instead of supporting the current practice
of evenly spreading pay raises across the Federal workforce without real
regard to performance or contribution.
The Administration believes the components of this pay policy are crucial
for the effective and responsible recruitment, retention and motivation
of quality people we need to accomplish our mission. We urge the Congress
to support this approach. Electronic
Government (E-Gov)
A key component of the President’s Management Agenda is the Electronic
Government (E-Gov) Initiative, which is designed to bring more services
to the American citizen over the Internet, make government more efficient,
and improve IT management throughout the Executive Branch. I would like
to highlight a program under the purview of this subcommittee – “The
E-Gov Fund” – which supports projects that make Federal information
and services more readily available to members of the public, the business
community, and State and local governments, as well as between Federal agencies.
The President’s Budget requests $45 million for the E-Gov Fund so
that we can continue and expand upon the successes we have already achieved
in this effort. Over the last year, the Federal government made significant
progress toward becoming a transformed and more productive “E-Government”
to better serve citizens. Through the use of the E-Gov Fund we were able
to jump start efforts to make it easier for citizens to obtain services
from and interact with the Federal government, to improve government efficiency
and effectiveness, and to increase the government’s responsiveness
to citizens.
Even with limited funding, this Initiative is achieving noteworthy successes,
including the following: GovBenefits is providing online access to 419 citizen-focused
Federal benefit programs and 48 state level benefit programs; E-Payroll
is migrating 22 payroll providers down to four; USA Services is presenting
a single face of government for citizens by providing timely, accurate and
consistent responses about government information and services via email,
phone, fax, letter and the web; and, Grants.gov is making available online
more than $360 billion in annual grants from 26 Federal agencies for which
grantees can apply. A full report of the use of the $5 million you provided
in FY 2003 is available in the March 8, 2004, Report to Congress on Implementation
of The E-Government Act at www.whitehouse.gov/omb/egov
Conclusion
Since President Bush took office, our Nation has confronted a cascading
set of challenges. The President and Congress responded on all fronts, with
tax relief to get the economy going, the largest reorganization of the Federal
Government in 50 years to help secure the Nation by creating a new Department
of Homeland Security, and the largest increases in the defense budget since
the Reagan Administration, to wage and win the War on Terror. The President’s
2005 Budget builds on this record of accomplishment. With renewed economic
growth and the Congress’ cooperation in restraining spending and focusing
it on our most critical priorities, we can accomplish the great goals the
President has set for the country, while dramatically improving our budget
situation.
I look forward to working with the Committee on the OMB Budget and the overall
FY 2005 Budget. |