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TREAS.
HJ
10
. A13P4
v.325
U,S. Department of the TREASURY
PRESS RELEASES
THE NAFTA
Expanding U.S. Exports, Jobs and Growth
Clinton Adn1inistration Staten1ent
on the North American Free Trade Agreement
''In the face of all the pressures to do the reverse, we mllst conzpete, not retreat ..
President Clinton, February 26, 1993
f
''1 '-.11,' h:- 111,'
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ISBN 0-16-041871-2
2/1"'\'/12-Q"2:...;
Administration Statement on the
North American Free Trade Agreement (NAFTA)
What Does NAFTA Mean?
It Means:
• Harnessing a changing global econolny for the benefit of At11erican workers.
• 200,000
nc~r
higher-paying, export-related jobs for Atnericans.
• A level playing field for
u.s.
exporters.
• Enhanced access to Mexico, a growing rnarket of 90 million consumers.
• Creation of the biggest market in the world.
• Better environrnental protection.
• A plan to expand
President Bush.
u.s. trade supported by both President Clinton and
• Effective U.S. leadership to meet the requirements of the
post-Cold War world.
NAFTA-The North American Free Trade Agreement
It's Good For Atnerica
July, 1993
The North American Free Trade Agreen1ent (NAFTA):
Expanding Exports, Jobs and Growth
"The tntth of our age is this-and must be this:
Open and competitive commerce will enrich us as
a nation ... And so J say to you in the face of all
the pressures to do the reverse, we must compete,
not retreat. "
- President Clinton, February 26, 1993
"By bUilding together the largest free trading
region in the world, Mexico, the United States and
Canada are working to ensure that the future will
bring increa<;ed prospen'tv, trade, and new jobsfor
the citizens of each of our countries. "
- President Bush, July 15, 1992
very genera~ion of Americans has embr;~ced the
challenge of its times. l\one has shrunk from the
task. Our biggest challenge today is economicto channel a changing international economy to our
henefit.
E
The Clinton Administration is committed to rebuilding
the u.s. economy from the ground up. We must prepare our entire work force to compete in the global
economy and make sure that nobody gets left behind
in the process. We look at trade-and every other
issue-from the viewpoint of what is best for ordinary
Americans who \vork hard, play by the rules, and \,,cant
a chance to get ahead. The key huilding hlocks are
economic gro\vth and johs.
The North American Free Trade Agreement
(NAFTA) is a part of this forward-looking strategy.
This Administration supports the NAFTA with supplemental agreements because it will create highwage U.S. jobs, boost U.S. growth, and expand the
base from which U.S. Hrms and workers can compete in a dynamic global economy.
Critics of NAFTA use scare tactics to assert that NAFTA
will put Americans out of work. The truth is quite the
opposite:
•
NAl'lA will spur fUl1her joh gains and push johs
related to expot1s to Mexico toward the 1 million
mark.
•
Defeating J'<AFTA could cost hundreds of thousands of such jobs.
The facts about NAFTA:
•
NAFTA will create the biggest market in the world
-right at our doorstep: a $6. S trillion market with
370 million people.
•
NAFTA will level a playing field that remainsdespite recent Mexican market openings-substantially tilted in Mexico's favor. !\1exico's tariff barriers
to U.S. goods are still 2.5 times greater than our
own. All tariffs will be phased out under NAFTA.
•
NAFTA will expand henefits the United States has
enjoyed since Mexico began to open its markets in
19H6. U.S. merchandise exports to Mexico have
risen by 22H'}i) since 1986, reaching $40.6 billion in
1992
•
U.S. johs supported by these merchandise exports
rose from 274,000 in 1986 to an estimated 700,000
in 1992-and these jobs are in all 50 states.
(Merchandise exports to Canada support another
l.5 million U.S. jubs.)
•
NAFTA will create an estimated 200,000 additional
high-wage johs related to exports to Mexico by
1995.
•
NAFTA will increase opportunities for American
firms to sell to Mexico. Those opportunities are
especially important for small and medium-size
businesses that cannot readily overcome high
Mexican border harriers.
3
\1'1:
•
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illl'g~t1 Illlllli-
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I.Irill ,I,~,IIIl"1 I ,~ 1''\pl lrh
illlpi lib In llll \ k:-;il'l
\ \I I \ 1\ dl ,~I,lllll,llI\ 1,,1"1' 1Il,IIl\ III 1111' l!rl"Nlrl'"
III \"'\1, I) 111.11 lllITl'IlIl\ II )J11rihutl' tl
,1\ l'I,I,~I'
.i1rl'.ll.l\ l'lltl'r dut\ -lrlT, (luI' J\ l'r"gl' urillllil
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it'! .lg.lill"t illlpi )rh In IIIl \k'\i'l 1 '~l.'l' (:Il,lrt I, I
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11'1111\ .2; tillll'" Iliglll'! tll.11l till.' l'quil .dl'llt I S 1.11
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\ < 1\ I I \ I I "" I
llli1l'd SLltl'",
•
\1c:\il'l 1 CUITl'llth ILl" nl 1 I lhlig~l1i, III til C()lltilllll'
rl'l'l'nt Ilurkl't-Ilpellillg Il)(l\l'," 1)J1 \\hich tIH)u";(nd"
I l i l S jllh" ~drl'~llh dl']X'nlL '\,\FIA \\ill n()t ()n"
I. Creating the Biggest Market in the World
II lck ill CUITl'nt ~Icce,"" hut L':-;p;(nd th:lt :I CCl'"" ,
With NAFfA, the llnited States, Canada and Mexico
will create the higgest market in the world-a
comhined economy of $6.5 trillion and 370 million people:
•
'\,\IT\ \\ill e1iminJtl' l""jxTi~dl\' hurdens()llle uritl"
;md III In-uritl h;IITier" in ;( numher ()I ke\' sector,,,
\\Ilerl' till' I 'nitnl SUte," i" c()lllpetitiH' \is-;(-\i"
\k:-;ie< l-"uch ;10., ;IUtl l," ;(nd ;(griculture,
•
( luI' ,I llllp,'titl lr" ,11'1' 1':-;P~llldillg thl'ir Ilurkl'h ill
hili )1'" ,II1d ,\"i,1
\,\1''1'.\ i,,, I )ur I )PPI )rtullit\ tl)
Il'''PI )Ild ,II1d ,I 1I11lx'tl',
•
Ih illlrl"l"ill,~
I)lir
1':-;PI)rt I )PPI ll1ullitil''', \,HT\ \\ ill
l'Il,lhk U" tl) Uk,' Jl.h~1I1Ugl' III I
~,('l.llnlllllil
NAFfA will require relatively little change on our
part-while requiring Mexico to sweep away
decades of protectionism and overregulation:
•
"trl'll.~tll,,, ,lllll rl'lluill till' \\ I lrld'" higgl,,,t .md h",,,t
I'"
ILlII III ;dl I S l':-;Plllb tl) \Ic:-;il'll \\ill he l'!igihk
Illr ATI
1
\k:-;ic~m uritl." \\hen ,\AFL\ Like,s died
Iln Jmu~IIY L I'l) L
pi lrllT.
•
I S l':-;PI lib e1igihlL'
I'm uriff-frl'e l'ntry int() .\k:-;ic()
includl'''1 l111e I If I lUI' 1111 )st U )111pctit il'l' prodUl'h:
II. Levelling the Playing Field
- ~l'111il( mdul'tl lr" and U l111puters
Mexico's trade harriers are now much higher than
ours. ~AFTA will level a playing field now tilted
heavily in Mexico's favor:
.\LiclliIll' tl)( l\.S
,\en l"P;ICl' equip111ent
- Tl'1l'U )111111Unicltil)]b equip111L'nt
CHART 1
Mexico's Average Tariff Barriers Against ll,S, Exports
are 2, -) Times Higher than Equivalent V,S, Tariff
Barriers Against Imports from Mexico
r1ntn mil' equipment
.\ Icdicd dl'\il'L's
•
\\'ithin the fir"t !'il'l' \ear.s after ,\AFTA is implcl1lentnJ. t\\l)-thirds
of ( S
indu,strial l'XP()]1s \\ill
L'nter .\Ic:-;iu) dut\'-frL'e,
•
I' miLT the "AI'TA, .\ Ic:\ico \\'i11 I)Ix:,n its markl't "ignitkanth tl) (,:." manufacturl'd l':\P(Jrts, For L':\ampic, fl)r autl )111oti\e rnrts, .\Icxicl) \\ill eliminate
-:;"" Ilf its dutil',s mer fill' Yl'ar" and phasl' (Jut the
U.S. 4%
rl'''t (l\er ten \'l'ars,
•
'\.\FL\ al"o \\ill require '\iL':-;ic( 1 tl) ()jx'n its market
tl) I~, "l'nile l'Xpl )Ib (I ',", "en ice L':\ports t()
N () R T
•
II
A
~\I I, I{ 1 (. ,\
\j
F I,
T
1 I
I, ,\ II 1
:\ ( , 1\ 1 1 \1 1 '\ I
l'viexico \\'LTC SNl) hillion in ll)l)~), Thi ..., \\ illlx'ndit
:-.uch industric:-. ;IS enhanced lL'kl'()l11l11unil'ati()n ...,
CHART 2
''''l'nin's, insUr;IIKL', h;lnking, ;Il'C(lllnting, :lI1d
ad\'LTtising,
U,S, Employment Supported
by Merchandise Exports to Mexico
IOO()
l)O()
l'ndl'r NAbVli\, our :ICCl'SS to Cln:ld;l'.'" Sl'lyil'l' l1urkct also will he more open tlun it is under till'
existing II,S,-Cln;lcb Free Track Agrl'l'l1ll'nt.
rs::
800
7()()
,/,
..0
2,600
Removing Mexican restrictions against u.s.
exports means that u.s. companies no longer will
have to invest in Mexico or nlanufacture in
Mexico to supply the Mexican market.
"t:l
~
?
Without
~O()
MFTA
'JO
.,g'" '100
f-;
WO
200
\;\F'IA will eliminate l\kxiclI1 rl'ljuirl'llll'nh that force
our companies in i\kxic() to
•
Purciusl' fl.kxici n goods in..,tl,;!d ()f (IS,-Iludl'
equipment and l'( )mp( 111l'nts:
•
Export thl'ir production, uSlull\· t() the llnitl'll
Stall's, inslL'ad of sdling dirl'l,tly into the j\iexiclI1
nnrh,t: and
•
100
o
'--r
Il)H(, Il)H7 191;1; Il)H9 1990 1991* 19<)2* 1<)<),1 199'1 19l)S
·'i..E.\'/ima/ed
CHART 3
U,S. Jobs Supported by Exports to Mexico
Pay More Than Other U.S, Jobs
Produce in Mexic<) t() sell in I\kxic() F<)r l'x;lmpll',
the current Auto Decree has the dfl'ct ()I h:IITing
autol11()ti\'L' imp()rt." fml11 thl' llnitl'd SUtes thmugh
a complex SL'J'il'S ()f im'l'stn1l'nt requirements tlut
will he phased out unck'r NAFIA,
J 1.32
III. Creating Higher-Wage U.S. Jobs
A strong consensus of the economic s(udil's (iI;lt h;l\l'
l()okl'd ;It the lahor effects of NAFTA kl\'l' found it will
rl'."ult in incrl'ased job." ()r inLTe;lsed I'l';i\ \\agl's-or
hoth,
()ur experience confirms the findings ()f these studil'.".
SilKl' l'vkxico hl'gan to open lip its economy ;lI1d pre]Xlrl' I'm \JAF1J\, the nUl11hl'r ()f Aml'ric;lI1 \\'( )rkl'r" producing merchandise ex pC 11is t() ,\kxil'() h;ls risen fre)111
T' I,()()O in I t)N6 to ;tn l'"timJtl'l1 7()(),()()() List ye:IL (Sl'l'
All Industries
~()(),()()()
\\ith l\iAFTA \\l' ;lI1ticipall'
rela(l'd johs hy I l)l)S
•
\V;lgl':-' or liS \\()rkl'r" in j()hs rL'bll'd (0 l'X]101b (0
I\kxico are uo,,, III(~f1ER than the nation;t\ ;1\L'J'-
Defeating NAFTA could cause a sharp drop in
exports to Mexico and thus the loss of hundreds
of thousando.; of u.s. jobs:
•
\:AFTA \\ill fUltlll'r open the fl.lcxic;\I1 l'con()I11Y "0 th;lt
we can push employment rl'Litl'd to l'x]1( lib () l'vkxilo
t()\\ard the ] million mark.
With()ut \lAFTA, \\l' ;ltlticip;ltl'
;1
rl'lllllti( 111 in
ll,~.
l'Xpt )r(..., ;lI1d rl'\;t(l'll I( )1\". !\kxic<) l< )lIkl"utkr capi
ul !light, cii."it1H'."ll1h'l1l, ;llld .1 10..., ..., or l()llii<iL,t1l'l'
in its l'C< )noll1\'. A k'.":-' 11l';!lth\' !\k,il'() \\ ()uld he
Ie...,s ahk to ;dTord imports prOlllll'ed in the I 'nited
Sutes,
I\]OI{E l'XP()ri-
age, (Sl'l' Chait :1,)
S~rvice,
• All U,S, private sector, nOll,agricultural t'mploymcllt
II1II Employment supported hy merchandise export, to M~xico
Chait 2.)
•
ManufactUring
•
Thl' precise il11P;ICt is difficult «) I1lCISllrl'.
I 1()\\'l'\'LT, in the fir..,t (\\() \'L';lr:-. ()f the I'.k"il() dl'ht
cri,..,i,.., ( I l)S 1-ll)S5 ), IS l'X pt lib t () !\ k" il() d r()ppl'd
hy .lim( d il;df.
,
•
II
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III -'1111111111 1II,c;II 1I,I,c;" 1"1 1 ,, 1,IIlli ,I ,,11.11')) ,()IlILI,,1
II1I11 III,'
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II I
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nJe Wage Issue
nle idea that l.l.S. workers can't compete with lowwage Mexican workers is a Iuyth. II l( )I11P;lllil'"
Ik'lilk'd \\ hl'll' 1" II )(,111' h,I"I'd ..,1 )k'" I)n \\;lgL'S, iJllI'''II11l'lll \\ Illiid III 11k III 1'lllII1111l'," I11Ul,h P()( )11'1' Ilun
\k"ll) Il.lili ,Illd 1),lllgl.llk'"h \\ I lllki 1)(' j()h :Ind l1un-
Protecting, and Assisting U.S. Workers
u!,llluring pi 1\\ nill lU"l'" TIUI lu"n'l h;lpPL'Ill'l1.
'\ \II \ Il()1 ()11" 1\ ill 111',111' ,I 1.II,c;l' 111l1111)lT I l! Ill'\\ jllh"
III 1'\p'ln illdll"llil''', hlll ,Ihll \\ ill l'Il,"UIl' 111.11 11UI
Illll)llrl-"l'll"ili\l' illdll"lrtl'" IU\l' "uh"unli;rI n)(ll11 !Ill
,lll lll"lllll'lll
'\ \ 1"1',\ 1'111\ idl'" I"l ILl n"il i( In PlTilld.., I)! up I() I::;
•
I I;
\l';II" ill l'iil11in;lling urill" ,llld I )lhlT h:lllilT"
()Jl
till'
1111 )"t "I'Il"iti\ l' I ,,,, pn )dull ,"l'ltl )1"", ,,,ulh ;1" hi lU,"I'III )Id gLI..,,"\\ ,Ill', Ii l( )t\\I';IL :lIld,,( )1l11' !ruih ;Ind Il'gVLlhk,,,,
I S \II )rkl'i'." 1';lrll high \\ ,Igl'" hl'I';IU,"l' \II' ;111' thl' il1(),"1
pn )dUl'lill' \\1 )rkl'r,,, in thl' \\1 )r1d, :\1l1L'riClllS c;ln il1l'l'I
thl' lh;rlk'ngl' ()! illlL'rn;lti(ln;l1 c()l11pl'titi()n, :\:\IT\ II ill
l'nluncl' I S pn )ductilitl' ;llld innL';lsL' t·.S. \\:Igl''',
\iL'\ic() lunl'llll\ iIllP()"l'''' n() harril'r,,, ()n f()rl'ign
iml'"I()I" \\h() \\i"h t()"l't up pruducti()n in ,\iL'\ic() for
l'\p()rl. \k\ic() g()l'," L'll'll !urthn in l'nCl)uclging forl'ign inll'..,IIllL'nl t()"lT\icl' tl1L' d()IllL'"tic m:lrkL,t hI'
rl'''lril'ting :Illl',"," tim )llgh illlp( )Ib. :\:\FTA \\ill I'lil11i-
•
h)1 I)tlll'r pnldllll", I,S, Llli!b \\ill h l ' plu"l'd ()ut
()\IT 1(1 IV;II"" 1)1 k',,,,,,, ()n" Ulil!." Ilut ,Irl' ;rlrl';llh
I lTI I( )11 II ill hI' I'limin;lll'd il11llll'di;ltl'h ;t!tn I IlL,
,lgIl'l'lllvnl l'ntl'r" inl() !( l1\'l',
•
Tlli,,, gudu;t\ Il'llll )1:rI I)! h;lllin" \\ill pn )Iidl' l'( )IllP;lllil',,, ;Ind \\1)lkn,,, lil1K' I() Il'''P(lIlel I() ch;lIlging
I )c"pill' Ihl' (llx'nlll'"'' ()! thl' I S llurkl'l ;lnd ahility of
IS, ;l1ld l)tl1l'1 f()rl'ign inll'"t()rs t() '''l'l up sh()p 111
\k\iu) n( 1\\. Ihl' Initl'd SUlL'," is n()t hl'ing swampl'd
\lith imp(lrt," 1ll:llk, Iw I()\\-p:lid ;\kxiCll1 \\'()rkns:
•
1'( )IllIX'lili'l' ullldili( )n",
•
n:ltl' ,,,ulll inCl'ntill'" 1<) !( )rl'ign im'l'st( )I'S.
If tIll' I nitI'd SLltl'," \lne g()ing t() hI' tl()mlcd \\ith
,,,ulh iJllpl lib. it :t1rl':llh \\( lull! h:111' happl'nl'd,
'\,\1"'1'.\ 1'( )nLlin" "IX'li:t\ ruk',,, ;III( )\\ing ;1 Il'lllpl )un'
Il'in"UlL'l11l'nl ()! I ',S, Llli!b ()r I )tlllT Illl';I"url'" I()
•
III Lilt thl' rl'l n"l' i,,, true: I'S l'XP<llb t() i\k\ic()
kill' incrl':I"ed fir Jll( )re than I IS, import,,, from
\k\iC(1
•
Thl' lnitnl Sutl'< Ltrgl'st hiLttnal surplus in manuLlcturl'd pmduch i,,, \\ith \il'xic(),
pn )Il'll I',S, 11()lklT" ,1Ilel 1.11111l'L" in 111l' l:I"l' (I!
injun !n)1ll ,1"uddL'n"UI}~l' in il11p( lib !n )111 \iL'\il'l)
III Cln;ld;1. PIl'..,iell'nl C1inl()n h;I" dirl'C1l'l1 I,",
IUlk' 11l'gl 11 i;ll( )1" I( ) "l'l,k ,I "uppkllll'nLiI ;Igrl'l'I11l'Il1 II) hl'''url' Illi," pn)1 i"il)n i,,, u"l'd dfl'llill'h,
•
Till' Inill'll SUIl'" II ill Iluinuin ell )1111'''lil'
1.1\\," pn)-
Immigration
I idin,~ 1111 Iwn,titil'," I)n dUIllIWd ()I"uh"idizl'd
illlplllh IILII illjurl' IS indu"lrI,
To the extent that our workers compete with lowpaid Mexicans, it is as much through undocumented imntigration as trade. Thi,,, pattl'rn threatl'n,,,
Iin,II", '\,\1"1',\ inlludl',,, ,,,Irill luk" I)! I )Iigin IIl;11
\\ ill pll'l l'nl pn )dUlb I)! n( In- ,\, \I·T \ II )Untril'," In lill
111\1 -paid, 11)\\ -,,,kill I ',S, \\llrkI'L",
Il"l'il "l.~ PldlTl'nli;t\ Irl\III111'1l1 undlT '\,-\IT-\,
•
•
\11111 1l1,c;ll ,\\1"1'\" Ill'I 1'11('11 I)n I "
II II' 111,1"1' \\ I IlklT" 1\ hi 1 111.11 LIll' jl)h II I"", 111l' C1illllln
strong, fully
funded worker adjustment progranl II I ;I""i"t till'
\lllllini"lr.lli'1I1 i" I' 11 11 III il1l'd III lUI Illg ,I
1r.Ill"illlln 1'1 Ill'\\ IlUrkl'1 rl"rlitil'"
III ,Ilk!tlll In, Ihl' I nill'd "!.Ill''', (,Ill,ld,1. ,md \il'\ill) \\ ill
1'''!.Ihll"h ,I
("1'1'
"I"
:\'orth American COmnllssion on Labor.
III 'n \ I
1
l<
Imhin:ltil 1T1
()f
d< )llll',-,tic rd< lrln:-. and ,\AFIA-
rl'Litl'd gn mtll in \il'\ic() \\ill kl'l'p mllrl' \k\ican-,
;It hi )ml',
II )h" II ill hl' pi hi-
IiI l', il i" likl,h ,t\"1 I II I k';ld II I "111111' jl)h di"pLIll'llll'nl.
Thl'
•
[t i,,, likl'h th:lt a rl'ducti()n in immigration \\ill
innl'a"l' thL' rL'al \\agl''' of !<l\\-,,,killl'd urhan and
rur;rI \\( )rkn,,, in thl' InitL'd SLltl',",
N ( ) 1\ I
II
A \ I F I{
I ( .\ '\
F
IV. Increasing Opportunities to Export to
Mexico
T
1\ I I
•
)111\
in Il)S():
•
I(K'~lti( lll, this prl'krl'I1l'l' i.., like\\' t() ('( mtinuc'.
•
l'.S. l'\:pon.s to :\k\:ico haH' e"jxtndl'd l'nonl1ous-
•
~tnd
produd ...,. Ih C()ntLl."'r, the :1\'c'Llgl' .Iap~lnl'."c' 'i\x'nt
S:'lS~ on [IS products, c1e"pite the Lll'l tlut :1\L'I-
The l'.S. trade halance \\'ith :\k"in) lu.s shifted
fnll11 ~l S~- hilli(lI1 dl+icit in Il)S- t(l ~l ~~() hilli(lI1
SlRPU '-'; in ll)l)2, (-';l'e Ch~111t.)
U.S. Merchandise Trade with Mexico:
From Deficit to Surplus
agl' JqXIIW.Sl' il1L'( lI111'S ~lrl' fi\l' til1ll'''' a.., high ~l'"
~l\ l'r~lgl' :\k.\.iclI1 illl< lml''''
Key sectors benefitting from NAFfA include automotive, agriculture, Cmancial services, textiles, and
comnlunications:
•
- - L.S. Exports
[I.S. teinomI1lUnicltion'i e"purr.'> jumped =;()"" in
]l)l)!. i\Jc\.ic() is tlte industry"'" sec'( lIllI brgl'."t l'''P()I1
- - - l'.S. Imports
m~lrkd :lticr C:lI1ada.
LX Deficit
I~
~k\:iCl) pUrdl~I."l'" Ill< )rC' imp( lIb per PCTS( 111 fn JIll
till' lnitl'd SUtl'''' tlUll d(ll'" till' I11(Jrl' ;tfllul'nt
FUr(lpGln C(lIllI11Unit\· ('(llintric'." and Jqxln. F(lr
l'\:;llllpil', b"t H';IL l'alh \ k'\:iC;lI1 , ()Jl till' J\('J":lgc,
pUrdLI.Snl l1l<lrl' th:ln S j=;() \\( lrtll ()f [''s'-1l1:1dl'
cl \\'hopping S I().() hill ion in Il)l)2.
CHART 4
-I) n'J1h (If l'\C'IY d(llbr tlLlt \k\:IClJ ...,pel1Ll" (lIl j(lrpnJcillct'> i"'''pcJ1t (JJ1 [. S g(Hllk (;iH'1l it'>
c'i:~n
h, rising (rul11 S12, I hilli()n in Il)S() to S2S hill ion in
1l)l)()
; \ ( ; I{ I I \ I I '\ I
Mexican consumers prefer lI.S. good,,:
NAFTA will "lock in" and expand trade gains
achieved to date. Sinn: \k'\:ic'() hq~~ln () ()pl'n up its
c'\.'()J1(
I{ \ I) I
/./
----\---
/'
/'
./
•
./
I ktrnit's Big 5 prl'did that their c()mhinl'd l'XP()I1S
luld ri."'l' from l,()()()-plu ..., t() ()\l'r ()(),()()() \ chicle'>
Cl
in :'-lAFIXs fir ...,t \l'~lr ~tl()nl'.
:'>Je~()tjatj()ns
Be),\an
•
i\k"IC() \\~IS prinurih' ~l hulk c()I11I1l(Klit\ market f()r
l'.S. ~lgricultuul l'\:p()rt ..., prim t() 11):-;-. N()\\ it is
(me ()f till' llnitl'cl SLltl''''- brgl''it amI h"tc..,t gn )\\ing
high-\alul' market.s lligh-\,alul' products n()\\
~llCllunt tllr ,tlmnst :()"II ()f ~tli I '.S. ;lgricultur~d 'i~tlC'i
\·lTSU..,-I()"" in 19.')-.
Mexico is important to the U.S. economy heLlu.sl' it
is (lUI':
•
Third brgl's( l'''pon m~lrkl'( ~lnd thl' fastest gro\\,ing major l'''pOI1 markl'l:
Since Il)Sh, l '.-';. mlTcllandisl' exports t( 1
\k\:ico h~l\l' inlTl'~l.sed h\' 22So" ([cl S lil.(l
hillion )-2 .."1 tin1l'.s Ll.stl'r th~ln llS l'\:pmts
t( 1 the \\()rld.
•
Sl'cond Ltrgl'st IILlrkl'l ~lftl'r CIIl~llLI for l11anubcturl'd l'XPOI1s (amounting t() S5 I. ~ hill ion in ll)l)2)
•
n l'st m:lrkl'l for :luricultur~tI 1)f()duCh utier
Third Iar('"\
"
Jlp~ln ~lIld Clll:ld~l), rl'acIling S:\.- hilli()n in I l)l)2
(:1 2f2" I inlTe:l."'l' .since I l)S()).
Small and Medium-Size Businesses
The significant expansion of the Mexican market
will benefit small and medium-size businesses in
particular. These c()mpanil's 1l.Sll~tlly bck till.' re.S()lIIH'.'>
t() penetr~ltc thl' thicket (Jt :\k\:iClI1 track, harril'rs and
rl'gllbt( lIY rl' ...,triL'ti( 1I1.".
B\ I( l\\ning c< lSts ;lnd di...,...,( lh-
ing harril'r", :'-l:\FTA \\'ill 1ll'lp'imallcr husinesses t()
pl'ndLlte till' :\k"ican market \\ith(lllt ha\'ing t() inn'..,t
in l\Ie\:ico.
v. Enhancing Environmental Protection
'.;AJ-TA ~lnd it.-, .sllpplcml'nLt! ~lgreements \\ill help
l'n"llrl' tlut l'CC In( )Illie dl'\elopllll'llt Likes pbce in cl
\\~l\' th~lt pn lll'ct.S and impn In'''' the elwin lllllwnt.
III, '\ \1 1\ 1,'\1 11",11 1,11-,"
,I 111,1 ,1"1) 111 1"\1 1,~llI/I11,~
III,' 1,111Illll,llll) 1),'1\\,"1111,1,1,' ,llhllll" ,'11\ lilllllll,'lll
•
II" 1111.1111, "\1)11, II ,'Ihl, 11,,'111,'111 1)\ Ill" 1111',',' ,( 1lll1III,', ,,j Ill" 1)lllhlj)il- (,j '11,Lllll,ll)k' d"\\'I(IPIll,'111
,llhl "III, I"l III,'
d,II,I,
•
Iljl\\ ,lid ILirIll( 1I1i/,lli( )11'
()I
,LiI1-
11",lltll ,111,1 ',Ikt\ \\ ill Ill' jL'( )p;lrdi/nl h\ '\,\FT.\, In
1,Ill, '\,\1'1,\ rllk'" ,tll( )\\ till' IXlrticip;lting L( )UntriL':-'
•
C'(
North Anlerican Commission on the
Environment t():
l'"uhli'>h ;1
•
1I1,,>idning tilL' di,,>pute,
n:rLlin inlL'rn;lti( )n;t1 L'n\ir()n1l1L'nLtI ;lgree1l1ent,,>
n lI11l1l'nLti I;l\\s:
•
•
Pn lI11()tl' :111 intL'gr:llL'd [\(}rth AI1lL'riclI1 approacil
()r
CFC:-,) in till' e\ent thn c()nflict \\ith
'\:\FLY,'> rllk,'>,
J>r()\ide:1 l()c:t1 p()int t() l':\p:lI1d :lI1d ,'>trengtllL'11
L':\i,,,ting L'mimn1l1enLti initi:ltill's: and
(including til< )SL' ()n L'mbl1.~l'rnl ,'>lx'ciL':-' ;lIld till'
•
Strl'ngtllL'n d( )1l1l,,'>tic enl( )rn'lllL'nt ()I n;lti( lI1:ti l'mi-
t() tl1L' l'mimn1l1ent:
'\,\/-"1':\ gill':-' prL'L'l'dL'nCL' t() tilL' tr;ldL' pr()\i:-,i()n,,> ()f
U'>l'
F(),'>tl'r puhlic discu,,>si()n ()I l'min )nlllL'nt;ti C()I1ClTns:
•
",I di,pUlL' .Iri,'l" til;lt lu'> L'mirun1l1enLti i1l1plic;ltil )Il.', '\,\IT\ pn)\ idL','> t<)r ,'>ciL'ntitic h( urds t() guidL'
IXlnvii'>h
,Ind ()tIlLT illlpn )\l'llll'nh,
;lIld pn)\ in,L',) t() L'n;lct t( )ugill'r
L'm in )nIllL'nLtI "unLLirLb,
•
enforceluent. public access t()
jlldili.ll I, )ntllh ll) l'l1tt lI'll' l'm in )11111l'nLt! LI\\" transparency il1 till' dl'\ \'I ( )pllll'nt ()I L'm in )11111l'nLt! 1.1\\"
pn)\ idl' It)r l'llnti\ l'
\1()rl'()\lT, thl' lnitl'd Sute,,,. CIIUlLI, ;ll1d \k:\il<) \\ill
'\(1 "\I,IIIl,~ I ,',il-I,tI ()r ,LIll' r,'glll,lti()11 t() pn)tl'ct
(,ll1d tilL'ir'l.ItL"
TIl",lIppk'llll'I1LtI ,lgrn'llll'nt ()n till' l'l1\ in )1111lL'nt \\ ill
•
Fm1l1:tih gill' emimn1l1enul aciYice t() trade repre,,>enuti\e,,> fro1l1 the three NAFIA c(}untries,
:\,\1'"1'.\ ;III()\\,'> c()Untril',,> t() i1l1P()'>l' strict emin)n-
In addition, the llnitnl SUtL'S, Canad:l and Me:\ic() will
1l1l'nUI sLlmbrel.'> (1I1 iml','>t1l1l'nt ;lI1d :\AFIA c< )untrie,,> ;Igrl'l' n()t t() \\l';lken l'min lI11l1enLti pn )lL'cti()n
L',>uhli:-,il :1
t() ;lttLiCt in\e,'>t1l1l'nt.
North American Conunission on labor
th:lt \\ill:
•
F()'>ter discussion ami hetter appreciati()n of \\:orker
righh :lIld I:thm ,'>LlI1dards in each NAI~TA c()untry,
VI. Beyond NAFfA: Supplemental
Agreements on the Environment, Labor and
Import Surges
•
•
PrL''>iLknt C1int()n,lIpp()rh '\,\IT\ .Is IXlrt
()f ;1 gn l\\tll
'>tr;ltL'g\ I()r tilL' lnitnl SUtl',,> hut Ix'lil'\l':-' tlut '\AFL\
un hl' l'nlLlnLl'LI. TILlt i:-, \\ III till' .\d1l1ini'>tr;lti()n i:-,
,'l'd~ing Suppk1l1l'nLti ;lgrl'l'1l1l'nh ()n i1l1p()rt'>urge'>,
till' l'min )nl11l'nl. ,lIld Llh( )r, Thl"l"l'p;ILlte ;lgrl'e1l1L'nh
\\ill pn )\idl' ,Idditi( )n;t! ,1.','ULlnll' tlLlt '\AIT\-L'nluncl'd
gn l\\ til \\ ill hL"l'n,itiIL' t() l'min "l1l1L'nLtI ;lIld Llh()r
l( )nClTn"
Till' ,lgrl'l'l11l'nt ()n
inlport surges \\( )uld l',uhli:-,h ;1
tri-n,lti( "ul \( )llll11ittl'l' t() hl'ip l'lburl' thl' dkcti\L' u'>e
()I '\\1'1\, pn)\ i,i( )Ib ,tll()\\ ing lL'1l1P( )1";11\ rl'lid in tlK'
L'\ l'nt ()I injuri( )lh i1l1p( )rt,urgL'"
Thl' Prl',idl'nt l'mi:-';Igl',' .I,~rl'l'1l1l'nh tlLlt \\ill nl';ltl'
l'( lI11l11i""i( )n, ()n thl' environment ,lI1d labor, The
P( 1\\ IT, ,Ind Illndi( )n,
()I
tlll"l' l" "l11l1i"i( lib \\ill hL'lp
II11l'n 1\ l' l( )nditi( 1I1, It II' \\, "llT, ,lI1d thl' l'min )n1l1ent
,lIld \\ III Illlpn 1\ l' l'nl( lrll'l11l'nt ,)1 n;lti, )n;ti
LI\\",
Enl< )ur:lge d()mestic enf()rcement ()f nati()nal
Iahor
I:t \\s: :lI1d
J>ro1l1()lL' the raising and strengthening of Iahor
sund:mls in \:()l1h A1l1L'rica,
The supplemental agreements cannot resolve
overnight all environmental and labor problems.
But defeating NAFfA and the supplemental agreements would only aggravate these problems.
Never has the United States had a comparable
opportunity to promote improved environmental
and labor conditions. If NAFfA and the supplemental agreemenL'i are successfully concluded and
enacted, we will have an unparalleled opportunity
with our neighbors to advance a broad agenda for
economic growth and environmental improvement for our countries and all our people.
VD. NAFfA and American Leadership
•
AI1K'ril:l\ ahility III C<)(lIX'LIlL' (JI1 ,I dinT"\.' r:lI1gl'
(lji,","ll\.'." \\ith [\Ic"inl .11lt! (ltlwr d\.'IllII\.T:ltic n:ltilln"
tim lllgl1< lut Lltin An1l'ric:I,
In the post-C()ld W:lr \\'()rlLl, AI1K'riclJ1 Il';ld\,.'r."hip \\ill
..
he measured in I)arr h". the LTc;tri\it\. :l11el :1 ""rc"si\l'ness of our trade policy, Bold, original, :l11d for\\ardI()oking, i\AFTA is \\()Ith)' ()f :1 \\'()J'lLl iL-:ll kT.
,..,~
•
•
In North Americ:I, di\'isi()n hL't\\cTn foreign <Ind
domestic matters n:lrrI1\\'.S e\'er\' d:I\', AmeriC:lI1
cOl11munitic's arc inc'\itahly affected hy \\'h;lt h:lp-
•
'JAFrX." dl'k:lt \\1 luld :dsl I till'< )\\ ."aml in the C'\\.'"
I If I 11II :dlil'.,> tim Hlghl Hit C\.'ntr:d <Iml ~outh Alllnicl.
\\111 1 :Irc' .'>tri\ing tl) 11IX'I1 thc'ir nurk\.'1'> :ll1d delll( lCr;lTizl" tl1l'ir ,,>( )cietic'.,>, Anti-AIll\.'ricani'>I11, pI'< )lL'ctil JI1i~m, ~Illd :lut!JIlrit:lri:lni'>m IlUY \\ell incrl':I,"\.',
pens in Canalb :111<.1 i\ic'xic< 1, Their pn 1hkm" spill
()\'er the h()rder t() l1:1rm lb-jU,"t .IS thl'ir suce-e."s
adds to ()lIr \\'l'lfare,
The NAFfA's approval will demonstrate America's
strong commitment to global leadership.
By inLTe:lsing the tl( l\\S (If C< 11l11l1lTll' :l11d cult un.'
and hy forging nC'\\' lJ'(),"s-h()rdl'r friendships
among Lth()r ,mel l'l1\'ironnk'ntal organizations, the
Conclusion
NAF1A \\ill promote pro"lx'rity and dC1l1()cracy in
neighh( )ring \kxin 1, Americll1.s ",h( 1 LtV( lr frecd()111
and good gO\C'rllllll'llt ill I\kxico should Lt\()r
NAFIA
NAFfA has been negotiated by two Administrations.
It stands as a testament to the ability of the United
States to design a bipartisan foreign policy crafted to the requirements of the post-Cold War
world.
•
The f\AI'''IA'" dck:11 \\()lIld "l'ri(lll."I\ lbllLlgl'
'JAFIA's defeat would shock the i\kxiCl11 nOll\)my, depn.:'ss \\'ages and living standard.", reduce the
:Vkxican capacity t() purch:lsl' 11S pmducts, and
stimuLIte immigration, It could also cre:lte tension"
on a h()st of critical issue,s from illegal drugs t() oil.
I\AFTA will cre:ltL' johs
Iless, It \\ill lTC:ltC thl'
world, J\k'\il'O\ stmng
pn )ducts Ius lTl'~ltl'd a
:Iml impr()\c ()ur cOl1lpL'liti\c'
brg\.'''r, richl'st m:lrkl'l in the
:ll1d growing dCI1l:lnd f()r l'S
$=i,h hilli()n liS tr;lde ,'>urplu'>,
\Vith a ."tmngcr l\iJL'xicln en Jl1( 1m) :ll1d higher ,vkxiclll
\\agcs, tkmand t( lr l i ,S, go()ds \\ill continuc t() expand,
In\.Tl':lscd :Icce"s t() thc r:lpidly gJ'()\\'ing i\iJL'"icln markL'l \\ill creatc \,'xtuordin;IlY ncw ()ppOl1unitics fm l',~,
ccllllp:lnie.'i ;lJld workl'l'.'>. T:lking alhant:lgc' of thc."c
oppol1unitics will k:ld to iIllTc:l"cd pn hpcrit\ in till'
llnited SLltCS, It will dcmonstratl' Al11crican kadL'rship
in :lll\:ll1cing (lpl'n 111;lrkds :111l1 promllting democracy
hL'rc in our hemispherc,
NAFfA Is Good For America
Questions and Answers about NAFTA
Q. H()ll' e({ll
I(/J;f!,c
:lh~yieu, {/ luW-iI/C()J/lC COlllltry, /)C slic/l ({
1Il({ rkctji)/' fi.,\'
e.\1)( )11s?
A. l\kxico now is our third-brgcst tuding p:lrtncl.
Q. H'ill
,\~lF'};1 resliit ill IIlClss/I'e {' S )f!iJ
lI'{//J,e
lusses II! !()11'-
,Hcxiulil lI'urkc/:\?
A. Nil '\JAFTA will incrl':ls\.' johs. pn lducri\it\' and
Although Mcxican pCI' capita inconw,S :Irc I()w r\.'l:Itivc to incomes in thc Unitcd'll:ltl's, i\kxic() is ;1
;111(\
country of 9() million Jx'opie (who prefcr llS to
other f( )reign products) :Ind a de\'L'!oping country
with an impnl\'ing economic ()utl()ok, On ;t pl'r
IbngLtdc.'>h \\'( lulLl hc cn Jl11 1111 ic P( l\\L'rhl lll.se's h"
n( l\\. ()tlll'l' flll( lrs .sllch .I.'i high \\( lrkL'r pI'< lc!lIcti\-
clpiu hasis, Ml''\ic() purch:lscs morl' liS products
than ()ur tradc p:lrtners in thc EIlI'OPCIl1
Community and .Japan, NAfTA will help the l :nited
SUtl''' takl' furthl'r ,1(h:IJ1L1gl' Ilf the gr()\\ing
Mexican 111;lrkd for llS expolb,
\\;Iges in thc lnitnl SUte.s as
\\\.,11
.IS in l\kxiL'< 1
C:an:I(\:1. If 1()\\L'r wagcs \\L'rl' thc onl\, rea."I)n
t!Jat COII1P~ll1il's Ill( )\'L'd t() ()ther countries, I Liiti ami
it\' in thc I 'nited ~L1te.s :111L1 high n( l11-\\:lge co."ts
in i\kxic() (including tr:lnspl )rLlti( ll1, Illtr~l."tructurl',
:l11d SUPP( 111 ."c'lyicc' CI l.'>I'» 111~lkc' ll,~, \\1 Irk\.'r"
C<ll11pL'titi\\.' tl1;111 their i\kxic:lll u )Untcrp:lrts,
111(
lr\.'
'\ 1 I I; 1 11
\ \ I 1 I; 1( \ '\
I' I, I I
,\ , , I, I I \ I I '\ 1
\11>11'11\1'1. lllllkr '\,\1'1.\" 1'111<-" (>I (lrl,C:II1, (1111\
Q. ,Ire Ihe /I('II(.'/il.,' u/I'('(('III {S ("\IIUI'/ ("\INIIISi()1I (!/'cr-
I 111ldill I" IluI ILI\,' "llh"1.I111 i,II \( 1rt 11\1l1l'ri,,111
111.111'11,11" \\ 111 1',',,'1\,' l)rd,T,'l1li,1I tr,'.ltllll'l11. \\ itll
st{/ted~ Is liIust ({ this ,!!,WII't/l dill' t() (',\fl()rts (i//Nlrt.\'
1111' Ill',' ,111,1 I.m ILl,'" ,ll1d im ,'-.llllL'111 L'm in )111l1L'nt
(r,',II,'d 1)\ \ \11'\, \\ (lr\.;l'r" in ,ill tIHL'L' \ortll
t() Ihc {lIit('d Stelt('S~
\111,'11,,111 ,( 11111IriL'-' \\ ill Ill' 11L'ttLT ,Ihk t( 1 .-'lIL'L'L'L'l1
I( 1,C:(.'lil,'1 \\ 1111 11( 111- \( lrtll\nllTil';lJ1 pI'< ld1I1'LT-',
Q. ! 111/1'
Iili II 11' /I '(Jil', 'IS In iliid
IIccd {lssistell ICC' /)CUIlISC
I { \ I/Tl~
A. \,\1"1,\ \\ ill lTl';ltL'
I1UI1\
1l1( lrL' j( lh-; in till' I ',S, thJn
,II',' I( l"t, Till' Ill1111hLT (l! p( l-.iti( In.-' tlLlt \\ill hL' I( 1St
dill' I( 1 \,\IT,\ i.-. likL'h' t() lx' \L'ly"m;1I1
.\mLTiclJ1
,
\\ (lrkl'r-. ,Irl'-.tl'< lI1gh c< lmpL'titiH' in \\( lrld m;lr\.;L'h:
,
I ,~, h;lrriLT" t( 1 imp( lrt-. 1'1'< 1111 \k"ic< 1 ;lrL' ;t1rL':ILh'
\LT\ I()\\: .lJ1d .\k"il< 1'-, pI'< lductiH' CJp;ILit\ i" \L'IY
.-.!lull rl'Llti\ L' t( 1 til;lt (11' thl' lnitL'd SUtl'.-. :lJ1d \\ill
~L'\L'n \\ilh hL';llth\' gr<)\\'tll~rL'IlLlin-.() f()r
dL'CldL'." t( 1 1'( lInl',
tho I ore ({,'S(,IIIN('d ill ,1 {(',\'ic'() ({lui t/JCII sbi/I/lcd /Jud'
A. Tht:' hulk of IS L'''pons to \k"ico is fur consulllption in tilL' .\kxic:lJ1 m:lrkL'l and not for rL'turn to
thL' l'.S, IndL'L'd, in 11)l)2, IS L'Xports of componL'nt input> for pmduL'lion shJring JrrangL'll1L'nt" in
\k"ic< 1 (i,L'" \laqllildorJs) c<)mpri,-;L'd In l'stimJ!L'd
22"" of ;t11 I'S L'''POtts to ;\k"ico, c()ll1pJrL'd \\illl
52"" in 10S-, WhilL' inc()rporatL'd into products
L'\L'ntu:t1ly L'''pottL'd hack to the I initl'd States, these
comp()nL'nts still-;uppot1 I'S johs rL'latL'd to tlwir
pn Klucti( 1l1, An L'stimatL'd S5() () ()f the gn )\\,th in I: S
L'''ports to '\k"ico in the List fi\'L' YL'ars was for
.\ k"iCll1 c()n,-;umption, not re-L'''pott,
Q. Is I/Jc (llilcd ,),(({I('s prillwril)' ('.\porlillg IIwchillcr),
({wi ('{flii/Jlllelll I/J({I .lleyico !l'ililise 10 creo/e illdlls-
SiI1CL' \,\I'T.\ \\ill hL' plu-'L'll in (l\L'I' .1 filtL'L'n \L':lr
Iwriod, ;1 .-.uh-.unti:1I P;lrt ()f tilL' po-.iti()n lo-;sL',-; is
likL'h t() lx' :1 h-;()rhL'l I h\ :lttriti()n througll \ ()IUnLllY
rL'lirL'mL'nt or rL',-.ignJti()n, CLTLlinl\ a 11\' j()h dispbCL'mL'nt (l! \\( 1rking ,\mLTic:lJ1,-. Iw \::\FI'..... \\ill lx'
h;lrL'h IX'rL'L'ptihk rL'LitiH' t() ()thL'l' changL',-. in thL'
I'S L'COnOm\' ,-;uch :1" ddL'nsL' c< )]1\LT,-.ion, tL'chn()I( 19ic:1I ;llh:lI1cL' and dungL',-; in c< )]1"umLT U"tL'",
\\hik tilL' IK't hL'nefih ;lrL' ck:lr, thL' AdministrJtion
rL'I'( 19nizL',-; that S( )1l1L' I' S \\'( )rh'rs ma\ ,-.uffLT di-.1()L':lti()n, For :111\' IS \\orh-r \\ho is in L1Ct dispLiCL'd Iw \::HT.... , thL' :\dministr:lti()n is com1l1ittL'd
t( 1 PI'<)\ idL' tlK' :lssist:lI1LL' nL'L'dL'l1 f()r him ()r hL'r t()
.ldju"t t() Lh:lnging nurkL't c< )]1diti( lib,
Q. \\ illlu(l!,cS ill I/Je {llilcd SI{flcs/oll ill ()rder I() C()I11/I('/e l/'ll/J I()/I'er-Iu(l!,e ,1 {C.\'iUIIi I(I/)()r~
tries t/J(/I cOlild l/JclI IC(ld
({II
c.\f)()}"1 (/ss{/lIlt
Oil 0111'
II /({ rkels.~
A. In percL'ntagL' tL'rms, capital goods haH:' hL'l'n the
sl()\\L,-;t gro\\'ing major expOt1 category to j\k"ico
in tlK' last fin' YL'ar,"" Although still the Iargl'st componL'nt ()f {'S e"pot1s to l'vll'xico, capital goods
h;l n' dL'crL'asL'd frol111()()~' of total liS L'XpOt1s to
.\kxico in 10S- to 55"" in 11)92. In contrast, capital
goods c()l11prisL'f()" I) of lIS expotts to all devl'loping countriL's and 50"" of { '.s. L'XpOtts to thl' \\'orIcL
Tht:' {'nitL'd StatL'S l:'njoys a significant compl:'titive
tradL' aLh'antagl' in many arl:'as of capital goods,
In any L'\'L'n!. l'.S, l:'xports of capital goods to
\k"ico should not hl' \'iewl:'d as a liahility for thl:'
l'.S, L'conom\', Such L'''POtts support production
and high-paying johs in thL' l :nitl:'d States and will
do so for many yelrs to coml', Mexico's neL'd for
A. Iligh \\;lgL'" in tilL' I S rdkct tlK' pr<lllucti\it\' of
il11pot1l'd capital g()ods is likl'ly to continul' as long
\ml'ric:ln \\ or""'r", \\hidl i,-. tl1L' higl1L'"t in thL'
\\ orld, ~il1l'L' l'.S, joh-. "upportL'd h\' L'''P()lb :lrL', on
J \l'UgL', higllL'r-p:l \ing, rL'q u irL' higl1L'r >kilb than
,1tllL'r I( )Ib, .lJ1d \::\FT\" pI'< 1m( )ti()n ()f l'XP( lib \\'ill
as the \ll'xico maintains a healthy, l'xpanding l:'conOI11Y, b'en tl1(' C'nitL'd Statt:'S, thL' world's most prodllcti\L' t:'conOI11Y, must expand and replace a part
of its capital l'CjuipmL'nt each Yl'ar,
kJd to l1\'t joh LTL':ltion, \,.... ,"1':\ \\ill -.trt:'ngtl1L'n
finally, IS capital goods an.:' on the cutting edge
LltlllT tlul1 dq1J'L'-''' I S
of tL'chnology, Exports of capital goods support
.1\L'LlgL' rt:';t1 \\agt:'-.,
\\ ilh,lut \:\FT,\, hundr\.'d"
(If
tholl''':lnd-; ()f
,\m\.Ti"lJ1" \\ ill Ill,,\.' I 1PP( 1nunitiL'-' t( 1 find g()( 1d-PJ\ing 111h" pI'< 1,lulil1g \.'''P( 1rh II lr thL' \k"iL:lJ1 I11Jrkt:'t
10
T I, \ I) I
good, high-paying johs,
N ()
Q. \rh{[!
/l({S h('(,11
I{ T II
/he ('lieu rI/he
C(/Il{[(/{/ Free 'Jiw/c . I,t: J'('('II 1('11/
A
\1 I 1,1 ( .\ \.
F I,
I I
T
{'lIi/ed S/(//('\~
1()8()
1\ \ I) I
\ , , I{ I I \1 1 '\ I
I nitL'li :--'UlL'~. Tlll''-,l' ,Irl' Jl()t I( )1>"[1 '-.1"
()I/ {',\' (',\!)()/"!S.~
\\()r\'lT". hut Lllhl'l' ['S I(lil" II)rL'g(lIll' 11\ \k,\il,1fl
\\1
A. lkfore thL' :lgrcL'IIlL'nt, C:ln:1Li:l iLld urill" (ll1
)rklT-, I<)r \\h()111 :\:\IT:\ \\ill pI"<
,lhk'
impOI1.-; that WL'rC tW() ()r thrcc til1K'S highcr th:lI1
n'(
lI1( 11l1ic ,t1tlTI1:1Ii\L' :II hi
tho,'>l' of tlw 11nitL'd ~utes (simiLtr t(l l\le,,"iul «llLl\)
\\'illl( )ul \I;\I·T;\ :lIld
AttL'r the :lgrcel11Cnt t() eliminall' uril'!',> ami otlll'!"
prc.'>surL'."
IXl1Tiers on
all Iinitni
J>\ .\11K·ril,lll
Stall's~Canalb tude tl()\YS :lI1d
11)1'
,I
1\
ilk, ,Ill ,llL'l'pl~
)Illl.'
."In ll1.~l'r ,il.IL'\iC:1I1 L'C<Il1(
)111\',
ilkg:t1 r\k\iLll1 L'l11igr:lti(ll1 I() thl'
1111ilni SUll'S \\( llllLl (1111\' U )l1til1Ul' tl) il1nl':I~L'.
!11:1ny rL'strictions on im'cstment and selyiccs, 11,,'-,.
merchandisc e""l)( n1S grL'\\ .2;" () hL't\\eL'n Jl)N~ and
199.2 (from S:]() hilli()n to Sl)() hilli()n) liS scnicL'
cxport'> to Cl11alLt inne:lsed
hy
-,~()
II
t()
S J7 ..2
hil~
li()l1 during the S:IIllL' time perimj AIs(), since the
:lgreement, there h:1YL' hL'en nUl11erous calls from
h()th sides
of the horLier t() :lcccicute the
~chni~
uled phase ()ut of tariffs,
Q. \\''11(//
/()llp,-/('}'}/1 illl/J{fU
Ii'ill
,\AF1~1
/I(II'e
()I/ i/h~t:({1
i III /}/ (f.!, m (i()llli'( III / ,l/cxicr ).~
Q.
III tIl(' s/Ju/"t (C/'Ill. lI'oli/1l elilllll/{/till,f.!, ,l/exic() :,' /)({}'J'i-
('/\. /() {'S ('.t<ricil//lim/ illl/)(I/h Ic(/c/ /() II/()/"e /"II/'{//
,l/('.YiUIII IIIICIlI/J/III'IIICIi/ (/1Ie! illc/"('(/se /II'('."'II/"es
II 1I:r..; /'({ ((' /11 1he
/I!
{ III/cd :''llt i /('S~
A. Thc NAFIA :lgrcL'tl1L'nt contain'> the longL'st phasc~
in peri()d (LIp t() 1'1 \C:lrs) I'm l"l-k,,"iu) t() liher:t\i/l'
agricultural tr:ldL' P( )liciL's with thl' l'nitL'C.I St:lles :ll1d
ClI1:ld:1. Thi,,, gi\es iykxil';1l1 Ltrm bhorers time til
adju,'>t :lnd \\ill help minimi/L' ."h( )n-term immigLltioI1 dfech. \\'ith or \\ithoUI \I:\I',,],/\., :lgricultural
A. NA~~IA will promote L'cOI1Oll1iL' growth :lnd incrC:1Sl'
rd(
)1'111"
\\ill
U
11ltinLle I( 1 rcducl' l'\kxiClJl ,lgriCldtllr~
\yages in all threL' c()untric-;. This \yill crcall' morL'
al l'mpl()ymel1l. [\AFTA \\i11 enh:ll1ce thL' ()PpoI1U-
ec()nomic ()pp()I1unities f( lr \\OrkCL" in l\1L',,"iu l -
nitil'~ for di~pbced j'\k\ic:ll1 ;lgricliltural \\()rkers to
find ()IIll'r j( lhs in the .\k\ic:ln eCI)J)( H11\'.
the single l110st impoI1:111t, l()ng-terl11 rl'!11cd\' t() illc~
g:t1 l11igr:lli( m 1I11 tint Cl )untr). ACL"< )rding I() .-;( ll11L'
rn
scholars, signific:l11t real \\:lgc incre:lses l'oulLi :lls( 1
occur tor l'.S. rULtI :lI1d lowcr skilled urh:l11 workers :lS a result of reLiucl'd ellligr:ltion
fr()m ,il.IL',,"ic()
/mc/('j1ulI'sji'ulll ,\~lI-TI Il'()/\'CII I/Ie
.11011' ()/ilh;f.!,({/ c/m,f.!,s il//(J //11' ('IIi/cd S/(I/es;'-
Q. \rrl/l!i
iIlCl'C{[SC
A. Whill' NAFTA \\ill redllce tariffs. il \\ ill not rl'b\
to thl' lnited States,
cust( )l1b n Il1ln)1.o.;
Some economic studil's of NAF[A consiLil'ring thL'
the llnitnl SUle.'> :lnd l\1L',,"ic() 11:1.,> increased in
()J)
the h( )('(.Il'r. As tradc hl'l\\'cen
immigration is.'>ue h:l \l' hcvn misconstruL'd t() sug-
recent ye:lrs, c()operation in c()untl'rn:lrc()tics :lt1d
gl'st that hundrl'ds of thousands of Al11eril':lI1S
b\\ enforcemcnt In'> impro\'cll. By prom()ting I'S-
would lo,>e their johs hecllN.' of NAFTA. [n Ltet,
i\kxic:ln
C(
)Opl'r:lli()l1, IlIc NAFTA. un f().'>ll'r :1 p()~i
these studil's do n()t show sud1 re.'>ults. Thl' "II S"
tiH' atmosphcre for f1ll111l'r hilater:tl df()J1s to fight
joh lossl's tllrn out to hc hundreds of thousands of
drugs.
Mexican workl'rs
\\h()
decidl' to rennin in l\ll'xico
heclusc of thc enhanced joh oppOI1unitics LTeall'Li
hy NAFTA: \\itl1<Jut NAFTA, they would ha\c
lTossl'd the hordcr to compete for johs in IlIe
For More Information, Contact:
Office of the
u.s, Trade Representative,
()Oll 17th St., N.\\'. \'i'~lshington, D.C 2()~(i()
I
, '!
FOR IMMEDIATE RELEASE
July 30, 1993
CONTACT: Scott Dykema
(202) 622-2960
u.S., COLUMBIA SIGN TAX INFORMATION ACCORD
The Treasury Department today announced that the United States and Colombia
have signed an agreement to exchange tax information.
The agreement, signed July 21 in Bogota, authorizes both governments to
exchange information for purposes of administering their tax laws. The tax accord enters
into force when both governments exchange diplomatic notes.
The new agreement includes a variety of restrictions designed to protect
taxpayers' rights. For example, information obtained under the agreement is confidential.
Requested information will be furnished by the Internal Revenue Service only when
there is sufficient evidence that there is noncompliance with Colombian tax laws and that
the information will be used only for tax purposes. Copies of the agreement with
Colombia will be available in several weeks.
Copies o{ a separate tax information accord with Peru may be obtained by writing
the Treasury Public Affairs Office, Room 2315, Washington, D.C. 20220. The United
States and Peru have exchanged diplomatic notes, bringing the accord into force as of
March 31, 1993. The agreement qualifies Peru as a country in which foreign sales
corporations can incorporate and maintain offices, as provided in the Internal Revenue
Code.
-30LB-305
FOR RELEASE AT 3:00 P.M.
August 2, 1993
Contact: Michelle Smith
(202) 622-2960
TREASURY ANNOUNCES MARKET BORROWING ESTIMATES
The Treasury Department on Monday announced that its net market borrowing for the
July-September 1993 quarter is estimated to be $58.3 billion, with a $40 billion cash balance
on September 30. The Treasury also announced that its net market borrowing for the
October-December 1993 quarter is estimated to be in a range of $95 billion to $100 billion,
with a $35 billion cash balance at the end of December.
In the quarterly announcement of its borrowing needs on May 3, 1993, the Treasury
estimated net market borrowing during the July-September 1993 quarter to be in a range of
$90 billion to $95 billion, assuming a $40 billion cash balance on September 30. The
current lower borrowing estimate largely reflects the carry-over of a higher-than-expected
cash balance at the end of June and lower outlays in the July-September period, particularly
for the Resolution Trust Corporation.
Actual market borrowing in the quarter ended June 30, 1993, was $53.5 billion, while
the end-of-quarter cash balance was $60.6 billion. On May 3, the Treasury had estimated
market borrowing for the April-June quarter to be $37.0 billion, with a $35 billion cash
balance on June 30. The increase in market borrowing and a lower cash deficit accounted
for the increase in the cash balance.
-30LB-306
UBLIC DEBT NEWS
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Tenders for $12,214 million of 13-week bills to be issued
August 5, 1993 and to mature November 4, 1993 were
accepted today (CUSIP: 912794G40).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
3.08%
3.10%
3.10%
Investment
Rate
3.15%
3.17%
3.17%
Price
99.221
99.216
99.216
Tenders at the high discount rate were allotted 72%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
42,617
44,162,331
3,464
30,252
98,159
16,796
1,584,990
8,922
15,285
18,767
16,335
699,065
820,102
$47,517,085
Accepted
42,617
10,850,144
3,464
30,252
41,759
15,956
267,870
8,922
12,485
18,767
16,335
85,065
820,102
$12,213,738
$42,541,773
1, 302,929
$43,844,702
$7,238,426
1, 302,929
$8,541,355
2,910,915
2,910,915
761, 468
$47,517,085
761,468
$12,213,738
Type
Competitive
Noncompetitive
Subtotal, Public
Federal Reserve
Foreign Official
Institutions
TOTALS
An additional $78,532 thousand of bills will be
issued to foreign official institutions for new cash.
LB-307
UBLIC DEBT NEWS
Tenders for $12,313 million of 26-week bills to be issued
August 5, 1993 and to mature February 3, 1994 were
accepted today (CUSIP: 912794H72).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
3.24%
3.25%
3.25%
Investment
Rate
3.34%
3.35%
3.35%
Price
98.362
98.357
98.357
$10,000 was accepted at lower yields.
Tenders at the high discount rate were allotted 45%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
35,548
42,221,363
2,725
24,589
90,830
22,952
1,474,251
7,228
11,327
18,567
12,785
695,504
645,095
$45,262,764
Accepted
35,548
11,406,812
2,725
24,589
37,080
21,852
23,701
7,228
8,577
18,567
12,785
68,004
645,095
$12,312,563
$40,427,386
1,011,446
$41,438,832
$7,477,185
1, 011, 446
$8,488,631
3,000,000
3,000,000
823,932
$45,262,764
823,932
$12,312,563
Type
Competitive
Noncompetitive
Subtotal, Public
Federal Reserve
Foreign Official
Institutions
TOTALS
An additional $84,868 thousand of bills will be
issued to foreign official institutions for new cash.
LB-308
EMBARGOED FOR RELEASE
UPON DELIVERY
(APPROXIMATELY 1: 00 p.m.)
TEXT AS PREPARED
FOR DELIVERY
STATEMENT BY SUSAN LEVINE
DEPUTY ASSISTANT SECRETARY FOR
INTERNATIONAL DEVELOPMENT, DEBT AND ENVIRONMENT POLICY
TREASURY DEPARTMENT
BEFORE THE
INTERNATIONAL DEVELOPMENT SUBCOMMITTEE
OF THE HOUSE COMMITTEE ON BANKING AND URBAN AFFAIRS
August 3, 1993
Introduotion
Mr. Chairman.
I appreciate the opportunity to testify before
this Committee on the Global Environment Facility (GEF). The
purpose of the GEF is to help combat four major threats to the
global environment: climate change, the loss of biodiversity,
ozone depletion, and the pollu~ion of international waters.
Addressing these four environmental threats is vital to the longterm interest of the United States. It is an investment in the
future environmental security of our nation and the world.
This Administration has a strong commitment to the global
environment. We have followe~ up on the Rio Earth summit with
concrete action and international leadership by signing the
Biodiversity Convention and committing to reduce u.S. emissions
of greenhouse gases to 1990 levels by the year 2000. Becoming a
major player in the GEF is an essential element in the new
approach this Administration is taking on international
environmental issues.
I would like to note that the question is not whether there will
be a GEF -- that decision has already been made. The question is
whether or not the U.S. should be a part of the GEF.
The GBI' is Important to berioa:
EDvironment
Threats to the Global
The GEF is in our national interest for the following reasons:
It will help reduce the risk of global warming, a force that
would severely impact global weather and our agricultural and
other productive capacities. It will help combat the depletion
of the ozone layer, protecting Americans and citizens of every
nation from the harmful radiation that can cause skin cancer and
reduce resistance to disease. It will help preserve biological
diversity, our library of life, which provides our basic food
needs, leads to cures to disease, and underpins the job-creating
LB-309
- 2 -
field of bio-technology. And it will safeguard the ecological
integrity of our international waters, helping to put a stop to
the degradation of coastal zones and the over-exploitation of
marine resources.
By acting now, the GEF will help reduce the magnitude of these
environmental impacts and help avoid more costly defensive
expenditures and domestic controls that the u.s. might need to
undertake in the future. Given the positive impact on u.s.
national interests, it is in fact questionable whether a
contribution to the GEF should be labeled "foreign assistance" as
opposed to a domestic priority.
The GEP is a Cost-Effective Method for Addressing
o.s.
Znterests
The GEF provides funding only for the "agreed incremental costs
for achieving agreed global environmental benefits." This means
that financing will be devoted only to those activities that
benefit the global, as opposed to local, environment, and will
only fund the costs of actions which, because benefits accrue
globally and not locally, recipient countries would not undertake
in their own interest.
Although the u.s. is committed to reducing the stress on the
global environment, we cannot do it alone. Addressing global
environmental issues requires the cooperation of both developed
and developing countries.
Unfortunately, the crush of poverty
that exists in developing countries restricts their public
expenditure to projects with national benefits. The benefits to
a poor country from protecting the ozone layer, the climate
system, biodiversity, and international waters are real, but
difficult to quantify. These benefits are essential in the longterm, but pale in urgency in comparison with such critical needs
as providing primary education and basic health care.
Here is where the GEF comes in. The GEF provides additional
grant and concessional financing to allow developing countries to
implement alternative projects that address the protection of the
global environment. For a climate change example: Many
developing countries will require new sources of electricity
during the next decade, and fossil-fuel plants will often be the
first choice for meeting this demand, even though the burning of
fossil fuels emits carbon dioxide, contributing to the greenhouse
effect. At some cost above a hypothetical first choice fossilfuel plant, a developing country could purchase the latest
energy-efficient technology, or perhaps install renewable energy
sources. It is to provide the financing for that extra, or
"incremental," cost between the first choice project and the
lower carbon-emitting alternative that the GEF has been created.
Developing countries and conventional development banks will
still be responsible for providing the financing for the cost of
- 3 -
their first choice options towards the purchase of lower carbonemitting alternatives. The GEF only pays the amount that is
needed to avert the degradation of the global environment. In so
doing, the GEF will facilitate further economic expansion in
developing countries while addressing, in a pragmatic way, the
global environmental hazards associated with unfettered growth.
The GEP is Important to U.S. Foreign Policy
The GEF is a linchpin of U.S. policy towards the climate change
and biodiversity conventions. It has been designated on a
probationary basis as the mechanism for fulfilling key financial
obligations of developed country Parties to those agreements.
There is no other viable mechanism that could satisfy the
requirements of the conventions, and we are working hard so that
the GEF becomes the conventions' permanent choice. If the GEF is
not selected as a permanent mechanism, it will require several
years, at substantial expense and on less favorable terms, to
negotiate separate new financial institutions dedicated to the
different conventions. The failure of the united states to
support the GEF would be interpreted as a lack of support for
u.s. obligations under the conventions. It could also unravel
the international momentum for action engendered through the
signing of these agreements. The failure to support the GEF
would also leave the objectives of combatting ozone depletion and
the pollution of international waters unmet.
The GEP supports the American Economy:
Business
opportunities for U.S.
We are working to structure a GEF that the united states can
support, not only because of our environmental objectives, but
because the GEF has important commercial potential for the United
states. The GEF will introduce important new technologies and
approaches in which the U.s. has a strong competitive advantage.
These include renewable energy technologies, electricity demand
management, pollution control techniques, and commercial
applications from genetic resources, just to name a few. A
successful GEF will provide a catalyst for much larger follow-on
opportunities, in the form of direct investment, exports, and
contracting services. Influencing the policies of the MDBs and
the priorities of developing countries towards the integration of
environment and development will create enormous new markets for
environmental technologies. In fact, many U.s. companies are
extremely interested in participating in the GEF projects. A
number of u.s. firms, including ENRON, Ogden Energy and
Environmental Services, Texaco, Bechtel, Brooklyn Union Gas, and
westvaco participated in a recent GEF seminar on business
opportunities in the GEF.
Quite frankly, we must recognize that a restructured GEF will be
a reality with or without the united States. All of the other
- 4 -
major donors have contributed to the pilot phase of the GEF,
giving it around $800 million dollars in resources. The U.S. is
the only major country that has not contributed to the Core FUnd.
The same countries that have contributed to the Core FUnd are
prepared to establish a permanent Facility. We must move to
ensure that in the longer term American firms will be well placed
to export their technology and know-how as countries recognize
the benefits of new approaches in sectors such as energy and
transport.,
The Administration's Objectives for GEF Restructurinq
Earlier this year, the Treasury Department chaired a full interagency review of u.s. policy towards the GEF. In May, I led a
u.s. delegation to international negotiations in Beijing. Our
policy is currently focused on a few salient issues, including
the GEF Secretariat, project approval, and information
disclosure. We are convinced that the GEF must fund only the
highest quality projects and that GEF policies must reflect the
state of the art for implementing sustainable development. Its
operations must be cost-effective and streamlined. It must have
the flexibility to work effectively with a variety of executing
agencies, including NGOs. We feel strongly that the GEF
Participants should retain the ultimate authority over the GEF's
policies and projects, and it is likely that others will
accommodate us on this issue if we contribute to the GEF. The
GEF must also be transparent and accountable to contributors and
beneficiaries alike, and therefore must establish clear
procedures ensuring that the participants, NGOs, and the general
public have access to information on GEF and associated projects
throughout all phases of the project cycle. It must also
establish clear procedures ensuring NGO participation and
consultation with affected peoples throughout the project cycle.
While we all agree that more needs to be done to ensure
participation by NGOs and affected peoples in the project cycle,
NGOs are already involved in GEF projects. For example, the
following NGOs are a sampling of those involved in the GEF: the
International Union for the Conservation of Nature is involved in
the appraisal of several projects including Wildlands Management
in the Congo; World wildlife Fund is also involved in several
projects including Transfrontier Conservation Management in
Mozambique; CARE is working on a Tropical Forest project in
Cameroon; and the Nature Conservancy is involved with Mexican
Biodiversity Conservation efforts. There are many more examples,
including local NGOs and university teams.
The Importance of strong o.s. Support for the GEF
The u.s. is playing an important role in the GEF restructuring
negotiations. Treasury organized an informal meeting of several
OECD countries in New York coinciding with the united Nations
- 5 -
commission on sustain~ble Development. The next steps include
more informal consultations with the OECD and key developing
countries, immediately followed by a Participants' meeting here
in Washington in September. There will be a meeting in Paris in
November, and the final negotiating session is scheduled for
Cartagena, Colombia, in December.
The objectives I've outlined above for the GEF will not be
achieved without effective u.S. policy leadership, backed by a
significant u.S. contribution to the GEF. The existence of the
GEF is a given; the question is whether the united States will be
able to shape the organization to achieve our policy goals. The
Administration's request for the GEF in FY 1994 is absolutely
critical to our credibility and effective voice in this important
environmental endeavor. We cannot continue to negotiate
successfully if we remain the only major donor that has not
contributed to the GEF Core Fund. We must contribute our fair
share to be taken seriously.
I am very pleased that this Committee has not included conditions
on GEF associated projects in its FY 1994 authorization bill.
The objectives of this Committee are the bedrock of our policy,
but our inability to contribute will continue to hamper our
ability to achieve those goals. Our attempt to steer the policy
debate without commensurate contribution is increasingly resented
by donors and recipients alike. This Administration has
engendered considerable international approval through its
increased commitment to the global environment, but the lack of a
u.S. financial commitment to the GEF is endangering this good
will. An immediate u.S. contribution will greatly improve our
ability to negotiate the transparent and participatory GEF we all
seek.
I would now be happy to answer any questions that you might have
regarding our views on the GEF, and this Administration's policy
for achieving our mutually held objectives. Thank you, Mr.
Chairman.
FOR RELEASE AT 2:30 P.M.
August 3, 1993
CONTACT:
Office of Financing
202/219-3350
TREASURY'S WEEKLY BILL OFFERING
The Treasury will auction two series of Treasury bills
totaling approximately $24,400 million, to be issued August 12,
1993. This offering will provide about $1,075 million of new
cash for the Treasury, as the maturing bills are outstanding in
the amount of $23,318 million.
Federal Reserve Banks hold $5,850 million of the maturing
bills for their own accounts, which may be refunded within the
offering amount at the weighted average discount rate of accepted
competitive tenders.
Federal Reserve Banks hold $1,720 million as agents for
foreign and international monetary authorities, which may be
refunded within the offering amount at the weighted average
discount rate of accepted competitive tenders. Additional
amounts may be issued for such accounts if the aggregate amount
of new bids exceeds the aggregate amount of maturing bills.
Tenders for the bills will be received at Federal
Reserve Banks and Branches and at the Bureau of the Public
Debt, Washington, D. C. This offering of Treasury securities
is governed by the terms and conditions set forth in the Uniform
Offering Circular (31 CFR Part 356, published as a final rule on
January 5, 1993, and effective March 1, 1993) for the sale and
issue by the Treasury to the public of marketable Treasury bills,
notes, and bonds.
Details about each of the new securities are given in the
attached offering highlights.
000
Attachment
LB-310
HIGHLIGHTS OF TREASURY OFFERINGS OF WEEKLY BILLS
TO BE ISSUED AUGUST 12, 1993
August 3, 1993
Offering Amount .
.
.
.
.
Description of Offering:
Term and type of security
CUSIP number
Auction date
Issue date
. . .
Maturity date
Original issue date
Currently outstanding .
Minimum bid amount
Multiples . . . . . .
$12,200 million
$12,200 million
92-day bill
912794 G5 7
August 9, 1993
August 12, 1993
November 12, 1993
May 13, 1993
$11,621 million
$10,000
$ 1,000
182-day bill
912794 H8 0
August 9, 1993
August 12, 1993
February 10, 1994
February 11, 1993
$14,906 million
$10,000
$ 1,000
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids
Accepted in full up to $1,000,000 at the average
discount rate of accepted competitive bids
Competitive bids
(1) Must be expressed as a discount rate with
two decimals, e.g., 7.10%.
(2) Net long position for each bidder must be
reported when the sum of the total bid
amount, at all discount rates, and the net
long position is $2 billion or greater.
(3) Net long position must be determined as of
one half-hour prior to the closing time for
receipt of competitive tenders.
Maximum Recognized Bid
at a Single yield
35% of public offering
Maximum Award .
35% of public offering
.
. . . .
Receipt of Tenders:
Noncompetitive tenders
Competitive tenders
Payment Terms .
Prior to 12:00 noon Eastern Daylight Saving time
on auction day
Prior to 1:00 p.m. Eastern Daylight Saving time
on auction day
Full payment with tender or by charge to a funds
account at a Federal Reserve Bank on issue date
-'
A
VI
TREASURYNEWS
I
Department of the Treasury
Washington, D.C.
'
Telephone 202-622-2960
Text as Prepared for Delivery
FOR IMMEDIATE RELEASE
August 3, 1993
STATEMENT OF TREASURY SECRETARY LLOYD BENTSEN
WHITE HOUSE PRESS BRIEFING
For those of you who think I'm always camped out on Capitol Hill, today I also
did what I do everyday as Treasury Secretary. I wrote $800 million in hot checks.
Do you know how long it took me before I had written more hot checks than all
taxpayers in Alabama, Arizona, Georgia, Louisiana, Nevada, Oklahoma, and New Jersey
pay in personal income taxes in one year? 74 days. Didn't even take me 100 days. Just
74 days in office.
That's why we need deficit reduction. There is no other alternative. And the
only message that I want to leave you with today is that this plan does it by restoring
fairness.
Those in the upper incomes who saw their taxes go down in the '80s will be asked
to pay a bigger share toward deficit reduction.
And the middle-income wage earners in this country should not be fooled by
rhetoric. There is no income tax increase for them. None. Working families making
less than $180,000 a year will not pay one extra penny in income tax. Not one. The only
new tax that the average working family will pay is a 4.3-cent-a-gallon gasoline tax.
That comes to a dime a day for an American family. We're asking the American family
to take a hit of a dime a day to reduce our deficit.
I think they'll be willing because Americans are fair people. As long as
Washington is fair with them -- as long as we really reduce deficit spending -- I think
they'll be with us on this one.
And we will be fair. Because this bill is not so much about taxes, as it is about
spending cuts. I've been telling you we'd get $1 of spending cuts for $1 of revenues. We
did. In fact, we exceeded that goal. And that's why I'm so confident this will pass both
chambers of the Congress.
On Friday, I'm going to wish I was still a Senator. You see, I would have enjoyed
casting a vote that finally puts budget cutting and low interest rates first.
-30LB-311
Average and Marginal
Federal Income Tax, Social Security, and Medicare Tax Rates
for Four-Person Families at the Same Relative Positions
in the Income Distribution, 1955-1992
Office of Tax Analysis
Department of the Treasury
November 4, 1992
This repon was prepared by Allen H. Lerman of the individual Taxation Division of the Office of Tax Analysis.
Average and Marginal Federal Income Tax, Social Security, Medicare Tax Rates
for Four-Person Families at the Same Relative Positions
in the Income Distribution, 1955-1992
These historical tables show average and marginal Federal income tax, social security, and
medicare tax rates from 1955 through 1992 for hypothetical four-person families at the median income
for a four-person family and at one-half and twice that median income level. The income of these
hypothetical families is assumed to come from wages and salaries earned by one spouse. If the income
were from other sources, the amount of Federal income tax might differ in certain years, as would the
FICA (social security and medicare) tax in all years.
The median income levels through 1991 were obtained from various issues of the U.S. Census
Bureau's "Current Population Reports, Series P-60." Median income for 1992 was estimated on the
assumption that the "real" level of median income will not change from its 1991 level and that nominal
median income will reflect changes in the price level. The actual value of the CPI-U, 136.2, has been
used for 1991. The estimated CPI-U level for 1992, 140.4, is based on actual data through September
and the assumption that thereafter the CPI-U will increase by 0.3 percent per month.
Through 1986, each family is assumed to have itemized deductions equal to 23 percent of its
income. Since the average level of itemized deductions decreased as the result of changes included in
the Tax Reform Act of 1986, beginning for 1987 itemized deductions are assumed to be equal to 18
percent of income. For purposes of calculating its Federal income tax, each family' itemizes its
deductions only if doing so reduces its income taxes. For tax purposes, each family claims four personal
exemptions and claims any other deductions, tax credits, or rebates that were generally available to
similarly situated taxpayers in the given year except that the families do not claim the Earned Income
Credit (EIC). I
The average and marginal tax rates shown are based on nominal wage income which excludes
employers' shares of social security and medicare taxes and any other statutory or voluntary fringe
benefits paid by employers.
Table 1 shows average and marginal Federal income tax rates. Table 2 shows average and
marginal employee social security and medicare tax rates (employee FICA tax rates). Table 3 shows
combined Federal income tax and employee FICA tax rates. (Entries in Table 3 are the sum of the
similar entries in Tables 1 and 2.) Table 4 shows Federal income tax rates and the combined employee
and employer shares of FICA taxes. (Entries in Table 4 are the sum of the similar entry in Table 1 plus
twice the similar entry in Table 2.)
The family at one-half median income would generally have been eligible for the EIC in 1975 and 1992 (at
the estimated income level). If the 1975 family had claimed the EIC, its average income tax rate would have
been 4.12 percent and its marginal income tax rate would have been 27 percent (from the phaseout of the
EIC). In 1992, if the family were eligible for the EIC, its average and marginal tax rates would de~nd on
whether one or both of its dependent children were EIC eligibles and whether the family was eligible for
the Young Child Supplement and/or the Health Insurance Supplement. Assuming that the family were not
eligible for either supplement, its average income tax rate including the impact of the EIC would have been
4.67 percent and its marginal income tax rate would have been 28.14 percent (from the phaseout of the Ele)
if both children were ElC eligibles. If only one child were an EIC eligible, the average income tax rate
including the effect of the EIC would have been 4.68 percent and the marginal rate would have been 27.57
percent. (fhe average and marginal tax rates mentioned above for the EIC eligible family are the income
tax rates similar to those shown in Table 1. Since the rates shown in Tables 3 and 4 include Federal income
tax rates, they would be affected also.)
Table 1
Average and Marginal Federal Income Tax Rates for Four-Person Families
at the Same Relative Positions in the Income Distribution:
1955-1992
Yea,
One Half Median Income
Average
MarginaJ
Income
Income
Tax
Tax
Rate
Rate
Income
Median Income
Average
MarginaJ
Income
Income
Tax
Tax
Income
Rate
Ra'e
Twice Median Income
Average
MarginaJ
Income
Income
Tax
Tax
Income
Rate
Rate
1955
1956
1957
1958
1959
2,460
2,660
2,7«
2,843
3,035
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00
4,919
5,319
5,488
5,685
6,070
5.64
6.38
6.65
6.96
7.49
20.00
20.00
20.00
20.00
20.00
9,838
10,638
10,976
11,370
12,140
10.76
1122
11.40
11.59
11.93
22.00
22.00
22.00
22.00
22.00
1960
1961
1962
1963
1964
3,148
3,219
3,378
3,569
3,744
0.15
0.49
1.19
1.95
2.06
20.00
20.00
20.00
20.00
16.00
6,295
6,437
6,756
7,138
7,488
7.n
7.94
8.30
8.68
7.56
20.00
20.00
20.00
20.00
18.00
12,590
12,874
13,512
14,276
14,976
12.11
12.22
12.44
12.85
11.66
22.00
22.00
26.00
26.00
23.50
1965
1966
1967
1968
1969
3,900
4,171
4,497
4,917
5,312
2.16
2.72
3.32
403
4.58
14.00
14.00
15.00
15.00
15.00
7,800
8,341
8,994
9,834
10,623
7.09
7.48
8.00
9.21
9.92
17.00
19.00
19.00
20.42
20.90
15,600
16,682
17,988
19,668
21,246
11.12
11.50
11.89
13.37
14.24
22.00
22.00
22.00
26.88
27.50
1970
1971
1972
1973
1974
5,583
6,088
6,4004
6,855
7,485
4.65
4.73
4.37
4.88
4.171/
15.00
15.00
15.00
16.00
16.00
11,165
12,176
12,808
13,710
14,969
9.35
9.27
9.09
9.45
8.99 1/
19.48
19.00
19.00
19.00
22.00
22,330
24,352
25,616
27,420
29,938
13.47
13.45
13.52
14.05
14.35
25.62
28.00
28.00
28.00
31.00
1975
1976
1978
1979
7,924
8,658
9,362
10,214
11,256
4.22
4.68
3.61
4.73
5.11
17.00 2J
17.00
17.00
19.00
16.00
15,848
17,315
18,723
20,428
22,512
9.62
9.89
10.42
11.07
10.84
22.00
22.00
22.00
25.00
24.00
31,696
34,630
37,446
40,856
45,024
14.86
15.51
16.40
17.38
17.20
3200
32.00
36.00
39.00
37.00
1980
1981
1982
1983
1984
12,166
13,137
13,810
14,591
15,549
6.02
6.82
6.51
6.53
6.50
18.00
17.78
16.00
15.00
14.00
24,332
26,274
27,619
29,181
31,097
11.42
11.79
11.06
10.38
10.25
24.00
23.70
25.00
23.00
22.00
48,664
52,548
55,238
58,362
62,194
18.25
19.11
18.01
16.83
16.62
43.00
42.46
39.00
35.00
38.00
1985
1986
1987
1988
1989
16,389
17,358
18,543
19,528
6.56
6.64
5.16
5.17
5.29
14.00
14.00
15.00
15.00
15.00
32,n7
10.34
10.48
8.90
9.30
9.36
22.00
22.00
15.00
15.00
15.00
65,554
69,432
74,172
78,102
81,526
16.78
1704
15.80
1521
15.28
38.00
38.00
35.00
28.00
28.00
1990
1991
1992
20,726
21,528
22,240 E
5.12
5.04
15.00
15.00
15.00 2J
41,451
43,056
44,480 E
9.33
9.30
9.20
15.00
15.00
15.00
82,902
86,112
88,960 E
15.10
15.03
14.83
28.00
2800
28.00
19n
~,382
2J
4.752J
34,716
37,086
39,051
40,763
Department of the Treasury
OffIce of Tax Analysis
1/
2J
E
1/
November 4, 1992
Adjusted to reflect rebate. of 1974 tax liabilties provided by P.L 94-12.
Excludes effect of Earned Income Credit See footnote on text page for explanation.
Estimated from 1991 income as adjusted for price level (CPI-U) chang.. : 1991 CPI-U, 136.2;
estimated 1992 CPI-U, 140.4.
Note:
Median income is for a four- person family. All income il aalume to be earned by one spouse.
Itemized deductions are assumed to equal 23 percent of income through 1986 and 18 percent thereafter.
Source:
Median incomes from U.S. Census Bureau, 'Current Population Reports, Series P-60', various issues.
1/
Table 2
Average and Marginal Employee Social Security and Medicare (FICA) Tax Rates
for Four-Person Families at the Same Relative Positions in the Income Distribution:
1955-1992
i
I
Y.ar
One Half Median Incom.
Marginal
Av.rag.
FICA
FICA
Tax
Tax
Rate
Incom.
Rat.
1955
1956
1957
1958
1959
2,460
2,660
2,744
2,843
3,035
1960
1961
1962
1963
1964
3,148
3,219
3,378
3,569
3,744
1965
1966
1967
1968
1969
2.00
2.00
2.00
2.25
2.25
2.50
3.00
Twice Median Income
Average
Marginal
FICA
FICA
Tax
Tax
Incom.
Rat.
Rat.
2.25
2.25
2.50
4,919
5,319
5,488
5,685
6,070
1.71
1.58
1.72
1.66
1.98
0.00
0.00
0.00
0.00
0.00
9,838
10,638
10,976
11,370
12,140
0.85
0.79
0.86
0.99
0.00
0.00
0.00
0.00
0.00
3.00
3.13
3.63
3.63
3.00
3.00
3.13
3.63
3.63
6,295
6,437
6,756
7,138
7,488
2.29
2.24
2.22
2.44
2.32
0.00
0.00
0.00
0.00
0.00
12,590
12,874
13,512
14,276
14,976
1.14
1.12
1.11
1.22
1.16
0.00
0.00
0.00
0.00
0.00
3,900
4,171
4,497
4,917
5,312
3.63
4.20
4.40
4.40
4.80
3.63
4.20
440
4.40
4.80
7,800
8,341
8,994
9,834
10,623
2.23
3.32
3.23
3.49
3.52
0.00
0.00
0.00
0.00
0.00
15,600
16,682
17,988
19,668
21,246
1.12
1.66
1.61
1.74
1.76
0.00
0.00
0.00
0.00
0.00
1970
1971
1972
1973
1974
5,583
6,088
6,404
6,855
7,485
4.80
5.20
5.20
5.85
5.85
4.80
5.20
5.20
5.85
5.85
11,165
12,178
12,808
13,710
14,969
3.35
3.33
3.65
4.61
5.18
0.00
0.00
0.00
0.00
0.00
22,330
24,352
25,616
27,420
29,938
1.68
1.67
1.83
2.30
2.58
0.00
0.00
0.00
0.00
0.00
1975
1976
5.85
5.85
5.85
6.05
6.13
5.85
5.85
5.85
6.05
6.13
15,848
17,315
18,723
20,428
22,512
5.20
5.17
5.16
5.24
8.13
0.00
0.00
0.00
0.00
6.13
31,696
34,630
37,446
1978
1979
7,924
8,658
9,362
10,214
11,256
2.60
2.58
2.58
2.62
3.12
0.00
0.00
0.00
0.00
1980
1981
1982
1983
1984
12,166
13,137
13,810
14,591
15,549
6.13
6.65
6.70
6.70
6.70
6.13
6.65
6.70
6.70
6.70
24,332
26,274
27,619
29,181
31,097
6.13
6.65
6.70
6.70
6.70
6.13
6.65
6.70
6.70
6.70
48,664
52,548
55,238
58,362
62,194
3.26
3.76
3.93
4.10
4.07
0.00
0.00
0.00
0.00
0.00
1985
1986
1987
1988
1989
16,389
17,358
18,543
19,526
20,382
7.05
7.15
7.15
7.51
7.51
7.05
7.15
7.15
7.51
7.51
32,n7
34,716
37,088
39,051
40,763
7.05
7.15
7.15
7.51
7.51
7.05
7.15
7.15
7.51
7.51
65,554
69,432
74,172
61,526
4.26
4.33
4.22
4.33
4.42
000
0.00
0.00
0.00
000
1990
1991
1992
20,728
21,528
22,240 E
7.65
7.65
7.65
7.65
7.65
7.65
41,451
43,056
44,480 E
7.65
7.65
7.65
7.65
7.65
7.65
62,902
86,112
88,960 E
4.73
5.29
5.32
0.00
1.45
1.45
19n
2.00
Median Incom.
Average
Marginal
FICA
FICA
Tax
Tax
Incom.
Rat.
Rat.
40,856
45,024
78,102
Department of the Treasury
Office of Tax Analysi.
November 4, 1992
E
Estimated from 1991 income at adjusted for price level (CPI-U) chang .. : 1991 CPI-U, 136.2;
estimated 1992 CPI-U, 140.4.
Note:
Median income is for II four-person family. All income is assume to be earned by one spouse.
Itemized deductions are assumed to equal 23 percent 01 income through 1986 and 18 percent thereafter.
Source:
0.00
Median incomes from U.S. Census Bureau, 'Current Population Reports, Series P-60', various issues.
Table 3
Average and Marginal Federal Income Tax Plus Employee Social Security and Medicare (FICA)
Tax Rates for Four-Person Families at the Same Relative Positions in the Income Distribution:
1955-1992
Vear
On. Half Median Income
Average
"arginal
Combined Combined
Tax
Tax
Rate
Rate
Income
Median Income
Average
Marginal
Combined Combined
Tax
Tax
Income
Rate
Rate
Twice Median Income
Average
Marginal
Combined Combined
Tax
Tax
Income
Rate
Rate
1955
1956
1957
1958
1959
2,460
2,660
2,744
2,843
3,035
2.00
2.00
2.25
2.25
2.50
2.00
2.00
2.25
2.25
2.50
4,919
5,319
5,488
5,685
6,070
7.35
7.96
8.37
8.62
9.47
20.00
20.00
20.00
20.00
20.00
9,838
10,638
10,976
11,370
12,140
11.61
12.01
12.26
11.59
12.92
22.00
22.00
22.00
22.00
2l!.00
1960
1961
1962
1963
1964
3,148
3,219
3,378
3.569
3,744
3.15
3.49
4.32
5.58
5.69
23.00
23.00
23.13
23.63
19.63
6,295
6.437
6,756
7,138
7,488
10.06
10.18
10.52
11.12
9.88
20.00
20.00
20.00
20.00
18.00
12.590
12,874
13.512
14.276
14,976
13.25
13.34
13.55
14.07
12.82
22.00
22.00
26.00
26.00
23.50
1965
1966
1967
1968
1969
3,900
4,171
4,497
4,917
5,312
5.79
6.92
7.72
8.43
9.38
17.63
18.20
19.40
19.40
19.80
7.800
8,341
8.994
9,834
10,623
9.32
10.80
11.23
12.70
13.44
17.00
19.00
19.00
20.42
20.90
15,600
16,682
17,988
19,668
21,246
12.24
13.16
13.50
15.11
16.00
22.00
22.00
22.00
26.88
27.50
1970
1971
1972
1973
1974
5,583
6,088
6,404
6,855
7,485
9.45
9.93
9.57
10.73
10.02 1/
19.80
20.20
20.20
21.85
21.85
11,165
12,176
12,808
13,710
14,969
12.70
12.60
12.74
14.06
14.151/
19.48
19.00
19.00
19.00
22.00
22,330
24,352
25,616
27,420
29,938
15.15
15.12
15.35
16.35
16.93 1/
25.62
28.00
28.00
28.00
31.00
1975
1976
1977
1978
1979
7,924
8,658
9,362
10,214
11,256
10.072J
10.53
9.46
10.78
11.24
22.85 2J
22.85
22.85
25.05
22.13
15,848
17,315
18,723
20,428
22,512
14.82
15.06
15.58
16.31
16.97
22.00
22.00
22.00
25.00
30.13
31,696
34,630
37,446
40,856
45,024
17.46
18.09
18.98
20.00
20.32
32.00
32.00
36.00
39.00
37.00
1980
1981
1982
1983
1984
12,166
13,137
13,810
14,591
15,549
12.15
13.47
13.21
13.23
13.20
24.13
24.43
22.70
21.70
20.70
24,332
26,274
27,619
29,181
31,097
17.55
18.44
17.78
17.08
18.95
30.13
30.35
31.70
29.70
28.70
48,664
52,548
55,238
58,362
62,194
21.51
22.87
21.94
2093
20.69
43.00
42.46
39.00
35.00
38.00
1985
1986
1987
1988
1989
16,389
17,358
18,543
19,526
~,382
13.61
13.79
12.31
12.68
12.80
21.05
21.15
22.15
22.51
22.51
32,777
34,716
37,086
39,051
40,763
17.39
17.63
16.05
16.81
16.87
29.05
29.15
22.15
22.51
22.51
65,554
69,432
74,172
78,102
81,526
21.04
21.37
20.02
19.54
19.70
38.00
38.00
35.00
28.00
28.00
1990
1991
1992
20,728
21.528
22,240 E
12.77
12.69
12.40 21
22.65
22.65
22.65 2J
41,451
43,056
44,480
16.98
16.95
16.85
22.65
22.65
22.65
82,902
86,112
88,960
19.83
20.32
20.15
28.00
29.45
29.45
E
E
Department of the Treasury
Office of Tax Analysis
1/
2J
E
November 4,1992
Adjusted to refleet rebates of 1974 tu: liabiitiea provided by P.L 94-12.
Exclud.. effeet of Earned Income Credit. See footnote on text page for explanation.
Estimated from 1991 Income as adjusted for price level (CPI-U) chang.. : 1991 CPI-U, 136.2;
estimated 1992 CPI-U, 140.4.
Note:
Median income is for a four- person family. All income is assume to be earned by one spouse.
Itemized deductions are assumed to equal 23 percent of income through 1986 and 18 percent thereafter.
Source:
Median incomes from U.S. Census Bureau, 'Current Population Reports, Series P-60', various issues.
1/
Table 4
Average and Marginal Federal Income Tax Plus Combined Employee and Employer Social Security
and Medicare (FICA) Tax Rates for Four-Person Families
at the Same Relative Positions in the Income Distribution: 1955-1992
Half Median Income
Average
Marginal
Combined Combined
Tax
Tax
Income
R.te
R.te
One
I
I
Ve.r
\
Median Income
Marginal
I Average
I Combined
Combined
Tax
Tax
Income
Rate
Rate
I
Twice Median Income
Average
Marginal
Combined Combined
Tax
Tax
Aate
Income
Rate
1955
1956
1957
1958
1959
2,460
2,660
2,744
2,843
3,035
0.00
4.00
4.50
4.50
5.00
4.00
4.00
4.50
4.50
5.00
4,919
5.319
5,488
5,685
6,070
5.64
9.54
10.09
10.28
11.44
20.00
20.00
20.00
20.00
20.00
9,838
10,638
10,976
11,370
12,140
10.76
12.80
13.12
11.59
13.91
22.00
22.00
22.00
22.00
22.00
1960
1961
1962
1963
1964
3,148
3,219
3,378
3,569
3,744
6.15
6.49
7.44
9.20
9.31
26.00
26.00
2625
2725
23.25
6,295
6,437
6,756
7,138
7,488
12.35
12.41
12.74
13.56
12.21
20.00
20.00
20.00
20.00
18.00
12,590
12,874
13,512
14,276
14,976
14.40
14.46
14.66
15.29
13.98
22.00
22.00
26.00
26.00
23.50
1965
1966
1967
1968
1969
3,900
4,171
4,497
4,917
5,312
9.41
11.12
12.12
12.83
14.18
21.25
22.40
23.80
23.80
24.60
7,800
8.341
8,994
9,834
10,623
11.55
14.13
14.46
16.19
16.97
17.00
19.00
19.00
20.42
20.90
15,600
16.682
17.988
19,668
21,246
13.35
14.82
15.12
16.86
17.76
22.00
22.00
22.00
26.88
27.50
1970
1971
1972
1973
1974
5,583
6,088
6,404
6,855
7,485
14.25
15.13
14.77
16.58
15.871/
24.60
25.40
25.40
27.70
27.70
11,165
12,176
12,808
13,710
14,969
16.06
15.93
16.40
18.67
19.31
19.48
19.00
19.00
19.00
22.00
22,330
24,352
25,616
27,420
29,938
16.82
16.78
17.17
18.66
19.51 1/
25.62
28.00
28.00
28.00
31.00
1975
1976
1977
1978
1979
7,924
8,658
9,362
10,214
11,256
15.92 2J
16.38
15.31
16.83
17.37
28.702J
28.70
28.70
31.10
28.26
15,848
17,315
18,723
20,428
22,512
20.03
20.23
20.73
21.55
23.10
22.00
22.00
22.00
25.00
36.26
31,696
34,630
37,446
40,856
45,024
20.06
20.68
21.56
22.62
23.44
32.00
32.00
36.00
39.00
37.00
1980
1981
1982
1983
1984
12,166
13,137
13,810
14,591
15,549
lB.28
30.26
31.08
29.40
28.40
27.40
24,332
26,274
27,619
29,181
31,097
23.68
~.26
20.12
19.91
19.93
19.90
25.09
24.46
23.78
23.65
37.00
38.40
36.40
35.40
48,664
52,548
55,238
58,362
62.194
24.78
26.63
25.87
25.03
24.76
43.00
42.46
39.00
35.00
38.00
1985
1986
1987
1988
1989
16,389
17,358
18,543
19,528
20,382
20.66
20.94
19.46
20.19
20.31
28.10
28.30
29.30
30.02
30.02
32,777
34,716
37,086
39,051
40,763
24.44
24.78
23.20
24.32
24.38
36.10
36.30
29.30
30.02
30.02
65,554
69,432
74,172
78,102
81,526
25.30
25.69
24.24
23.86
24.12
38.00
38.00
35.00
28.00
28.00
1990
1991
1992
20,726
21,528
22,240 E
20.42
20.34
20.05 2J
30.30
30.30
30.30 2J
41,451
43,056
44,480 E
24.63
24.60
24.50
30.30
30.30
30.30
82,902
86,112
88,960 E
24.57
25.62
25.47
28.00
30.90
30.90
1/
Department of the Treasury
Office of Tax Analysis
November 4, 1992
2J
E
Adjusted to reflect rebates of 1974 tax liabii1ies provided by P.L 94-12.
Excludes effect of Earned Income Credit See footnote on text page for explanation.
Estimated from 1991 Income as adjusted for pricelellel (CPI-U) changes: 1991 CPI-U, 136.2:
estimated 1992 CPI-U, 140.4.
Note:
Median income is for a four-person family. All income is assume to be earned by one spouse.
Itemized deductions are assumed to equal 23 percent of income through 1986 and 18 percent thereafter.
1/
Source:
Median incomes from U.S. Census Bureau, 'Current Population Aeporta, Series P-60', various issues.
I'
FOR RELEASE WHEN AUTHORIZED AT PRESS CONFERENCE
August 4, 1993
CONTACT: Office of Financing
202/219-3350
TREASURY AUGUST QUARTERLY FINANCING
The Treasury will auction $16,500 million of 3-year notes,
$11,000 million of 10-year notes, and $11,000 million of 30-year
bonds to refund $26,706 million of publicly-held securities
maturing August 15, 1993, and to raise about $11,800 million new
cash.
In addition to the public holdings, Federal Reserve Banks
hold $4,524 million of the maturing securities for their own
accounts, which may be refunded by issuing additional amounts of
the new securities.
The maturing securities held by the public include $3,856
million held by Federal Reserve Banks as agents for foreign
and international monetary authorities. Amounts bid for these
accounts by Federal Reserve Banks will be added to the offering.
The 10-year note and the 30-year bond being offered today
are eligible for the STRIPS program.
Tenders will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington, D. C.
This offering of Treasury securities is governed by the terms and
conditions set forth in the Uniform Offering Circular (31 CFR
Part 356, published as a final rule on January 5, 1993, and
effective March 1, 1993) for the sale and issue by the Treasury
to the public of marketable Treasury bills, notes, and bonds.
Details about the notes and bond are given in the attached
offering highlights.
000
Attachment
LB-312
HIGHLIGHTS OF TREASURY OFFERINGS TO THE PUBLIC
AUGUST 1993 QUARTERLY FINANCING
August 4, 1993
Offering Amount
Description of Offering:
Term and type of security
Series
CUSIP n...mer
Auction date
Issue date
Dated date
Maturity date
Interest rate
Yield
Interest payment dates
Minimum bid amount
Multiples
Accrued interest payable
by investor
Premium or discount
STRIPS Infonnation:
Minimum amount required
Corpus CUSIP n...mer
New TINT CUSIP n...mer
New TINT due date
$16,500 mill ion
$11,000 million
$11,000 million
3-year notes
Series Z-1996
912827 L7 5
August 10, 1993
August 16, 1993
August 16, 1993
August 15, 1996
Determined based on the average
of accepted competitive bids
Determined at auction
February 15 and August 15
$5,000
$1,000
10-year notes
Series B-2003
912827 L8 3
August ", 1993
August 16, 1993
August 15, 1993
August 15, 2003
Determined based on the average
of accepted competitive bids
Determined at auction
February 15 and August 15
$1,000
$1,000
30-year bonds
Bonds of August 2023
912810 EQ 7
August 12, 1993
August 16, 1993
August 15. 1993
August 15, 2023
Determined based on the average
of accepted competitive bids
Determined at auction
February 15 and August 15
$1,000
$1,000
None
Determined at auction
Determined at auction
Determined at auction
Determined at auction
Determined at auction
Not
Not
Not
Not
Determined at auction
912820 BG 1
Not applicable
Not applicable
Determined at auction
912803 BC 6
912833 LM 0
August 15, 2023
appl i cabl e
applicable
appl icable
applicable
The following rule. apply to all .ecurltle. mentioned above:
Submleslon of Bid.:
Noncompetitive bids
Accepted in full up to $5,000,000 at the average yield of accepted competitive bids_
Competitive bids
(1) Must be expressed 8S a yield with two decimals, e.g., 7.10X.
(2) Net long position for each bidder must be reported when the sum of the total bid amount,
at all yields, and the net long position Is $2 billion or greater.
(3) Net long position must be determined as of one half-hour prior to the closing time
for receipt of competitive tenders.
Maximum Recognized Bid
at a Singie Yield
Maximum Award
Receipt of Tende,.:
0
Noncompetitive tenders
Competitive tenders
Payment Tenn.
35X of public offering
35X of public offering
Prior to 12:00 noon Eastern Daylight Saving time on auction day
Prior to 1:00 p.m. Eastern Daylight Saving time on auction day
Full payment with tender or by charge to a funds account at a Federal Reserve Bank on issue date
-
~
,
Department of the Treasury
Washington, D.C.
G·
-··~
TREASURY NEWS
Telephone 202-622-2960
FOR RELEASE WHEN AUTHORIZED AT PRESS CONFERENCE
August 4, 1993
CONTACT:
Office of Finar.cing
202/219-3350
TREASURY AUGUST QUARTERLY FINANCING
The Treasury will auction $16,500 million of 3-year notes,
$11,000 million of 10-year notes, and $11,000 million of 30-year
bonds to refund $26,706 million of publicly-held securities
maturing August 15, 1993, and to raise abo~t $11,800 million new
cash.
In addition to the public holdings, Federal Reserve Banks
hold $4,524 million of the maturing securities for their own
accounts, which may be refunded by issuing additional amounts of
the new securities.
The maturing securities held by the public include $3,856
million held by Federal Reserve Banks as agents for foreign
and international monetary authorities.
Amounts bid for these
accounts by Federal Reserve Banks will be added to the offering.
The 1U-year note and the 30-year bond being offered today
are eligible for the STRIPS program.
Tenders will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington, D. C.
This offering of Treasury securities is governed by the terms and
conditions set forth in the Uniform Offering Circular (31 CFR
Part 356, published as a final rule on January 5, 1993, and
eftcctive Ylarch =-, 1993) for the sale and issue by the Treasury
to the public of marketable Treasury bills, notes, and bonds.
Details about the notes and bond are given in the attached
offerlng hiohlights.
000
A>::acllm-=-nt
.
HIGHLIGHTS OF TREASURY OFFERINGS TO THE PUBLIC
AUGUST 1993 QUARTERLY FINANCING
August 4, 1993
Offering Amount
Description of Offering:
Term and type of security
Series
CUSIP number
Auction date
Issue date
Dated date
Maturity date
Interest rate
Yield
Interest payment dates
Minimum bid amount
Multiples
Accrued interest payable
by investor
Premium or discount
STRIPS Information:
Minimum amount required
Corpus CUSIP number
New TINT CUSIP number
New TINT due date
$16,500 million
$11,000 million
$11,000 million
3-year notes
Series Z-1996
912827 L7 5
August 10, 1993
Augus t 16, 1993
August 16, 1993
August 15, 1996
Determined based on the average
of accepted competitive bids
Determined at auction
February 15 and August 15
$5,000
$1,000
10-year notes
Series B-2003
912827 L8 3
August 11, 1993
August 16, 1993
August 15, 1993
August 15, 2003
Determined based on the average
of accepted competitive bids
Determined at auction
February 15 and August 15
$1,000
$1,000
30-year bonds
Bonds of August 2023
912810 EQ 7
August 12, 1993
August 16, 1993
August 15, 1993
August 15, 2023
Determined based on the average
of accepted competitive bids
Determined at auction
February 15 and August 15
$1,000
$1,000
None
Determined at auction
Determined at auction
Determined at auction
Determined at auction
Determined at auction
Not
Not
Not
Not
Determined at auction
912820 BG 1
Not applicable
Not applicable
Determined at auction
912803 BC 6
912833 LM 0
August 15, 2023
applicable
applicable
applicable
appl icable
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids
Competitive bids
Maximum Recognized Bid
at a Single Yield .
Maximum Award
Receipt of Tenders:
Noncompetitive tenders
Competitive tenders
Payment Terms
Accepted in full up to $5,000,000 at the average yield of accepted competitive bids.
(1) Must be expressed as a yield with two decimals, e.g., 7.10%.
(2) Net long position for each bidder must be reported when the sum of the total bid amount,
at all yields, and the net long position is $2 billion or greater.
(3) Net long position must be determined as of one half-hour prior to the closing time
for receipt of competitive tenders.
35% of public offering
35% of public offering
Prior to 12:00 noon Eastern Daylight Saving time on auction day
Prior to 1:00 p.m. Eastern Daylight Saving time on auction day
Full payment with tender or by charge to a funds account at a Federal Reserve Bank on issue date
TALKING POINTS
FOR THE
FINANCING PRESS CONFERENCE
August 4, 1993
Today, we are announcing the terms of the regular Treasury
August midquarter refunding.
I will also discuss Treasury
financing requirements for the balance of the current calendar
quarter and our estimated cash needs for the October-December
quarter.
1.
We are offering $38.5 billion of notes and bonds to
refund $26.7 billion of privately held notes and bonds maturing
on August 15 and to raise approximately $11.8 billion of cash.
The three securities are:
First, a 3-year note in the amount $16.5 billion,
maturing on August 15, 1996.
This note is scheduled to
be auctioned on a yield basis on Tuesday, August 10.
The minimum purchase amount will be $5,000 and
purchases above $5,000 may be made in multiples of
$1,000.
Second, a 10-year note in the amount of $11.0 billion,
maturing on August 15, 2003.
This note is scheduled to
be auctioned on a yield basis on Wednesday, August 11.
The minimum purchase amount will be $1,000.
2
Third, a 30-year bond in the amount of $11.0 billion,
maturing on August 15, 2023.
This bond is scheduled to
be auctioned on a yield basis on Thursday, August 12.
The minimum purchase amount will be $1,000.
In our May 5, 1993 press conference, we announced that beginning
with this August refunding, the Treasury will offer 30-year bonds
semiannually.
Therefore, the next 30-year bond is scheduled to
be offered in the February 1994 refunding.
2.
As announced on Monday, August 2, we estimate a net
market borrowing need of $58.3 billion for the July-September
quarter.
The estimate assumes a $40 billion cash balance at the
end of September.
Including this refunding, we will have raised
a net $35.5 billion of the $58.3 billion in market borrowing
needed this quarter.
This net borrowing was accomplished as
follows:
$3.8 billion of cash from the 2-year note that settled
August 2:
$11.4 billion of cash from the 5-year note that settled
August 2:
$14.4 billion of net cash from the regular weekly bills
including those announced yesterday:
$0.9 billion of cash in the 52-week bills:
a paydown ot $6.8 billion in the 7-year note that
matured July 15; and
3
$11.8 billion of cash from the refunding issues
announced today.
The Treasury will need to issue $38.8 billion of marketable
securities during the rest of the July-September quarter to
paydown $16.0 billion of cash management bills that mature on
September 23 and raise net cash of $22.8 billion.
This financing
could be accomplished through sales of regular 13-, 26-, and 52week bills and 2-year and 5-year notes at the end of August and
September.
3.
We estimate Treasury net market borrowing needs to be
in the range of $95 billion to $100 billion for the OctoberDecember quarter, assuming a $35 billion cash balance on
December 31.
4.
The borrowing estimates for the two quarters assume
that legislation providing funds for resolutions of problem
thrift institutions will be enacted shortly.
5.
For the foreseeable future, we believe that the current
regular issue cycles for bills, notes, and bonds will be
sufficient to refund maturing securities and raise needed cash.
In order to maintain a regular, predictable pattern of debt
issuance, we would provide ample advance notice to the public if
there were to be any change in the regular offerings.
4
6.
We are also announcing that the Treasury is extending
the single-price auction experiment for regular monthly offerings
of 2- and 5-year notes for another year.
Thus, we are extending
the experiment, which began with the 2- and 5-year note auctions
in September 1992, through the 2- and 5-year auctions to be held
in August 1994.
We believe that more observations are necessary to
evaluate the single-price auction technique thoroughly.
The
results of the experiment to date have not revealed evidence that
the single-price auctions have added to the cost of financing the
debt.
As we announced last september, the Treasury will evaluate
the results according to indicators such as cost, breadth of
participation in auctions, concentration of auction awards,
yields at auction relative to when-issued and secondary market
trading, and dispersion of bids.
7.
We will accept noncompetitive tenders up to
$5 million for each of the notes and bonds.
The 10-year notes
and 30-year bonds being announced today are eligible for
conversion to
S~PS
(Separate Trading of Registered Interest and
Principal of Securities) and, accordingly, may be divided into
separate interest and principal components.
8.
The November midquarter refunding press conference will
be held on Wednesday, November 3, 1993.
TREASURY FINANCING REQUIREMENTS
April - June 1993
$Bil. I
I
Uses
135 112
Sources
125
125
100
$Bil.
Coupon Maturities ~
75
Increase
in Cash
50 l- Balance
•
Deficit~
•
Savings Bonds
1 ~4
100
Net
Market
Borrowing
• •
•
3
18%
75
50
State and Local
25
o
~ Coupon Refunding
~
25
o
Includes budget deficit, changes in accrued interest and checks
outstanding and minor miscellaneous debt transactions.
Department of The Treasury
OHico of Markel Finance
August 2. 1993·27
TREASURY FINANCING REQUIREMENTS
.
$BII.
July - September 1993
i
I
Uses
175 -
-1 175
$Bil.
Sources
163/4
--150
150·125
100
Coupon Maturities ~
•
•
Savings Bonds
State and Local
•
-·100
2%
4
75
125
~ Coupon Refunding
1/4
Borrowing
•
Foreign Nonmarketables
50
58%
~ Deficit~
25
75
50
25
Decrease in Cash Balance.v
o
~
t
o
Includes budget deficit, changes in accrued interest and checks
outstanding and minor miscellaneous debt transactions.
'!; Issued or announced through July 30, 1993.
.v Assumes a $40 bililion cash balance September 30,
Departmenl of Ihe Treasury
Office of Markel Finance
1993.
Augusl 2. 1993-26
TREASURY OPERATING CASH BALANCE
Semi- Monthly
$Bil. I
Without
-New --.
60
Borrowing
Tax and Loan
Accounts Balance
Total Operating Balance
•
~
40
!.I
,,
,,
,
I
20
01
• •
,,
,,
,
Federal Reserve Account
' ....
-20
..
.
'•
-40LI----~--~----~----~--~----~----~--~----~----~--~----~--~~--~----~
Jul
Aug
Sep Oct
1992
Nov
Dec
Jan
Feb
Mar
Apr
May Jun
1993
Jul
Aug
Sep
JlAssumes refunding of maturing issues.
Depar1ment of the Treasury
OHlce 01 Markel Finance
Augusl 2.
1993~29
TREASURY NET MARKET BORROWING .11
$Bil. i
Coupons
Over 10 yrs.
103.5
ltd
100
.$Bil.
100
~ 2-10 yrs.
Bills
80
80
II
60
60
40
40
20
20
o
o 1-
-20
-20
-40
II
III
1989
IV
II
III
IV
1990
.11 Excludes Federal Reserve and
Department of the Treasury
Office of Market Finance
II
III
1991
IV
II
III
1992
IV
II
III
'-40
1993
Government Account Transactions.
August 2.1993·4
13-WEEK BILL AWARDS TO PRIVATE INVESTORS, FEDERAL
RESERVE SYSTEM, AND OFFICIAL FOREIGN CUSTODY ACCOUNTS
Quarterly Averages, 1989 through 111-1993*
$Bil.r-.- - - - - - - - - - - - - - - - - - - - . . . . . . . ,
•
D
Private
IIlII Federal Reserve System
Foreign Official
81-----
61-----
41-----
21-----
0'
"m"','E
II
III
1989
Department of the Treasury
Office of Market Finance
IV
II
III
1990
IV
II
III
IV
1991
Calendar Quarter
II
III
1992
IV
II
III
1993
• Latest bill settled July 29. 1993
August 2, 1993-5
26-WEEK BILL AWARDS TO PRIVATE INVESTORS, FEDERAL
RESERVE SYSTEM, AND OFFICIAL FOREIGN CUSTODY ACCOUNTS
Quarterly Averages, 1989 through 111-1993*
$Bil. ••- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ,
•
III Federal Reserve System
D Foreign Official
Private
81-
61-
41--
21--
0'
=
II
III
1989
IV
II
III
1990
IV
II
III
IV
1991
Calendar Quarter
II
III
1992
IV
II
III
1993
• Latest bill settled July 29, 1993
Depanment ot the Treasury
Office ot Market Finance
August 2. 1993-6
52-WEEK BILL AWARDS TO PRIVATE INVESTORS, FEDERAL
RESERVE SYSTEM, AND OFFICIAL FOREIGN CUSTODY ACCOUNTS
Quarterly Averages, 1989 through 111-1993*
$Bil.ir-- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ,
•
IIJ Federal Reserve System
D Foreign Official
Private
101--
81--
61--
41--
21--
o'
-
m --:t?9 =-m "
II
III
1989
Oepartmenl of lhe Treasury
Office of Markel Finance
PSf
IV
II
III
1990
IV
II
III
IV
1991
Calendar Quarter
II
III
1992
IV
II
III
1993
* Latest bill settled July 29, 1993
Augus12,1993-7
NET STRIPS AS A PERCENT OF PRIVATELY HELD
STRIPPABLE SECURITIES
$Bil.l
Held in STRIPS Form
Percent
(Left Scale)
(Right Scale)
rJi;;;] 30 Year
30 Year
C=:I20 Year
-10Year
180
_20 Year
!: ... :l 10 Year
160
1%
70
60
140
50
120
40
100
80
30
60
20
40
10
20
0'
11,','jl'
t/(/)r
J
A
j!(/jf',J)<f/2'!f"l!
SON 0
1991
J
'IV'lf/-Jf'c'.jt
F M A M J
!f"'lt/!y,li
J
A
SON
1992
:\>c 11
0
-:,jt/
J
lj
If
'/1;
F M A
-I!
11
i
'0
M J J*
1993
*Through July 23, 1993
Dnp,lrllTlf>nl oj Ihn
Ofllo?' flf M3rkpl
TH~"sllry
F-lilcHlU'
Allgus12.199313
NET NEW CASH FROM NONCOMPETITIVE TENDERS IN
WEEKLY BILL AUCTIONS Y
$Mil.r-.------~~:=:~:........:::..:==-=--=-=--=------== Discount Rate %
Net New Cash (left scale)
300
D
26 week
•••••• 26 week
•
13 week
13 week
............
...
...
--
200
4.0
3.5
..
". ••........•..-.
.- .~..••...•..
•-
100
Discount Rate (right scale)
.
3.0
#--
2.5
oIII • • '
•••
1 1 •••••••
Ill" lui j
-100
-200
~ Ii ~ ~ , ~ ~ ~ ~ ~ ~ • ~ ~ • • • • • • •
)'
u
I J
i
III
il,
Iu
I[
-400'!
I
U
II
Jul
Aug
II
Sep
It:I 'I
I
lJ
-300
A
-I'-IIULI
L
U
U
III~
i
II • • II • It:I II It:I Ii • Ii II • • • • It:I
Oct
II
Nov
I!
Dec
Jan
1992
II
Feb
II
Mar
Apr
I'
II
May
Jun
Jul P
1993
.11 Excludes noncompetitive tenders from foreign official accounts and the Federal Reserve account.
Department 01 the Treasury
Office of Market Finance
p Preliminary
Auguust 2. 1993-14
NONCOMPETITIVE TENDERS IN TREASURY NOTES AND BONDSY
$Bil.
2.5
$Bil.
_7Year
~ 2&5Year
IllllBllJ 3, 10 & 30 Year
r--
-
2.5
-
2.0
r;
/
;
2.0 ~ ~
'?
~
r7
1.5
I--
t;;
~
t;;
~
~
1.0
.5
~
~
~
~
t;;
r::
~
f--
t/:
t/.;
1%
~
~
~
1%
I
~
~
t;:;
JASONDJ
1991
1992
,.!!Excludes foreign add-ons from noncompetitive tenders.
I':
r7
t8
v;
f--
1.0
I--
.5
p
0
~
r;;
I
F M A M J J A SON 0 J
r-- 1.5
~
I?,
r;;~
~
~
o
I
I
.~
r;;
I--
~
~
~
~
t;;
t:::
I~
F M A
t2
M J
J
1993
p Preliminary
Treasury increased the maximum noncompetitive award to any noncompetitive bidder to $5 million effective November 5, 1991.
Effective February 11. 1992 a noncompetitive bidder may not hold a position in WI trading, futures, or forward contracts,
nor submit both competitive and noncompetitive bids for its own account.
Department 01 the Treasury
Office of Market Finance
August 2.1993-15
TREASURY NET BORROWING FROM NONMARKETABLE ISSUES
$Bil.
10
$Bil.
D
Ea
D
Savings Bonds
•
Foreign Nonmarketables
Domestic Series
10
State and Local Series
7.8
3.5
5
5~··
01-
,='II
10
-1.1
-0.6
-1.2
-5
I
II
III
1989
IV
II
III
IV
II
1990
1991
e
III
IV
II
III
1992
IV
II
Ille 1-5
1993
estimate
Department of the Treasury
Office of Market Finance
August 2 t 993·33
SALES OF UNITED STATES SAVINGS BONDS
1980 - 1993
$BiI.·...----------------------------------,
6
5
~ Total Sales
4
3
2
•
Payroll Sales
1
..~~..~~~~~~~~--~----..--~~~~~~~~~~~~~~
o~·
1980
1981 1982 1983 1984 1985 1986 1987 1988
Oe;lartment of the Treasury
Office of Market Finance
1989
1990 1991 1992 1993 e
End of Quarter
e estimate
August 2.1993-17
STATE & LOCAL GOVERNMENT SERIES
$Bil.l
I
Gross Issues
\*"",,"n'~:;;;
Redemptions
~
10 I-
5
-
A
~ ~
"
$Bil.
--ho
5
~~~~~~~~{"
01
10
I$Bil.
$BiU
-
NetSLGs
5--
5
---":a:::
o1
I"
'" "
27
-5
11- 5
I
1989
Department of the Treasury
Office of Market Finance
1990
1991
1992
10
1993
August 2,1993-18
STATE AND LOCAL MATURITIES 1993 -1995
$Bil.
$Bil.
12.8
II
12
12
-
~
10
-
~
~
-
10
-
8
-
6
-
4
-
2
~~
8
~~
6.9
.- ..-~
6
~
~
~~
~
1
4
I
I
2
o
-
I
III
IV
1993
DepClrtmenl 01 the Treasury
Oft Ice of MiirkE't FInance
I
II
I
III
1994
I
IV
I
-[
I
II
III
IV
I
o
1995
Auqusi 2 1993·30
QUARTERLY CHANGES IN FOREIGN AND INTERNATIONAL
$Bil.,
HOLDINGS OF PUBLIC DEBT SECURITIES
.$Bil.
Nonmarketable
35
35
F.0:l
~
Marketable
~ Net Auction Awards to Foreign.1l
• Other Transactions
30
25.8
25
30
25
20
20
15
15
10
10
5
5
o
o
-5
-5
-10
-10
-15
-7.9
-15'
I
II
III
1989
IV
II
III
1990
IV
II
III
1991
IV
II
III
1992
IV
I
1121
1993
20
.11 Auction awards to foreign custody purchasers netted against holdings of maturing securities.
2.1 Preliminary
Department of the Treasury
Office of Market Finance
August 2.1993-16
NET AWARDS TO FOREIGN OFFICIAL ACCOUNTS 11
$Bil.
il.
r - .- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ,
Notes
~ 5 years and over
1;::::::::::1 2-4 years 2/
8
-
6.1
8
Bills
6
6
2.9
4.1
1.5
4
4
2
2
o
o
-2
-2
-4
-4
-6
-8
-6
-4.2
I
II
III
1989
IV
II
III
1990
IV
II
III
IV
1991
II
III
IV
1992
II
III
is,
'-8
1993
Quarterly Totals
..!/ Noncompetitive awards to foreign official accounts held in custody at the Federal Reserve in
excess of foreign custody account holdings of maturing securities .
.?/'
Department of the Treasury
Office of Market Finance
4 year notes not issued after December 31, 1990.
.;y Through July 30, 1993.
August 2.1991·31
SHORT TERM INTEREST RATES
Quarterly Averages
%
%1
Prime Rate
Federal Funds
12
10 I-
SA\.
12
r
I
-i
L..
10
Through
July 28
8~
•
Commercial
Paper
6
~LJ ..\
1
II
~
8
, L-r
~
•
3 Month
Treasury Bill
41-
!~
~
~...
---14
2'
2
1983
1984
Department of the Treasury
Office of Martlet Finance
1985
1986
1987
1988
1989
1990
1991
1992
1993
August 2, 1993-23
SHORT TERM INTEREST RATES
Weekly Averages
%
1%
Prime Rate
61
•
/6
Through
July 28
*5
5
Commercial
Paper
•
4
4
•••••
••
• ••• ••
••
'
.. •••••.--
-
4b
....
Federal Funds
• cs:: ...-...-...._.
(
1%rF <>w~ ~3
•••••
~~
_ ? A.A~ ~·······~r
•
3
3 Month
Treasury Bill
2'
I
I
II
Oct
Department of the Treasury
Office
or Market Finance
I
I
I
Nov
1992
I II
I
I
Dec
I
I
I
I
Jan
II I
I
I
Feb
I II
I
I
Mar
I
I
I"
Apr
I
I
I II
I
I
I
May
Jun
1993
I
I
I
'2
Jul
August 2, 1993-24
LONG TERM MARKET RATES
Quarterly Averages
%
%
14
14
13
13
12
12
11
~New
'Illfu
10 I~.I
'''''
s
8
!I"~
"N
flllij
Treasury
!
-
'!!It!JlW",..""
-
~u~,
30-Year~
7
Through
July 28
-=="-~~
%~
91
11
Aa Corporales
Inll!!ll!!tr
•
·'l!ljllU!h.h'
I
1983
1984
1985
7
illnntlU,"
I
5
1986
1987
1988
1989
1990
19
8
30-YE
Municipal Bonds
6
110
1991
I
1992
I
I
16
5
1993
l)pp..=!rlrnenl ollhe Trf'3SUfY
Ofll,~e
0 1 Markel
hfl~nce
AugusI2.1993·25
INTERMEDIATE TERM INTEREST RATES
Weekly Averages*
%
0/0 I
~
r.4f4
~
~
~...
~
tf',
'
......,. ....., ,
,~
#
~
7
'-
..
Through
July 23
!
FNMA 7% Pass-Through
'....~
.....
#
#""'A~"',
...~_...
.,;
~-~,
,
,
-Ii
AA 10-Year Industrial
17
~
6
6
5
5
Treasury 5-Year
4
I
I
'I
Oct.
!
I
I I! I I I I I I I I ,I I
Dec
Nov
1992
*
lh:'partrnonl of the' T r()d~;l1ry
()f t'/1(H kpl f Ifl;lflU"l
OIlICl~
Jan
I II I
j
.
I I II I I I I I I I ! I
Mar
Apr
1993
May
i
I I II
Jun
Jul
4
Salomon 10-yr. AA Industrial is a Thursday rate, All rates are offer side,
J\uqust::?, 1'J fJ 3·26
MARKET YIELDS ON GOVERNMENTS
010'
6
j
'I
,
,%
,6
I
I
July 30, 1993
•
5
5
I.
4t-
,
%/'
'1
7.0r-
I
May 3,1993
:r
3t-
1
2
1
1
I .. ;
I
I
I
I
I
I
14
16
18
20
1%
I
/
12
21
,
i
I
22
24
26
--14
---i 7.0
I: -13
5.5
30
28
12
3
4
5
6
7
8
9
10
Years to Maturity
Department of the Treasury
Off,ee of Market Finance
August 2. '993 32
PRIVATE HOLDINGS OF TREASURY MARKETABLE DEBT
BY MATURITY
$Bil.
2600
r - ,- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ,
2400
2200
2000
June 30, 1993
~
2515.5
I
DOver 10 years
407.4
lID
2-10 years
~ 1-2 years
1800
1600
•
1 year & under
•
Bills
903.8
1200
~
1000
354.7
1400
I
I
I
800
342.6
600
I
I
400
507.0
200
I
o
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
As of December 31
Departrne!l1 olltle Treasu'Y
OffICe ot Mari<el Flflance
August 2. 1993-1
PRIVATE HOLDINGS OF TREASURY MARKETABLE DEBT
Percent Distribution By Maturity
Coupons
[] Over 10 years
[ill
2-10 years
~ 1-2 years
• 1 year & under
•
Bills
100%
:16 :
80
60
40
20
o
1982
1983
1984
1985
1986
1987
1988
As of December 31
1989
1990
1991
1992
Jun'93
Depanment of the Treasury
OHlcP of Market Finance
Auyust 2. 1993-2
AVERAGE LENGTH OF THE MARKETABLE DEBT
Privately Held
years--------------------------~----------------------------I
Months
.... JUne1947
10 Years
10
76
5 Months
June 30, 1993
5 Years, 10 Months
74
9
72
8
/
70
68'~~--~~--~--~~--~~--~--~~~
7
J
F
MA
J
M
J
AS
0
N
D
6
December 1975
2 Years
5 Months
5
4
~
3
2,
!
!
!
!
!
I
I
!
!
I
I
!
!
I
!
!
'
I
!
!
!
!
!
!
,
!
!
!
I
j
I
I
!
I
I
I
!
!
!
(
!
!
I
I
I
I
I
!,
194547 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93
Department of the Treasury
Office of Market Finance
August 2. 1993-3
MATURING COUPON ISSUES
August - December 1993
(in millions of dollars)
June 30, 1993
Held by
Maturing Coupons
11 7/8%
83/4%
8
%
85/8%
63/8%
81/4%
6 1/8%
7 1/8%
6
%
11 3/4%
9
%
73/4%
85/8%
5 1/2%
75/8%
5
%
Note
Note
Note
Bond
Note
Note
Note
Note
Note
Note
Note
Note
Bond
Note
Note
Note
08/15/93
08/15/93
08/15/93
08/15/93
08/31/93
09/30/93
09/30/93
10/15/93
10/31/93
11/15/93
11/15/93
11/15/93
11/15/93
11/30/93
12/31/93
12/31/93
Totals
'----
Total
Federal Reserve
& Government
Accounts
Private
Investors
Foreign.Y1
Investors
6,593
7,370
15,499
1,768
14,087
8,745
15,373
7,013
15,716
12,478
7,518
17,211
1,509
15,628
8,974
16,539
1,606
68
2,686
164
967
341
1,521
468
1,567
2,223
272
3,776
224
1,146
778
2,133
4,987
7,302
12,813
1,604
13,120
8,404
13,852
6,545
14,149
10,255
7,246
13,435
1,285
14,482
8,196
14,406
313
1,407
2,665
50
1,055
1,225
1,755
558
2,857
1,996
1,354
2,271
73
1,906
673
1,534
172,021
19,940
152,081
--
11
Department of the Treasury
OffIce of Mar~et Fmance
-
21,692
_.
-
-
F.R.B. custody accounts for foreign official institutions; included in Private Investors.
August 2, 1993·11
TREASURY MARKETABLE MATURITIES
Privately held, Excluding Bills
'28
:
~
240
26
24
.
I
28.2
1994
23.4
ega
!!l3lI
I
29.1
""'"
IJ
29.2
S",
14 r
i I
23.5
23.4
22
20
18
16
14
12
~
10
8
6
9.4
4
2
0,' . [(0 -
34
32
30
28
1/'1
-
-
[/'7 -
[
-'[(O·V{d
'A
m.V(J'kO
PI
i I
30.8
1~11IiI ~nll
lUlU
Ill!
9.6
I
II
i
,
10.2
26
24
22
20
18
16
14
15.9
15.7
163r,.;1 16.6
15.6
16.1
!l1
~~
~.
~j;
I»mI
·PI-g
=
38
~.5
H
~
i~
3 2.3
:~i
,..;,
1
30,,,
28"'il
~.
24"
22 _
w
mm-g1996
I
~
a;.~,
I
Iii
I
•
-
"
ii
~ I~1l
2~q
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M
Department of the Treasury
Office of Market Finance
A
M
J
i,2
I
,is,
ii
~~
19.3
il;;
"
2001
.
J
I'
AS
0
141
13.4
9.4
NO
Securities issued prior to 1991
IIlI!I
New issues calendar year 1991
J
o
I :
25.0
I
12.2
_
.
•
18
16
9.7
11.0
I
10.1
~
9.4
F
I
13.0
24
I
J
2000
12.0
;::r
I
'ils
'""
1~
I-
4
2
O '.W-J.»m
14
12",
F
M
A
M
J
J
I
A
S
o
N
0
New issues calendar year 1992
IDfJWD Issued or announced through July 30, 1993
August 2. 1993-8
TREASURY MARKETABLE MATURITIES
Privately held, Excluding Bills
$Bil
2002
22
20
22.3
18
16
14
11.0
12
10
8
6
41
2.5
1.7
2
0
28[
26
24
22
20
24.7
2003
18
16
14
12
10
7.1
8
6
l:t
6.3
:t
I
;tt
I
~~
II
~r
J
I
I
III
8.8
~,
:t
!.
I
8"_ _~_ _ _ _~~_ _ _ _~_ _ _ _~6
FM
Department of the Treasury
OffIce of Market Finance
1
A
M
J
J
A
_
_
I!
I
".9
SON
6.8
II
~
2007
_
II ~r-
2006
4.7
o
20~5
D
J
FM
A
M
J
J
A
S
_
Securities issued prior to 1991
o
!!II
New issues calendar year 1991
~i~ii@ Issued or announced through July 30, 1993
o
N
0
New issues calendar year 1992
August 2. 1993·9
TREASURY MARKETABLE MATURITIES
Privately held, Excluding Bills
r
$8"
24
22
20
18.0
8,1 ~-~-~::-:------r-:---
~~t
17
2°1
26
:
24
22
20
L=~~d=:t=~::
18
16
14
I
22 I18
,
2019
18.9
~
11.9
11.7
10.9
I
1II!l!!
:
m
19.3
I-
I ::
16
14
12
10
II
32.1
~~-
I
20 I-
I-
2021
I
I-
12
10
6
4
2
T
28
26
24
22
20
18
I
11
2023
I
2020
I '
t
J.
0,
I
oJ...--
rl
!]
~E
8/-
103
10.0
210
17.6
16
14
12
10
100
99
I
8
I
I
4
[
2
o i...--
J
F
M
Deparlmenl ollhe Treasury
OHrce of Market Finance
A
M
J
J
A
SON
0
_
Securities issued prior to 1991
Iii
New issues calendar year 1991
8-6
4
2
J
r=J
FM
A
M
J
J
A
S
o
N
o
New issues calendar year 1992
@;l~;;iM Issued or announced through July 30, 1993
Augusl 2. 1993-10
SCHEDULE OF ISSUES TO BE ANNOUNCED AND AUCTIONED
IN AUGUST 19931/
I
-
Monday
Tuesday
2
3
9
10
Wednesday
4
6
5
11
13
12
Announce
52 week
Auction
30 year?!
Auction
10 year?!
Auction
3 yearS!
Friday
Thursday
I
I
16
17
23
24
Auction
2 year 4/
30
,
18 Announce
2 year
5 year
19
25
26
20
Auction
52 week3/
27
Auction
5 yearY
31
~-
-
Y
(',.( ,j"!f\ PI'!
( HIll" , " ~.~
1
"I
r I.'
II",
1[1- ,.' I
'I
"I
I
Does not Include weekly hills
2jFor set1lement August 16
:3jFor settlement August 26
4/ For settlement August 31
-
-
SCHEDULE OF ISSUES TO BE ANNOUNCED AND AUCTIONED
IN SEPTEMBER 1993 11
Monday
-
Tues day
Wednesday
1
-- -------
--
-
6
-----
f-~--~-.-.---.
-
.---
7
Friday
Thursday
2
---. - -
---
--+---
8
.
--
3
----- ----
_.-_.
9
.
------- ----
--
10
Annou nce
52 week
Holida y
13
--
f------
14
15
Annou nce
2 year
5 year
16
17
Auction
52 week 2/
~----
20
21
Auctio n
2 year 3/
27
28
22
23
24
Auction
5 year3J
29
-
30
I
-
y Does not Include weekly bills
?! For settlem ent Septem ber 23
U'>'-Jr1rT~""r'
{)!I'IP
,'I",
,T~JI'~f-Tj
1, t'
j
]I For settlem ent Septem ber 30
---
SCHEDULE OF ISSUES TO BE ANNOUNCED AND AUCTIONED
IN OCTOBER 1993 V
Mond ay
Tuesd ay
Wedn esday
Thurs day
Friday
1
---
4
5
._._.__
._--
6
7
9
----------
Annou nce
52 week: '/
11
- - - - . - . - ~--.
12
13
Holida y
18
25
- - - - -- - - --
14
- --
--
- ------
15
Auctio n
52 week 2 /
19
26
Auctio n
2 year 3j
20 Annou nce
2 year
5 year
21
27
28
Auctio n
5 year 3 /
22
I
I
I
I
I
29
1j Dues rlU! Include weekly t)IItS
2/ For settlem ent Orto!)e r 21
3) For settlem ent Nuvern bpi 1
~
RETROACTIVE RATE CHANGES
The following is a list of retroactive rate increases and
their effective dates.
1917: The Revenue Act of 1917 imposed a surtax on
individuals and an excess profits tax on corporations. The Act
was passed on October 3, 1917 and the rate changes applied
retroactively to the 1917 calendar year.
1918: The Revenue Act of 1918 increased individual rates
and corporate rates. The Act was passed February 24, 1919 and
the rate increases applied retroactively to the 1918 calendar
year.
1935: The Revenue Act of 1935 increased the individual
surtax rate and the corporate rate. The Act passed on August 30,
1935. The effective date for this tax was generally prospective,
based on a pro ration formula, but for some corporations, it was
possible that the rate could have been retroactive from July 30.
1935 to June 30, 1935.
1936: The Revenue Act of 1936 imposed an undistributed
profits tax on corporations. The Act was passed on June 22, 1936
and the tax applied retroactively to December 31, 1935.
1938: The Revenue Act of 1938 altered the distribution of
the corporate tax to make the tax more progressive. High income
corporations faced a higher tax.
The Act was passed May 28, 1938
and applied retroactively to years beginning after December 31,
1937.
1940: The Revenue Act of 1940 raised corporate rates and
imposed a Defense Tax on individuals. The Act was passed June
25, 1940 and was effective retroactively to December 31, 1939.
The Second Revenue Act of 1940 added an additional surtax on
corporations and an excess profits tax on corporations. The Act
was passed October 10, 1940. Both increases were effective
retroactively back to December 31, 1939.
1941: The Revenue Act of 1941 increased the surtax on
individuals and corporations, effective retroactively to December
31, 1940. The Act was passed on September 9, 1941.
1942: The Revenue Act of 1942 increased the normal tax and
the surtax on individuals, both retroactive to December 31, 1941.
The Act also increased the corporate surtax, again retroactive to
December 31, 1941.
1943: The Revenue Act of 1943 increased the excess profits
tax on corporations. The Act was not passed until February 25,
194~
~nrl
~hp
rate changes applied retroactively to December 31,
194].
1~SO:
The Excess Profits Tax Act of 1950 imposed an excess
tax to taxable years ending after June 30, 1950. The Act
was approved January 3, 1951.
profit~
IgSI:
The Revenue Act of 1951 increased corporate rates
both retroactively and prospectively.
The rates were increased
as of January 1, 1951, with further increases to take effect
January 1, 1952.
The Act was passed October 21, 1951.
The Revenue and Expenditure Control Act of 1968
iDposed a surtax on all taxpayers.
For individuals, estates and
trusts, the surtax was retroactive to April 1, 1968.
For
corporations, the surtax was retroactive to January 1, 1968. The
Act was passed on October 22, 1968.
1968:
Tax Reform Act of 1976 increased the alternative
tax on individuals from 10 percent to 15 percent. The
corporate alternative minimum tax was similarly increased to 15
percent.
Both increases were effective after December 31, 1975.
The Act was passed on October 4, 1976.
1976:
mini~um
- 2 -
FOR IMMEDIATE RELEASE
Aug. 5, 1993
STATEMENT OF TREASURY SECRETARY LLOYD BENTSEN
I think it's great that Herb Kohl is confronting the special interests and their scare
campaign. These powerful groups have misrepresented the economic program and it's
high time someone stood up to them.
When the special interests spend the kind of money they have in Wisconsin, it's
almost impossible to set the record straight unless you respond on TV. Herb Kohl is in
a position to do that. These interest groups operate like bullies, never imagining that
anyone will fight back, and he is to be commended for taking them on.
-30-
LB-313
PUBLIC DEBT NEWS
"- '- I G ,) ,)
Department of the Treasurv • Bureau of the Public Debt • Washington. DC 20239
FOR RELEASE AT 3:00 PM
August 5. 1993
Contact: Peter Hollenbacn
(202) 219-3302
PUBLIC DEBT ANNOUNCES ACTIVI1Y FOR
SECURITIES IN THE STRIPS PROGRAM FOR JULY 1993
Treasuris
Bureau of the Public Debt announced activitv. firures
for the month or' Julv. 1991-..
.
....
of securities within the Separate Trading of Registered Interest and Principal of Securities
program (STRIPS).
Dollar .-\mounts in Thousands
Principal Outstanding
(Eligible Securities)
S700.254.639
Held in Unstripped Form
S502.927'-+73
Held in Stripped Form
$197,327.166
S14.723.280
Reconstituted in July
The accompanying table gives a breakdown of STRIPS activity by individual loan description.
The balances in this table are subject to audit and subsequent revision. These monthly figures
are included in Table VI of the Monthly Statement of the Public Debt, entitled "Holdings of
Treasury Securities in Stripped Form."
Information about "Holdings of Treasury Securities in Stripped Form" is now available on the
Department of Commerce's Economic Bulletin Board (EBB). The EBB, which can be
accessed using personal computers, is an inexpensive service provided by the Department of
Commerce. For more information concerning this service call 202-482-1986.
000
PA-127
TA8l£ VI-HOlDINGS OF TREASURY SECURmES IN STRIPPED FORM.
28
~1IR
(In thousands)
I
~-~
f
Por-.. Hl1IeI II
~Fam
~
LOIfl
o.cr....
"~_CI994
" " ..... _
1 I If4,
"·1995
NoIe 8-1995
'0 Ir2'!I. _ . C 1995
~ Ir2'!I. Nee. ().1995
87 _ _• 4,996
7
:\18.... _ . C 1996
MaMIY
o.r
I
I
Tot ..
no.
Pa1IDn t-.s II
5q)ped Farm
ManII'
S6.658.~
$o4.981.7~
SI.676.SlO
S206.«I)
I
6.933.861
5.316.261
1.617.1iIlO
121,1;00
7 127.086
•.294.766
2.832..320
161. •
i
7955.901
5.056.~1
2.8911.«100
601.000
11115195
7.JI8.55O
3.888.550
3.4JO.000
10.«1)
2/15196
8.• ,7.0'9
7.722.619
694.G
166.«1)
5115196
20.085.&13
19.312.843
m.SlO
8.000
2.092.SlO
241.600
3).000
11I1~
2/15195
5115195
8115195
I
11115196
20.258.810
18.166.010
Ir2'!I. _ . " 1997
8518'!1. _ . 8-1997
87 _ _ _ CI997
5115197
9.921.237
8.686.837
1.234.G
&15197
9.362.836
8.207.636
1.155.200
.().
11115197
9.8011.329
7.478.729
2.329.1iIlO
59.200
B ''''' _ . "'998
2/15198
9.159.068
8.458.588
700.480
121.600
5115198
9.165.387
6.780.987
2.3114.400
120.000
9 " ..... NoI. C '998
8115198
11342.&16
9.784.246
1.558.400
91.200
87"' .... NoI. 0·'998
87 _ _• ,,·.999
11115198
9.902.875
7.685275
2.217.1iIlO
.().
2/1$199
9.719.623
9.022.023
697.1iIlO
89.600
? ."' .... _ . 8-1999
511$199
10.0017.103
7.813.503
2.233.1iIlO
145.600
9.555.444
608.200
.().
9.341.960
1.432.000
24.000
.'.600
, II .....
Nee_ ().1996
~
q"l, _ .
8 '998
_ . C 1999
8115199
'0.163.&14
'7S .... _ . ().1999
1111$199
'0.773.960
B "2'!I. NoI. ,,·2000
2115<00
10.673.033
6 7,6 .... NoI. 8·2000
8 :)I..... _ . C 2000
5115<00
10 .•96.2:JJ
8115<00
11.000.&16
B~.
I
I
9.890.233
782.SlO
6.910.~
J.585.6OO
0-
9.374.086
1,106.560
59.840
100.000
11115<00
11519.682
9.810.882
1.708.SlO
7 Y4 .... __ "·2001
2/15101
11.312.802
10.581.602
731.200
48.000
8"" _ . 8-2001
5115101
12.398.083
11.079.858
1.318.225
26.«1)
7 7"''''' Nee. C 2001
8115101
12.339.1115
11.665.585
673.600
0-
7 Ir2'!I. Nee. ()'2OO1
7 Ir2'!I. _ . ,,2002
11115101
24.226.102
24.002.902
223.200
271.200
5115102
11.71 •. 397
11.260.957
453.440
0-
6 li8'!I. Nee. 8·2002
61.5102
23.859.015
23.822.215
36.SlO
.().
2/1~
23.562.691
23.560.675
2.016
.().
8
1/2'JI.
Nee. 0·2000
6- " ..... Nee. ,,·2003
11115104
8.~1.806
5.663.806
2.648.000
1.056.000
'2'!I. Bond 2005
511~
• 260.758
3.27 •. 9C8
985.850
.'4.000
10Y..... Bond 2005
8115105
9.269.713
8.252.1\3
1.017.600
3.200
1:\18.... Bond 2006
2/15106
4.755.9.6
'.155.276
640
.().
I I Y ..... Bond 2009 ••
11"511~
6.005.584
3.963.184
2.042.400
657.600
2.190.880
" 518' Bond 2004
,'.% Bond 2015
2115115
12.667.799
•. 825.079
7.842.720
10518'!1. Bond 20'5
8115115
7 ••9.916
3.005.596
•. I44.3Z0
525.4<40
97,S.... Bond 2015
11115115
6.899.859
2.933.459
3.966.G
1.166.«1)
9 11 ..... Bond 2016
2/15116
7.266.854
5.666.~
1.1iIlO.800
200.000
7 "., Bond 2016
5115116
18.623.551
18.060.:151
763.200
.().
7 'r2'!I. Bond 2016
11115116
18.864.448
17.709.568
1.1~.880
.().
8 :)I ..... Bond 2017
5115117
18.194.169
5.102.329
13.091.840
745.120
8 7_ Bond 2017
8115117
14.016.858
5.082.458
8.934.Gl
547.200
'1
91_ Bond 2018
5115118
8.708.639
2.1\ 1.839
6.596.eoo
97.600
9'!1. Bond 2018
11115118
9.032.870
653.870
8.179.000
.().
87_ Bond 2019
8 , _ Bond 2019
2/15119
19.250.798
4.434.798
14.816.000
1.094.«1)
&15119
20.213.832
14.105.352
6.108.480
71.040
2/15120
10.228.868
3.293.268
6.935.800
601.800
8 I r2'!I. Bond 2020
8 Y..... Bond 2020
5115120
10.158.883
2.236.323
7.922.560
639.520
8 Y..... Bond 2020
8115120
21.418.606
3,342.286
18.076.320
616.000
77_ Bond 2021
2/15111
11.113.373
9.423.773
1.689.1iIlO
73.tm
81_ Bond 2021
8 , _ Bond 2021
5115111
11.958.888
4.391.208
7.567.680
397.4<40
8' EIond 2021
&15111
12.163.482
7.376.922
•. 786.560
408.J20
11115121
32.798.394
11.939.319
20.859.075
I.GI2.800
TABLE VI
HOLDINGS OF TREASURY SECURmES IN STRIPPED FORM, JULY 31, 1913-Continued
(In thousands)
.
L.,." 00IcriIlII0n
~"""""'CUUrdng
I
Malllll'y
Oat.
I
I
I
Talal
;
Porloon Held .,
uns~
Form
i
PortIon _
.,
,
SIra*l f.cml
lm
&'15/22
10352.790
8.915.990 I
11115/22
I
10.699.626
10334.626 I
J64.1m
7 1'8"" Botld 2023
2/15123
i
18.374.361
18.369.561
i
A.1m
'EllectNe Mev 1. 1987. _
14J6.
s~
lorm _e ""'JIbIe lor reca\SlllUbDn 10
~
lIl'trIpped
ManIh'
l
'9732716611
700254.639 I
hold .,
Aec::anIINed
I
n-.
I
7 5IlI... Bond 2022
Tala!
I
I
7 11.'" Botld 2022
I
27
.a.1m
2S1.eoo
~
U.723.280
lorm
Nole On the 4th~.-v at ad> mantI'I Tlible III .... De . _ .ner 300 pm oaslern lme on ..... Cotrnwce ~I S Economoc BuIe.... 6oato IEBeI The leiIIIlIlone runoet 'or .-0 "'ormallon
abOUI EBB IS 1202) 482·19116 The _
., IhS , _ are SI.ClIIICI 10 au<JI ;n:I ~l ao~tmenl'
FOR IMMEDIATE RELEASE
August 5, 1993
Contact: Michelle Smith
(202) 622-2960
TREASURY DEPARTMENT ASSESSES CIVIL PENALTY AGAINST
THE HONG KONG AND SHANGHAI BANKING CORPORAnON LIMITED
The Department of the Treasury on Thursday announced that The Hong Kong and
Shanghai Banking Corporation Limited has paid a civil money penalty of $225,000 for failing
to report certain cash transactions within the prescribed period of time as required by the
Bank Secrecy Act (BSA).
The violations involved single cash transactions in excess of $10,000, which were not
reported on currency transaction reports (CTR) at the Guam Branch of the bank. These
violations occurred in 1987 when the bank was under different management and stemmed
from a failure to adhere to internal controls designed to identify and report transactions
subject to the BSA.
The amount of the penalty was agreed upon by Treasury and the bank in complete
settlement of the bank's civil liability under the BSA for activities of the Guam Branch of the
bank. In determining the amount of the penalty, Treasury considered the bank's full
cooperation and improvements to the BSA compliance program implemented by the bank's
new management for U.S. operations.
Treasury has no evidence that the Guam Branch or any of its employees or officers
engaged in any criminal activity in connection with the reporting violations, nor was it under
investigation because of its failure to file CTRs.
LB-314
(MORE)
Assistant Secretary (Enforcement) Ronald Noble said: "The Bank"Secrecy Act is
designed so that banks and other types of financial institutions help the government fight
potential money laundering. Banks represent our front line of defense against financial crime
and, under this law, provide critical information to law enforcement. "
"For this reason, Treasury is continuing its efforts to assess civil penalties against
banks and nonbank financial institutions for violations of the BSA reporting and
recordkeeping requirements," Noble said. Noble also commended the Internal Revenue
Service Examination Division and examiner Roberto LeBron, for their assistance in this
matter.
The BSA requires banks and other financial institutions to keep certain records, file
CTRs on currency transactions in excess of $10,000 and file reports on the international
transportation of currency, travelers checks and other monetary instruments in bearer form.
The purpose of these records and reports is to assist the government in combatting money
laundering as well as for use in civil, criminal, tax and regulatory investigations.
-30-
. . . . ._
J
FOR IMMEDIATE RELEASE
August 5, 1993
I) ~.! i
CONTACT: Michelle Smith
(202) 622-2960
TREASURY ANNOUNCES LAW SUIT AGAINST BRUNSWICK BANK & TRUST
The Department of the Treasury today announced that the Justice Department, at the
request of the Secretary of the Treasury, is suing a New Jersey bank to collect more than
$450,000 in civil money penalties.
The suit alleges that on numerous occasions, Brunswick Bank & Trust Co., of New
Brunswick, N.J., received cash deposits in excess of 10,000 but did not report them on
currency transaction reports as required by the Bank Secrecy Act (BSA).
The total penalty of $472,004 was assessed on October 21, 1992 after Treasury
determined that Brunswick had failed to comply with the reporting requirements, and is the
maximum penalty amount authorized by law.
Compliance deficiencies at the bank were discovered and reported to Treasury by the
Federal Deposit Insurance Corporation (FDIC). Although negotiations were held, Treasury
and the bank were unable to resolve this matter.
Ronald Noble, Assistant Secretary of the Treasury (Enforcement), said, "Compliance
deficiencies and reporting failures are extremely serious and deprive Treasury of financial
information that can be vital in the battle against organized crime, drug trafficking and tax
evasion." Noble commended the FDIC for its assistance in this matter and its diligence in
effective review of the bank's compliance with this important law.
LB-315
(MORE)
In the past year, Treasury has assessed more than $4 million in Sank Secrecy Act
civil money penalties against banks, a credit union, currency exchanges, check cashers,
casinos, an individual and an import/export corporation. These penalties reflect Treasury's
continuing commitment to enforce BSA compliance by all types of affected financial
institutions and individuals.
The BSA requires banks and other financial institutions to keep certain records, file
currency transaction reports with Treasury on cash transactions in excess of $10,000 and file
reports on the international transportation of currency, travelers checks and other monetary
instruments in bearer form. The purpose of these records and reports is to assist the
government's efforts in combatting money laundering as well as for use in civil, tax, and
regulatory and other criminal investigations.
-30-
FOR RELEASE WHEN AUTHORIZED AT PRESS CONFERENCE
August 4, 1993
Office of Financing
CONTACT:
202/219-3350
TREASURY AUGUST QUARTERLY FINANCING
The Treasury will auction $16,500 million of 3-year notes,
$11,000 million of 10-year notes, and $11,000 million of 30-year
bonds to refund $26,706 million of publicly-held securities
maturing August 15, 1993, and to raise abo~t $11,800 miJ:ion new
cash.
In addition to the public holdings, Federal Reserve Banks
hold $4,524 million of the maturing securities for their own
accounts, which may be refunded by issuing additional amounts of
the new securities.
The maturing securities held by the public include $3,856
million held by Federal Reserve Banks as agents for foreign
and international monetary authorities.
Amounts bid for these
accounts by Federal Reserve Banks will be added to the offering.
The 10-year note and the 30-year bond being offered today
are eligible for the STRIPS program.
Tenders will be received at Federal Reserve Banks and
Branches and at the Bureau of the 2ublic Debt, Washington, D. C.
This offering of Treasury securities is governed by the terms and
conditions set forth in the Uniform Offering Circular (31 CFR
Part 356, published as a final rule on January 5, 1993, and
effective March 1, 1993) for the sale and issue by the Treasury
to the public of marketable Treasury bills, notes, and bonds.
Detalls about the notes and bond are given in the attached
offerlng highlights.
000
TALKING POINTS
FOR THE
FINANCING PRESS CONFERENCE
August 4, 1993
Today, we are announcing the terms of the regular Treasury
August midquarter refunding.
I will also discuss Treasury
financing requirements for the balance of the current calendar
quarter and our estimated cash needs for the October-December
quarter.
1.
We are offering $38.5 billion of notes and bonds to
refund $26.7 billion of privately held notes and bonds maturing
on August 15 and to raise approximately $11.8 billion of cash.
The three securities are:
First, a 3-year note in the amount $16.5 billion,
maturing on August 15, 1996.
This note is scheduled to
be auctioned on a yield basis on Tuesday, August 10.
The minimum purchase amount will be $5,000 and
purchases above $5,000 may be made in multiples of
$1,000.
Second, a 10-year note in the amount of $11.0 billion,
maturing on August 15, 2003.
This note is scheduled to
be auctioned on a yield basis on Wednesday, August 11.
The minimum purchase amount will be $1,000.
2
Third, a 30-year bond in the amount of $11.0 billion,
maturing on August 15, 2023.
This bond is scheduled to
be auctioned on a yielu basis on Thursday, August 12.
The minimum purchase amount will be $1,000.
In our May 5, 1993 press conference, we announced that beginning
with this August refunding, the Treasury will offer 30-year bonds
semiannually.
Therefore, the next 30-year bond is scheduled to
be offered in the February 1994 refunding.
2.
As announced on Monday, August 2, we estimate a net
market borrowing need of $58.3 billion for the July-September
quarter.
The estimate assumes a $40 billion cash balance at the
end of September.
Including this refunding, we will have raised
a net $35.5 billion of the $58.3 billion in market borrowing
needed this quarter.
This net borrowing was accomplished as
follows:
$3.8 billion of cash from the 2-year note that settled
August 2;
$11.4 billion of cash from the 5-year note that settled
August 2;
$14.4 billion of net cash from the regular weekly bills
includinq those announced yesterday;
$0.9 billion of cash in the 52-week bills;
a paydown of $6.8 billion in the 7-year note that
matured July 15i and
3
$11.8 billion of cash from the refunding issues
announced today.
The Treasury will need to issue $38.8 billion of marketable
securities during the rest of the July-September quarter
~o
paydown $16.0 billion of cash management bills that mature on
September 23 and raise net cash of $22.8 billion.
This financing
could be accomplished through sales of regular 13-, 26-, and 52week bills and 2-year and 5-year notes at the end of August and
September.
3.
We estimate Treasury net market borrowing needs to be
in the range of $95 billion to $100 billion for the OctoberDecember quarter, assuming a $35 billion cash balance on
December 31.
4.
The borrowing estimates for the two quarters assume
that legislation providing funds for resolutions of problem
thrift institutions will be enacted shortly.
5.
For the foreseeable future, we believe that the current
regular issue cycles for bills, notes, and bonds will be
sufficient to refund maturing securities and raise needed cash.
In order to maintain a regular, predictable pattern of debt
issuance, we would provide ample advance notice to the public if
there were to be any change in the regular offerings.
4
6.
We are also announcing that the Treasury is extending
the single-price auction experiment for regular monthly offerings
of 2- and 5-year notes for another year.
Thus, we are extending
the experiment, which began with the 2- and 5-year note auctions
in September 1992, through the 2- and 5-year auctions to be held
in August 1994.
We believe that more observations are necessary to
evaluate the single-price auction technique thoroughly.
The
results of the experiment to date have not revealed evidence that
the single-price auctions have added to the cost of financing the
debt.
As we announced last September, the Treasury will evaluate
the results according to indicators such as cost, breadth of
participation in auctions, concentration of auction awards,
yields at auction relative to when-issued and secondary market
trading, and dispersion of bids.
7.
We will accept noncompetitive tenders up to
$5 million for each of the notes and bonds.
The lO-year notes
and 30-year bonds being announced today are eligible for
conversion to
S~PS
(Separate Trading of Registered Interest and
Principal ot securities) and, accordingly, may be divided into
separate interest and principal components.
8.
The November midquarter refunding press conference will
be held on Wednesday, November 3, 1993.
TREASURY FINANCING REQUIREMENTS
$Bil.
April - June 1993
l
I
Uses
135ta
Sources
125
125
Coupon Maturities ~
100
75
I
50 I
25
$Bil.
I
Increase
in Cash
Balance
•
-
Deficit 1/
•
18%
~ Coupon Refunding
Savings Bonds
11;4
75
50
State and Local
o
1/ Includes
budget deficit, changes in accrued interest and checks
outstanding and minor miscellaneous debt transactions.
Oepartmenl 01 The Treasury
Of lieD 01 Markel Finance
Net
Market
Borrowing
• •
•
3
100
25
o
l\uQu',I?, lqq 1 ;>7
TREASURY FINANCING REQUIREMENTS
$B
'I
July - September 1993
I '\
I
Uses
175
I$Bil.
Sources
163 1/4
175
150
150
125 I
100 I
Coupon Maturities
State and Local
•
4
751
t ..
. . ~ Coupon Refunding
1125
Savings Bonds
-,- --- •
1100
.
2%
•
1/4
Foreign Nonmarketables
50 I
.t~~;~:';'i~~·
.
..
•
58 1 4
175
150
25
25
Decrease in Cash Balance
3
o
o
1/
Includes budget deficit, changes in accrued interest and cllecks
outstanding and minor miscellaneous debt transactions
:', Issued or announced through July 30, 1993
1,
Assumes a $40 bililion cash balance September 30, 1993
()r'J!'\f!rrlf)lil ()1 lhR TrA,l<;IIIV
U'h
0(,'
M;'lr1<e<1
rlll,lIHI)
/'1 II' ~ I I' 1,'
1 (1'1
I ,'H
TREASURY OPERATING CASH BALANCE
' ~_____________________
S_em_i_-M_o_n_th~ly~______________~______~
$S II, I
-
60
Tax and Loan
Accounts Balance
Total Operating Balance
•
~
40
Without
New ---Borrowing !I
20
I
I
I
I
I
I
01
•
'
Federal Reserve Account
I ...
I
I
I
I
-20
,
,
.
t
t
It
-40
I
Jul
Aug
Sep
Oct
1992
Nov
Dec
Jan
J1Assurnes
')1
, I" I
t
f lId' r If"' I IJ'
~,' II - .' t ~ ,I I I!:
•
Feb
Mar
Apr
Of rlliltlHlIlq issues
I
May
1993
Jun
Jul
Aug
Sep
TREASURY NET MARKET BORROWING 11
$UII'I
Coupons
F:-) Over 10 yrs.
100
o
103.5
100
2-10 yrs.
84.1
81.0 80.6
Bills
80
II
I$Bil.
80
76.7
72.4
64.6
60 .-
60
40
40
20
20
o 1-
o
I
-20
-20
-40
II
III
1989
IV
II
III
IV
1990
11 Excludes Fe(jeral Reserve and
[)"l .1r!rnent 01 the Trl?asIJr',
0111 .' ·)1 Market Fl(irtr1re
II
. _ .. -L-...
IV
III
1991
1-40
II
III
1992
IV
\I
III
1993
Governl nent /lccount Transactions
A'J\~\I,.t,'
l"H
~
,1
13-WEEK BILL AWARDS TO PRIVATE INVESTORS, FEDERAL
RESERVE SYSTEM, AND OFFICIAL FOREIGN CUSTODY ACCOUNTS
Quarterly Averages, 1989 through 111-1993*
$Bil..,- - - - - - - - - - - - - - - - - - - - - - - ,
•
o
Private
III
Foreign Official
Federal Reserve System
81--
61-
41--
21--
0'
-
m. m. WP=-I88'= m.-m' '88'- 881-.'
II
"'
1989
Department of the Treasury
Office of Market Finance
,v
II
"'
1990
'V
tgjI.
II
m. sga, m. '88'- 881' m. '88'- m. R88
"'
'v
1991
Calendar Quarter
II
"'
1992
'V
II
"'
1993
• Latest bill sel1led July 29, 1993
August 2 19935
26-WEEK BILL AWARDS TO PRIVATE INVESTORS, FEDERAL
RESERVE SYSTEM, AND OFFICIAL FOREIGN CUSTODY ACCOUNTS
Quarterly Averages, 1989 through 111-1993*
$BiLr,- - - - - - - - - - -_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _-,
•
Private
D Foreign Official
1m Federal Reserve System
81-
61---
4f-
21---
0'
•
1M' 00-
II
1989
Department 01 the Treasury
OHlce of Market Finance
6_
III
m-
IV
mw sssw ww mw
B8!- '88- @IW mw SSSW @IW
II
III
IV
II
III
1990
IV
1991
Calendar Quarter
II
w-W-
III
1992
IV
m-
ISS-W
II
III
1993
• Latest bill settled July 29, 1993
August 2 1 qqj n
52-WEEK BILL AWARDS TO PRIVATE INVESTORS, FEDERAL
RESERVE SYSTEM, AND OFFICIAL FOREIGN CUSTODY ACCOUNTS
Quarterly Averages. 1989 through" 1-1993*
$Bil..-.- - - - - - - - - - - - - - - - - - - - - - - - ,
Federal Reserve System
•
Private
D Foreign Official
m
10~
8~
61--
4~
2~
0'
• m--m--m- maw·
II
III
1989
IV
£88- tBS- 88'II
III
IV
1990
me m----w- me w· we me m.
II
III
IV
1991
Calendar Quarter
II
III
1992
IV
W' '99-!991
II
III
1993
• Latest bill settled July 29. 1993
Department of the Treasury
OHlce 01 Market Finance
f...ut}uo." 2 1 :lql ;'
NET STRIPS
Privately Held, 1991-1993
$8il.'1- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ,
100
rStrippable
Stripped
-
•
801-
-
As of July 31, 1991; $500.6 billion,
$130.0 billion
D As of July 31, 1992 $589.5 billion,
$146.8 billion
I§'m As of July 23, 1993
$196.1 billion
$657.1 billion,
60
40·-
20·-
o
Less than 5 years
5-10 years
10-15 years
15-20 years
20-25 years
25-30 years
Years Remaining to Maturity
Department cllhe I reaslJf}I
!)f1,( e ot Mdr~el FlndflcP
A,jl~"
I 1 1
r, '
NET STRIPS AS A PERCENT OF PRIVATELY HELD
STRIPPABLE SECURITIES
Held in STRIPS Form
Percent
t..;!'.ilf'l
180
(Hlqht Sr,ll(')
! 30 Year
_ 2 0 Year
10 Year
160
1()o
70
30 Year
c:::=J 20 Year
, ',. '., 10 Year
60
1.'10
"
51)
1
120
,
100
l
:
I
'.:
. , : iI
I
!
80
30
!
1
'
I ~":--;r,,
: '
,I
'
:
..a'i::
::
i.'.'
••
'.'
"
"1"._
•.. 11.. . "'JO!!!J!.!!.---~---w
60
'="
\ I 'i
"
. ,I
I
i!;
I,
.
.
':
40
:
'
•
: ii"
:
" I:;,
I.I "
i"i
i:
:
>"
'
: >:
l:
20
o!
J
A
.
(:"I
1"
SON 0
1991
J
F
M A M J
~
:
::
Lj
:
J
A
"~
r
p
, ".' " ~,.1
I
I
;
' '
I
" " ,
Ij ,i
SON
1992
'Tllr(IU~li1 ,lilly ?:l, 1rJ",1
j'"
",
: i
[)
J
1
'
,'"
F
M A
':!!'!:
M J J'
1SN:)
10
I ()
NET NEW CASH FROM NONCOMPETITIVE TENDERS IN
WEEKLY BILL AUCTIONS 1/
Discount Rate %
$Mil.r--I- - - - - - - - - - - - - - - - - Net New Cash (left scale)
300
200
o
26 week
•••••• 26 week
•
13 week
13 week
...--.---..-..
...
...
--....
.
•
Discount Rate (rrght scale)
4.0
3.5
.......•••..., • • • • • • •.....''... • .....
..
~
•••••••
3.0
100
2.5
0 ' .8M • • • • • • • • • • • • a
• • •M
• • • • • • •• • • • • • • • • • • • • • • • • • • • •• • - 1=1 -,
-100
-200
-300
-400 II
I II
Jul
Aug
II I
Sep
Oct
II
Nov
III
Dec
Jan
II I
Feb
III
Mar
Apr
May
II
Jun
Jul P
1993
1992
11 Excludes noncompetitive tenders from foreign offiCial accounts and the Federal Reserve account
Department of the Treasury
Office of Market Finance
p Preliminary
Auguu'>'
'2
!qg] 14
NONCOMPETITIVE TENDERS IN TREASURY NOTES AND BONDSV
$Bil.
f
I
_7Year
c::J 2 & 5 Year
whHill;imJ 3, 10 & 30 Year
2.5
2.01
$Bil.
2.5
I 1_
2.0
M
n
I
r-
1.51
riil f..
1.0 I
~I
r-I
il(
l
"~
.~\~
i
r-
I!!
1.5
nl,
L.
';~'
t~
If!
~;I
~!I:,
f..
~i
?~.~
'!l~~
I~~~
1.0
~h
(....
m
~;
g~
~m
~r''-
.5
11111111111~lllllllllllllllo
~;!<
.~
r,
t~
H~
~,
~~~:
~)_$I
M A M J
J
A SON 0
J
F
M A
1992
~xcludes
foreign add-ons from noncompetitive tenders
M J
1993
JP
p Preliminary
Treasury Increased the maXimum noncompetitive award 10 dny noncnmpelilive bidder to $5 million ef1ectlve November ~ t 9'1 1
Ef1ectlve February 11 1992 a noncompetitive bidder may nol hold d pnsltlon
nor submit both competitive dnd noncompetitive bids for Its own account
Irl
WI trildlng futures. or forward contrdclS
Department of the Treasury
OHlce 01 Market F mance
Auqus' 2 1qql 1~
TREASURY NET BORROWING FROM NONMARKETABLE ISSUES
$8il.I
.
I $Bil.
D Savings Bonds
10
o
o
State and Local Series
•
Foreign Nonmarketables
Domestic Series
-~
7.8
10
3.5
5.7
5
- ·5
01-
-10
-1.1
-0.6
-5
-1.2
I
II
III
1989
IV
II
III
1990
IV
II
1991
e
III
IV
II
III
1992
IV
1-5
lillie
1993
estimate
Department 01 It-,e Treasury
Office of Markf'1 Finance
A, I'l I',' . J
1 '~ .• \
\'
SALES OF UNITED STATES SAVINGS BONDS
1980 - 1993
$Bil. I
6
5
~ Total Sales
4
3--
2
•
Payroll Sales
1
o~,~----~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992 1993 e
End of Quarter
Department 01 the Treasury
OHlce of Market Finance
e estimate
August 2 1991 1 7
STATE & LOCAL GOVERNMENT SERIES
$811,1
I
-
$Bil.
Gross Issues
Redemptions
10
10
''-...
;'
.-,,'
"
"C..-
,,:"5
,
..,,'( ,' /.~
5
5
oI
$Bil.
I0
I$Bil.
I
-
NetSLGs
5
5
--":a:::
oI
-5
I.
1/
1/1
1989
IV
1/
III
1990
IV
8"
I!
I
III
1991
'= "
IV
10
§
II
II!
1992
IV
II J-5
1993
Depdrtn' .... n! of the Tre<'1sury
Office 'If Market i="lnance
AllQt),·,j
<
1'-/'-/1 1)-\
STATE AND LOCAL MATURITIES 1993 -1995
$Bil.
$Bil.
12.8
12
12
10.9
9.8
10
10
9.3
8.9
I
8
8
7.4
6.9
I
6
5.8
5.2
6
5.6
I
I
4
4
2
2
i
o
~_l
III
IV
1993
I ). I
IrI'Il' III
I IPI' ('
(,I fJ
f
t tli.·
l'l<l!
f
_I
i
~
II
III
1994
IV
II
III
o
IV
1995
'1.,.1,'
III !II
,
:.,
i'l
I
QUARTERLY CHANGES IN FOREIGN AND INTERNATIONAL
$8il..HOLDINGS OF PUBLIC DEBT SECURITIES
,$8il.
35
30
25.8
25
Nonmarketable
n~
35
Marketable
D Net Auction Awards to Foreign 1.1
• Other Transactions
30
25
20
20
15
15
10
10
5
5
o
o
-5
-5
-10
-10
-15
-7.9
-15'
II
III
1989
IV
II
III
1990
IV
II
III
1991
IV
II
III
1992
IV
, 20
IllY
1993
1.1 Auction awards to foreign custody purchasers netted against holdings of maturing seCUrities.
Y
Departmenl 01 the Treasury
Office 01 Market Finance
Preliminary
AuglJS! 2 ,qg) 16
NET AWARDS TO FOREIGN OFFICIAL ACCOUNTS V
$Bil. I
I$Bil.
Notes
CJ 5 years and over
[3J 2-4 years 2./
Bills
8 ---
-
6
3.8 2.2
4 --
2.9
6.1
8
6.0
3.6
6
4.5
4.1
2.1
1.5
4
2
2
o
o
-2 --
-2
-1.1
-4
-6
- -~ -6
-4.2
-8
II
III
1989
IV
II
III
1990
IV
II
III
IV
1991
II
III
IV
1992
II
III ~
I
-8
1993
Quarterly Totals
'/ Noncompetitive awards to foreign official accounts held In custody at the Federal Reserve In
excess of foreign custody account holdings of maturing seCUrities
2/
Oep,Jnrnent of the Treas,Jry
Ottl( (' ,)1 Market Finance
4 year notes not Issued after December 31, 1990
:y Through July 30, 1993
A'Jqw;t.!. 149111
SHORT TERM INTEREST RATES
Quarterly Averages
0/0 I
I
12
Prime Rate
Federal Funds
10 I -
.$~l
I
-- 12
---l
L.
r'
0/0
10
Through
July 28
8~
•
....
~':;N""'"
,~:::
Commercial
Paper
~:
~
"-'';': -:.-
6~
. II
,.
~
~
~~
~.~-
I
t-i
~
16
L...
3 Month
Treasury Bill
4
8
-- 4
2
21
1983
1984
Department 01 the Treasury
OHlce 01 Markel Finance
1985
1986
1987
1988
1989
1990
1991
1992
1993
Auquc;t 2 1gg] 2 i
SHORT TERM INTEREST RATES
Weekly Averages
%1
1%
Prime Rate
61
•
16
Through
July 28
t
5
5
Commercial
Paper
•
4
4
Federal Funds
•
..:.'::
~
4\::. ,:.:. .:.:....
3
•
. ':.
3
3 Month
Treasury Bill
2'
I
I
II I
Oct
Departmenl 01 Ihe Treasury
OHlce 01 Markel FInance
I
I
Nov
1992
I II
I
I
Dec
I
I
I
I
Jan
II I
I
I
Feb
I II
I
I
I
Mar
I
I
Apr
II
I
I
I II
I
I
I
May
Jun
1993
I
I
I
12
Jul
AlJgusl
'2
1y~ ~ 24
LONG TERM MARKET RATES
Quarterly Averages
0
°O~I------------------------------------------------~ 0
14
14
13
13
12
12
11
11
~New Aa Corporates
10
Tilrnlrqh
JI.ly?8
9
J
8
19
8
7
7
30-Year
Municipal Bonds
6
5
6
15
I
1983
"
I 10
~
j , •
,
ITt"
, , I (, II
I' ( ~,' I I ~. • ,-
I, ,
1984
t
1985
1986
1987
1988
1989
1990
1991
1992
1993
INTERMEDIATE TERM INTEREST RATES
Weekly Averages'
oo
~
~
.,,-
--- -,.",-
~ A
~
IV~'-...
.".
0
........ ,
___
7
..
, ".-- '., ...".
~"IftJJth._
AA 10-Year Industrial
""llIu,,'~
,l!111I11111
i-
'"-,
.;
,I'
1
FNMA 7% Pass-Through
,_
,
". .!I~!'Uf!fIlIlI~liI'l
d'I",""'"
"'.,
o
ThroUllh
July 23
..........
, , - .....
7
/
6
6
5
5
Treasury 5- Year
4
Oct
Nov
Dec
Jan
Feb
Mar
1992
. Salomon l(J-Vr AA Industrial IS a Thursday lilte
1),".'1111",
'1,,,
I
r.
'Ttl,
~.ll'h
. f
Apr
1993
May
Jun
Jul
All re!les ilrF.' flffpl sid!'
'1.,-1,'\
'I, ,
4
~
/0
MARKET YIELDS ON GOVERNMENTS
I
I
i
i
0
i
I 10
6
6
August 2, 1993
•
5
5
0'
I
I
10 i
4
o~
4
•
701
170
651
165
601
160
May 3,1993
3
5.5
12
14
16
L--____~______~______~______~______~________
18
20
L_______
2'
2
3
4
, 55
30
I
10
5
6
22
24
26
3
28
:_------~------~----~i
7
8
2
10
9
Years to Maturity
[lq),IfIITlPI1!
nn,r
I'
,II
ttl(>
(>I M,lfkpl
Tr.'
IC,'JlY
r 111,1nr p
1\11')11,1
l
1'1'1'
PRIVATE HOLDINGS OF TREASURY MARKETABLE DEBT
BY MATURITY
$Bil.
2600
I I- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - ;
June 30, 1993
•
2515.5
DOver 10 years
2400
o
2200
I
407.4
2-10 years
I
2000
[ ] 1-2 years
1800
l
1600
1400 I-
~
1 year & under
•
Bills
~
9d3.8
I
~
I
120011000 ~
/'
////j
354.7
I
I
800 I-~
342.6
600
I
400
I
507.0
I
200
o
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
As of December 31
'I,:"r'(]"nl
',I-J
.- r
1 I,A
"r ... f'fd' ,r,
11.~'
r ,r ...,"-1
,'1.'11'
111
I
PRIVATE HOL DIN GS OF TRE ASU RY MA RKE TAB LE DEB T
Percent Distribution By Maturity
Coupons
0 Over 10 years
EJ 2-10 years
1,}Ooo
~ 1-2 years
~ 1 year & under
•
Bi"s
80
60
40
20
o
1982
I '{'[',11\'lI"
( 'If
! r'·,l','.".,
I (,' 1h •.
"( 'f '. 1 ](~ ( , f
I.'
\""
1983
1984
1985
1986
1987
1988
As of Dece mber 31
1989
1990
1991
1992
Jun'9 3
AVERAGE LENGTH OF THE MARKETABLE DEBT
Privately
Held
years _ _ _ _ _ _ _ _ _
__
_ _ _ _ _ _ _ _ _ _--,
~ June 1947
Months
10 Years
5 Months
10
76
June 30, 1993
5 Years, 10 Months
74
9
72
8
70
68~1--~~
7
J
___ L_ _
F
~~
MA
_ __ L_ _~~_ __ L_ _~~_ _~
J
M
J
AS
0
N
D
6
December 1975
2 Years
5 Months
5
4
3
2
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
II
194547 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93
Department of the Treasury
Office of Market Finance
Allgusl2 19<1YJ
MATURING COUPON ISSUES
August - December 1993
-
(in millions of dollars)
-
---
June 30, 1993
Held by
Maturing Coupons
11 7/8°'0
8 3/4°0
0''0
8
85/8°0
63/8°0
8 1/4°0
6 118° °
7 1/8°:0
~/O
6
11 3/4°/0
0'
9
°
7 3/4~'0
8518°0
5 1/2°0
75/8%
0;0
5
Note
Note
Note
Bond
Note
Note
Note
Note
Note
Note
Note
Note
Bond
Note
Note
Note
08/15/93
08/15/93
08/15/93
08/15/93
08/31/93
09/30/93
09/30/93
10/15/93
10/31/93
11/15/93
11/15/93
11/15/93
11/15/93
11/30/93
12/31/93
12/31/93
Total
Federal Reserve
& Government
Accounts
--
6,593
7,370
15.499
1,768
14,087
8.745
15,373
7,013
15,716
12.478
7,518
17,211
1,509
15,628
8,974
16,539
1,606
68
2,686
164
967
341
1,521
468
1.567
2,223
272
3,776
224
1,146
778
2.133
I
I
Totals
i
-
1I
CJt'U,jrln1t:rol (·1 ltlf'~-iffll .'
ut ~..1drH·'
I
Hi B
I
172,021
accuunts for
I
Private
Investors
ForeignY
Investors
4,987
7.302
12.813
1.604
13.120
313
1.407
2,665
50
1,055
1,225
1,755
558
2,857
1,996
1,354
2,271
73
1,906
673
1,534
8.404
13.852
6.545
14.149
10.255
7,246
13.435
1,285
14.482
8,196
14.406
~;;:940~-+-;-52~8~--I ;;-;;92-'
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12
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1
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4
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13
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DepJrtmenl ill !l"H~ T rerlSV\1
Ottlce (::.11 Market F InanLP
A!F.J<J ,[ l
l'l'j~',"
AGKEE~EST
TH~
K~PUBLll
BET~EE~
OF
THE
OF
GOVERS~ENT
COLO~BIA A~D
THE
GOVEkS~EST
Of THE U:--;l'lfD STATES Uf A."lEidCA FOR THE
EXCHASGE OF TAX
1 11 e
Iv 0 V ern IJ e t\
G0 v e r Illil e n t
0
t
0
f
tile Rep u tJ 1 1 C
t i1 e Un 1 ted S t
f
I~fOk~Ar£O~
d
ellter lIlto tile Agreement for
te
S
0
0
flo 1 0 [il b 1 a
f AIII e r 1 c a a g r e e
d
n d the
t
0
tile l:xchange vf Tax
lrlforr.idtlon lilere1nJfter reierred to as "tlle
Agreement"),
111 accordance 1.1th the
AKTIlLE
~DJl:CT
1.
A~D
Sl~Pl
folloloilng
provlslons:
1
OF APPLiCATION Of THE
AG~EE~EST
OBJECT
Tilt! Contractlng States snaIl assist each other to
tacilitate the exchange of information for assuring
tile accurate determinatlou,
assessm~,.t
and
collectlon of taxes covered by the Agreement, with
a view to
prev~llt
and combat within their
respective jurisdictions, fiscal evasion, fraud,
alld avoldance and develop improved information
sources for tax matters.
I..
LEGAL LIMITATIONS
tne I...vIllrdct1ng .:.>tates shall cooperate with each
othel"
t-Q
carry out the objective of thls
Agreement.
Such cooperation shall be provided
tnrough exchange of information authoflzed pursuant
to ArtIcle 4 and such related me?S'jres as may be
agreed upon by tile competent authorities of the
Contracting States pursuant to Article 5.
3,
S(0~t
Uf
APP~ICA1'ION
lntormatlon sllall be excnallged to fulflll the
purpose of thIS Agreement witnout regard to whetner
.
tile person to whom tne informatIon relates IS, or
.. nellier tile Inforfi1ation is held by, a resIdent or
I1dtIonai of tIle Corltrdctlng States.
AkTICLf 2
TAXES COVlkED BY THE
1.
AG~ll~:EtH
[AXES LUVEREU
[nls Agreement shall apply to the following taxes:
a)
In the case of Colombia:
income tax and
complimentary taxes, sales tax, stamp tax, and
mOVIe theater tax.
b)
In the case of the Uni ted States of America:
federal taxes on income, self employment income,
transfers to avoid income tax, estates and
gifts; and excise taxes.
2.
IDENTICAL, SIMILAR, SUBSTITUTIVE, OR ADDITIONAL
TAXES
ThlS Agreement shall apply also to any identical or
similar tax imposed after the date of signature of
the Agreement or taxes in addition to, or in place
of, the existing taxes.
The competent authorities
of the Contracting States shall notify each other,
with the frequency agreed, of any change In their
legislation, as well as Judicial decisions, which
may affect their obligations pursuant to this
AiSreer.:Jent.
3.
ACTIO~S
BARRED BY STATUTE OF
LIMITATIO~S
The Agreement shall not apply to the extent that an
action or proceeding concerning taxes covered by
this Agreement
li~itatlons
1S
barred by the statute of
or has expired pursuant to the law·s of
the appllcant State.
4.
STATe TAXES,
~lU.·dCIPAL
TAXeS, ETC.
Tll1S Agreement shall not apply to taxes imposed by
5
tat e s, pro v 1 n c e s, de par t In en t s, reg ion s ,
municipallties or other political sub.divisions or
!-,ossesslons that are under tlle jurisdiction of the
COlltracnng States.
ARTICLE 3
DEFINITIONS
1.
l.lEFINITIONS
For purposes of this Agreement:
a) The term competent authority means: the entity
authorized to request and receive information.
i)
In the case of Colombia, the Director of the
Special Administrative Unit Directorate of
National Taxes or his delegate.
In tIle case of the Uni ted States of Amerlca,
11)
the Secretary of the Treasury or his delegate.
b) The term natlonal means any indlvidual and any
legal entity or any other collective elltity,
derlving Its status as such from the laws in force
in the Contracting States.
c) [he term person means any indivIdual, legal
entity, or any other collective entity according
to the laws of the Contracting States.
J)
The term tax r.Jeans any tax to .;hich tile Agreement
applIes.
e) Tn e t e r ru i n for III a t Ion
1
n
d
n y for r.J
\.0,'
h d t eve r,
I;]
e a n san y f act
a fl J ttl a t
In d)'
0
r
5
tat erne nt,
be reI e van tor
r.la t e ria 1
to tbe admInIstratIon and enforcement of taxes
covered by thIS Agreement, including among others:
1)
the testimony of individuals,
11)
tne docuruents, recorJs or tangible personal
property in the posseSSion of a person or
Contracting State alld
Iii)
expert opinions, technical concepts,
valuations and certifications.
f) The term applicant State means the Contracting
State applying for or receiving information; and
the term requested
~tate
means the Contracting
State providing or requested to provide
information.
g) For purposes of determining the geographical
area of Colombia within which it may exercise
its jurisdiction to obtaIn
Of
compel production
of Information, ColombIa means the territory of
Colombia.
h)
For purposes of determining the geographical
area of the United States of America within
~hlCh
it may exerCIse its JurisdIctIon to obtain
or compel production of
inf~rmation,
the United
States r.leans tile United States of America,
Including Puerto kico, the Virgin Islands, Guam
dnd any otiler possession or terrItory of tlle
UnIted States.
0\DEl-ISED 1EI01S
Any term not defIned In thIS Agreement shall have
the
[iJ
e anI n g .... h i c rl i t t I a sun d e r the 1 a I.' S
0
f the
Cc,ntraCtlng States cOllcernlng taxes covered by this
Agreement, unless tne context otl1erwise requires or
the competent authorities agree to a common meaning
pursuant to the provisions of Article S.
ARTICLE 4
EXCHANGE Of INFORMATION
1.
OBJECT Of THE EXCHANGE
The competent authorities of the Contracting States
•
shall exchange information to administer and
enforce their domestic -laws concerning taxes
covered by this Agreement, including information to
administration of taxes under this Agreement, the
recovery of fiscal claims derived from such taxes,
the enforcelilent of the tax laws, the prosecution of
fiscal violations or the determInation of
administrative appeals in relation to such taxes,
and the oversight of the above.
Such persons or
authorities may use the information only for tax
purposes and may disclose it
I~
public court
proceedlngs or in Judiclal decIsions of the
applicant State ill relation to such matters.
AkTICLE 5
MUTUAL AGkEE~E\T PROCEDURE
1.
PkOGl<.A,l.lS FOt<.
D1PLD1E.\T rSG THE AGREDIE.'H
The competent authorItIes of tile Contracting States
shall implefilent programs to carry out the purposes
oft his Ag r e e men t .
The s e pro g ram sma yin c 1 u de, i n
addition to exchanges of information specified in
Article 4, other measures to improve tax
compliance, such as technical assistance, training,
exchange of technical know-how, development of new
audit techniques, execution of simultaneous and/or
joint examinations and investigations of fiscal
violations and crimes, identification of new areas
of tax evasion and avoidance, and joint studies of
such tax evasion and avoidance areas.
z.
INTE~P~ETATION
AND APPLICATION OF THE
AG~EEMENT
Tile competent authorities of the Contracting States
shall endeavor to resolve by mutual agreement any
difficultIes or doubts arising as to the
interpretation or applicatIon of this Agreement.
In particular, the competent authorities Day agree
to a corumon meaning of a term.
3.
DlkECT COMMUNICATION OF THE
COMPETE~T
AUTHOiITIES
The competent authorities of the Contracting Stat.es
may communIcate
~ith
each other Jirectly in order
to cdrry out the prOVIsions of thls Agreement.
AkTICLl:. 6
COSTS
1.
U~Ul\AkY
A\D EXTkAOkUI\AkY CUSTS
Unless the competent authorities of the Contracting
States otherw-ise agree, ordinary costs incurred for
the execution of this Agreement shall be borne by
the requested State and extraordinary costs shall
oe borne by the applicant State.
2.
DETERMINATION OF
EXTRAORDINA~Y
CO~TS
Tne competent authorities of the Contracting States
shall determIne by mutual agreement when a cost is
extraordinary.
ARTICLE 7
ENTkY INTO FORCh
This Agreement shall enter into force upon an
exchange of notes by the duly authorized
affect the determination, assessment, and
collection of such taxes, the recovery and
enforcement of tax clalms, the investigation or
prosecution of alleged tax crimes and violations
lnvolving the contravention of tax laws and
regulations.
2.
GE.\l:.kAL A.\D AUTO.'IATIC
It-,:FORMATIO~
The competent authorities of the ContractIng States
shall automatically transmIt inforruation to each
other that they consider of vital importance to
accolilplish tne obJectlves ot tilis Agreement.
The
competent autnorltles shall agree on the type of
InformatIon, the forru,
language, and procedures to
be used to excllallge suctl
..).
SPO~TA;-;LOUS
infor~atlon
.
I\FO"~lATIO~
Tne competent dutllorities of the Contracting States
shall spontaneously transmit informdtion to each
oUler, wrlen dUrIng the course of tHeir own
activIties, informatiol1 which IS likely to be
relevant to, and bear significantly on,
accomplishment of the purposes referred to In
para~raph
1 of this Article, may have come to the
attention of one of the Contracting States.
The
competent authorities shall determine the
information to be exchanged, establishing the form
and language in which it will be transmitted.
4.
~PECIFIC
INFORMATION
The competent authority of the requested State
shall provide informatlon upon specific request by
the competent authority of the applicant State for
tile purposes referred to in paragraph 1 of this
Article.
If the information available in the tax
fIles of the requested State is not sufficient to
enable compliance idth the request, that State
shall take all measures, allOwed by its
legIslation, including compulsory measures, to
provide the applicant State with the information
requested.
a) POwers of tne requested State
The requested State sllall have the authorIty to:
1)
examine any books, papers, records, or
other personal property which Llay be
relevant or materlal to such inquiry;
11)
questiofl any person having knolodedge or
III
possession, custody or control of
infor~atlon
whlCh may be relevant or
/;Jatenal to such inquiry; and
111)
compel, pursuant to lts own legislation,
dny person having knowledge or in
possesslon, custody or control of
information Which may be relevant or
material to such inquiry, to appear at a
stated time and place and testify under
oath and produce books, papers, records, or
other personal property.
b) Privileges
In the execution of a request, the privileges
granted under the laws or practices of the
applicant State shall not be
requested State.
ap~lied
in the
The claim for privileges under
the laws or practices of the applicant State
sildll be exclusively determined by the courts of
such State, and the claim for privileges under
the laws or practices of the requested State
shall be exclusively determined by the courts of
that State.
c) Objection
~roceJures
TIle Contrdcting Stdtes
may
establish
administrative or jUdicial objection or claim
procedures, with a view to prevent the abuse of
the exchange of Information authorized by this
Ag reeme n t .
).
ACTIOSS OF THE
kE~UESTEU
STATE FOR RESPONDING TO A
SPeCIFIC kE«UEST
~hen
Informatlon IS requested by a Contracting
State pursuant to the foregoing paragraph, the
requested State shall obtain and provide the
information in the same manner, as if the tax of
the applicant State were the tax of the requested
State and were being imposed by the latter.
However, if specifically requested by the competent
authority of the applicant State, the requested
State shall:
a) specify the time and place for the taking of
testimony or the production of books, papers,
recorJs, and other personal
pro~erty;
b) place the indlvldual glving testimony or
produclng books, papers, records, and other
~ersonal
property under oath;
c) secure for its examinatlon, without editing
the m, t 11 e
0
r 1 lS 1 n alb 0 0 k s, pap e r s, r e cor d s, and
other personal property;
d) secure or produce true copies of originals
~lncluding
books, papers,
testl~ony
and records);
e) certIfy or obtain a certlflcation from the
c<Jrrespondlng lJodies, of the authenticity of
L1ooks, papers, records, and other personal
j-'
t)
r 0 per t y i-' r 0 J u c ed,
d
s the c J s e
In J
y
be;
eXdlHne tne i nd I vluual produc Ing books, papers,
records and atller personal property regarding
tile purpose for which the item produced
1S
or
was maintained and the manner in which the
ruaintenance is or was carried out;
g) permit the competent authority of the applicant
State, to provide written questions to be
answered by the individual testifying or
producing books, papers, records, and other
personal property;
h) perform any other act not in violation of the
laws, or at
pract~ces
varianc~
with, the administrative
of the requested State; and
i) certify either that tne procedures requested by
the competent authority of the applicant State
were followed or that the procedures requested
could not be followed, with an explanation of
the reasons therefore.
6.
SCOPE OF THE
T~ANSMISSION
OF
I~FORMATION
The exchange of information referred to in this
Agreement aoes not compel the Contracting States:
a) to supply Information the dIsclosure of which
\,iOlJld be contrary to public ·policy;
b) to carry out adminIstrative measures at variance
with their respective laws or regulations;
c) to supply particular items of Information which
are not obtainable under their respective
lJ~S
or regulations;
J)
to supply Information which would disclose any
commercial, industrial, trade, lJrofessional, or
business secret or trade process; and
e) to supply Information requested by the applicant
State to administer or enforce a provision of
the tax law of the applicant State, or any
reqUIrement connected therewith, which
discrimInates against a national of the
requested State.
A provision of tax law, or
connected requirement, will be considered to be
discriminatory against a national of the
requested State if it is more burdensome with
respect to a national of the requested State
than with respect to a national of the applicant
State in the same circumstances.
For purposes
of the preceding sentence, there is no
discrimination
~hen
the applicant State taxes on
a worldwide basis and the requested State does
not.
The provisions of this subparagraph shall
not be construed to prevent the exchange of
information with respect to:
in the case of
Colombia, that which is related to the lncome
tax on dividends and participation of
non-resiJents and tlle compllmentary
tax on remlttances abroaJ; and, in the case of
tne United States, tne tax on uranch proflts or
the excess interest of a branch or on the
preillium lnCOlile of foreign lnsurers.
7.
kEGULATIUSS
ixcept as
fO~
EXECUTISG A
provlde~
RE~UEST
In paragraph 6 of thIS Article,
the provisIons of the preceding paragraphs shall be
construed so as to impose on a Contracting State
the obligatIon to use all legal
~eans
and its best
efforts to execute a request.
8.
USE OF THE INFORMATION RECEIVED
Any information receIved by a Contracting State
shall be treated as secret In the same manner as
information obtaIned under the domestic laws of
that State and shall be disclosed only to persons
or authorities of the applicant State, including
Judicial and administrative bodies involved in the
determination, assessment, collectIon, and
AR::C:.2 8
Ei~~er
Co~tracti~~
AG:ee~~rt
~c~ic~
c~ve~
at
cf its
t~
t~e
3~y
State
ti~e
to
the
~er~i~ate
after its
i~te~tior.
ot~e~
~ay
e~try
ter~i~ate
Cont=3cti~g
State
ir.to force
it ras been
t~ro~g~
JONE at Sn~t~fe de Bogota, i~ duplicatei in the English and
Soa~ish
lanauaqe~,
the two texts having equal authenticity,
this 21st day of July, 1993.
for the
Gover~~ent
of the
For the Government of the
Republic of Colombia
united States of
lJ
\
,
IIll'lIl ClIl1Ipl'llSat iOIl IILde
alll'r Decelllber :1 i,
i ~)H l,
ill
taxable
):ea;·:-
ending alter that date.
I. Taxation of uncmploymcnt cnmpcnsation (scc. 611 uf thc Ad
and sec. 85 of the Code)·
Prior Law
All or a portion of unemployment compensation benefits paid
pursuant to government programs may be included in the recipient's gross income. The amount of unemployment compensation
t hal is included in adjusted gross income generally is limited to
IIlle-half of the excess of (11 the sum of the tax)lnyer's adjusted
~r()ss income, all unemployment compensation paid pursuant to
government programs, all disability income of the type eligible for
t~XdIlSi()1l from income (under Code sec_ l05(d)), and the amount allowed under the deduction for two-earner married couples over (2)
the taxl,uyer's base amount.
The hase amount was $25,000 in the case of a married individual
filing a joint return; zero in the case of a married individual filing
n separate return (unless he or .she lived apart from his or her
sJlouse for the entire taxable year); and $20,000 in the rase (l( all
other individuals.
An indi\ iJual may be subject to an estimated tnx penalty to the
extent that est ~mateJ tax payments and withholding for a taxable
year ar~ less that 80 percent of actual lax liability for that year.
Reasons for Change
In order tt' increase cumulative revenues during fiscal years 1983
to 1!)RG by an amount approximately equal to the increased outlays
r<lslIlting from the Act's provision of additional unemployment
benefits (secs. G02-60G), tL ~ Act lowers the income thresholds which
determine the amount of unemployment compensation includible
in adjusted gross income. ny extending the duration of unemployment benefits for those who cannot find work, while simultaneously increasing the taxation of benefits for those who have substantial umounts of other income during the year, the Act improves the
targeting of available resources to those who are most in nCl·d.
Explanation of Provision
The Act reduces the base amounts for purposes of computing the
amoullt of unemployment compensation included in adjusted gross
illcOJlll' from ~2{),OOO to $12,000 for single taxpayers and from
$~;\fl'lfl to $IS,OOO for married taxpayers filing jOilll returns. The
hast· IIll<"JTlt remains zero f.;,' marripd t:Jxpayt'rs \\'ho file separate-
ly
,I, .. 1,,o,kgruunJ o( the p,uvi5,un, s.·,
1.1 ..
,
t
\-
~1 . .t(·rlll'lIl uf
thl'
CUlTllIlltlN!
(Ir
(2bl
II Ikl' N ..
('~Hdl
rt"/I(I'
17 71;11
"\I.~l"t
11 1.','_',
1r.1
Sp('('w/ rille (IIr IIl1dl'r/J(/)",e1lt o( estimated tax. -An individual is
lIot to be penalized ror all lInderpaynH.'nt 0'- est illl;lIl'd LIX to till'
extent thut the underpayment is attributable to the inclusioll in
income or unemploYlllent cOlllpensation receiV('d dining 1!IS~ tltnt,
IJllt for the provi~i[)n lowl'ring the hase amounts, W;IS Ilot illcludibh'
III IIlCOIlJe.
Special rille (fir (Isml r('ar ((lxpaycrs.-A fisc;t1 y(';lr I:lxpan'r
whose taxable year illl'lllti('s Jalillary I, I!IHL, taKes into act'oLJpt
the entire amount of unell1ployrnl'nt compensation received during
the fiscal year for purpos(~s of determining how IllllCh to illdllde ill
iIlCUIIll' I/owever, the ilH'I'I'aSe in adjllsteJ gross illculnL' ror tltat
fiscal year which can occur as a result of this sect ion of the Act \s
limited to the amount of ul1('mploynwnt cOlllpens;ltioll p;lid aftc1J
Decelllber :!I, I!IHI.
'
U('l'fllile
f:fff'ci
The provision will illCl'ease fiscal year receipts by $7G:1 million III
1983, $7:34 million in 1!IR·I, $(ill million in l!It;.ri, $tilg million in
lD8(i, and $(i[)O million in lQH7.
Dq)artmcnt of the Treasury -
FOR IMMEDIATE RELEASE
August 9, 1993
1
.-.
~"11." I)
~
\
~
J
-...,:
•
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Tenders for $12,383 million of 13-week bills to be issued
August 12, 1993 and to mature November 12, 1993 were
accepted today (CUSIP: 912794G57).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
3.04%
3.05%
3.05%
Investment
Rate
3.11%
3.11%
3.11%
Price
99.223
99.221
99.221
Tenders at the high discount rate were allotted 27%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
36,956
49,839,593
5,596
47,228
90,783
20,267
1,437,027
9,325
14,086
21,393
17,585
808,585
911.496
$53,259,920
Accegted
36,956
11,005,944
5,596
38,038
34,323
14,807
117,507
9,325
14,086
21,393
17,585
155,935
911.496
$12,382,991
Type
Competitive
Noncompetitive
Subtotal, Public
$48,245,238
1.415.098
$49,660,336
$7,368,309
1.415.098
$8,783,407
2,900,010
2,900,010
699.574
$53,259,920
699.574
$12,382,991
Federal Reserve
Foreign Official
Institutions
TOTALS
An additional $69,526 thousand of bills will be
issued to foreign official institutions for new cash.
LB-316
Dq~artment
of the Treasu_ry •
FOR IMMEDIATE RELEASE
August 9, 1993
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Tenders for $12,348 million of 26-week bills to be issued
August 12, 1993 and to mature February 10, 1994 were
accepted today (CUSIP: 912794H80).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
3.16%
3.18%
3.18%
Investment
Rate
3.26%
3.28%
3.28%
Price
98.402
98.392
98.392
Tenders at the high discount rate were allotted 17%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
40,333
52,647,814
10,815
41,782
74,551
25,075
1,877,608
12,306
8,682
25,946
8,470
616,943
663,193
$56,053,518
Accepted
40,333
11,287,232
10,815
31,782
23,801
23,415
141,428
12,306
8,682
25,946
8,470
70,333
663,193
$12,347,736
$50,993,615
1,089,777
$52,083,392
$7,287,833
1,089,777
$8,377,610
2,950,000
2,950,000
1, 020,126
$56,053,518
1, 020,126
$12,347,736
Type
Competitive
Noncompetitive
Subtotal, Public
Federal Reserve
Foreign Official
Institutions
TOTALS
An additional $101,474 thousand of bills will be
issued to foreign official institutions for new cash.
LB-317
DCQ.artmcnt of the Treasury •
FOR IMMEDIATE RELEASE
August 10, 1993
RESULTS OF TREASURY'S AUCTION OF 3-YEAR NOTES
Tenders for $16,668 million of 3-year notes, Series Z-1996,
to be issued August 16, 1993 and to mature August 15, 1996
were accepted today (CUSIP: 912827L75).
The interest rate on the notes will be 4 3/8%. The range
of accepted bids and corresponding prices are as follows:
Low
High
Average
Yield
4.48%
4.49%
4.49%
Price
99.709
99.681
99.681
Tenders at the high yield were allotted 68%.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
29,830
42,933,009
7,609
31,432
70,618
49,513
1,555,982
57,349
28,922
47,803
16,721
597,562
159,480
$45,585,830
Accepted
29,830
15,781,769
7,609
31,432
60,658
27,273
360,577
57,349
18,422
47,803
16,721
68,992
159,480
$16,667,915
The $16,668 million of accepted tenders includes $887
million of noncompetitive tenders and $15,781 million of
competitive tenders from the public.
In addition, $1,090 million of tenders was awarded at the
average price to Federal Reserve Banks as agents for foreign and
international monetary authorities. An additional $2,899 million
of tenders was also accepted at the average price from Federal
Reserve Banks for their own account in eXChange for maturing
securities.
LB-318
'G· · ·~· · · · ·.· ·
TREASURY NEWS
Department of the Treasury
CONTACT:
".
Office of Financing
202/219-3350
TREASURY'S WEEKLY BILL OFFERING
The Treasury will auction two series of Treasury bills
totaling approximately $24,400 million, to be issued August 19,
1993. This offering will provide about $175 million of new cash
for the Treasury, as the maturing bills are outstanding in the
amount of $24,217 million.
Federal Reserve Banks hold $6,088 million of the maturing
bills for their own accounts, which may be refunded within the
offering amount at the weighted average discount rate of accepted
competitive tenders.
Federal Reserve Banks hold $1,815 million as agents for
foreign and international monetary authorities, which may be
refunded within the offering amount at the weighted average
discount rate of accepted competitive tenders. Additional
amounts may be issued for such accounts if the aggregate amount
of new bids exceeds the aggregate amount of maturing bills.
Tenders for the bills will be received at Federal
Reserve Banks and Branches and at the Bureau of the Public
Debt, Washington, D. C.
This offering of Treasury securities
is governed by the terms and conditions set forth in the Uniform
Offering Circular (31 CFR Part 356, published as a final rule on
January 5, 1993, and effective March 1, 1993) for the sale and
issue by the Treasury to the public of marketable Treasury bills,
notes, and bonds.
Details about each of the new securities are given in the
attached offering highlights.
000
Attachment
LB-319
ft--{l
,
Telephone 202-622-2960
Washington, D.C.
FOR RELEASE AT 2:30 P.M.
August 10, 1993
I
HIGHLIGHTS OF TREASURY OFFERINGS OF WEEKLY BILLS
TO BE ISSUED AUGUST 19, 1993
August 10, 1993
Offering Amount . .
. . .
Description of Offering:
Term and type of security
CUSIP number
Auction date . . .
Issue date
. . .
Maturity date .
Original issue date .
Currently outstanding
Minimum bid amount
. . . .
Multiples . . . . . .
$12,200 million
$12,200 million
91-day bill
912794 E5 9
August 16, 1993
August 19, 1993
November 18, 1993
November 19, 1992
$26,430 million
$10,000
$ 1,000
182-day bill
912794 H9 8
August 16, 1993
August 19, 1993
February 17, 1994
August 19, 1993
$10,000
$ 1,000
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids
Accepted in full up to $1,000,000 at the average
discount rate of accepted competitive bids
(1) Must be expressed as a discount rate with
two decimals, e.g., 7.10%.
(2) Net long position for each bidder must be
reported when the sum of the total bid
amount, at all discount rates, and the net
long position is $2 billion or greater.
(3) Net long position must be determined as of
one half-hour prior to the closing time for
receipt of competitive tenders.
Competitive bids
Maximum Recognized Bid
at a Single Yield
35% of public offering
Maximum Award .
35% of public offering
.
.
. . . . .
Receipt of Tenders:
Noncompetitive tenders
Competitive tenders
Payment Terms .
Prior to 12:00 noon Eastern Daylight Saving time
on auction day
Prior to 1:00 p.m. Eastern Daylight Saving time
on auction day
Full payment with tender or by charge to a funds
account at a Federal Reserve Bank on issue date
MINUTES OF THE MEETING OF THE
TREASURY BORROWING ADVISORY COMMITTEE
OF THE PUBLIC SECURITIES ASSOCIATION
AUGUST 3 AND 4, 1993
August 3
The Committee convened at 9:00 a.m. at the Treasury
Department. All members were present, except Mr. Napoli.
the attached list.
See
I gave the Committee an informational background briefing
updating Treasury borrowing estimates and historical information
relevant to the Treasury August midquarter refunding. The
borrowing estimates and background information had been released
to the public on August 2, 1993.
The Committee also received a briefing by a Treasury staff
member on current economic conditions. Under Secretary Newman
then gave the Committee its "charge", which was to make
recommendations on the August Treasury refunding and related
matters. See the attached Charge. The meeting adjourned at
10:35 a.m.
The Committee reconvened at 2:35 p.m. at the Madison Hotel.
All members were present, except Mr. Napoli. A Committee member
circulated a draft of financing schedules (attached) as the
starting point of the discussion. The meeting began with a
discussion of the likely Treasury overall financing need in the
rest of the July-September quarter. The Committee voted
unanimously to recommend that the following issues be sold in the
August refunding:
$16.5 billion of 3-year notes, maturing 8-15-96
$11.0 billion of 10-year notes, maturing 8-15-03
$11.0 billion of 30-year bonds, maturing 8-15-23.
No reopenings were recommended. The Committee believed that it
is appropriate for the Treasury to offer $11.0 billion of 10-year
notes in the August refunding, an increase of $0.25 billion from
the amount sold in the May 1993 refunding, in order to signal
that the Treasury may increase the size of 10-year offerings over
time.
The Committee considered, but did not vote on, a financing
pattern during the rest of the quarter. The Committee discussed
the possibility of increasing the size of the regular monthly 5year notes, but deferred making a recommendation until an
unspecified later date. The Committee voted unanimously to
recommend a $40 billion cash balance at the end of September.
The Committee consensus estimate was that the Treasury's
October-December borrowing requirement may be closer to $85
billion than to Treasury's estimate of $95-$100 billion. The
2
committee was mindful that the Treasury will not issue a 7-year
note or a 30-year bond during the quarter. The consensus was
that the Treasury should increase the sizes of regular weekly and
52-week bills, monthly 2- and S-year notes, and the 3- and 10year notes in the November refunding. The consensus was also
that the Treasury should issue fewer regular bills, if actual
borrowing needs are closer to the Street estimate, and that the
Treasury should issue large amounts of cash management bills in
November to mature in January and April, in order to manage cash
and debt around the tax payment dates. The committee voted
unanimously to recommend a Treasury cash balance of $35 billion
on December 31.
The Committee unanimously recommended that the Treasury
extend the single-price auction experiment for monthly 2- and 5year note auctions for one year beyond the auctions in August
1993. The Committee believed that the results of the experiment
have been inconclusive to date, there have been no negative
effects from the experiment, and extension might test the auction
technique under a wider range of market conditions. Prior to the
vote, the committee discussed whether to recommend expanding the
experiment to other Treasury securities, but no vote was taken,
since the Treasury had not asked the Committee to consider this
question.
The meeting adjourned at 4:15 p.m.
August 4
The Committee reconvened at 8:00 a.m. at the Treasury. All
members were present, except Mr. Napoli. The Chairman presented
the Committee report to Under Secretary Newman. There was a
question-and-answer period related to the recommendations.
The meeting adjourned at 8:30 a.m.
~
~
I K. Quseley,
ffice of Market
Domestic Finance
August 6, 1993
J
Attachment.
1993
TRBABURY BORROWING ADVISORY COKMITTBB
PUBLIC SBCORITIBS ASSOCIATION
O~
TBB
CBAIRXAlf
Morgan B. Stark
Managing Director
Granite International capital Group
666 - 5th Avenue, 33rd Fl.
New York, NY 10103
VICB CBAIRXAlf
stephen C. Francis
General Manager
Fischer, Francis, Trees & Watts
18 Finsbury Circus
London EC2M 7BP England
Daniel S. Ahearn
Partner
Wellington Management Company
75 State Street
Boston MA 02109
Kenneth de Regt
Managing Director, Governments
Morgan Stanley & Company
1221 Avenue of the Americas New York, NY 10020
Thomas Bennett
Partner
Miller Anderson & Sherrerd
One Tower Bridge
West Conshohocken, PA 19428
Richard Kelly
Chairman of the Board
Aubrey G. Lanston & Co., Inc.
1 Chase Manhattan Pl., 53rd Fl.
New York, NY 10005
Louis Betanzos
Executive Vice President
National Bank of Detroit
611 Woodward Avenue
Detroit, MI 48226
Mark F. Kessenich, Jr.
President
Eastbridge Capital, Inc.
135 East 56th Street
New York, NY 10022
Jon S. Corzine
Partner
Goldman, Sachs , Company
85 Broad Street
New York, NY 10004
Bruce R. Lakefield
Managing Director
Lehman Brothers
200 Vesey Street, 9th Fl.
New York, NY 10285
Ralphael de la Gueronniere
Chairman
Discount corporation of New York
58 Pine street
New York, NY 10005
Robert D. McKnew
Executive Vice President
Bank of America
555 California street, 10th Fl.
San Francisco, CA 94104
2
Gregory C. Menne
Vice President
A.G. E~wards & Sons, Inc.
One North Jefferson
st. Louis, Missouri 63103
Richard B. Roberts
Executive Vice President
Wachovia Bank & Trust Co., NA
P.O. Box 3099
Winston-Salem, NC 27105
Daniel T. Napoli
Senior V. President & Director
Merrill Lynch capital Markets
& Risk Management
World Financial ctr., N. Tower
New York, NY 10281
Joseph Rosenberg
President
Lawton General Corporation
667 Madison Avenue
New York, NY 10021-8087
William H. Pike
Senior Managing Director
Chemical Bank
277 Park Avenue
New York, NY 10172
Stephen Thieke
Managing Direct~r
Morgan Guaranty Trust Co. of NY
60 Wall Street, 20th Fl.
New York, NY 10260
Marcy Recktenwald
Managing Director
BT Securities, Inc.
130 Liberty Street
New York, NY 10006
Craig M. Wardlaw
Executive Vice President
NationsBank Corporation
NationsBank Corporate Center
Mail Code NCI 007-0606
Charlotte, NC 28255-0001
August 3, 1993
COMMITTEE CHARGE
The Treasury would like to have the Committee's specific
advice on the following:
Treasury financing
the composition of a financing to refund $26.7 billion of
privately held notes and bonds maturing on August 15 and to
raise $11 billion to $12 billion of cash in regular
refunding issues;
the composition of Treasury marketable financing for the
remainder of the July-September quarter and the OctoberDecember quarter;
the appropriate levels of Treasury cash balances on
September 30 and December 31; and
the market reception, if the Treasury were to decide to
continue the single-price auction experiment for 2- and 5year notes for one year beyond the auctions in August 1993.
Other topics
The Treasury would welcome any comments that the Committee
might wish to make on related matters.
Treasury Financing - Third Quarter, 1993
End of Quarter Treasury Balances
1993
1992
1991
1990
I 1989
I
1988
QI
21.6
19.5
32.0
I S.5
1.t.7
22.9
Q2
60.6
.t7.0
.t3.6
3.t.6
.t3.7
39.6
Q3
",0.0·
5S.8
.t 1.5
.to.2
.t 1.0
.t.tA
Q4
29.9
.tS.8
32.2
26.9
33.7
-£"1111"",,'
-\nn.
-\ct.
D:lre
Dote
17-Jun 2.t-Jun
16-Jul 22 -J ul
IJ-Aug 9-Aug
10-Sep 16-Sep
Ann.
Act.
Date
Date
31-Aug 02-Sep
31-Aug 02-Sep
Matunnl
~
~
23.697
23.891
23.172
22.354
21,679
1.737
1.667
2.046
2.672
2,855
25.434
25.558
25.218
25.026
24.534
05-Aug-93
12-Aug-93
19-Aug-93
26-Aug-93
22,360
23.318
24.217
23,796
2.166
1,082
583
1,004
24.526
24.400
24,SOO
24,SOO
02-Sep-93
09-Sep-93
16-Sep-93
23-Sep-93
30-Sep-93
23,780
23,707
23,668
23,445
23,843
326,927
1.020
1,093
1,132
1.355
957
21,369
24.S00
24,SOO
24,SOO
24,800
348,296
14,992
14,717
14,616
14,889
59,214
353
538
884
3- and 6- Month Bills
01-Jul-93
08-lul-93
15-Jul-93
22-jul-93
29-Jul-93
Subtotal
Sett.
D:lte
Ol-lul
29-Jul
26-Aug
23-Sep
Subtotal
Sen.
Dale
07-Sep
07-Sep
24,SOO
I-Year Bills
ill
2,386
15.345
15,255
15,500
15,500
61,600
C:lsh Management Bills
0
16-Sep
23-Sep
°
4,000
16,037
20,031
Subtotal
Total Bills
406,178
6,000
4.000
(4,000)
( 16,037l
(10.037)
13,718
6,000 (01-20-94)
4,000
(4,000)
Q
6,000
419.S96
Size of
Auction
Foreign
0
16.753
11.373
16.003
11,023
750
350
1.200
Coupons
21-lul
21-Jul
27-lul
28-lul
10-Aug
II-Aug
12-Aug
12-Aug 17-Aug
12-Aug 17-Aug
12-Aug 17-Aug
Mat. 7 - Year Note
July 2-Year Note
July 5-Year Note
02-Aug
02-Aug
Aug. 3- Year Note
Aug. 10-Year Note
Aug. 30- Year Note
Total for August Refunding
6,459
12,989
o
(6,459)
3,764
11,373
26,706
12,244
3S,950
16.000
10.750
11.000
37,750
17.400
12,100
16,500
11.500
900
600
16.500
11,500
900
600
IS-Aug
IS-Aug
24-Aug 31-Aug
25-Aug 31-Aug
Aug. 2-Year Note
Aug. 5-Year Note
13,120
o
4,280
12,100
22-Sep
22-Sep
2S-Sep 30-Sep
29-Sep 30-Sep
Total Coupou
Sep. 2-Year Note
Sep. 5-Year Note
13.852
8,404
3,548
3,696
81 t SlO
44,546
17,400
12,100
126,076
487~108
58,264
545,972
Complete Total
Treasury Financing - Fourth Quarter. 1993
IgJ!.l
MI1l:![iD&
New
07-0ct-93
14-Oct-93
21-<Xt-93
2S-{)ct-93
23,945
23,713
23,164
1,655
25,600
1,887
3,236
4,029
25,600
26,400
26.400
04-Nov-93
12-Nov-93
18-Nov-93
26-Nov-93
22,940
24,371
24,405
3,460
2,579
2,029
1,995
26,400
26,400
26,400
26,400
24,240
2,160
24,485
1,915
1,977
1,748
26,400
26.400
26,400
26.400
W11
.29,&4'
lMQQ
34t.6OQ
14.279
1,721
14,259
2,241
\6,000
16,500
3- and 6- Month Bills
End of Quarter Treasury Balances
Q2
60.6
Q3
·W.O·
35.0-
11992
01
21.6
19.8
~7.0
58.S
29.9
,i i991
32.0
~3.6
41.5
48.8
\ 1990
1989
i 1988
18.5
34.6
40.2
32.2
1~.7
43.7
396
41.0
26.9
33.7
,. i )l9J
I
~2.9
~4.4
Q4
02-00c-93
09-Dec-93
16-Dec-93
2J-Dec-93
30-0ec-93
• E.<'fJmIH,;<
Dote
23,821
24,423
24,652
25,223
:311,'53
Subtotal
Ann.
22,371
Act.
Date
SeU.
l~-oct
21-oct
IS-Nov
16-Dec
14.783
Subrotaf
.43121
SP1f
IS-Nov
IS-Dee
0
0
16,000
10.000
16,000 (4-21-94)
10,000 (1-20-94)
SUbloUl
0
1C5,noD
26,000
35'5.074
6:1~
416,600
~
I-YeAr Bills
OS-Oel
OS-Nov
en-Dec
2-Nov
9-Dec
Ann.
Act.
Sett.
D:lle
Q.!!2
~
.u.u
~
49;1'(X)O
Cash Management Bills
04-Nov II-Nov
07-Dec 9-Dec
,01J1 Bm-
Size of
OU£lIon
Coupons
20-0ct
20-0ct
26-0ct Ol-Noy
27-Oct Oi-Noy
03-Nov
03-Nov
Io-Nov IS-Nov
II-Nay IS-Noy
Mat. 7-Ycar Noco
Oct. 2-Yellr Note
Oct. 5-Year Note
Nov. 3-Year Note
Nov. IO-Year Note
Total for November Refundins
(6,545)
3,351
14,149
0
12.100
(2,021)
30.200
17.650
12.100
16,750
11.500
17,650
12.100
16.750,
11.500
Nov. 2-Year Note
Nov. 5-Year Note
14.383
0
3,267
12.100
22-Dec
22-Dec
28-Dec 31-Dcc
Dec. 2-Year Note
Dec. 5-Year Note
14,406
3.244
Lm
~
1f'..D
'.4CO
90..926
be.. I~
Compl.m Total
16.500
11.500
32,221
22-Nov 30-Nov
23-Nov lO-Nov
29-Dec 31-Dec
0
17,500
12.100
17.250
11. 750
29.000
17-Nov
17-Nov
'1'CIfaI COupoo..
jho~ld
6,545
.~974
QS9.Rb-lr
)
1l.9)300
SJS,900
REPORT TO THE SECRETARY OF THE TREASURY
FROM THE TREASURY BORROWING ADVISORY COMMlTfEE OF TIIE
PUBUC SECURITIES ASSOCIA nON
August 4, 1993
Dear :Mr. Secretary:
Since the Committee's meeting with Treasury in early May, economic activIty led by car
sales, capItal spending, and industrial production has improved. Growth prospects for the current
and following Quaner center around a solid 3% for GOP. Inflation is widely viewed as sta.ble
near a stubborn 3% floor. The rising cost of medical services, public transportation, and college
tUltion, coupled with Federal. state, and local tax increases on gasoline. cigarettes. and income.
seem to assure little additional progress will be made in reducina inflation further.
Notwithstanding the debate over whether current lower interest rates 'Will offset the drag
of higher taxes on GDP growth. profits. and incentives to work and invest, near-term optimism
is constrained by the effects of reduced defense spending, increased taxarion and retroactivIty.
uncerta.in health costs. low consumer confidence. continued corporate downsizing and the
increased recognition that growing economies in Europe and Asia are required for extended GDP
growth here. Responding to the above and the recently articulated posture of monetary policy,
the YIeld curve has flattened significantly since early May. Specifically. the 12 month to 30-year
spread has narrowed by over SO basis points. as the 30-year bond has declined in yield by 28
basis points to 6.52% and 12-month and 2-year yields have increased by 28 and 36 basis points
to 3.53% and 4.14%. respectively.
Within this context, the Committee met to consider the composition of a financing to
refund S26.7 billion of privately-held notes and bonds maturing on August IS and to raise S11 to
$12 bIllion of cash. Given the announced 558.3 billion financing for the current fiscal quarter and
the $22.25 billion previously issued or announced, there remains a net S36 billion to be financed
this quarter. The Committee voted unanimously. 19-0. in favor of a quarter-end balance of $40
billion and the selling at competitive auction of three new issues totalling 538.5 billion comprised
of:
Refunding
SI6.S billion of l-year notes. maturing 8/15/96;
$11.0 billion of la-year notes, maturing 8/15/2003; and
511.0 billion of 30-year bonds. maturing 811S/2023
to raise SI1.8 billion new cash.
·2·
Underlying the Committee's refunding recommendation is Its belief that (1) the quarterly
refunding should remain a central focus of Treasury fmancing; (2) that Investors expect the
Treasury to confirm in this refunding its commitment to issue Sl1 billion or more long bonds
tWlce a year; and (3) that the to-year note should be SILO billion to affirm its new role as a global
benchmark security and to signal that it will need to grow in size above present levels in the next
quarterly refunding.
SummarY of Quarterly Financmg to be Done
AuChons
Refunding
D.m
M
August
S38.5 blllion
2-year notes
August
September
$16.5
$165
$60
August
September
SILO
SILO
513.6
August
September
515.7S0
$}5.750
S2.0
8 auctions
524.4
S24.6
6 x 524.8
$8.0
5-year notes
I-year bills
3- & 6-month bills
Raismg
SlI.8 billion
Net Cash Mgmt Bills
(10.0)
Net Already Issued
522.250
Foreign Add-ons
Total net market borrowing
S58.250 billion
The Committee sees the need for one cash management bill of 56 billion to be auctioned
September 2 to mature January 20, 1994, an attractive maturity given the high Treasury cash
balance anticipated for January 31. 1994. The Committee notes a further potential cash need for
up to S4 billion intra-September, and recommends an intra-quarter cash management bill to be
auctioned September 2 to mature September 16.
•3-
Concerning the follow-on October-December first fiscal quarter, the Comrmttee concurs
with the targeted $35 billion quarter-end balance. The $95-100 billion net market borrowing
anticlpated by the Treasury is, however, above most current private estimates of approximately
S85 bUllon. Should actual needs evolve closer to the private estimates, the Comminee
recommends reducing the 3- and 6-month bill offerings set fonh in the financing schedule below:
Summary Qf Octgber-December Finaqclng
Auctlons
~
Raisin2
Refunding
3-year
10-year
S17.2S0 billion
$11.7S0
($3.2 billion)
$16.500
$16750
$16.750
$70
Sl1.500
SI1500
$11.500
$26.3
$16.000
$16.500
$16.500
$5.7
2 x 25.600
11 x 26.400
529.8
516.000 to mature 4/21/94
S15.000 to mature 1120/94
$31:0
2-year notes
5-year notes
i-year bills
3- & 6-month bill
Cash management bills
7-year
($6.5)
Estimated Foreign Add-ons
ill
Total Net Market Borrowing
$95.9 billion
-4 The fust fiscal quarter financing will be Wlique inasmuch as Treasury will not only face
high interest payments on the ~ovember 15 mid·quarter refunding date, but as well will no longer
raise money via 7-year notes Of 30-year bonds. As such, larger offering SlZes for the 2-year and
5-year note cycles, as well as the 3- and IO·year notes in the refunding wIll play key roles. Also,
longer dated cash management bills, moving maturities to the second fiscal and prospectively less
demanding third fiscal quarters, will be central.
Concerning the question of extending the single-price auction experiment for 2· and ) -year
notcs for one year beyond the auctions in August 1993, the Committee voted 19-0 In favor of
continuation
In support of this unanimous view, the Committee offers the following
observations'
The marketplace and investors expect the single price auction agreement to
continue;
There appear to be no major negative effects associ81ed with the experiment;
The experiment has been conducted in a market environment characterized by low
volatility. an accommodattve monetary policy, a positively sloped yield curve
providing substantial financing margins, and widespread global investor
participation. Additional data, particularly if it happened to be gathered in more
adverse and volatile conditions, would be useful in assessing the value of single
price auctions to the Treasury
While as yet there appears no clear evidence, either way. that single-price auctions
have reduced Treasury financing costs, attracted new investors, or encouraged
more aggressive bidding. compared to multiple price auctions. interestingly,
immediate post-auction volatility appears to be less with the single-price auction.
Lastly, the Committee felt that more experimentation and more extensive analysis,
especially if under different market conditions and with the new Treasury
fmancing focus, would be helpful in aiding the Treasury's assessment.
The committee also discussed the potential attraction of inc1udini other Treasury cycles
in the experiment at a later date but achieved no consensus.
Mr. Sect"etary, this concludes the Committee's report and we stand ready to address your
questions or comments.
Sincerely,
gtU.~
Morgan B. tar
Chairman of the Treaswy Borrowing
Advisory Committee of the PSA
UBLIC DEBT NEWS
RESULTS OF TREASURY'S AUCTION OF 10-YEAR NOTES
Tenders for $11,025 million of 10-year notes, Series B-2003,
to be issued August 16, 1993 and to mature August 15, 2003
were accepted today (CUSIP: 912827L83).
The interest rate on the notes will be 5 3/4%. The range
of accepted bids and corresponding prices are as follows:
Low
High
Average
Yield
5.77%
5.78%
5.78%
Price
99.849
99.774
99.774
Tenders at the high yield were allotted 55%.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
11,512
32,810,452
9,825
13,027
49,608
23,717
1,303,624
7,231
3,632
18,322
2,274
422,980
28,476
$34,704,680
Accepted
11,512
10,567,202
9,825
13,027
45,108
14,217
198,374
7,231
3,622
18,322
2,274
105,950
28,452
$11,025,116
The $11,025 million of accepted tenders includes $482
million of noncompetitive tenders and $10,543 million of
competitive tenders from the public.
In addition, $800 million of tenders was awarded at the
average price to Federal Reserve Banks as agents for foreign and
international monetary authorities. An additional $1,100 million
of tenders was also accepted at the average price from Federal
Reserve Banks for their own account in exchange for maturing
securities.
The minimum par amount required for STRIPS is $800,000.
Larger amounts must be in multiples of that amount.
Also, accrued interest of $0.15625 per $1,000 of par must
be paid for the period August 15, 1993 to August 16, 1993.
LB-320
UBLIC DEB4·;,·NEWS
RESULTS OF TREASURY'S AUCTION OF 30-YEAR BONDS
Tenders for $11,002 million of 30-year bonds to be issued
August 16, 1993 and to mature August 15, 2023 were
accepted today (CUSIP: 912810EQ7).
The interest rate on the bonds will be 6 1/4%. The range
of accepted bids and corresponding prices are as follows:
Low
High
Average
Yield
6.32%
6.35%
6.33%
Price
99.063
98.666
98.931
Tenders at the high yield were allotted 10%.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
9,347
22,150,499
1,878
12,240
38,138
3,306
936,429
664
2,394
8,613
916
295,083
5.197
$23,464,704
Accepted
9,347
10,747,399
1,878
12,240
38,138
3,306
128,929
664
2,391
8,613
746
42,982
5.197
$11,001,830
The $11,002 million of accepted tenders includes $390
million of noncompetitive tenders and $10,612 million of
competitive tenders from the public.
In addition, $525 million of tenders was also accepted
at the average price from Federal Reserve Banks for their own
account in exchange for maturing securities.
The minimum par amount required for STRIPS is $32,000.
Larger amounts must be in multiples of that amount.
Also, accrued interest of $0.16984 per $1,000 of par must
be paid for the period August 15, 1993 to August 16, 1993.
LB-321
August 13, 1993
STATEMENT OF TREASURY SECRETARY LLOYD BENTSEN
NAFTA SIDE AGREEMENTS
I'm delighted that Ambassador Kantor and his counterparts have concluded the
important supplemental agreements to NAFTA. We soon will be able to take NAFTA
to Congress for approval, and get on with the business of creating 200,000 new jobs for
Americans. This is very good news.
-30-
LB-322
TREASURY NEWS
Department of the Treasury
Washington, D.C.
FOR IMMEDIATE RELEASE
August 13, 1993
A
.
•
V
Telephone 202-622-2960
CONTACT: Michelle Smith
(202) 622-2960
BENTSEN NAMES DIEHL TO MINT JOB
Treasury Secretary Lloyd Bentsen on Friday named Philip Diehl to be Executive
Deputy Director of the United States Mint. Diehl is presently Counselor to the Secretary and
Chief of Staff at the Department of the Treasury.
"It is important to have Philip at the Mint to help insure success for the
Administration's management reinvention plans. He has the knowledge and the ability to get
the job done," Secretary Bentsen said.
Diehl will begin serving in the new position September 8. In addition to assisting in
the reinvention process, he will focus on the Mint's marketing program.
Diehl, 42, has served as Counselor to the Secretary and Chief of Staff since January
21. He is a former staff director of the Senate Finance Committee and legislative director
for Senator Lloyd Bentsen.
He earned an M.A. in government from the University of Texas at Austin and a B.A.
in political science and economics at Austin College in Sherman, Texas.
The Mint has more than 2,200 employees in four mints, in Washington, D.C., and at
Fort Knox. It produces the nation's supply of circulating coinage and has numismatic and
bullion coin sales of approximately $500 million a year.
-30LB-323
FOR RELEASE AT 2:30 P.M.
August 13, 1993
CONTACT:
Office of Financing
202/219-3350
TREASURY'S 52-WEEK BILL OFFERING
The Treasury will auction approximately $15,250 million of
52-week Treasury bills to be issued August 26, 1993. This
offering will provide about $625 million of new cash for the
Treasury, as the maturing 52-week bill is currently outstanding
in the amount of $14,616 million.
In addition to the maturing
52-week bills, there are $23,796 million of maturing 13-week and
26-week bills.
Federal Reserve Banks hold $9,926 million of bills for their
own accounts in the three maturing issues.
These may be refunded
at the weighted average discount rate of accepted competitive
tenders.
Federal Reserve Banks hold $3,692 million of the three
maturing issues as agents for foreign and international monetary
authorities.
These may be refunded within the offering amount at
the weighted average discount rate of accepted competitive
tenders. Additional amounts may be issued for such accounts if
the aggregate amount of new bids exceeds the aggregate amount of
maturing bills.
For purposes of determining such additional
amounts, foreign and international monetary authorities are
considered to hold $555 million of the maturing 52-week issue.
Tenders for the bills will be received at Federal
Reserve Banks and Branches and at the Bureau of the Public
Debt, Washington, D. C. This offering of Treasury securities is
governed by the terms and conditions set forth in the Uniform
Offering Circular (31 CFR Part 356, published as a final rule on
January 5, 1993, and effective March 1, 1993) for the sale and
issue by the Treasury to the public of marketable Treasury bills,
notes, and bonds.
Details about the new security are given in the attached
offering highlights.
000
Attachment
LB-324
HIGHLIGHTS OF TREASURY OFF~RING OF 52-WElt BILLS
TO BE ISSUED AliGUS'!, 26, ~9 9 3
August 13, 1993
Offering Amount .
.
.
.
.
.
Description of Offering:
Term and type of security
CUSIP number
Auction date
Issue date
Maturity date
Original issue date
Maturing amount . . .
Minimum bid amount
Multiples . . . . .
364-day bill
912794 L6 9
August 19, 1993
August 26, 1993
August 25, 1994
August 26, 1993
$14,616 million
$10,000
$1,000
Submission of Bids:
Noncompetitive bids
Competitive bids
$15,250 million
(1 )
(2 )
(3 )
Accepted in full up to $1,000,000
at the average discount rate of
accepted competitive bids.
Must be expressed as a discount rate
with two decimals, e.g., 7.10%.
Net long position for each bidder
must be reported when the sum of the
total bid amount, at all discount
rates, and the net long position are
$2 billion or greater.
Net long position must be reported
one half-hour prior to the closing
time for receipt of competitive bids.
Maximum Recognized Bid
at a Single Yield
35% of public offering
Maximum Award .
35% of public offering
.
.
Receipt of Tenders:
Noncompetitive tenders
Competitive tenders . . . .
Payment Terms .
.
.
.
.
.
.
Prior to 12:00 noon Eastern Daylight
Saving time on auction day.
Prior to 1:00 p.m. Eastern Daylight
Saving time on auction day.
Full payment with tender or by charge
to a funds account at a Federal
Reserve bank on issue date.
Text as Prepared for Delivery
Advance for 1 p.m. PDT (4 p.m. EDT)
August 17, 1993
REMARKS OF TREASURY SECRETARY LLOYD BENTSEN
LOS ANGELES WORLD AFFAIRS COUNCIL
It has been too long since I've had the chance to talk
here -- almost five years. Times have changed.
I was a
candidate then. NOW, at long last, I'm part of an administration
trying to make a change in America.
I want to spend some time today talking about two of the
major, interconnected issues on my plate, the North American Free
Trade Agreement, and our economic relations throughout the
Pacific region. Then perhaps I can take a few questions.
First, however, I want to put these issues into broader
perspective. Our efforts to increase trade, with Mexico, with
Asia and the Pacific, everywhere, are part of an effort to deal
directly with our economic problems. They also represent our
recognition of and part of our response to the fact that while
security issues were the overriding factor during the Cold War
years, now the economic dimension is paramount.
President Clinton was elected because people wanted a change
from the status quo. We're doing that. We're looking more than
six weeks or six months down the road. We're looking to
America's long term economic health. We're not slapping bandaids on problems, praying the bleeding will stop, and acting
surprised as we grow weaker and weaker.
We took the first steps toward restoring long term strength
in our economy with passage of our deficit reduction bill. We've
got interest rates down to record low levels. Now we're moving
ahead, taking on other problems. We're taking on the health care
issue, to get deficits down even more and be sure Americans have
access to affordable health care. We're aggressively pursuing
NAFTA, the GATT talks, and talks with Japan, because trade
agreements and open markets are another way to generate long term
growth and create jobs.
We're putting the status quo and gridlock behind us.
It's
not going to change in six weeks or six months, but if we work
together, we'll make a major difference a year from now, two
years, three years from now. And these problems can stay fixed.
LB-325
2
We passed that deficit reduction bill with just Democratic
votes, but we need Republican votes on some of these other
solutions to our problems. These problems that ~e're taking on
are not Democratic problems. They're not Republ1can problems.
They're American problems. Americans want the political parties
to work together to solve American problems.
I'm delighted that just the other day forme: President Bush
applauded President Clinton's co~itment to gett1~g NAFTA
approved and put in place. Pres1dent Bush recogn1zes that NAFTA
will be good for America.
Now I want to get a bit more specific about NAFTA.
I
believe ~e can get it through Congress this fall and in place by
the start of next year.
It won't be easy, but it's doable.
We're going to be waging an aggressive fight for NAFTA this
fall.
We've got an experienced hand in Bill Daley to direct our
effort. And we're going to set up another command center like
the war room we had going for the deficit reduction package.
We're not going to get behind on the message curve on this one.
We'll be out there making sure the misinformation is labeled for
what it is, and making sure people understand that NAFTA means
more jobs, at better wages, for thousands upon thousands of
Americans -- 200,000 in fact.
NAFTA is a good agreement, but because we wanted to make it
even better, our negotiators have worked out supplemental
agreements on labor issues, on how to deal with import surges,
and on the crucial issue of the environment. And we're also
working on the fine print of a mechanism to fund environmental
clean-up along the border.
We're looking at a Border Environmental Financing Facility
with a capitalization on the order of several billion dollars.
When we talk about these side agreements, particularly on
the environment, without NAFTA, we may continue to see
environmental problems, and none of us wants that.
What will NAF~A give,us? We already have 700,000 jobs
related to trade w1th Mex1co.
Some 400,000 of those jobs have
been created since President Salinas began to liberalize his
country's trade rules.
NAFTA will generate about 200 000
additional U.S. jobs in the next two years alone. And we
estimate that NAFTA-related jobs will pay 12 percent more.
Where are those jobs? Who benefits? Let me tick off a few
of the winners here in California. Cal-State Lumber Sales of San
Y~idro for ~ne., Their sales are up 700 percent.
They say that
w1th ~A~TA 1~ w1ll get even better. Western Digital in Irvine
says 1t s g01ng to be able to add to its work force because
3
computer parts tariffs will go down. Johnson Environmental at
Santa Ana is a small business. They say their sales of package
closing machines to Canada and Mexico will go up by a factor of
four, and they'll hire 50 percent more workers.
Big business,
small business, and in between, everyone benefits.
I want to say one other thing about NAFTA and jobs.
Organized labor and others have some sincere concerns that NAFTA
may cost jobs here in America. The point here is that jobs can
go south to Mexico now, or the Far East, or anywhere. That's the
effect of global competition, not NAFTA. On balance, NAFTA's a
net job creator, 200,000 of them. And for those who are affected
by NAFTA, we have job retraining programs. We want everyone to
benefit from NAFTA, and the prosperity it's going to bring.
If you look at what's happened with our trade position with
Mexico, you'll see what lower trade barriers mean. Today, Mexico
has replaced Japan as our second-largest market for manufactured
products. Our trade position with Mexico has turned around
because of what President Salinas has done with trade barriers.
We've gone from a trade deficit of nearly $6 billion to a surplus
today of $5.4 billion. Exports to Mexico are over $40 billion.
Seven years ago they were just $12 billion. And that's why we're
working hard to crack markets everywhere, not just in Mexico.
There's another important point about NAFTA that needs to be
made
one of the most important. NAFTA not only levels the
playing field, it ensures it will stay that way. Right now, half
of what comes in from Mexico does so duty free, and the duty on
the rest averages just 4 percent. On the other hand, our goods
going into Mexico, on average, face 10 percent duties.
If you
look at automobiles, our duty for a Mexican-built car is just 2.5
percent, but we pay a 20 percent duty to send a car into Mexico.
While I'm talking about cars, let me remind everyone that right
now Mexico says we have to buy $20,000 in auto parts from them
before we can sell one $10,000 car in Mexico. That's the sort of
disparity we want to eliminate.
NAFTA will get rid of much higher barriers to our goods than
to our imports from Mexico. And it will eliminate things you
can't chart on any graph, like licensing requirements and the
like that hamper many of our businesses now.
Failure to pass NAFTA could put at risk the 700,000 jobs
that now depend on trade with Mexico. Remember, all the
liberalization we've seen in trade rules with Mexico has been
voluntary. There is no guarantee that whoever succeeds President
Salinas won't jack those tariffs back up to as high as 50 percent
which would be consistent with Mexico's GATT obligations.
There is another dimension to the case for NAFTA.
Take it
from a Texan, where we've got an BOO-mile border with Mexico.
4
I know about the illegal immigration problem.
NAFTA is going to
help raise living standards in Mexico, ~hich will reduce the
economic incentive to cross the border lllegally and put demands
on our public services. And a higher standard of living in,
Mexico means they will be buying more u.s. goods, and creatlng
more jobs here.
Finally, failing to adopt NAFTA could have serious
international repercussions.
It could damage our ability to
cooperate on a variety of issues with Mexico, and throughout
Latin America. That's not to mention how our ability to reach
trade agreements elsewhere could be affected.
To sum up, we're going to take our case to the American
people in an aggressive way. We've got a good thing going here,
and Americans need to know about it. NAFTA is all about jobs.
NAFTA is all about growth. NAFTA is all about helping the
environment. And NAFTA is about a better way of life for
Americans.
NOW, having looked south for a while and talked about jobs,
I want to shift my focus westward across the Pacific for a few
minutes and talk about -- you guessed it -- creating jobs.
If you'll recall, jobs is what we were after at the Economic
summit in Tokyo last month. We talked at length about the jobs
we can create in the united states, throughout the Pacific, and
around the world, with lower trade barriers in Japan, and with
lower barriers worldwide through the GATT process. We talked
about holding a jobs summit in Washington this year.
And, if you
follow these issues closely, and I imagine many of you do, you'll
remember also that President Clinton spoke about building a new
partnership with the Pacific.
Over the years, the United States and the people of the
Pacific region have been linked by a common security interest.
That aspect of our relationship remains important.
But economic
interests are taking on new and greater significance. We are
being drawn closer together now not by a common enemy but by our
common economic interests, and by the desire to create the jobs
and prosperity that underpin democracies.
I consider making this new Pacific relationship work as one
of my major tasks. We will use every forum available to advance
this cause. We have a large network, if you will of
organizations to assist,in relations with Europe :- NATO, the
OECD, ~he G-7 ~nd the,llke. But in the Pacific the parallel
economlC ~nd dlplomatlc structure is not as widespread.
That
means,a h~gher degr~e of visibility and importance for the
organlzatlon for ASlan and Pacific Economic Cooperation, among
others.
5
To understand the importance of creating a vibrant Pacific
Community, I want to share some figures with you. Asia is going
to be a driving force in the global economy in the next few
decades. That fact alone is enough to make businessmen and those
of us in government pay far closer attention to the Pacific
region.
In China, for example, there are one billion consumers,
and last year they imported more than $80 billion of merchandise.
Economic growth there has averaged in the double digits for the
past decade. Last year, Asia -- excluding Japan -- accounted for
fully one fifth of U.S. trade.
I saw a story two weeks ago in a newspaper that drove home
that point.
It said that U.S. exports to developed countries
last year rose by less than 2 percent, and exports to western
Europe fell by more than 1 percent. What really made the
headline was that our exports to developing countries and the
newly industrialized countries in Asia were up nearly 14 percent
last year from 1991. We did an astounding 47 percent more export
business with Indonesia from one year to the next.
You don't have to be the guy who invented stealth technology
to figure out that we ought to be strengthening our historic ties
to the region to create growth and jobs not only for our economy,
but for all economies.
When you look at all the charts and tables that the
economists spread out on my desk, one of the things that stands
out is that the U.s. foreign direct investment presence in Asia
is not what it could be.
In 1991, for instance, our foreign
direct investment in Asia was less than half what it was in Latin
America. The encouraging sign, however, is that our foreign
direct investment flow to Asia is growing.
Everywhere else in the world, trade with multinational
affiliates accounts for a larger share of U.s. exports than in
Asia.
For example, that kind of export was 27 percent worldwide,
but in Asia, exports to U.s. affiliates was just 14 percent.
If the United states were able to invest more heavily in
Asia, it could boost our exports to the point it could help start
our regional trade imbalances headed downward. And at the heart
of it all, it would create jobs, which is exactly what we want.
And the creation of jobs brings me back to what it was we
were working toward at the Tokyo summit. As part of our global
effort to restore growth and create jobs, President Clinton
announced that he was going to convene a special meeting of heads
of state from the Organization of Asian and Pacific Economic
Cooperation up in Seattle this fall.
That will allow the
president and his counterparts to talk about ways to share
prosperity and opportunity.
6
The president also asked me to meet with the Pacific finance
ministers so that we can work on the economic challenges we face
in strengthening the relationships throughout the region.
Let me close here by saying that the Clinton Administration
is committed to the economic course that gives us long term
solutions to our problems, not temporary fixes that leave us
worse off later. We've taken the first step by starting down the
deficit reduction road, and we're going to step up to problem
after problem and set them right. We're going to take on health
care. And we're going to put NAFTA in place. We're going to
work on freer trade through the GATT process. We're going to
seek new trade opportunities in Japan and throughout Asia and the
Pacific. And remember why we're doing this: To get our economy
on the move again, growing and creating jobs for all Americans.
Thank you very much.
* * *
UBLIC OEBT NEWS
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Tenders for $12,380 million of 13-week bills to be issued
August 19, 1993 and to mature November 18, 1993 were
accepted today (CUSIP: 912794E59).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
3.00%
3.03%
3.03%
Investment
Rate
3.06%
3.10%
3.10%
Price
99.242
99.234
99.234
$5,000,000 was accepted at lower yields.
Tenders at the high discount rate were allotted 19%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
LocatiQn
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
33,163
46,802,179
5,590
40,180
32,185
18,319
2,717,657
9,708
4,979
22,931
12,300
960,358
790,522
$51,450,071
Accegted
33,163
10,894,230
5,560
40,180
32,185
14,269
347,637
9,708
4,979
22,931
12,300
172,808
790,522
$12,380,472
Type
Competitive
Noncompetitive
Subtotal, Public
$46,341,348
1,300,723
$47,642,071
$7,271,749
1,300,723
$8,572,472
3,087,900
3,087,900
720 1 100
$51,450,071
720,100
$12,380,472
Federal Reserve
Foreign Official
Institutions
TOTALS
LB-326
UBLIC DEBT NEWS
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Tenders for $12,201 million of 26-week bills to be issued
August 19, 1993 and to mature February 17, 1994 were
accepted today (CUSIP: 912794H98).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
3.06%
3.12%
3.12%
Investment
Rate
3.15%
3.21%
3.21%
Price
98.453
98.423
98.423
Tenders at the high discount rate were allotted 96%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED ( in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
31,991
49,063,196
7,116
31,856
25,856
18,652
2,247,053
11,815
5,495
18,822
6,933
709,893
586 1 600
$52,765,278
Accegted
31,991
11,286,778
7,116
31,856
25,656
16,588
137,013
11,815
5,495
18,822
6,933
34,813
586 1 600
$12,201,476
Type
Competitive
Noncompetitive
Subtotal, Public
$47,984,455
947 1 323
$48,931,778
$7,420,653
947 1 323
$8,367,976
3,000,000
3,000,000
833 1 500
$52,765,278
833 1 500
$12,201,476
Federal Reserve
Foreign Official
Institutions
TOTALS
LB-327
i ;.'
U.S. Department of the Treasury
Financial Crimes Enforcement Network
I;:~l;
i .;
~~ :,.1 ,) ~~ L
U
FOR IMMEDIATE RELEASE
August 17, 1993
Contact: Anna Fotias
(703) 905-3695
ANNOUNCEMENT
OF
FinCEN's MOVE TO NEW BUILDING
The Treasury Department's Financial Crimes Enforcement
Network (FinCEN) is moving to a new building in two stages over
the weekends of August 14-15 and August 21-22.
On August 23, all
personnel will be located at FinCEN's new address, which is:
Financial Crimes Enforcement Network (FinCEN)
Tycon Courthouse Building
2070 Chain Bridge Road
Vienna, Virginia 22182
FinCEN's telephone number at its new address is:
(703)
905-3520.
During the week of August 16-20, a temporary telephone number for
FinCEN at its former Ballston location is (703) 875-2277.
FinCEN's operations will continue during the move.
The FinCEN
1-800-S0S-BUCK telephone number, used by enforcement agencies
for authorized calls from the field to request FinCEN's
assistance, will remain connected.
FinCEN, created by the Treasury Department in 1990, supports
law enforcement investigations of money laundering and other
financial crimes.
It is the Government's central source for
analysis of financial and computerized data.
-30FPA-1
FOR RELEASE AT 2:30 P.M.
August 17, 1993
CONTACT:
Office of Financing
202/219-3350
TREASURY'S WEEKLY BILL OFFERING
The Treasury will auction two series of Treasury bills
totaling approximately $24,400 million, to be issued August 26,
1993. This offering will provide about $600 million of new cash
for the Treasury, as the maturing 13-week and 26-week bills are
outstanding in the amount of $23,796 million.
In addition to the
maturing 13-week and 26-week bills, there are $14,616 million of
maturing 52-week bills. The disposition of this latter amount
was announced last week.
Federal Reserve Banks hold $9,926 million of bills for their
own accounts in the three maturing issues. These may be refunded
at the weighted average discount rate of accepted competitive
tenders.
Federal Reserve Banks hold $3,610 million of the three
maturing issues as agents for foreign and international monetary
authorities. These may be refunded within the offering amount
at the weighted average discount rate of accepted competitive
tenders. Additional amounts may be issued for such accounts if
the aggregate amount of new bids exceeds the aggregate amount
of maturing bills.
For purposes of determining such additional
amounts, foreign and international monetary authorities are
considered to hold $3,055 million of the original 13-week and
26-week issues.
Tenders for the bills will be received at Federal
Reserve Banks and Branches and at the Bureau of the Public
Debt, Washington, D. C. This offering of Treasury securities
is governed by the terms and conditions set forth in the Uniform
Offering Circular (31 CFR Part 356, published as a final rule on
January 5, 1993, and effective March 1, 1993) for the sale and
issue by the Treasury to the public of marketable Treasury bills,
notes, and bonds.
Details about each of the new securities are given in the
attached offering highlights.
000
Attachment
LB-328
HIGHLIGHTS OF TREASURY OFFERINGS OF WEEKLY BILLS
TO BE ISSUED AUGUST 26, 1993
August 17, 1993
Offering Amount .
$12,200 million
$12,200 million
92-day bill
912794 G6 5
August 23, 1993
August 26, 1993
November 26, 1993
May 27, 1993
$12,205 million
$10,000
$ 1,000
182-day bill
912794 J2 1
August 23, 1993
August 26, 1993
February 24, 1994
August 26, 1993
Description of Offering:
Term and type of security
CUSIP number
Auction date
Issue date
Maturity date
Original issue date
Currently outstanding
Minimum bid amount
Multiples .
$10,000
$ 1,000
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids
Competitive bids
Accepted in full up to $1,000,000 at the average
discount rate of accepted competitive bids.
(1) Must be expressed as a discount rate with
two decimals, e.g., 7.10%.
(2) Net long position for each bidder must be
reported when the sum of the total bid
amount, at all discount rates, and the net
long position is $2 billion or greater.
(3) Net long position must be determined as of
one half-hour prior to the closing time for
receipt of competitive tenders.
Maximum Recognized Bid
at a Single Yield
35% of public offering
Maximum Award .
35% of public offering
Receipt of Tenders:
Noncompetitive tenders
Competitive tenders
Payment Terms .
Prior to 12:00 noon Eastern Daylight Saving time
on auction day
Prior to 1:00 p.m. Eastern Daylight Saving time
on auction day
Full payment with tender or by charge to a funds
account at a Federal Reserve Bank on issue date
FOR RELEASE AT 2:30 P.M.
August 18, 1993
CONTACT:
Office of Financing
202/219-3350
TREASURY TO AUCTION 2-YEAR AND 5-YEAR NOTES
TOTALING $27,000 MILLION
The Treasury will auction $16,000 million of 2-year notes
and $11,000 million of 5-year notes to refund $13,120 million of
publicly-held securities maturing August 31, 1993, and to raise
about $13,875 million new cash.
In addition to the public holdings, Federal Reserve Banks
hold $967 million of the maturing securities for their own
accounts, which may be refunded by issuing additional amounts
of the new securities.
The maturing securities held by the public include $955
million held by Federal Reserve Banks as agents for foreign
and international monetary authorities. Amounts bid for these
accounts by Federal Reserve Banks will be added to the offering.
Both the 2-year and 5-year note auctions will be conducted
in the single-price auction format. All competitive and noncompetitive awards will be at the highest yield of accepted
competitive tenders.
Tenders will be received at Federal Reserve Banks and
Branches and at the Bureau of the Public Debt, Washington, D. C.
This offering of Treasury securities is governed by the terms and
conditions set forth in the Uniform Offering Circular (31 CFR
Part 356, published as a final rule on January 5, 1993, and
effective March 1, 1993) for the sale and issue by the Treasury
to the public of marketable Treasury bills, notes, and bonds.
Details about each of the new securities are given in the
attached offering highlights.
000
Attachment
LB-329
HIGHLIGHTS OF TREASURY OFFERINGS TO THE PUBLIC OF
2-YEAR AND 5-YEAR NOTES TO BE ISSUED AUGUST 31, 1993
August 18, 1993
Offering Amount .
Description of Offering:
Term and type of security .
Series
CUSIP number
Auction date
Issue date
Dated date
Maturity date.
Interest rate .
Yield . . . .
Interest Payment dates.
Minimum bid amount
Multiples .
Accrued interest
payable by investor .
Premium or discount .
$16,000 million
$11,000 million
2-year notes
Series Z-1995
912827 L9 1
August 24, 1993
August 31, 1993
August 31, 1993
August 31, 1995
Determined based on the
highest accepted bid
Determined at auction
February 28 and August 31
$5,000
$1,000
5-year notes
Series R-1998
912827 M2 5
August 25, 1993
August 31, 1993
August 31, 1993
August 31, 1998
Determined based on the
highest accepted bid
Determined at auction
The last calendar day of
February and August through
August 31, 1998
$1,000
$1,000
None
Determined at auction
None
Determined at auction
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids .
Accepted in full up to $5,000,000 at the highest accepted yield
Competitive bids . . . . (1) Must be expressed as a yield with two decimals, e.g., 7.10%
(2) Net long position for each bidder must be reported when the
sum of the total bid amount, at all yields, and the net long
position is $2 billion or greater.
(3) Net long position must be determined as of one half-hour prior
to the closing time for receipt of competitive tenders.
Maximum Recognized Bid
. 35% of public offering
at a Single Yield
. . 35% of public offering
Maximum Award .
Receipt of Tenders:
Noncompetitive tenders . Prior to 12:00 noon Eastern Daylight Saving time on auction day
Competitive tenders.
. Prior to 1:00 p.m. Eastern Daylight Saving time on auction day
Payment Terms .
. Full payment with tender or by charge to a funds account
at a Federal Reserve Bank on issue date
FOR IMMEDIATE RELEASE
August 19, 1993
STATEMENT OF SECRETARY LLOYD BENTSEN:
Jacques de Larosiere has an outstanding record of accomplishment in international
finance and development. I am confident of his ability to provide the strong leadership that
the EBRD will require as it carries out its vitally important mission of promoting market
reform in Eastern Europe and the newly independent states. I look forward to working
closely with him.
-30-
LB-330
DBLIe DE~T NEWS
_i
Dq~artmcnt of the Treasur}' • Bureau of the Public Debt • Was.hi'l&ton, DC 20239
~l.IC p~
CONTACT: ,05 t;iae of Financing
FOR IMMEDIATE RELEASE
August 19, 1S19.j
"
",
i:, \.,~
,I'
"
202-219-3350
I.~
RESULTS OF TREASURY'S AUCTION OF 52-WEEK BILLS
Tenders for $15,281 million of 52-week bills to be issued
August 26, 1993 and to mature August 25, 1994 were
accepted today (CUSIP: 912794L69).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
3.29%
3.30%
3.30%
Investment
Rate
3.42%
3.43%
3.43%
Price
96.673
96.663
96.663
$5,000,000 was accepted at lower yields.
Tenders at the high discount rate were allotted 47%.
The investment rate is the equivalent coupon-issue yreld.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
10,033
48,790,047
7,962
19,225
20,434
12,575
1,969,265
6,013
8,305
13,076
7,253
979,165
244,775
$52,088,128
Accegted
10,033
14,639,530
7,962
19,225
17,784
10,575
181,097
6,013
5,655
13,076
7,253
117,865
244,775
$15,280,843
Type
Competitive
Noncompetitive
Subtotal, Public
$47,233,850
449,278
$47,683,128
$10,426,565
449,278
$10,875,843
3,850,000
3,850,000
555,000
$52,088,128
555,000
$15,280,843
Federal Reserve
Foreign Official
Institutions
TOTALS
An additional $5,000 thousand of bills will be
issued to foreign official institutions for new cash.
LB-331
,-lll2
Monthly Treasury Statement
of Receipts and Outlays
of the United States Government
For Fiscal Year 1993 Through
July 31, 1993,
and Other Periods
Highlight
Military active duty pay, veterans benefits, and supplemental security income payments for
August 1, 1993 were accelerated to July 30, 1993, thereby inflating outlays for the month of July.
RECEIPTS, OUTLAYS, AND SURPLUS/DEFICIT
THROUGH JULY 1993
1200
Contents
1000
B
I
800
L
L
600
I
400
0
N
S
200
Summary, page 2
Receipts, page 6
Outlays, page 7
Means of financing, page 20
Receipts/outlays by month, page 26
Federal trust funds/securities, page 28
0
Receipts by source/outlays by
function, page 29
-200
Explanatory notes, page 30
-400
Compiled and Published by
Department of the Treasury
Financial Management Service
Introduction
of receipts are treated as deductions from gross receipts; revolving and manage.
ment fund receipts, reimbursements and refunds of monies previously exP8nded In
treated as deductions from gross outlays; and interest on the public debt (PlilIt
issues) .is recognized on the accrual basis. Major information sources If'Idude
accounting data reported by Federal entities, disbursing officers, and FOdera
Reserve banks,
The Monthly Treasury Statement of Receipts and Outlays of the Un/ted States
Government (MTS) IS prepared by the Financial Management Service, Department of
the Treasury, and after approval by the Fiscal Assistant Secretary of the Treasury, is
nonnally released on the 15th workday of the month follOWing the reporting month.
The publlcalion IS based on data prOVided by Federal entities, disbursing officers,
and Federal Reserve banks
Triad of Publications
The MTS is part of a triad of Treasury financial reports. The Dajly Tre8Siry
Statement is published each working day of the Federal Government. It proVides
data on the cash and debt operations of the Treasury based upon reporting of the
Treasury account balances by Federal Reserve banks, The MTS is a repon 01
Govemment receipts and outlays, based on agency reporting, The U.S. GoVerTll'Tlellr
Annual Report is the official publication of the detailed receipts and outlays of the
Govemment. It is published annually in accordance with legislative mandates Qrven
to the Secretary of the Treasury.
Audience
The MTS IS published to meet the needs of: Those responsible for or interested
In the cash posItIOn of the Treasury; Those who are responsible for or interested in
the Government's budget results; and IndiViduals and businesses whose operations
depend upon or are related to the Government's financial operations.
Disclosure Statement
ThiS statement summanzes the financial activitieS of the Federal Govemment
and off-budget Federal entities conducted in accordance with the Budget of the U.S.
Government, I.e., receipts and outlays of funds, the surplus or deficit, and the means
of flnancmg the deficit or disposing of the surplus. Information is presented on a
modified cash baSIS: receipts are accounted for on the basiS of collections; refunds
Data Sources and Information
The Explanatory Notes section of this publication provides information concern.
ing the flow of data into the MTS and sources of information relevant to the MrS
Table 1. Summary of Receipts, Outlays, and the Deficit/Surplus of the U.S. Government, Fiscal Years 1992 and 1993,
by Month
[$ millions]
Period
Outlays
Receipts
Deficit/Surplus (-)
FY 1992
October
November
December
January
February
MarCh
April
May
June
July
August
September
Year-te-Dete ,_"".,.",. _"".""" ..
78,065
73.095
103.636
104.031
62.747
72,127
138,351
62,184
120,878
79,050
78.101
118,184
114.659
117.779
106.170
119.699
111.927
122,839
123,748
108,957
117.096
122,197
102,843
112,722
36,594
44.684
2,534
15.668
49.180
50,712
-14.603
46,773
-3.782
43,147
24,742
-5,462
'1.090.449
'1.380,637
'290,188
76,826
74,628
113.685
112,713
66,133
83,447
132,117
70,753
128,586
80,639
125.618
107,353
152.632
82,896
2114.330
2127,422
124,026
107,717
117,487
120,216
48.792
32,726
38,947
-29.817
48,197
43,974
-8.091
36,963
-11.099
39.577
939.527
1,179.697
240,170
FY 1993
October
November
December
January
February
MarCh
Apnl
May
June
July
Year-Ie-Date " " " " " " " " ' " ' ' ' ' ' ' ' '
'The recetpl. outlay and ooflClt figures differ from the FY 1994 Budget. released by the Office
of Management and Budget on Apnl 8. 1993. by $210 millron due mainly 10 reVISIOOS In data
foilOwlng the release of the Final September Monthly Treasury Statement
'Outlays have ~ ,ncreased by $603 millron In February 1993 and correspondingly decreased
In Marcn 1993 A recetpl for the Loan Guaranty RevolvIng fund was erroneously reporte(l to the
IIQUtClanng 8CCOUni ,nSlead of the finanong aCCOUnt This had been correcte(l In Marcn Instead of
Note: The receipt and outlay figures for FY 1992 and FY 1993 have been reVl!;ed to ,efI;C
the reclaSSification of the account "Tonnage Duty Increases", from a governmental recetptID'
offsetlJng governmental receipt
Note: The DePOSit In Transrt Differences {suspense) clearing accounts for Postal SeM:e a'C
Treasury (Office of the Secretary, FinanCial Management Service and Bureau of the Public DeU
have been reclasSified from a non-bu<lgetary status to a budgetary status
FebnJary
2
Table 2.
Summary of Budget and Off-Budget Results and Financing of the U.S. Government, July 1993 and
Other Periods
[$ millions]
Current
Fiscal
Year to Date
This
Month
Classification
Total on-budget and off-budget results:
Total receipts ............................. .
Prior
Fiscal Year
to Date
(1992)
Budget
Estimates
Full Fiscal
Year'
80,639
939,527
894,163
On-budget receipts .................................. .
Off-budget receipts ................................. .
57,153
23,486
681,134
258,393
640,053
254,111
-Total outlays ........................................... .
120,216
1,179,697
1,165,071
On-budget outlays .................................. .
Off-budget outlays ... . ............................. .
96,252
23,964
966,681
213,015
962,540
202,532
Total surplus (+) or deficit (-) ...................... ..
-39,577
-240,170
-270,908
On-budget surplus (+) or deficit (-) ............... .
Off-budget surplus (+) or deficit (-) ............... .
-39,099
-478
-285,547
+45,377
-322,487
+51,579
Total on-budget and off-budget financing
39,577
240,170
270,908
Means of financing:
Borrowing from the public .......................... .
Reduction of operating cash, increase (-) ........ .
By other means ..................................... .
1,055
32,447
6,076
203,663
30,647
5,859
262,224
3,979
4,705
'New budget estimates will be published in the next Monthly Treasury Statement, after the
'elease of the Mid-Session Review, by the Office of Management and Budget in August.
... No Transactions.
Note: Details may not add to totals due to rounding,
:igure 1. Monthly Receipts, Outlays, and Budget Deficit/Surplus of the U.S. Government, Fiscal Years 1992 and 1993
$ billions
150
120
90
..
.......... ,
.,. ,,, .
,
. ,. .
,,
,
. ..
",
,,
.
"
'
./
~.
60
Receipts
30
0
-30
Deficit(-)/Surplus
-60
-90~-r-.-.--r-'-.--r-'-.--'-'-.--r-'-.--'-'-.--r-'-.'
Oct.
Dec.
Feb.
Apr.
Jun.
Aug.
Oct.
FY
FY
92
93
3
Dec.
Feb.
Apr.
Jun.Jul.
Budget
Estimates
Next Fiscal
Year (1994)'
Figure 2.
Monthly Receipts of the U.S. Government, by Source, Fiscal Years 1992 and 1993
$ billions
ITotal Receipts
I
1
Oct.
Dec.
Feb.
Apr.
Jun.
Aug.
FY
Oct.
Dec.
Feb.' Apr.
JunJul.
FY
93
92
Figure 3. Monthly Outlays of the U.S. Government, by Function, Fiscal Years 1992 and 1993
1ffirl--------------------------------------------~
Total Outlays
1
1
Feb.
FY
92
Apr.
Jun.
Aug.
Oct.
FY
93
4
Dec.
Feb.
Apr.
JunJul.
Table 3. Summary of Receipts and Outlays of the U.S. Government, July 1993 and Other Periods
[$ millions]
Classification
This Month
Current
Fiscal
Year to Date
37,489
2,695
415,149
91,067
385,758
78,795
23,486
6,670
1,709
419
4,214
944
1,761
1,252
258,393
70.192
21,333
3,957
39,377
10,378
15,329
214,353
254,111
69,787
19,332
3.995
37,426
9,313
14,228
221,419
Comparable
Prior Period
Budget
Estimates
Full Fiscal Year'
Budget Receipts
Individual income taxes ......................................... .
Corporation income taxes .................................. .
Social insurance taxes and contributions:
Employment taxes and contributions (off-budget) ...... .
Employment taxes and contributions (on-budget) ...... .
Unemployment insurance ................................ .
Other retirement contributions ................................ .
Excise taxes .................................................... ..
Estate and gift taxes """""'"''''''''''''''''''''''''''''''
Customs duties .................................................. .
Miscellaneous receipts """"''''''''''''''''''''''''''''''''''''
Total Receipts _............................................... .
80,639
939,527
894,163
(On-budget) ................................................. .
57,153
681,134
640,053
(Off-budget) ................................................ .
23,486
258,393
254,111
202
259
23
660
3,531
254
24,902
2,356
1,474
1,346
2,002
2,089
170
10,694
55,596
2,253
234,517
24,299
24,366
13,740
2,109
1,956
160
10,038
49,248
2,199
241,191
23,430
23,279
12,760
27,399
24,039
2,138
566
853
3,827
481
3,191
236,977
247,353
20,783
5,317
8,591
37,879
4,666
227,598
215,727
233,187
20,657
5,432
8,249
39,448
4,272
226,426
17,920
104
4,275
482
-551
1,247
3,121
72
256,487
38,242
30,435
4,813
223
11,853
30,581
683
255,756
32,104
29,175
4,964
-99
11,736
29,702
336
-2,192
1,385
-18,511
5,923
-2,934
21,780
-55
-3,094
-81,548
-28,376
-76,721
-30,496
Total outlays .................................................. .
120,216
1,179,697
1,165,071
(On-budget) .•••••.••••••••••.••...••..•••••••..••..........••
96,252
966,681
962,540
Budget Outlays
Legislative Branch ............................................... .
The Judiciary .................................................... .
Executive Office of the President ..................... .
Funds Appropriated to the President .................. .
Department of Agriculture ............................. ..
Department of Commerce ............................ .
Department of Defense-Military ............................... .
Department of Defense-Civil .................................. .
Department of Education ................................. .
Department of Energy .......................................... .
Department of Health and Human Services, except Social
Security ....................................................... .
Department of Health and Human Services, Social Security .
Department of Housing and Urban Development ............. .
Department of the Interior .................................... .
Department of Justice ................................. .
Department of Labor ...................................... .
Department of State ...................................... .
Department of Transportation ................................. .
Department of the Treasury:
Interest on the Public Debt """''''''''''''''''''''''''''''
Other """""'"''''''''''''''''''''''''''''''''''''''''''''''
Department of Veterans Affairs ........................... .
Environmental Protection Agency ........................ .
General Services Administration ........................ .
National Aeronautics and Space Administration ........ .
Office of Personnel Management ........................ .
Small Business Administration """"""'"''''''''''''''''''''
Other independent agencies:
Resolution Trust Corporation ................................. .
Other """""''''''''''''''''''''''''''''''''''''''''''''''''
Undistributed offsetting receipts:
Interest ........................................................ .
Other .......................................................... .
(Off-budget) •••••.••••.•••.•••••••••.••...•....•...•.......•.
23,964
213,015
202,532
Surplus (+) or deficit (-) .................................. ..
-39,577
-240,170
-270,908
(On-budget) ................................................. .
-39,099
-285,547
-322,487
(Off-budget) ................................................ .
-478
+45,377
+51,579
'Includes a reclassification from a non-budgetary status to a budgetary status of $44 million for
FY 1992 and -$6 million for FY 1993 for the "Deposit in Transit (suspense) clearing accounts for
Postal Service and Treasury (Office of the Secretary. Financial Management Service and Bureau of
the Public Debt).
Note: Details may not add to totals due to rounding.
'The budget estimates will be published in the next Monthly Treasury Statement, after the
elease of the Mid-5ession Review, by the Office of Management and Budget in August.
'Includes a recfassification from a government receipt to an oHseHing governmental receipt of
-$65 million for FY 1992 and -$48 million for FY 1993 for the account "Tonnage Duty Increases".
5
Table 4.
Receipts of the U.S. Government, July 1993 and Other Periods
[$ millions1
This Month
Classification
Gross
Receipts
I
Refunds
(Deduct)
Current Fiscal Year to Date
I
Receipts
Gross
Receipts
I
Refunds
(Deduct)
I .
t
Recelp s
Prior Fiscal Year to 01_
Gross
Receipts
I
Refunds
(Deduct)
i
I II
Rtce/pIa
......,
Individual Income taxes:
WIthheld
PresKlenlla1 Elecl10n Campaign Fund
Other
362.251
27
125.264
'36.396
2
'2.759
342.584
22
121.997
Total-Individual income taxes .........................
39,157
1,668
37,489
487,542
72,393
415,149
464,602
78,844
38S,75i
Corporation Income taxes ..........••.......•..•••.•.•.••.•••
3,848
1,154
2,695
103,217
12,150
91,067
94,142
15,347
78,715
'21.139
'76
21.139
76
(' ')
( )
..
(")
(' ')
221.968
11.421
-12
221.968
11,421
-12
215.176
14.316
4
("J
(")
21.215
21.215
233.377
233.377
229,496
229.496
'2.284
'8
2.264
8
23.792
1.225
23,792
1.225
23.068
1.546
23.068
1.546
-1
-1
Social Insurance taxes and contributions:
Employment taxes and contributions:
Federal old-age and survivors ins. trust fund:
Federal Insurance Contributions Act taxes
Self-Employment Contributions Act taxes
DeposIts by States
Other
Total-FOASI trust fund
Federal dIsability insurance trust fund:
Federal Insurance Contributions Act taxes . . . . . . . . . . . .
Self-Employment Contributions Act taxes
Receipts from railroad retirement account ..........
. . .. .. .. ... . .
Deposits by States
. . . . . .. . . . . . . .
Other
Total-FDI trust fund
Federal hospital insurance trust fund:
Federal Insurance Contributions Act taxes
Self-Employment Contributions Act taxes
Receipts from Railroad Retirement Board
Deposits by States
............
Total-FHI trust fund ..
Railroad retirement accounts:
Rail industry pension fund
Railroad Social Security equivalent benefit
Total-Employment taxes and contributions
Unemployment insurance:
State taxes depoSited in Treasury ..
Federal Unemployment Tax Act taxes
Railroad unemployment taxes
Railroad debt repayment
Total-Unemployment insurance
...........
..
..)
(
(
)
r oJ
..
215,176
14.316
4
(")
1
(
-
)
1
(")
2,272
2.272
25.016
25.016
24.615
24,615
'6.280
'20
6,280
20
63.021
3,727
381
-3
61,584
4.572
337
3
67.126
66,496
61,584
4.572
337
3
66,496
1,949
1,117
2,092
1,201
2
328.584
323.900
2
323,898
16,446
4.747
62
79
14.509
4.783
136
36
132
14,509
4,651
21,333
19,464
(")
("J
63,021
3.727
381
-3
6.300
6,300
67,126
221
149
1.959
1.117
10
30.156
328.594
10
1,314
389
5
2
16.446
4.857
62
79
1,709
21.444
222
149
(")
30,157
(' .)
1,314
408
5
2
19
1.728
19
110
110
2.090
1,201
136
36
132
19,332
Other retirement contributions:
Federal employees retirement - employee
contributions .
Contributions for non-federal employees ..
410
9
410
9
3.875
81
3.875
81
3,907
88
3,907
Total-Other retirement contributions
419
419
3,957
3,957
3,995
3,995
Total-Social insurance taxes and
contributions ........................................
Excise taxes:
MIscellaneous excise taxes2
Airport and airway trust fund
Highway trust fund
Blacl\ lung disability trust fund
Total-EXCise taxes
. ...................................
~
32,304
19
32,284
353,995
120
353,875
347,359
134
347,225
2,103
437
1,655
55
-81
5
113
2,185
433
1,542
55
22.206
2,395
14,994
529
450
15
283
21,756
2.381
14,711
529
19.702
3.937
14,402
524
734
11
394
18,988
3.926
14.009
524
4,250
36
4,214
40,125
748
39,377
38,565
1,139
37,426
270
10,378
9,599
286
9,313
654
14,228
Estate and gift taxes .........................................
969
25
944
10,647
...............................................
1,831
70
1,761
15,976
837
415
Customs duties
Miscellaneous Receipts:
DePOSits of eamings by Federal Reserve banks
All other
88
647
15,329
14,882
11,654
32,854
155
11.654
2,699
18.505
32,919
14,508
155
14,353
(")
837
415
Total -
Miscellaneous receipts ........................
1.253
( )
1,252
Total -
Receipts ..........•...•••.•...•.•••.•.•••••.•.••
83,612
2,972
80,639 1,026,010
86,483
939,527
Total -
On-budget , .....................................
60,125
2,972
57,153
767,617
86,483
681,134
736,462
Total -
Off-budget .............. , .......................
23,486
23,486
258,393
258,393
254,111
..
'In accor~ Wlttl !he prOVISJQrlS of the SocIal Secunty Act as amended. "IndiVIdual Income
Taxes W,ttlheld have beefl Increased andFede<aI ContnbutJons Act Taxes" correspondingly
deCreased by $802 mliiton to correct esumates for !he quarter ending June 30. 1992, "IndiVIdual
Income Taxes Other have beefl deCreased and 'Self Employment ContnbutlO<1s Act Taxes"
correspona'ngly 'ncreased by $103 militon to correct esnmates fOf calendar year 1990 and poor
>indu<les amounts fOf wlndtall profits tax pursuant to PL %-223
=
18,5C5
5
2,914
21,424
5
21,419
990,572
96,409
894,163
96,409
640,053
=
=
254,111
::;
'Includes a reclassification from a governmental receipt to an offsetting governmental rFIHI
of -$65 million for FY 1992 and -$48 million for FY 1993 for the account "Tonnage M
Increases".
No Transactions.
(' .) Less than $500.000,
Note: Details may not add to totals due to rounding.
6
Table 5. Outlays of the U.S. Government, July 1993 and Other Periods
[$ millions]
Prior Fiscal Year to Date
This Month
Current Fiscal Year to Date
Gross IAPPlicablel Outlays
Outlays
Receipts
Gross IAPPlicablel Outl
Outlays
Receipts
ays
Classification
Legislative Branch:
Senate...
. ............................. .
House of Representatives .............. .
............................ .
Joint items
Congressional Budget Office ... .
Architect of the Capitol ....
Library of Congress ..
Govemment Printing Office:
Revolving fund (net) .....
General fund appropriations ................... .
General Accounting Office .......... .
United States Tax Court
.. . . . . ... . .
. ......... .
Other Legislative Branch agencies ..... . ......... .
. .......... .
Proprietary receipts from the public .....
Intrabudgetary transactions ................................. .
Total-Legislative Branch ............••.........•........
The Judiciary:
Supreme Court of the United States .................. .
Courts of Appeals. District Courts. and other judicial
services
Other
Total-The Judiciary
Executive Office of the President:
Compensation of the President and the White House
Office ..................................................... .
Office of Management and Budget ........................ .
Other ........................................................ .
Total-Executive Office of the President
Funds Appropriated to the President:
International Security Assistance:
Guaranty reserve fund ... . . .
. ................. .
. ........... .
Foreign military financing grants ......
Economic support fund ....................... .
Military assistance
.......................... .
Peacekeeping Operations .............. .
............................. .
Other
Proprietary receipts from the public
Total-International Security Assistance
Intemational Development Assistance:
Multilateral Assistance:
Contribution to the International Development
....................... .
Association
International organizations and programs
Other
........... .
Total-Multilateral ASSistance ................ .
Agency for International Development:
Functional development assistance program .......... .
Sub-Saharan Africa development assistance .......... .
Operating expenses .................................... .
Payment to the Foreign Service retirement and
disability fund ............................... .
Other ..................................
. ......... .
Proprietary receipts from the public ............. .
Intrabudgetary transactions ................. .
38
61
(")
1
38
60
8
8
2
2
17
30
16
30
1
11
1
11
31
31
4
4
3
3
379
642
65
18
183
273
1
9
8
-30
91
359
27
27
-1
6
-8
205
Gross
Outlays
378
632
65
18
174
273
362
653
66
18
202
322
-30
91
359
27
27
-6
-8
23
93
350
26
25
2,002
2,132
2
2
19
19
23
251
251
6
1.996
74
1.995
74
1.834
6
259
2,090
2,089
1,956
4
34
47
31
46
259
(* *)
25
(* *)
23
23
93
350
26
25
-6
-8
2,109
23
(* *)
1.834
100
(* *)
1,956
12
12
89
83
31
46
83
23
23
170
170
160
160
35
660
4.048
2.864
-4
172
810
3.959
2.565
131
26
35
591
509
219
3.959
2.565
131
26
35
-509
1.100
6.427
66
6
31
232
241
232
241
(* *)
(* ')
2
2
4
4
546
4.048
2.864
-4
23
26
23
26
466
-466
953
6.664
7.527
774
774
885
885
223
356
223
356
254
254
437
437
29
-29
60
486
7.617
212
2
212
2
488
214
214
1.353
1.353
1.575
1.575
135
76
135
40
40
1.127
576
393
1.127
576
393
1.161
422
369
1.161
422
369
76
41
489
85
-114
583
45
743
538
-743
Total-Agency for International Development
344
122
222
2.680
788
1.892
2.483
Peace Corps
.......... .
Overseas Private Investment Corporation .... .
Other..........
. ........... .
24
4
9
24
-5
161
165
-102
4
(* ')
4
165
60
69
8
589
131
459
4.327
957
112
576
17
941
210
10.698
(")
7
Total-Funds Appropriated to the President •••.•......
7
66
18
195
322
34
47
89
4
6
8
114
Intemational Monetary Programs
Military Sales Programs:
Special defense acquisition fund ....
Foreign military sales trust fund
Kuwait civil reconstruction trust fund
Proprietary receipts from the public
Other
361
643
100
93
Total-International Development Assistance
1
6
2,026
0 U
u ays
9
-8
202
3
IApplicable
I
Receipts
112
16
-1
941
(")
1.356
2,206
1,546
7
-1.356
1
9
660
23,444
173
451
-728
766
1.717
175
243
165
-68
61
67
11
56
3.370
4.464
1.020
3.444
576
-493
38
10.698
165
(' ')
7
239
10.335
279
10.667
-10.667
9
5
10,694
22,355
12,749
41
38
728
-493
230
9
54
9.914
10.335
226
-9.914
5
12,317
10,038
Periods-Continued
Table 5. Outlays of the U.S. Government, July 1993 and[$Other
millions)
This Month
Classification
Fanmers Home Administration:
Credit accounts:
A9r1cultural credit insurance fund
Rural housing insurance fund
Other
Salanes and expenses
Other
IA~a~1
Receipts
Gross
Outlays
-
0utIap
-
53
36
33
36
39
17
604
362
332
404
414
618
604
362
332
404
414
617
573
351
335
371
394
600
23
44
8
23
44
8
188
480
67
188
480
67
163
472
64
472
30
63
30
63
1,838
629
1,838
629
1,803
615
1.803
615
228
326
("')
48
7
2.020
3.390
("')
530
67
1.730
2.680
1
289
710
(")
530
67
3.015
4.109
2.041
2.665
(
1.445
(
("
609
6.006
4.411
1.596
7.696
27
401
401
719
33
23
7
-169
58
875
193
57
2.435
591
448
193
55
-1.098
264
984
145
40
2.528
938
-324
1
22.934
175
16.272
175
15.959
177
r')
85
266
'j
r
48
7
Foreign assistance programs
Rural Development Administration:
Rural development insurance fund
Rural water and waste disposal grants
Other
Rural Electrification Administration
Federal Crop Insurance Corporation
Commodity Credit Corporation:
Pnce support and related programs
National Wool Act Program
APPlicable!
Receipts
Outlays
Gatt
36
33
36
39
17
53
314
592
Total-Farmers Home Administration ..
I
Gross
Outlays
Gross IAPPlic.able! Outlays
Outlays
Receipts
Department of Agriculture:
Agncultural Research Service
Cooperative State Research Service
ExtenSion Service
Animal and Plant Health Inspection Service
Food Safety and Inspection Service
Agricultural Marketlng Service
SOil Conservation Service'
Watershed and flood prevention operations
Conservation operations
Other
Agricultural Stablhzation and Conservation Service:
Conservation programs
Other
Prior Fiscal Y8a, to
Current Fiscal Year to Date
960
351
27
91
23
7
113
60
736
1
58
..
(
)
282
2
1.060
427
2
3.533
327
6.662
..
)
573
351
335
371
~
4
596
163
64
..
)
513
58
973
513
58
4.706
2.990
719
417
568
145
2
3.432
281
-904
6,157
9.801
38
658
m
Food and Nutntlon Service:
Food stamp program
State child nutrition programs
Women, infants and children programs .
Other
2.027
425
226
27
2.027
425
226
27
20,486
5,979
2,462
518
20,486
5,979
2,462
518
19,098
5,633
2,234
478
19,098
Total-Food and Nutrition Service
2,706
2,706
29,446
29,446
27,443
27,443
106
21
118
106
21
118
1,155
257
1,085
1,155
257
1,085
1,165
254
1,032
1,165
254
1,032
244
244
2,496
2,496
2.452
2,452
36
-101
500
28
908
471
-908
-150
510
Forest Service:
National forest system
Forest service permanent appropriations
Other
Total-Forest Service
Other
Propnetary receipts from the publiC
Intrabudgetary transactions
Total-Department of Agriculture
Department
Economic
Bureau of
Promotion
38
2
101
-150
.......................
of Commerce:
Development Administration
the Census
, ........ ,.
of Industry and Commerce
SCience and Technology:
National Oceanic and Atmospheric Administration
Patent and Trademark Office
NaliOnal Institute of Standards and Technology
Other
485
25
1,060
-1,060
1,857
3.531
71.896
16.300
55.596
65.332
16.084
41,2.
24
30
26
3
21
30
26
129
290
255
18
111
290
255
130
273
245
35
96
273
245
141
5
25
1,359
46
189
61
21
1,367
62
155
72
24
1,343
62
155
32
1,339
46
189
29
171
1,655
53
1,602
1,657
24
1,633
16
92
10
-10
79
122
-122
..)
(
..
97
92
-97
( )
..
)
("i
17
254
181
2,1.
3
Total-SCience and Technology
176
5
Other
Proprietary receipts from the publiC
Intra budgetary transactions
Offsetting governmental receipts
16
(
.......................
478
5,388
143
5
25
4
Total-Department of Commerce
5,633
2,234
272
8
..
(
)
)
..
(
2.420
)
167
....
-5
2.253
2.380
(
)
72
-
79
(
-5
~
=
Table 5. Outlays of the U.S. Government, July 1993 and Other Periods-Continued
[$ millions]
This Month
Current Fiscal Year to Date
Prior Fiscal Year to Date
IAPPli~blel
Receipts
Gross IAPPlicablel 0 tI
Outlays
Receipts
u ays
Classification
Gross [APPlicable I Outlays
Outlays
Receipts
Department of Defense-Military:
Military personnel:
Department of the Army
Department of the Navy
Department of the Air Force
Total-Military personnel .........................
Operation and maintenance:
Department of the Army
Department of the Navy
Department of the Air Force
Defense agencies
.....................
.............
Total-Operation and maintenance.
Procurement:
Department of the Army
Department of the Navy ...........
Department of the Air Force
Defense agencies
.. ............
·....... . . ... ....
Total-Procurement
Research, development, test, and evaluation:
Department of the Army
Department of the Navy
Department of the Air Force
.....................
Defense agencies
Total-Research, development, test and evaluation
Military construction:
Department of the Army
Department of the Navy
Department of the Air Force
Defense agencies
Total-Military construction
..............
............
Family housing:
Department of the Army
Department of the Navy
...........
Department of the Air Force
·....................
Defense agencies
Revolving and management funds:
Department of the Army
Department of the Navy
Department of the Air Force
..............
Defense agencies:
............... .
Defense business operations fund
Other
Trust funds:
Department of the Army
Department of the Navy . . . . . . . . . . .
Department of the Air Force
·...... .......
Defense agencies
Proprietary receipts from the public:
Department of the Army
Department of the Navy
Department of the Air Force
Defense agencies
Intrabudgetary transactions:
Department of the Army
........ ..........
Department of the Navy
Department of the Air Force
Defense agencies:
Defense cooperation account
Voluntary separation incentive fund
.............
Other.
Offsetting governmental receipts:
Department of the Army
Defense agencies:
Defense cooperation account
Total-Department of Defense-Military
.............
Gross
Outlays
Outlays
3,675
3,126
2,358
3,675
3,126
2,358
24,725
23,522
17,758
24,725
23,522
17,758
27,607
24,505
18,128
27,607
24,505
18,128
9,159
9,159
66,006
66,006
70,240
70,240
1,824
1,870
2,224
1,468
1,824
1,870
2,224
1,468
19,784
21,471
20,729
15,699
19,784
21,471
20,729
15,699
21,544
21,741
21,215
10,827
21,544
21,741
21,215
10,827
7,386
7,386
77,682
77,682
75,327
75,327
859
1,625
1,925
299
859
1,625
1,925
299
9,685
24,848
21,176
3,039
9,685
24,848
21,176
3,039
10,970
26,762
22,206
2,733
10,970
26,762
22,206
2,733
4,708
4,708
58,748
58,748
62,670
62,670
487
525
986
650
487
525
986
650
5,137
7,561
10,570
7,661
5,137
7,561
10,570
7,661
5,036
6,461
10,090
7,258
5,036
6,461
10,090
7,258
2,648
2,648
30,929
30,929
28,844
28,844
95
71
94
128
95
71
94
128
864
746
964
1,302
864
746
964
1,302
692
905
926
941
692
905
926
941
388
388
3,875
3,875
3,463
3,463
108
78
101
8
108
78
101
4
1,115
721
783
69
1,115
721
783
52
1,276
653
737
31
1,276
653
737
25
-42
-2
-42
-2
68
-60
68
-60
-44
335
-4
335
-4
-4,241
-155
-4,241
-159
3,473
50
..
(
3
(
("')
4
1
-10
..
)
(
("')
-10
-88
..
(
)
60
25
..
-60
-25
..)
(
4
4
24,904
24,902
9
)
40
25
55
)
3
21
11
)
..
..88
(
3
21
11
(
)
2
2
17
3
..
..
(
15
20
25
4
55
38
31
-43
216
197
307
32
-216
-197
-307
-32
(
)
(
)
..
)
7
-44
1
2
..
(
)
3,473
48
..
(
)
15
32
23
-1
-43
157
299
271
75
-157
-299
-271
-75
92
513
115
92
513
115
100
808
8
100
808
8
-2
-949
-48
-2
-949
-48
-294
-294
-396
-396
235,383
21
-21
13
-13
38
-38
4,910
-4,910
866
234,517
5,781
241,191
246,972
Periods-Continued
Table 5. Outlays of the U.S. Government, July 1993 and[$Other
millions)
This Month
Classification
IAPPli~blel
ReceIpts
Gross
Outlays
Department 01 Defense-Civil
Corps of Engineers
Construction, general
Operation and maintenance, general
Other
Proprietary receipts from the pubhc
88
145
-34
Total-Corps of Engineers
199
Military retirement:
Payment to military retirement fund
Retired pay
MIlitary retirement fund
Intrabudgetary transactions
Education benefits
Other
Propnetary receipts from the public
Department of Education:
Office of Elementary and Secondary Education:
Compensatory education for the disadvantaged
Impact aid
School Improvement programs
Chicago htlgation settlement
Indian education
Other
Total-Office of Elementary and Secondary
Education
Office of BIlingual Education and Minority Languages
Affairs
Office of SpeCial Education and Rehabilitative Services:
SpeCial education
Rehabilitation services and disability research
Special Institutions for persons with disabilities
Ottice of Vocational and Adult Education
Office of Postsecondary Education:
College hOUSing loans
Student financial assistance
Federal family education loans
Higher education
Howard University
Other
Total-Department of Education
Department of Energy:
Atomle energy defense actiVitieS
Energy programs:
General sCience and research actiVities
Energy supply, Rand D actiVitieS
Uranium supply and ennchment activities
Fossil energy research and development
Energy conservation
Strategic petroleum reserve
Nuclear waste disposal fund
Other
Total-Energy programs
Power Marketing AdministratIOn
Departmental administratIOn
Propnetary receipts from the pubhc
Intrabudgetary transactions
Offsetting govemmental receipts
Total-Department of Energy .,. .. ,. ......... , .... , ......
164
2.719
3,042
12,273
12.273
11,169
rO)
0)
"J
176
2.883
21.396
-12.273
137
58
r
r
4
7
21.396
-12.273
137
54
-7
20,352
-11,169
121
83
175
24,299
23,598
930
1.226
886
155
-155
155
2,886
11.169
n
4
9
20,352
-11.169
121
80
-9
168
23,430
25
2,356
24,473
668
13
54
668
13
54
6
6
5.936
769
1.313
12
67
5,936
769
1,313
12
67
5,538
724
1.238
10
60
5.538
724
1.238
10
60
741
741
8.097
8,097
7,570
7,570
6
6
164
164
158
158
148
88
9
-153
148
88
9
-153
2.196
1.646
107
1.110
2,196
1,646
107
1.110
1,883
1.671
92
832
1,883
1.671
92
-4
300
246
26
12
4
13
6,083
3.726
565
163
16
56
-44
6,083
3,726
565
163
16
12
5,837
4,133
476
162
17
55
4
585
10,566
56
10,509
10.637
55
299
294
7
22
34
-7
247
305
56
299
294
-56
11
1,474
24,478
112
24.366
23.395
949
949
9.077
9,077
9.116
124
238
88
33
42
27
23
15
(>0)
124
238
88
33
42
27
23
14
1,174
2,373
939
338
423
361
211
127
2
1.174
2.373
939
338
423
361
211
124
1,063
2,262
1.054
342
377
201
267
169
3
167
590
(H)
590
5.945
2
5.942
5,735
3
5.732
133
14
85
48
14
-188
-22
-45
1.807
337
1,177
629
337
-1,934
-244
-68
1,260
361
1,123
2,381
..
........................
164
OutlaY'
1
(
Office of EducatIOnal Research and Improvement
Departmental management
Proprietary receipts from the public
930
1.226
886
24
2.169
Gross /Applicablel
Outlays
Receipts
814
1.197
872
-164
24
)
(>OJ
4
300
246
26
12
4
Total-Office of Postsecondary Education
Gross !Applicable!
Outlays
Receipts
Outlays
814
1,197
872
i
Prior Fiscal Year to D."
7
6
-1
7
6
...................
Outlays
88
145
-34
-24
2.169
Total-Department 01 Defense-Civil
Current Fiscal Year to Date
588
22
34
1,484
188
-22
45
1.934
-244
68
832
-43
5,837
4,133
476
162
17
10,582
247
305
60
-60
116
23,279
9,116
1,063
2.262
1.054
342
3n
201
267
2,294
-238
53
-
137
361
-2,294
-238
-53
~
1,665
319
10
1,346
16,922
3.182
13,740
16.234
3.473
12,760
-=
Table 5. Outlays of the U.S. Government, July 1993 and Other Periods-Continued
[$ millions]
This Month
Current Fiscal Year to Date
Prior Fiscal Year to Date
Gross IAPPlicablel Outlays
Outlays
Receipts
Gross IApplic.ableI Ouda s
Outlays
Receipts
y
Gross IAPPlicablel 0 d
Outlays
Receipts
u ays
Classification
Department of Health and Human Services, except Social
Security:
Public Health Service:
Food and Drug Administration .......... .
Health Resources and Services Administration
Indian Health Service ........ .
Centers for Disease Control
National Institutes of Health .............................. .
Substance Abuse and Mental Health Services
Administration ............................................ .
Agency for Health Care Policy and Research ........ .
Assistant secretary for health ................. . ......... .
Total-Public Health Service ........... .
Health Care Financing Administration:
Grants to States for Medicaid ........ .
Payments to health care trust funds
Federal hospital insurance trust fund:
Benefit payments .....................
. ......... .
Administrative expenses and construction ..
Interest on normalized tax transfers ........ .
Quinquennial transfers to the general fund from FHI
Total-FHI trust fund ...... .
Federal supplementary medical insurance trust fund:
Benefit payments ............................. .
Administrative expenses and construction
Total-FSMI trust fund
Other ........................ .
Total-Health Care Financing Administration
Social Security Administration:
Payments to Social Security trust funds ................ .
Special benefits for disabled coal miners ............... .
Supplemental security income program ..
Total-Social Security Administration
Administration for children and families:
Family support payments to States ..................... .
Low income home energy assistance ................. .
Refugee and entrant aSSistance ..
. ............... .
Community Services Block Grant ........................ .
Payments to States for afdc work programs ........ .
Interim assistance to States for legalization ............. .
Payments to States for child care assistance
Social services block grant ...............
. ........... .
Children and families services programs .......... .
Payments to States for foster care and adoption
assistance ...................................... .
Other .................................................. .
Total-Administration for children and families
Administration on aging ............................... .
Office of the Secretary ............. .
Proprietary receipts from the public ..................... .
74
143
157
161
663
..
(
)
4
4
625
1,929
1,392
1,110
7,909
617
1,862
1,264
971
6,966
2,277
52
227
2,320
77
123
15,520
14,200
62,057
37,250
62,057
37,250
55,297
34,185
55,297
34,185
8,113
136
75,308
1,028
75,308
1,028
67,228
945
67,228
945
8,249
8,249
76,336
76,336
68,173
68,173
5,047
103
5,047
103
43,703
1,181
43,703
1,181
40,581
1,385
40,581
1,385
5,150
5,150
44,883
44,883
41,966
41,966
30
30
124
124
-43
-43
23,291
23,291
220,650
220,650
199,577
199,577
1,528
67
3,673
1,528
67
3,673
6,158
673
20,487
6,158
673
20,487
6,109
693
17,513
6,109
693
17,513
5,268
5,268
27,318
27,318
24,316
24,316
1,408
34
21
28
54
11
41
193
351
1,408
34
21
28
54
11
41
193
351
13,155
1,029
293
334
606
125
320
2,337
3,017
13,155
1,029
293
334
606
125
320
2,337
3,017
12,754
1,078
252
385
502
468
12,754
1,078
252
385
502
468
2,326
3,311
2,326
3,311
155
155
2,126
(* 0)
2,126
(* 0)
1,988
(0 .)
1,988
23,064
74
143
157
161
663
628
1,929
1,392
1,110
7,909
232
232
8
8
70
2,277
52
227
1,509
15,524
6,220
3,643
6,220
3,643
8,113
136
70
1,509
(. 0)
4
2,297
2,297
23,342
23,342
23,064
49
16
49
16
-1,388
450
148
450
148
-13,201
144
1,388
11
13,201
613
1,862
1,264
971
6,966
2,320
77
123
4
14,196
..
(
)
144
11,385
-11,385
Periods-Continued
Table 5. Outlays of the U.S. Government, July 1993 and[$Ot~~r
millions]
--
Current Fiscal Year to Date
This Month
Classification
Gross rPPlicable
Outlays
Receipts
Department 01 Health and Human Services. except Social
Security:-Conlinued
Intrabudgetary transactions
QUinquennial transfers to the general fund
From FHI. FOASt. and FDI
Payments for health Insurance for the aged:
Feder 81 hospital Insurance trust fund
Federal supplementary medical insurance trust fund
Payments for tax and other credits:
Federal hospital Insurance trust fund
Other
Total-Department of Health and Human Services,
except Social Security ................................
Department of Health and Human Services. Social
Security (off-budget):
Federal old-age and survivors Insurance trust fund:
Benefit payments
Administrative expenses and construction
Payment to railroad retirement account
Interest expense on Interiund borrowings
Interest on normalized tax transfers
QUinquennial transfers to the general fund from
FOASI
Total-FOASI trust fund
Federal disability insurance trust fund:
Benefit payments
Administrative expenses and construction
Payment to railroad retirement account
Interest on nonnalized tax transfers
QUinquennial transfers to the general fund from FDI
Propnetary receipts from the public .
Intrabudgetary transactions'
Department of Housing and Urban Development:
Housing programs:
PubliC enterpnse funds
Credit accounts'
Federal hous.ng administration fund
Housing for the elderly or handicapped fund
Other
Rent supplement payments
Homeownershlp assistance
Rental hOUSing aSSistance
Rental hOUSing development grants
Low-rent public hOUSing
PubliC hOUSing grants
College hOUSing grants
lower Income hOUSing assistance
Section 8 contract renewals
Other
Public and Indian HOUSing programs:
Low·rent publiC hOUSing-Loans and other expenses
Payments for operatIOn of lOW-Income hOUSing
prOlects
Communlty Partnerships Agalnst Cnme
Total-Public and Indian HOUSing programs
Government NatIOnal Mortgage AssoclaltOn:
Management and liquldaling functions fund
Guarantees of mortgage-backed secunttes
Total-Government National Mortgage ASSOCIation
••••
-33,479
-33.479
-481
-481
-706
-706
236,977
227.116
219.883
1.624
3,353
219.883
1.624
3,353
208.741
1.550
3,148
208}41
1,550
3,148
22.538
22,538
224,859
224,859
213,440
213,440
2,933
96
2,933
96
27,828
755
83
27,828
755
83
25,139
700
58
25,139
700
28.666
28,666
25,897
25,897
-6,171
-6,149
-1
-6,149
233.187
3.029
(. 0)
13.205
(00)
-1,528
-6,171
11,389
215.727
58
(0 0)
24,039
(0 0)
24,039
247,354
(0 0)
247.353
233,188
9
5
3
68
57
10
36
58
-22
S44
312
56
232
-59
35
5
9
55
4,271
542
837
239
266
46
77
553
13
660
2,063
18
9,061
2,038
20
7,712
1,099
18
46
68
546
13
685
1,726
19
8,904
1,216
35
5,666
539
2,00
("")
18
8,904
1,216
35
22,123
6,264
15,86()
34
124
0)
(" oJ
50
217
2
923
237
3
50
217
2
923
237
3
5,108
782
266
46
77
553
13
660
2,063
18
9,061
2,038
20
1,713
20.770
4.871
15,900
15
14
170
33
137
158
177
13
177
13
1,966
92
1,966
92
1,789
24
204
203
2,228
33
2,195
1.972
43
2
178
-2
-135
898
4
1,364
-466
1,786
5
1,980
-19'
43
180
-137
898
1,368
-470
1,786
1,985
-199
r
,
-36,769
22.299
239
35
5
9
55
••••
-36.769
22.299
239
-4
.<
Gross IAPPlicablel
Outlays
Receipts OutlaYS
250,181
1,388
(")
Total-Housing programs
I
0 II
u ays
GrosslAPPlicable
Outlays
Receipts
27,399
28.787
-1,528
Total-Department of Health and Human Services,
Social Security(Off-budget) .. , ....•• ,. _.•.•.•.•.•.•.•••..
Outlays
-3.643
-3.643
3,029
Total-FDI trust fund
I
Prior Fiscal Year to Date
2,086
372
12
(0
oJ
-4
r
0)
("")
560
18
46
68
546
13
685
1.726
-
1}89
24
34
--
1,937
~
==
Table 5. Outlays of the U.S. Government, July 1993 and Other Periods-Continued
[$ millions]
This Month
Current Fiscal Year to Date
Prior Fiscal Year to Date
!APPIi~ble!
Receipts
Gross !APPlic.able! Outla s
Outlays
Receipts
y
Classification
Gross IAPPlicable! Outlays
Outlays
Receipts
Department of Housing and Urban Development:Continued
Community Planning and Development:
Community Development Grants .........
. ...........
Other
Total-Community Planning and Development
Management and Administration ..
............. ............
Other
Proprietary receipts from the public
Outla s
y
281
53
13
281
40
2.628
395
96
2.628
299
2.590
319
81
2.590
238
334
13
321
3.023
96
2.927
2.909
81
2.828
449
29
247
449
29
-247
414
30
21
54
6
-21
213
414
30
-213
588
2.138
27.397
6.615
20.783
29.234
8.577
20.657
50
34
3
53
455
87
196
566
455
87
196
566
445
99
344
525
54
6
Total-Department of Housing and Urban
Development .............................................
Gross
Outlays
2.726
Department of the Interior:
Land and minerals management:
Bureau of Land Management:
Management of lands and resources ..............
Fire protection
. . . . . . . . . . . . . . .. .
Other
....... , ...
. ..............
Minerals Management Service ...........
Office of Surface Mining Reclamation and
Enforcement
.............
28
28
246
246
248
248
.............
167
167
1.550
1.550
1.661
1.661
.................
............
20
22
38
62
17
14
218
233
395
528
166
120
25
218
233
275
528
141
241
199
486
526
171
100
3
20
22
25
62
14
26
241
199
386
526
144
159
17
142
1.541
145
1.395
1.622
126
1.496
65
130
65
130
1.024
1.223
1.024
1.223
898
1.120
898
1.120
..............
195
195
2.247
2.247
2.018
2.018
Bureau of Indian Affairs:
....................
Operation of Indian programs
Indian tribal funds
..............
Other
......................
143
29
22
2
143
29
21
1.140
143
289
17
1.140
143
273
924
369
274
16
924
369
258
Total-Bureau of Indian Affairs
194
2
193
1.573
17
1.556
1.568
16
1.552
Territorial and international affairs
Departmental offices
Proprietary receipts from the public
Intrabudgetary transactions
Offsetting governmental receipts
22
11
22
11
-163
-1
207
103
207
103
-1.649
-94
276
85
1.569
4
276
85
-1.569
-83
-4
1.716
5.432
62
376
2.427
1.564
613
1.104
1.753
673
534
-44
-376
438
8.249
Total-Land and minerals management
Water and science:
Bureau of Reclamation:
Construction program
Operation and maintenance .
...........
Other ..
Geological Survey
Bureau of Mines
.................
Total-Water and science ..
Fish and wildlife and parks:
United States Fish and Wildlife Service
National Park Service
Total-Fish and wildlife and parks
50
34
3
53
163
-1
.......................
747
Department of Justice:
Legal activities
...........
..............
.............
Federal Bureau of Investigation
Drug Enforcement Administration
Immigration and Naturalization Service
...............
Federal Prison System
Office of Justice Programs
Other .................
Intrabudgetary transactions
Offsetting governmental receipts
175
198
84
141
192
53
66
-2
...........................
908
Total-Department of the Interior
Total-Department of Justice
Department of Labor:
Employment and Training Administration:
Training and employment services
Community Service Employment for Older Americans
Federal unemployment benefits and allowances
State unemployment insurance and employment service
...............
operations
Payments to the unemployment trust fund
Advances to the unemployment trust fund and other
funds
1.649
-94
445
99
344
525
-83
(. ')
(")
1.811
5.317
7.147
80
2.427
1.564
613
1.104
1.815
673
534
-44
395
2.324
1.674
669
1.268
1.729
755
760
-194
-395
475
8.591
8.687
181
566
7.127
9
2.324
1.674
669
1.268
1.809
755
760
-194
46
175
198
84
141
183
53
66
-2
-46
55
853
9.067
414
33
7
414
33
7
3.331
325
121
3.331
325
121
3.318
321
92
3.318
321
92
45
17
45
17
59
7.532
59
7.532
31
364
31
364
1.006
1.006
2.573
2.573
150
150
13
Periods-Continued
Table 5. Outlays of the U.S. Government, July 1993 and($Other
millions]
This Month
i
Current Fiscal Year to Date
Prior Fiscal Yeer to Dale
Gross IAPPlicable lOti
Outlays
Receipts
u ays
Gross !APPliC8ble/
Outlays
Receipts Ouaays;
I
Classification
Department of Labor.-Continued
Unemployment trust fund>
Federal-State unemployment Insurance:
State unemployment benefits
State administrative expenses
Federal administratIve expenses >
Veterans employment and traIning
Repayment of advances from the general fund
Railroad unemployment insurance
Other
Total-Unemployment trust fund
Other
Total-Employment and Training Administration
Pension Benefit Guaranty Corporation
Employment Standards Administration:
Salaries and expenses
Special benefits
Black lung dIsability trust fund
Other
Occupational Safety and Health Administration
Bureau of Labor Statistics
Other
Proprietary receipts from the public >
Intra budgetary transactions
Gross
Outlays
IAPPlic~blel
Receipts
Outlays
l
-i
2,766
275
102
13
2,766
275
102
13
30,443
2,807
186
142
30,443
2,807
186
142
31,529
2,685
177
144
31,529
2,685
4
3
4
3
62
18
62
18
76
21
76
21
3,164
3,164
33,656
33.656
34,631
34,631
6
6
62
62
60
60
4,691
4,691
47,659
47,659
38,969
-146
681
-933
640
16
156
53
8
20
26
35
184
402
511
102
230
239
370
184
402
511
102
230
239
370
-2
-10,884
185
377
523
99
251
197
385
-1,057
37,879
40,568
63
16
156
53
8
20
26
35
2209
..
(
)
2
(**)
38,969
1,118
-478
185
377
523
2
99
251
197
385
-2
-1,057
-1,031
-10,884
3,827
39,494
252
56
252
56
1,837
402
1,837
402
1,725
300
1,725
35
9
35
9
119
347
84
119
347
84
113
317
59
113
317
59
Total-Administration of Foreign Affairs
351
351
2,788
2,788
2.515
2,515
International organizations and Conferences
Migration and refugee assistance
International narcotiCS contrOl
Other
Proprietary receipts from the public >
Intrabudgetary transactions
Offsetting governmental receipts
65
48
12
5
65
48
12
5
1,301
567
114
63
1,301
567
114
63
1,210
536
112
55
1,210
536
112
55
..
Total-Department of Labor
.............................
Department of State:
Administration of Foreign Affairs:
Salaries and expenses
Acquisition and maintenance of buildings abroad
Payment to Foreign Service retirement and dIsability
fund
Foreign Service retirement and disability fund
Other
-1,031
1,613
m
144
4,036
209
(
)
-167
481
481
4,666
1,650
5
25
1,650
5
25
Total-Federal Highway Administration> >
1,680
NatIOnal Highway Traffic Safety Administration
Department of Transportation:
Federal Highway Administration:
Highway trust fund:
Federal-aid hIghways
Other
Other programs
Federal Railroad Administration
Grants to National Railroad Passenger Corporation
Other
Total-Federal Railroad Administration
..
(
(' .)
Total-Department of State .•. _••.•.•.•••...•.••...••...•
1,615
)
..
(
)
1,120
39,448
300
..
(
)
rl
-155
-167
-155
4,666
4,273
12,557
112
198
12,557
112
198
11,944
119
149
11,944
119
149
1,680
12,868
12,868
12,212
12,212
19
19
197
197
196
196
120
35
120
34
465
310
12
465
298
508
358
17
341
154
154
775
12
763
866
17
-
14
(* .)
(0
oJ
4,272
508
849
Table 5. Outlays of the U.S. Government, July 1993 and Other Periods-Continued
[$ millions]
This Month
Current Fiscal Year to Date
Prior Fiscal Year to Date
Gross !APPlicable! Outlays
Outlays
Receipts
Gross lAPPlicable! 0 tl
Outlays
Receipts
u ays
Gross !APPlicable! Outla s
Outlays
Receipts
y
Classification
Department of Transportation:-Continued
Federal Transit Administration:
Formula grants ............................ .
Discretionary grants ......................... .
Other ..................................... .
139
118
27
139
118
27
1,545
1,062
305
1,545
1,062
305
1,630
1,045
411
1,630
1,045
411
Total-Federal Transit Administration
283
283
2,911
2,911
3,087
3,087
117
117
1,755
1,755
1,853
1,853
127
190
21
190
127
190
21
190
1,508
1,695
163
1,899
1,508
1,695
163
1,899
1,397
1,478
169
1,758
1,397
1,478
169
1,758
528
528
5,265
5,265
4,803
4,803
Federal Aviation Administration:
Operations
................... .
Airport and airway trust fund:
Grants-in-aid for airports ............................... .
Facilities and equipment ............................... .
Research, engineering and development ........ .
Operations ...................
. ........... .
Total-Airport and airway trust fund
(")
(")
(")
(")
2
-2
(")
2
-1
645
(")
645
7,021
2
7,018
6,656
2
6,654
39
27
245
22
39
26
2,115
226
413
233
5
2,115
226
413
228
2,048
286
377
261
5
2,048
286
377
256
Total-Coast Guard .................................... .
333
333
2,987
5
2,983
2,971
5
2,967
Maritime Administration ..................... .
Other ........................................ .
Proprietary receipts from the public ........................ .
Intrabudgetary transactions ................. .
Offsetting governmental receipts ..................... .
144
57
29
56
1,165
333
553
10
612
323
-11
839
252
480
12
26
360
241
-26
Other
Total-Federal Aviation Administration
Coast Guard:
Operating expenses ............. .
Acquisition, construction, and improvements ............ .
Retired pay .............. . ........... .
Other .................................................... .
245
22
115
1
2
-2
1
11
-2
-2
6
-6
126
3,191
28,256
657
27,598
27,078
653
26,426
-64
-65
-1,101
206
-1,799
146
13
55
-1,090
206
10
55
-1,812
146
Financial Management Service:
Salaries and expenses .......... . ............... .
Payment to the Resolution Funding Corporation ..... .
Claims, judgements, and relief acts .............. .
Other ...................................................... .
21
577
41
17
21
577
41
17
185
2,328
444
148
185
2,328
444
148
198
2,328
695
177
198
2,328
695
177
Total-Financial Management Service ................. .
656
656
3,105
3,105
3,398
3,398
Federal Financing Bank ..................................... .
Bureau of Alcohol, Tobacco and Firearms:
Salaries and expenses ............................. .
Intemal revenue collections for Puerto Rico ...... .
United States Customs Service ........... .
Bureau of Engraving and Printing ......... .
United States Mint ....................... .
Bureau of the Public Debt ................ .
-114
-114
224
224
225
225
28
16
154
28
16
154
302
162
1,472
-8
64
18
64
18
290
174
1,552
-26
81
199
290
-8
302
162
1,472
-13
59
247
1,552
-26
81
199
223
348
99
223
348
99
1,413
3,172
986
3,172
986
1,406
2,942
896
1,406
2,942
896
68
7
134
68
(")
9,261
639
1,630
118
7,181
483
2,874
120
5
7,181
483
2,874
115
(")
17,220
15,901
5
15,896
Total-Department of Transportation
Department of the Treasury:
Departmental offices:
Exchange stabilization fund ............................. .
Other ...................................................... .
Intemal Revenue Service:
Processing tax returns and assistance ..
. ........... .
. ........... .
Tax law enforcement .....
Information systems ................. .
Payment where earned income credit exceeds liability
for tax ..........................
. ............. .
Health insurance supplement to earned income credit
Refunding internal revenue collections, interest ....... .
. ................. .
Other .....
Total-Internal Revenue Service ..
3,317
-64
4
134
4
9,261
639
1,630
118
883
883
17,220
7
15
-13
59
247
1,413
-112
174
Table 5.
Outlays of the U.S. Government, July 1993 and Other Periods-Continued
[$ millions]
This Month
Classification
Gross IAPPlicable
Outlays
Receipts
Department of the TrellSury:-Continued
United States Secret Service
ComptrOller of the Currency
Office of Thnft Supervlson
Total-Interest on the public debt
Total-Department of the Treasury
~
Department of Veterans Affairs:
Veterans Health Administration:
Medical care
Other
Veterans Benefits Administration:
PubliC enterprise funds:
Guaranty and indemnity fund
Loan guaranty revolving fund
Other
Compensation and penSions
ReadJustment benefits
Post-Vietnam era veterans education account
Insurance funds:
. . . . . . . . . . ..
National service life
Unrted States government life
Veterans special life
Other
Total-Veterans Benefits Administration
Construction
Departmental administration
Propnetary receipts from the public:
National service life
Unrted States government life
Other
Intrabudgetary transactions
Total-Department of Veterans Affairs
417
270
205
171.683
84.804
171.683
84,804
176.369
79,387
176,369
79,387
17,920
256.487
256.487
255.756
255,756
3
-131
49
'1.787
49
-1,787
40
131
-1.425
-52
-11,810
594
-11.810
-594
-15,828
52
18,289
264
18,025
267,521
2,792
264,730
1,189
60
20
1,189
39
11,656
863
212
32
14
4
2,741
71
8
1.000
643
387
15.444
753
93
105
2
7
4
932
17
106
7
17.456
464
17.456
464
17,920
Environmental Protection Agency:
Program and research operations
Abatement, contrOl. and compliance
Water Infrastructure financing
Hazardous substance superfund
Other
Propnetary receipts from the pubhC
Intra budgetary transactions
Offsettlng governmental receipts
Total-Environmental Protection Agency
105
2
11
4
43
44
29
3
288
114
338
455
365
176
'2.054
40
-2.054
546
-15,828
-546
261,001
3,141
257,860
11,656
650
11,076
652
207
11,076
445
662
188
21
15.444
753
93
539
969
348
14,954
667
117
932
17
-70
7
1,202
24
120
14
244
880
378
294
89
-30
14,954
667
117
1,202
24
174
-54
14
2,988
19,381
1,334
18,046
18,953
1,676
17,277
49
110
(' ')
49
110
517
912
(")
517
912
530
866
(")
529
866
-355
30
-30
330
-330
355
(")
(")
(")
(")
(")
(")
..
69
-69
989
--989
-27
638
-638
-25
4,514
239
30,435
32,051
922
803
2,010
1,088
544
8
720
1,086
1,694
1,132
576
-136
-250
-8
162
4,813
5,134
-222
126
-29
16
38
)
..)
-27
4,275
33,302
66
135
157
99
39
-14
720
1,086
1.694
1.132
593
(
(")
2,866
17
136
-250
-1
497
15
482
4,975
115
63
115
63
(")
(")
18
33
2
-468
-8
-59
2
-16
-2
5
18
33
-5
2
-551
228
5
223
-468
-8
-59
2
-16
................
'-6
-43
119
14
...............
417
276
247
3.108
66
135
157
99
40
General Services Administration:
Real property activities
Personal property activities
Information Resources Management Service
Federal property resources activitieS
Gener al activities
Propnetary receipts from the public
Total-General Services Administration
75
58
33
2,741
71
8
(
.................
Gross jAPPlicablel
Outlays
Outlays
Receipts
0 tl
u ays
426
13
62
-1.425
................ ....
IAPPlicabl~1
Receipts
Gross
Outlays
426
301
175
79
2
3
Other
Propnetary receipts from the pubhc
Receipts from off-budget federal entities
Intrabudgetary transactions
Offsetting governmental receipts
Outlays
Prior Fiscal Year to Oat,
41
-36
16
41
43
17
Interest on the pubhc debt·
Public Issues (accrual baSIS)
SpeCial Issues (cash baSIS)
I
Current Fiscal Year to Date
549
16
-25
2,876
922
7
16
146
796
2,010
1,088
528
-146
-234
-234
169
4,964
-222
126
-29
lc
28
---71
29,175
28
38
-21
-99
-
Table 5. Outlays of the U.S. Government, July 1993 and Other Periods-Continued
[$ millions]
This Month
Current Fiscal Year to Date
Prior Fiscal Year to Date
Gross IAPPlicablel Outlays
Outlays
Receipts
Gross IAPPliC.abli Outla s
Outlays
Receipts
y
Gross IAPPlicablel Outla s
Outlays
Receipts
y
Classification
National Aeronautics and Space Administration:
Research and development .........................
Space flight, control, and data communications
Construction of facilities
....................
Research and program management .
. . . . . . . . . . . ................
Other
Total-National Aeronautics and Space
Administration , ...........................................
647
418
49
132
647
418
49
132
5,905
4,173
454
1,309
13
5,905
4,173
454
1,309
13
5,467
4.390
369
1,500
11
5,467
4,390
369
1,500
11
1,247
1,247
11,853
11,853
11,736
11,736
329
329
3,073
3,073
2,975
-144
-45
2,836
1
28,134
-423
-924
10
28,990
12,055
1,094
7
91
91
2,836
1
28,134
11,484
1.012
7
124
-3
-35
-35
-1
-45
Office of Personnel Management:
Government payment for annuitants, employees health
and life insurance benefits ...............
Payment to civil service retirement and disability fund .....
Civil service retirement and disability fund
Employees health benefits fund ..
Employees life insurance fund
..................
Retired employees health benefits fund ..
....................
. ...........
Other
Intrabudgetary transactions:
Civil service retirement and disability fund:
....................
General fund contributions
Other.
....................
2.975
1.240
110
1
10
...............
4,661
1,541
3,121
45,275
14,694
30,581
43.553
13,851
29.702
..................
66
35
1
50
-19
)
42
)
330
-90
31
413
849
358
55
189
668
431
15
(
942
311
42
413
613
401
12
.......................
116
16
1
42
..)
180
-72
40
188
..................
175
102
72
1,708
1,025
683
1,450
1,114
336
17
37
17
37
168
207
319
168
207
319
162
182
327
4
26
109
10
154
3
4
26
-45
7
698
5
184
1.200
107
1.888
33
698
-155
184
-687
74
691
3
177
1,600
110
1.849
39
691
-322
177
-249
71
358
6
69
1,338
12
249
-981
-6
-180
7.006
42
2,462
13.127
458
1,314
-6.121
-416
1.149
18,262
14
5,982
10,292
206
1,857
7.970
-193
4,125
38
237
9
11
9
4
29
59
39
-2
237
9
11
9
4
29
59
635
1,877
210
261
72
34
328
203
263
372
1.877
210
261
283
639
230
255
58
33
269
140
292
.. )
-8
639
230
255
58
33
269
140
20
4
-13
)
-4
23
79
27
356
79
46
248
281
-12
496
390
2
-249
-109
-13
Total-Office of Personnel Management
Small Business Administration:
Public enterprise funds:
Business loan fund
Disaster loan fund . . . . . . . . . . . . .
Other
Other
...........
.....................
Total-Small Business Administration
Other independent agencies:
.................
Action
. .. . . .. . . .. .
................
Board for International Broadcasting
Corporation for Public Broadcasting .. .................
District of Columbia:
.............
Federal payment
Other
Equal Employment Opportunity Commission ...
............
Export-Import Bank of the United States
..............
Federal Communications Commission
Federal Deposit Insurance Corporation:
Bank insurance fund
................
Savings association insurance fund
FSLlC resolution fund
Federal Emergency Management Agency:
PubliC enterprise funds
Disaster relief
........... ............
Emergency management planning and assistance
Other
...........
............
Federal Trade Commission
Interstate Commerce Commission
.............
Legal Services Corporation
National Archives and Records Administration
National Credit Union Administration:
Credit union share insurance fund
Central liquidity facility
Other
1.384
156
(")
-3
6
4
-3
..
..
(
)
..
(
)
..
(
17
..
(
)
12.731
1.956
7
(
..
..
160
(
)
28,990
-676
-862
(' ')
72
..
(
)
34
328
203
-333
..)
(
-19
11,908
1,936
7
..)
(
124
-1
-45
(
162
182
327
325
(
Table 5.
Outlays of the U.S. Government, July 1993 and Other Periods-Continued
[$ millions]
This Month
Classification
Gross
Outlays
Other independent agencies:-Continued
NatIOnal Endowment for the Arts
National Endowment for the Humanities
National Labor Relations Board
Nahonal SCience Foundation
Nuclear Regulatory Commission
Panama Canal Commission
Postal Service'
PubliC enterpnse funds (off·budget)
Payment to the Postal ServICe fund
Applic.able
ReceIpts
13
16
17
242
51
45
4.473
30
Railroad Retirement Board:
Federal Windfall SUbsidy
Federal payments to the railroad retirement accounts
Regional rail transportation protective account
Ral! industry pension fund:
Advances from FOASDI fund
OASDI certifications
Administrative expenses
Interest on refunds of taxes '
Supplemental annuity pensIon fund
Other
Intrabudgetary transactions:
Social Security equivalent benefit account
Payments from other funds to the railroad
retirement trust funds
Other
Total-Railroad Retirement Board
Resolution Trust Corporation
Securities and Exchange Commission
Smithsonian Institution
Tennessee Valley AuthOrity
United States Information Agency
Other
Total-Other independent agencies
l
....................
Total-Employer share, employee retirement
15
43
53,647
Outlays
Prior Fiscal Year to Oate
Gross jAPPlicable! 0 tl
Outlays
Receipts
u ays
Gross IAPPlicablel
--.
Outlays
Receipts
Outlays
-
142
130
142
1.999
54
-21
140
125
133
1.810
456
417
-2.349
161
37.324
511
242
58
242
58
255
247
)
(oo)
(
-891
890
60
5
2.415
8
-891
890
60
5
2.415
8
2.353
7
2,353
13
16
17
242
37
2
142
130
142
1.999
406
431
826
30
37.980
161
24
14
352
451
40.329
344
427
39.386
140
125
133
1,810
112
-9
-2.062
511
24
14
(" 'J
(
-90
89
8
-90
89
8
(>0)
(
247
247
397
397
3.905
3.905
3.802
3,802
-14
-14
-3.435
193
-3.435
193
-3.206
15
-3.206
15
676
676
3.452
3.452
3.538
39.439
89
316
4.220
861
951
42.372
-2,934
2.997
2
145
316
1,223
859
806
120,266
101,420
18,846
(<0)
("I
..
)
..
)
..
(
254
-2.192
10
32
210
102
-48
10.296
90
321
6.985
856
1.094
28.807
382
-18.511
90
321
1.810
856
712
8,921
-807
80,632
93,220
-12,587
..)
(oo)
498
10
32
662
102
206
2.691
8,113
Undistributed offsetting receipts:
Other Interest
Employer share. employee retirement:
LegISlative BranCh'
United States Tax Court:
Tax court Judges survivors annuity fund
The Judiciary
Judicial survivors annuity fund
Department of Defense-Civil:
MIlitary retirement fund
Department of Health and Human Services, except
SOCial Security:
Federal hospital insurance trust fund:
Federal employer contributions
Postal Service employer contributions
Payments for military service credits
Department of Health and Human Services, Social
Secunty (Off-budget):
Federal old·age and survivors insurance trust fund:
Federal employer contributions
Payments for military service credits
Federal disability Insurance trust fund:
Federal employer contnbutions
Payments for mihtary service credits
Department of State
FOf8tgn Service retirement and disability fund
Office Of Personnel Management:
Civil servICe retirement and disability fund
Independent agenCies:
Court of veterans appeals retirement fund
I
-
Current Fiscal Year to Date
452
(OO)
(
5.174
..
(
)
(oo)
(oo)
..
(
)
)
("J
-863
867
62
-863
887
62
(00)
)
..
(
255
247
..
(
..
(")
3.538
89
)
(")
-1,091
-1.091
-10,950
-10.950
-13.694
-13.694
-167
-38
-,81
-167
-38
-81
6 ~1.504
L380
-81
-1,504
-380
-81
6-1.479
6-365
-86
-1,479
-365
-494
-307
-494
-307
-4.501
-307
-4,501
-307
-4.265
-327
-4,265
-327
-53
-,33
-53
-33
-481
-33
-481
-33
-460
-35
-461:
-8
-8
-89
-89
-77
-71
-795
-795
-7,897
-7.897
-7,656
-7,6f/J
..
3.067
18
-26.223
-26.223
-35
)
n
-28.445
-28,445
(
3.067
-86
--
Table 50
Outlays of the UoSo Government, July 1993 and Other Periods-Continued
[$ millions]
This Month
Current Fiscal Year to Date
Prior Fiscal Year to Date
Gross IAPPlicablel Outlays
Outlays
Receipts
Gross IApplic.ableI Outla s
Outlays
Receipts
y
Gross IAPPlicablel Outla s
Outlays
Receipts
y
Classification
Undistributed offsetting receipts:-Continued
Interest received by trust funds:
The Judiciary:
Judicial survivors annuity fund
Department of Defense-Civil:
Corps of Engineers ..
Military retirement fund ...............................
Education benefits fund .................................
Soldiers' and airmen's home permanent fund .........
Other ............... ......................................
Department of Health and Human Services. except
Social Security:
Federal hospital insurance trust fund .............
Federal supplementary medical insurance trust fund
Department of Health and Human Services. Social
Security (off-budget):
Federal old-age and survivors insurance trust fund
Federal disability insurance trust fund ..................
Department of Labor:
Unemployment trust fund
...................
Department of State:
Foreign Service retirement and disability fund ..
Department of Transportation:
Highway trust fund
...............
Airport and airway trust fund
Oil spill liability trust fund ...
. .............
Department of Veterans Affairs:
National service life insurance fund ................
United States govemment life Insurance Fund
Environmental Protection Agency ......
National Aeronautics and Space Administration ..
Office of Personnel Management:
Civil service retirement and disability fund
Independent agencies:
Railroad Retirement Board ..
. ............
Other ............
Other .....
'"
Total-Interest received by trust funds
-6
57
-1
-2
-6
57
-1
-2
-13
-13
-12
-12
-11
-9.704
-47
-20
-11
-9.704
-47
-20
-14
-8.823
-54
-6
-14
-8.823
-54
-6
(00)
(" 0)
-6
-11
-6
-11
-10.541
-1.882
-10.541
-1.882
-10.035
-1.687
-10.035
-1.687
-12
-2
-12
-2
-25.722
-946
-25.722
-946
-22.450
-1.056
-22,450
-1.056
-3
-3
-2.528
-2.528
-3.613
-3.613
(00)
(0 0)
-546
-546
-513
-513
-3
-1
-3
-1
(00)
(" 0)
-1.542
-1.030
-43
-1.542
-1.030
-43
-1.637
-1.266
-8
-1.637
-1.266
-8
(0 0)
(00)
(00)
(00)
(" 0)
(" 0)
("0)
(" 0)
-1.083
-11
-2
-1
-1.083
-11
-2
-1
-1.070
-12
-3
-1
-1.070
-12
-3
-1
-1
-1
-25.090
-25.090
-23.654
-23.654
-54
-54
(0 0)
(" 0)
-747
-10
-29
-701
-2
-104
-701
-2
-104
-81.548
-76.721
-76.721
-9
-9
-747
-10
-29
-55
-55
-81.548
Rents and royalties on the outer continental shelf lands ..
Sale of major assets
..................
27
-27
-3,148
2.153
................
-3,122
27
Total outlays .................................................
137,652
17,436
120,216 1,354,569
...........................................
Total off-budget ...........................................
Total surplus (+) or deficit ................................
Total on-budget ...........................................
Total off -budget ...........................................
110,041
13,789
96,252 1,101,225
27,611
3,647
Total-Undistributed offsetting receipts
Total on-budget
-107,770
23,964
253,345
2.051
-2.051
-105,166
2,051
-107,217
174,872 1,179,697 1,351,759
186,688
1,165,071
134,543
966,681
1,109,841
147,301
962,540
40,329
213,015
241,918
39,386
202,532
2,153 -109,924
-39,577
-240,170
-270,908
-39,099
-285,547
-322,487
-478
+45,377
+51,579
MEMORANDUM
Receipts offset against outlays
[$ millions]
Current
Fiscal Year
to Date
Proprietary receipts ........................ ..
Receipts from off-budget federal entities .. .
Intrabudgetary transactions ................ .
Governmental receipts
.................................... .
Total receipts offset against outlays .......................... ..
'Includes FICA and SECA tax credits. non-<:ontribulory military service credits. special benefits
the aged. and credit for unnegotiated OASI benefit checks.
'InCludes a decrease in net outlays of $145 million for amortization of zero coupon bonds.
'Includes a reclassification from a governmental receipt to an offsetting governmental receipt
I -$65 million for FY 1992 and -$48 million for FY 1993 for the accounl "Tonnage Duty
creases".
'Includes a reclassification from a non-budgetary status to a budgetary status of $44 million for
Y 1992 and -$6 million for FY 1993 for the "DepoSit in Transit (suspense) clearing accounts for
ostal Service and Treasury (Office of the Secretary, Financial Management Service and Bureau of
,e Public Debt).
-2.153
Comparable Period
Prior Fiscal Year
36,505
34,549
190.889
~
228.934
177,512
6,359
218,419
'The Postal Service accounting is composed of 28-day accounling periods To conform w,th
the MTS calendar-month reporting basis utilized by all other Federal agencies. the MTS reflects
USPS results through 7/23 and estimates for $476 milhon through 7/31.
·Postal Service employer contributions to the FHI trusl fund have been Increased by $438
million for FY 1992 and by $342 million for FY 1993 and Federal employer contnbutlons to the FHI
trust fund have been correspondingly decreased to reflect contributions previously reported as
Federal employer conlributions.
... No Transactions.
(•• ) Less Ihan $500,000
Note: Details may not add to totals due to rounding
)f
19
Table 6. Means of Financing the Deficit or Disposition of Surplus by the U.S. Govemment, July 1993 and Other PeriOds
[$ millions]
Assets and Liabilities
Directly Related to
Budget Off·budget Activity
Net Transactions
(-) denotes net reduction 01 either
liability or asset accounts
Fiscal Year to Date
This Month
This Year
liabIlity accounts:
BorrOWing from the pubhC
Pubhc debt secunlles. ISSUed under general FinanCing authonlles:
Obhgatlons of the United States. ISSUed by'
United States Treasury
Federal Financing Bank
Total. pubhc debt securtties
-
Beginning 01
Prior Year
This Year
I
Close of
This rI'IOnUl
This Month
-1.689
285.640
345,309
4.049.621
15.000
4.336,950
15.000
4.335.261
15.001
-1.689
285.640
345.309
4.064.621
4.351.950
4.350.2€i
-8
450
355
4.895
219
-1.987
1.032
81.090
1.395
85.536
85.985
-2.147
281.101
347,515
3.984.565
4.267,812
4,265.665
Plus premium on public debt securtties
Less discount on public debt secunlles
Total public debt secuntles net of Premium and
discount
I
-
Account Balances
Current Fiscal Year
Agency secunties. ISsued under special financing authorities (see
Schedule B. for other Agency borrOWing, see Schedule C)
....
Total federal secunlles
Deduct
Federal secunlles held as investments of govemment accounts
(see Schedule D)
Less discount on federal securtties held as Investments of
govemment accounts
Net federal securtties held as Investments of govemment
accounts
1388
2.438
5.135
-3.865
18.030
20.727
23,165
291
286,235
343.650
4.002.595
4,288,539
4.288,830
-908
82.427
85,857
1.016.453
1.099.788
1.098.880
-145
-145
4,431
12.415
12.414
12.269
-763
82.572
81,426
1.004.038
1.087.374
1.086.610
2.998.556
3.201.165
3.202.22Q
1.055
203.663
262.224
7.976
-63
-519
2.440
6.872
-402
-786
1.443
5.178
373
-731
865
44.212
7.216
6,422
2.143
43.108
6.877
6.155
1.145
51.084
6.814
5,636
3.585
10.888
210.790
267.909
3.058,550
3.258.451
3.269,339
-22.568
-9.878
-18.768
-11.879
-1.004
-2.975
24.586
34.203
28.386
32.202
5.818
22.324
-32.447
-30.647
-3.979
58.789
60.588
28.141
-82
-3.206
2.000
980
12.111
-10.018
8.987
-8,018
8.9ll5
-8,018
-82
-1.206
980
2.093
969
887
-342
264
9
12.063
-1.562
-9.913
-27
1.365
-297
-9
19.699
6.692
-15.381
-73
31,762
5.471
-25.558
-109
31.162
5.129
-25.294
229
1.752
-537
-1.167
355
585
161
2.313
522
9.770
11.922
12,083
Loans to Intematlonal Monetary Fund
Other cash and monetary assets
(")
(")
I"
3.280
1.184
16.247
23.842
21,745
25.026
Total cash and monetary assets
29.088
-28.357
13.770
94.494
95.225
66.137
40
481
-16
2.888
2.822
--688
-2.406
2.722
-16.836
-4.439
5,394
-2.257
-4.479
5.874
-2.272
Total borrowing from the public
Accnued Interest payable to the public
Allocallons of special draWing rtghts
Depcslt funds
Miscellaneous liability accounts (includes checks Outstanding etc.)
Total liability accounts ....................................................
Asset accounts (deduct)
Cash and monetary assets:
US Treasury operattng cash:'
Federal Reserve account
Tax and loan note accounts
Balance
Special drawing nghts:
Total holdings
SDR certificates ISSUed to Federal Reserve banks
Balance
Reserve PCSltlon on the U.S. quota in the IMF:
US subscription to International Monetary Fund:
Direct quota payments
Maintenance of value adlustments
Letter of credit ISSUed to IMF
Dollar depcsits with the IMF .
RecelvaoleiPayable (-) for interim maintenance Of value
adlustments
Balance
Net activity. guaranteed loan financing
Net activity. direct loan financing
Miscellaneous asset accounts
Total anel accounts
.....................................................
....................................
Excess of liabilities (+) or assets (-)
28.663
29,110
-2,750
94,370
93.923
65,260
+39.552
+239,900
+270.659
+2.964,180
+3.164.528
+3.204,~
25
270
249
+39,577
+240,170
+270,908
Transactions not applied to current year's surplus or defiCit (see
Schedule a for Detatls)
Total budget. and off· budget federal entities (financing of deficit (+)
or dIsposition 01 surplus (-)) ............................................
-1.591
3.052
-1.585
-99
sovrres Of ,nf()m1at!()l'\ used to detemune Treasury s opera~ng cash ,ncome Include the
D",,, B",ance ....ores ITom Feoe<aJ Reserve Banks. repor!Jng from the Bureau Of PublIC Debt.
f!<IeCtronoe ~ral'sters tnrOugh tne Treasury F,nanoaJ CommunlCat!()l'\ System and reconohng Wires
"or' 1"1"",,& Rev""ue Centers Operanng cas~ .s presented on a modlnoo cas~ bas.s. deposns
are 'efleclec as rece"ed and W'tt1CrawaJs are reflec1ed as processed
'\AalC)(
245
+2,964,180
No TransactIOns
(. 'J Less than $500.000
Note. DetailS may not add to totals due to rounding
20
+3,164,772
-
27:
=
+3,204.350
=
Table 6. Schedule A-Analysis of Change in Excess of Liabilities of the U.S. Government, July 1993 and
Other Periods
[$ millions]
Fiscal Year to Date
Classification
This Month
This Year
...
liabilities
Excess of
beginning of penod:
Based on composition of unified budget in preceding period
Adjustments during current fiscal year for changes in composition
of unified budget:
Reclassification of the Disaster ASSistance Liquidating
Account, FEMA, to a budgetary status ........................ .
Revisions by federal agencies to the prior budget results ..... .
Reclassification of Thrift Savings Plan Clearing Accounts to a
non-budgetary status ........................................ .
Reclassification of Deposit in Transit Differences (Suspense)
Clearing accounts to a budgetary status ...................... .
~xcess
3,164,360
I
2,964,066
Prior Year
2,673,445
(")
-59
680
(")
168
174
129
--------------------------------3,164,528
2,674,254
2,964,180
of liabilities beginning of period (current basis) ............... .
====================
3udget surplus (-) or deficit:
Based on composition of unified budget in prior fiscal yr
Changes in composition of unified budget ........................... .
39,577
rotal surplus (-) or deficit (Table 2) ................................... .
39,577
240,170
270,908
478
-45,377
-51,579
-25
-270
-249
(")
(. ')
-25
-270
-249
3,204,079
3,204,079
2,944,913
240,170
270,908
----------------------------
====================
39,099
285,547
322,487
Total-on-budget (Table 2)
Total-off-budget (Table 2)
rransactions not applied to current year's surplus or deficit:
Seigniorage ..........
. ....................................... .
Profit on sale of gold ............................................ .
Total-transactions not applied to current year's Surplus or
............................................ .
deficit
:xcess of liabilities close of period .................................. .
fable 6. Schedule B-Securities isued by Federal Agencies Under Special Financing Authorities, July 1993 and
Other Periods
[$ millions]
Net Transactions
(-) denotes net reduction of either
Liability accounts
Account Balances
Current Fiscal Year
Classification
Fiscal Year to Date
Beginning of
This Month
This Year
.gency securities, issued under special financing authorities:
Obligations of the United States, issued by:
Export-Import Bank of the United States ............................... .
Federal Deposit Insurance Corporation:
Bank insurance fund .................................................. .
FSLlC resolution fund ................................................. .
Jbligations guaranteed by the United States, issued by:
Department of Defense:
Family housing mortgages ............................ .
Department of Housing and Urban Development:
Federal Housing Administration ................................. .
Department of the Interior:
Bureau of Land Management ......................................... .
Department of Transportation:
Coast Guard:
Family housing mortgages .......................................... .
)bligations not guaranteed by the United States, issued by:
Legislative Branch:
Architect of the Capitol ............................................... .
Department of Defense:
Homeowners assistance mortgages .................................. .
Independent agencies:
National Archives and Records Administration ....................... .
Tennessee Valley AiJthority ........................................... .
Total, agency securities ............................•..............
... No Transactions.
(•• ) Less than $500.000.
Nole: Details may not add to totals due to rounding.
21
I Prior Year
This Year
I This Month
Close of
This month
(")
(")
(")
-194
-2
-6,045
93
1,137
93
943
93
943
(")
(")
(")
7
7
7
-186
-204
-142
301
283
97
13
13
13
(")
(")
(")
162
173
174
12
11
-1
-1
-1
2,624
5,522
2,315
302
16,015
302
18,913
302
21,537
2,438
5,135
-3,865
18,030
20,727
23,165
Table 6.
Schedule C (Memorandum)-Federal Agency Borrowing Financed Through the Issue of Public Debt Securities,
July 1993 and Other Periods
[$ millions)
Classification
I
This Year
I
Beginning of
Fiscal Year to Date
This Month
Borrowing from the Treasury:
Funds Appropriated to the President:
Agency for Intematlonal Development:
HOUSing and other credit guaranty programs
Overseas Private Investment Corporation
Department of Agnculture
Foreign assistance programs
Commodity CredIt Corporation
Fanners Home AdmInistration:
Agriculture credit Insurance fund
Self-help hOUSIng land development fund
Rural hOUSing Insurance fund
Rural Development Administration:
Rural development insurance fund
Rural development loan fund
Federal Crop Insurance Corporation:
Federal crop insurance corporation fund
Rural Electrification Administration:
Rural commumcation development fund
Rural electrification and telephone revolving fund "
Rural TelephOne Bank
Department of Commerce:
Federal ship financing fund, NOAA
Department of Education:
Guaranteed student loans
College hOUSIng and academic facilities fund
College hOUSIng loans
Department of Energy:
Isotope production and distribution fund
BonneVille power administration fund
Department of HOUSing and Urban Development:
HOUSing programs:
..........
Federal Housing Administration
HousIOg for the ederly and handicapped
Public and Indian housing:
Low-rent public hOUSing
Department of the Intenor:
Bureau of Reclamation Loans
Bureau of Mines, Helium Fund
Bureau of Indian Affairs:
RevolVing funds for loans
.............
Department of Justice:
Federal pnson industries. incorporated
Department of State:
RepatriatIOn loans
Department of Transportation:
Federal Rallroad Admimstration:
Railroad rehabilitatIOn and Improvement
finanCing funds
Settlements of railroad litigation
Amtrak comdor Improvement loans
Regional rail reorganizatIOn program
Federal AviatIOn Administration:
Alfcraft purchase loan guarantee program
Department of the Treasury'
Federal FinanCing Bank revolVing fund
Department of Veterans AffairS:
Loan guaranty revolVing fund
Guaranty and IOdemnlty fund
Direct loan revolVing fund
Vocational rehabilitation revolVing fund
EnVIronmental Protection Agency'
Abatement, contrOl, and compliance loan program
Small BUSiness AdministratIOn:
BUSiness loan and revolVing fund
-,
Account Balances
Current Fiscal Year
Transactions
I
This Year
Prior Year
I
Close of
I
This month
This Month
..)
125
3
125
3
~1.767
70
17.282
140
22,983
166
22.583
-6.508
5.526
~1,998
1,989
5.752
1
2,558
5,807
111
281
1
679
16
1
84
4
-500
1,545
)
1,614
3
1,629
113
113
113
25
7,905
763
25
8,099
802
8,099
802
3
27
~400
55
96
5.301
..
(
125
)
33
r .)
194
40
23
3
..
)
(
..
(
1
2,668
4
25
2
~2
~50
(
2,090
156
524
2,090
156
524
2,090
156
9
1,906
12
2,276
13
2.226
8,774
8,959
8,959
50
50
75
100
2
2
252
4
252
252
8
15
15
20
20
20
4
320
9
314
524
~7,323
185
25
1,316
8
..
(
)
7
-1
('1
-39
2
39
8
-39
2
39
8
-39
2
39
8
..
..
)
~1
(>OJ
r .)
n
-645
~32,115
-16,534
149.422
117.953
117,301
~575
-61
43
-1,730
1
820
31
("J
1
1.435
223
1,731
1
860
83
)
921
40
1.730
5
(' .)
205
11
(
)
~140
-1.730
..)
(
205
22
4
(
..
(
5
11
11
21,
Table 6. Schedule C (Memorandum)-Federal Agency Borrowing Financed Through the Issue of Public Debt Securities,
July 1993 and Other Periods-Continued
[$ millions]
Account Balances
Current Fiscal Year
Transactions
Classification
Fiscal Year to Date
Beginning of
This Month
I
This Year
Borrowing for the Treasury.-Contlnued
Other independent agencies:
Export-import of the United States
............. .
Federal Emergency Management Agency:
National insurance development fund ............. . ......... .
Pennsylvania Avenue Development Corporation:
Land aquisition and development fund
Railroad Retirement Board:
Railroad retirement account ...................................... .
Social Security equivalent benefit account
Smithsonian Institution:
John F. Kennedy Center parking facilities
Tennessee Valley Authority ............. .
Total agency borrowing from the Treasury
financed through public debt securities issued
This Year
Prior Year
I This Month
Close of
This month
22
213
73
88
279
301
3
11
-144
18
26
30
3
7
73
76
76
-440
-335
2.128
2.670
2.128
1.978
2.128
2.230
20
150
20
150
20
150
253
-2,822
-26,606
-32,461
206,410
182,626
179,804
-14
-199
-202
4.344
4.159
4.145
5
-260
-435
22.742
22.477
22.482
-600
-3.850
-5.280
-2.205
12.858
26,446
3.675
9.608
26,446
3.675
9.008
26.446
3.675
-48
-48
1.624
-48
1.624
-96
1.624
-96
-30
-30
4.820
4.790
4.790
-12
-39
-18
124
97
85
-1
-52
-36
-50
-20
1.853
174
1.801
140
1.801
139
r .)
-28
-1
51
23
23
-2
-2
19
17
17
-22
-95
125
125
53
30
114
686
52
699
1.272
1.385
Sorrowing from the Federal Financing Bank:
Funds Appropriated to the PreSident:
Foreign military sales ............ .
Department of Agriculture:
Rural Electrification Administration ..................................... .
Farmers Home Administration:
Agriculture credit insurance fund ................ . .......... .
Rural housing insurance fund ................. .
Rural development insurance fund ........ .
Department of Defense:
Department of the Navy ................. .
Defense agencies ...................................... .
Department of Education:
Student Loan Marketing Association ............................ .
Department of Health and Human Services.
Except SOCial Security:
Medical facilities guarantee and loan fund ............................. .
Department of Housing and Urban Development:
Low rent housing loans and other expenses ......................... .
Community Development Grants ...................... .
Department of Interior:
Territorial and international affairs ...
Department of Transportation:
Federal Railroad Administration .................................... .
Department of the Treasury:
Financial Management Service ........................ .
General Services Administration:
Federal buildings fund ..
. .................................. .
National Aeronautics and Space Administration:
Space flight. control and data communications
Small Business Administration:
Business loan and investment fund .................................... .
Independent agencies:
Export-Import Bank of the United States ............... .
Federal Deposit Insurance Corporation:
Bank insurance fund .................................. .
National Credit Union Administration ................................... .
Pennsylvania Avenue Development Corporation .................. .
Postal Service ........................................................... .
Resolution Trust Corporation ............................. .
Tennessee Valley Authority
................ .
Washington Metropolitan Transit Authority
-33
-14
-97
-138
782
699
685
-1,440
-3.111
7.692
6.252
6.252
-7.660
10.160
2.500
2.500
-93
59
278
-17,448
-1.856
6.864
-109
38
1.703
-10.188
-3.446
78
9.903
46.536
9.592
177
126
10.182
29.088
7.829
177
136
10.182
29.088
7.736
177
-628
-32,117
-16,535
164,427
132,939
132,310
11
Total borrowing from the Federal Financing Bank .............. ..
No Transactions.
Note: This table includes lending by the Federal Financing Bank accomplished by the purchase
agency financial assets. by the acquisition of agency debt securities. and by direct loans on
half of an agency. The Federal Financing Bank borrows from Treasury and issues its own
:urities and in tum may loan these funds to agencies in lieu of agencies borrowing directly
ough Treasury or issuing their own securities.
(. 0) Less than $500.000
Note: Details may not add to totals due to rounding
23
Table 6.
Schedule D-Investments of Federal Government Accounts in Federal Securities. July 1993 and
Other Periods
[$ millions1
Securities Held as Investments
Current Fiscal Year
Net Purchases or Sales (-)
I
Classification
This Month
I
This Year
Federal funds:
Department of Agriculture
:Jepartment of Commerce
Department of Defense-Military
Defense cooperation account
Department of Energy
Department of Housing and Urban Development:
HouSing programs
Federal housing administration fund:
PUbliC debt secuntles
Government Nat.onal Mortgage Association:
Management and liquidating functions fund'
Public debt sec unties
Agency securllies
Guarantees Of mortgage-backed securities:
Publrc debt securrtles
Agency securrtoes
Other
Department of the In tenor
Public debt securrtleS
Department of Labor
Department of Transportation
Department of the Treasury
Department of Veterans AffairS'
Canteen service revolVing fund
Guaranty and Indemnity fund
Veterans reopened Insurance fund
Servicemen s group life Insurance fund
Independent agenCies'
Export-Import Bank of the United States
Federal DepoSit Insurance Corporation'
Bank Insurance fund
Savings aSSOCiation Insurance fund
FSLlC resolution fund:
Public debt secUrities
Federal Emergency Management Agency:
National flood Insurance fund
NatIOnal Credit Union Administration
Postal Service
Tennessee Valley Authonty
Other
Other
.............................................
Trust funds:
Legislative Branch
Library of Congress
United States Tax Court
Other
The JudiCiary
JudiCial retrrement funds
Department of Agriculture
Department of Commerce
Department of Defense-Mllrtary
VOluntary separation Incentive fund
Other
Department of Defense-Ovil
'-Illitar, retirement fund
ome r
This Year
Prior Year
Close of
This month
This Month
-3
2
-4
-1
5
8
5
9
10
-3
88
-2,023
393
-3.401
480
2,032
3,513
12
3.818
3.906
-40
-340
-643
5,858
5,558
5.518
-40
2
-40
4
-5
6
60
9
60
9
20
180
-61
1
508
-61
9
240
-11
7
2,699
62
245
3,027
62
252
3,207
1
253
56
2
19
16
412
796
95
2.294
1.400
4,914
-6
219
2.333
15.480
781
3.462
2,689
16.275
857
5,740
-3
43
40
40
16
-44
-3
-355
10
8
509
198
526
154
525
105
308
409
88
292
396
927
6
-1,533
416
-758
193
4,664
340
2.204
750
3,131
756
181
-657
-318
1,319
481
662
-49
17
-632
2.216
-43
-14
-471
352
1.781
1.497
12
189
131
262
4,310
-2,210
69
118
543
2,392
4,679
2,239
765
2.410
121
2,727
7,093
1.520
820
2,612
71
2,744
6.461
3.736
717
3.030
-102
4,007
-102
5,075
-16
56.611
123
57,589
123
60.619
21
2,928
3,905
5,059
56,734
57,711
60,639
("j
("j
(. 'j
4
27
4
4
27
t
193
6
209
13
3
r 0)
15
r
5
'j
1
16
(0 .)
(. 'j
r 0)
r .)
-15
-1
880
-8
-1.073
74
11.021
456
24
I
---.
-3
1
-1
Total public debt secunlieS
Total agency secuntles
Total Federal funds
Beginning of
Fiscal Year to Date
-
7
..)
9
2.745
16.217
876
5.756
154
2.598
I
2~
1;
(
r .)
I"
160
895
153
W-
C')
13,127
478
87.753
1.098
99.847
1.479
9877:
155;
15,
Table 6, Schedule D-Investments of Federal Government Accounts in Federal Securities, July 1993 and
Other Periods-Continued
[$ millions]
Securities Held as Investments
Current Fiscal Year
Net Purchases or Sales (-)
Classification
Fiscal Year to Date
Beginning of
This Month
I Prior Year
This Year
This Year
I This Month
Close of
This month
Trust Funds-Continued
Department of Health and Human Services. except Social Security:
Federal hospital insurance trust fund:
Public debt securities ................................................. .
Federal supplementary medical insurance trust fund .................. .
Other .................................................................... .
Department of Health and Human Services. Social Security:
Federal old-age and survivors insurance trust fund:
Public debt securities ................................................. .
Federal disability insurance trust fund ................................. .
Department of the Interior:
Public debt securities ................................................... .
Department of Justice .................................................... .
Department of Labor:
Unemployment trust fund ............................................... .
Other .................................................................... .
Department of State:
Foreign Service retirement and disability fund ......................... .
Other .................................................................... .
Department of Transportation:
Highway trust fund ..................................................... .
Airport and airway trust fund .......................................... .
Other .................................................................... .
Department of the Treasury .............................................. .
Department of Veterans Affairs:
General post fund. national homes .................................... .
National service life insurance:
Public debt securities ................................................. .
United States govemment life Insurance Fund ........................ .
Veterans special life insurance fund ................................... .
Environmental Protection Agency ......................................... .
National Aeronautics and Space Administration ......................... .
Office 01 Personnel Management:
Civil service retirement and disability fund:
Public debt securities ................................................. .
Employees health benefits fund ........................................ .
Employees life insurance fund ......................................... .
Retired employees health benefits fund ............................... .
Independent agencies:
Harry S. Truman memorial scholarship trust fund .................... .
Japan-United States Friendship Commission .......................... .
Railroad Retirement Board ............................................. .
Other .................................................................... .
Total publiC debt securities .......................................... .
Total trust funds
irand total
00
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0" 0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
•• 0000
0
0
0
0
0
0
000
0
0
0
0
0
0
000
0
0
000
0
000
0
000
0
000
0
000
0
000
0
0
0
0
0
0
0
0
0
0
0
0
-1.841
33
-7
5.735
4.349
45
11.859
3,272
105
120,647
18,534
621
128,222
22,850
673
126.381
22,883
666
1.795
-409
45.521
-1.816
49.151
409
306.524
12,918
350,251
11,511
352.045
11.102
26
-118
-161
117
336
149
118
175
-539
43
-16
13
-11.227
-36
35.133
52
35.656
21
35,117
64
-14
-12
441
25
420
5,999
(' ')
(")
6,454
38
6,440
25
-349
-83
10
41
2,388
-1.816
163
-13
2.371
339
168
27
20.962
15,090
1.399
184
23,698
13,358
1,552
129
23.350
13,275
1.562
170
5
2
34
39
39
483
-6
70
836
222
-12
55
390
(")
(")
11,310
134
1.406
4,456
16
11.840
127
1,481
5,287
16
11,793
128
1.476
5,292
16
-1.587
146
46
7.986
643
866
7.236
420
934
(")
(")
(")
284.430
5.993
12,604
1
294,003
6,490
13,424
1
292,416
6.636
13,470
1
(")
(")
2
-4
(")
(")
42
3
384
19
934
18
47
17
11.527
104
49
17
11,870
121
49
17
11,912
124
-47
2
-5
5
-3.836
78.521
80.798
959.719
1,042,077
1,038,240
-3,836
78,521
80,798
959,719
1,042,077
1,038,240
-908
82,427
85,857
1,016,453
1,099,788
1,098,880
0
... No Transactions
Note: Investments are in public debt securities unless otherwise noted .
Note: Details may not add to totals due to rounding.
(' 0) Less than $500,000.
25
Table 7. Receipts and Outlays of the U.S. Government by Month, Fiscal Year 1993
[$ millions]
Oct.
Classification
Noy.
Dec.
Receipts:
Individual Income taxes
CorporatlOO Income taxes
SocIal Insurance taxes and
contnbutlOOS
Employment taxes and
contnbutlOOs
Unemployment insurance
Other retIrement contnbutions
ExCIse taxes
Estate and gift taxes
Customs duties
MIscellaneous receipts
Total-Receipts this year
••••••
>
...........
Jan.
March
Feb.
April
May
June
July
Aug.
Sept.
Fiscal
Year
To
Date
-
Com.
Plrabit
Period
Plio!
F.Y.
37.287
2,096
33,097
1,478
51,171
22,950
73,704
3,212
23.947
792
27.935
12,724
56,137
17,795
17.919
2,376
56,463
24,949
37.489
2,695
415.149
91,067
385,758
78,795
28,135
1,034
426
3,670
1,027
1,666
1.485
30,264
2,270
366
4,082
954
1,503
613
31,252
245
421
4,014
959
1.539
1,135
28,209
844
363
3,307
888
1,310
876
31,623
2,259
369
3,342
822
1,347
1,633
32,980
240
432
4,514
977
1.598
2,045
45,164
3.581
431
4,168
1.898
1,544
1,399
33,062
8,849
365
3,502
1,009
1,419
2,252
37,738
301
366
4,565
900
1,642
1,662
30,156
1,709
419
4,214
944
1,761
1,252
328.584
21,333
3,957
39,377
10,378
15,329
14,353
323,898
76.826
74.628 113.685 112.713
66.133
83.447 132.117
70.753 128.586
80,639
939.527
98.679
57,153
681,134
29.906
23.486
258,393
......
.. ....
......
(On-budget) ........................
55.050
51,213
89.589
90.124
41.032
57.253
96.408
44,632
(Off-budget) ........................
21,776
23.414
24.096
22.589
25.100
26.194
35,709
26,122
19,332
3,995
37,426
9,313
14,228
21,419
TOlal-Receipts prior year
78,065
73,095 103.636 104.031
62,747
72,127 138.351
62,184 120.878
79.050
894,/63
rOn budget)
57,213
50,199
80,146
19,877
38.980
45,562 103.326
36.807
91.396
55.947
640.053
(Of! budgeIl
20.852
22.296
23.490
24.155
23.766
26.564
35.025
25.377
29.482
23.103
254.111
204
135
18
211
162
22
193
183
14
221
222
21
195
157
12
196
172
14
233
314
21
159
289
12
187
195
13
202
259
23
2,002
2,089
170
2,109
1,956
160
334
3.393
521
414
137
245
285
391
459
486
6,664
6,421
629
270
260
-27
218
74
368
168
242
483
283
-27
396
-315
275
234
238
86
459
-285
3,370
660
3,444
167
1.653
5.397
290
2.277
3,347
285
3.344
3,301
228
1.263
3,253
231
1,022
3,367
202
4,019
4,144
94
1.977
4,195
321
1,264
3,812
165
327
4.102
184
-297
3,828
254
16,848
38,748
2.253
10,698
38,550
2,199
9.210
6.526
5,698
3.613
7.265
5,327
9.118
8,140
6.974
4,385
6,986
5,027
5.656
7,154
5.736
6.192
7,657
6.179
8.682
8,888
5,551
3,541
7.369
5,630
6,449
10.310
7,917
9,159
7,386
4,708
66,006
77,682
58,748
70,240
75,321
62,670
3.002
393
219
2.752
427
218
3,337
500
264
2,636
333
263
2.930
251
275
3.418
400
284
2,958
373
296
2.755
410
263
4,493
401
299
2.648
388
291
30,929
3.875
2.672
28.844
3.463
2.600
905
-30
32
109
-3
238
676
-3
-59
559
93
-298
-652
-6,023
-2
287
-91
562
-4,391
-40
-964
3..m
-5,204
-1.250
..
-59
-47
(' ')
25,954
19.947
28,947
18,938
22.003
24,392
26.036
19.703
23,695
24,902
234,517
241.191
2,493
2,334
1,714
2,506
2.675
1.391
2.509
2.664
1.549
2.438
2,903
780
2,459
2,714
1.266
2,432
3.167
1,542
2.471
2,268
1.434
2.200
1.839
1,101
2,434
2,328
1,617
2,356
1,474
1,346
24,299
24,366
13,740
23.43)
1,438
1.476
1.573
1.348
1.546
1.633
1.806
1,407
1,785
1,509
15,520
14.1~
6.215
7.299
5.592
6.555
6,320
8.117
5,981
6.171
6.003
7,423
6,272
8.539
6.651
8.321
6,098
7,102
6,706
8.559
6,220
8.249
62,057
76.336
68,m
4.851
3.247
4,691
3.773
3.270
386
4.985
7.723
3.483
3,680
529
1,874
3.811
3.746
2.049
4,745
4,069
2,025
4.808
3.638
5.038
3,960
3.721
582
5.120
3.760
1,923
5,150
3,673
5,268
44,883
37,374
27,318
34.14'
2.178
-4.271
2,132
-4,269
2.507
-9.901
2.536
-796
2,626
-5.079
2,394
-5,428
2.213
-5.050
2,521
-5,009
1,939
-5.087
2.297
-4,966
23,342
-49,854
-45.42t
21.508
I -1.523
"530
2.771 I 2.638
43,838
5,145
-21
267
465
-1.515
22,230
2.840
-9
22.406
2.880
-16
22,430
2.994
-1,535
22.381
2,910
-12
25,731
2.994
-7
22,538
3.029
-1.528
224,859
28,666
-6,172
213>(
258'l'
-6 '1;
Outlays
..... ,
Legislative Branch
-_., .. . , .. ... ....
The Judiciary
Executive Office of the President .
Funds Appropriated to the President:
International Security Assistance ...
International Development
Assistance
Other .
Department of AgriCulture:
Foreign aSSistance, special export
programs and Commodity Credit
Corporation
Other
....
Department of Commerce .. ...
Department of Defense:
Military:
Military personnel .
Operation and maintenance
Procurernent
. - .....
Research, development. test. and
evaluation
............
Military construction
Family hoUSing
Revolving and management
funds
Defense cooperation acrount
Other
Total Military .
CIVil
Department of Education .
Department of Energy
Department of Health and Human
ServIces. except Social Secunty:
Public Health Service
Health Care Finanang Administration:
Grants to States for Medicaid
Federal hospital Ins trust fund
Federal supp med ins. trust
fund
Other
SocIal Secunty AdmiOistratlOO
AdmlnlstratlOO for children and
familIeS
Other
Department of Health and Human
ServiceS. SocIal Securrty
Federal oId-age and SUrviVors Ins.
trust fund
Federal disability Ins trust fund
Other
-5
-2
26
(
)
..
(
)
(")
-220
-151
..)
(
35
-316
23.219
12,7&:
55.29"
41.9f:t
24.31€
23,~
able 7. Receipts and Outlays of the U.S. Government by Month, Fiscal Year 1993-Continued
[$ millions]
Classification
Oct.
Nov.
Dec.
Jan.
Feb.
March
April
May
June
July
Aug.
Sept.
Fiscal
Year
To
Date
Comparable
Period
Prior
F.Y.
utlays-Continued
epartment of Housing and Urban
)evelopment .............. ............
.... .......
epartment of the Interior
apartment of Justice . ...............
apartment of Labor:
Unemployment trust fund .. ..
Other ....... .. ..... . .. ...........
apartment of State , .... ... ..........
apartment of Transportation:
Highway trust fund ....... ... .......
Other ........... .... ... . .. .... ..
apartment of the Treasury:
Interest on the public debt .... ......
Other .............. .... ', .. ..........
epartment of Veterans Affairs:
Compensation and pensions .... .....
National service life ..... ........ ....
United States govemment life .. .....
Other ................... ....... ....
wironmental Protection Agency .......
eneral Services Administration .. ......
ational Aeronautics and Space
~dministration
...... ...... .....
......
.....
ffice of Personnel Management
11all Business Administration ... ......
dependent agencies:
Fed. Deposit Ins. Corp.:
Bank insurance funds .... ..... . ..
Savings association fund ...........
FSLlC resolution fund ...... .......
'ostal Service:
Public enterprise funds (offbudget) ........... ... ...... ..
Payment to the Postal Service
fund .... ...... . ... ..... ........
lesolution Trust Corporation .........
rennessee Valley Authority ......
)ther independent agencies ... ......
jistributed offsetting receipts:
:mployer share, employee
retirement ........... ....... .....
nterest received by trust funds ... ..
lents and royalties on outer
continental shelf lands ........ ......
)ther . .. ......
.........
2.591
698
1,215
2,053
500
913
2,232
447
849
1,786
517
794
1,764
477
677
1,982
518
880
2,290
590
975
1,716
469
705
2,231
535
731
2,138
566
853
20,783
5,317
8,591
20,657
5,432
8,249
3,041
626
900
3,119
-288
365
3,459
410
529
3,584
521
371
3,519
277
247
4,001
212
405
3,381
747
329
3,127
457
658
3,261
596
382
3,164
664
481
33,656
4,223
4,666
34,631
4,817
4,272
1,479
1,449
1,486
1,485
1,320
1,640
1,061
1,297
852
1,303
1,165
1,670
878
1,770
1,188
1,272
1,586
1,506
1,655
1,536
12,670
14,928
12,062
14,363
17,978
133
22,506
-907
51,678
537
18,062
573
16,813
4,152
18,007
2,230
17,970
1,385
23,576
362
51,977
-326
17,920
104
256,487
8,242
255,756
2,104
2,623
37
1
1,400
439
165
79
27
1
1,610
511
-478
2,694
51
2
1,377
510
734
80
65
2
1,470
437
-662
1,422
55
1
1,751
383
383
1,441
91
2
1,929
581
468
2,800
69
1
1,437
518
-604
100
70
2
610
399
259
1,462
63
2
1,333
553
509
2,741
74
2
1,457
482
-551
15,444
602
17
14,373
4,813
223
14,954
847
24
13,350
4,964
-99
1,098
3,090
113
1,317
2,586
95
1,266
2,986
44
1,092
3,330
-1
1,008
2,886
41
1,344
3,180
154
1,249
3,294
33
1,080
2,761
103
1,154
3,348
30
1,247
3,121
72
11,853
30,581
683
11,736
29,702
336
97
-87
232
1
339
-848
-3
30
-514
-26
-102
-3,035
-389
779
-397
-6
123
-381
-6
-12
-96
-2
129
-200
21
129
-981
-6
-180
-6,121
-416
1,149
7,970
-193
4,125
-452
327
349
-677
-10
-504
-1,138
-315
-757
826
-2,349
-2,062
69
-2,578
271
2,326
......
......
......
-1,392
115
1,345
30
-566
140
1,125
......
-3,628
307
1,195
-622
72
1,416
-967
140
1,711
30
-2,698
217
1,291
-1,880
206
1,442
-1,986
133
-1,644
30
-2,192
210
1,485
161
-18,511
1,810
11,691
511
-2,934
1,223
10,205
-2,498
-443
-2,511 -2,522
-4,952 -34,461
-2,624
9
-2,564
-530
-2,560
-143
-2,737
-403
-2,580 -2,558
-5,206 -35,365
-3,067
-55
-26,223
-81,548
-28,445
-76,721
-427
-198
1
-506
-27
-2,153
-2,051
(")
(")
(")
(")
(")
(")
82,896 114,330 127,422 124,026 107,717 117,487 120,216
1,179,697
. .....
......
......
(")
-12
-442
(")
(")
-261
-36
-245
....
(")
. .....
. .....
tals this year:
.Dial outlays
.........................
125,618 107,353 152,632
(On-budget) ........................
103,777
(Off-budget) ........................
21,841
.....
........................
'olal-surplus (+) or deficit (-)
(On-budget)
(Off-budget) ........................
'olal borrowing from the public
....
otal-outlays prior year
83,434 116,571
84,922
89,874 103,184 101,852
23,919
-2,025
24,456
36,061
24,237
-48,792 -32,726 -38,947 +29,817 -48,197 -43,974
-48,727 -32,221 -26,982
-65
-1,552
+5,203 -48,842 -45,931
-505 -11,965 +24,614
+644
-8,355
30,689
61,969
21,078
83,322 103,493
96,252
966,681
24,395
23,964
213,015
+8,091 -36,963 +11,099 -39,577
-240,170
. .....
-4,813 -39,099
-285,547
......
......
22,174
-5,445 -38,690
13,994
+1,957 +13,535
+1,727 +15,912
-478
+45,377
37,727
30,832
1,055
203,663
5,464
24,757
Il4.659 II 7. 779 106.170 119.699 lIl,927 122,839 123.748 108.957 II 7.096 122.197
262,224
1.165.071
(On-budget)
94,669
95,486
95,472
97,139
88.704
99.894 102.713
86,270 102,288
99.906
962.540
(Off-budget) .
19.990
22.294
10,699
22.561
23,222
22,945
22.687
22.291
202.532
'otal-surplus (+) or deficit (-) prior
year.
(On-budget)
(Off-budget)
-36.594 -44.684
-2,534 -15.668 -49.180 -50,712 +14.603 -46,773
-37.457 -44.687 -15,326 -17.262 -49.724 -54.332
+862
+3 +12,792
+1,594
+544
.. No transactions .
• 0) Less than $500.000.
~ote:
21.035
Details may not add to totals due to rounding.
27
14.808
+3.782 -43.147
-270,908
+614 -49.463 -10.892 -43. 959
- 322.487
+3,619 +13,989
+2.690 +14.674
+812
+5/.5 79
Table 8. Trust Fund Impact on Budget Results and Investment Holdings 8S of July 31, 1993
[$ millions]
Fiscal Year to Date
This Month
Classification
Securities held as Investments
Current Fiscal Year
Beginning of
Receipts
Outiays
Excess
Receipts
Outlays
Excess
This Year
I
This Month
-
Close of
This Month
I
Trult receipts, outiays, and investments
held:
AIrport
Black lung disability
Federal dIsability Insurance .
Federal employees life and health
Federal employees retirement .......
Federal hospital insurance
Federal Old-age and survivors insurance
Federal supplementary medical Insurance
Highways
Military advances
, . . .. . . . .. .
Railroad retirement
. . . . .. ... .. . .
Military retirement
.............
Unemployment
Veterans life insurance
............
All other trust
.
1.225
6.639
23.488
4.901
1.544
1.356
439
1,034
2.741
31
393
528
53
3.029
-183
3.009
8.249
22.538
5.150
1.784
941
652
2.169
3.164
114
202
-95
2
-601
183
-1.784
-1,609
949
-248
-239
415
-213
-1.135
-423
-83
191
46,708
9.342
51,399
9.342
-4,691
433
55
2.427
37.742
80.609
269.806
50,780
16.253
10.667
7,134
32.927
34,654
1,426
5,797
5,265
511
28,666
-1.239
29.342
76.336
224.859
44,883
13.906
10,698
6,393
21.396
33,656
879
2.780
-1,854
20
-1.918
1.239
8,400
4.273
44.947
5,897
2,348
-31
741
11,532
997
547
3,017
578,485
179,395
498,332
179,395
80,153
3,411
531
26,748
Totsl trust fund receipts and outiays
and Investments held from Table 6-
0
..........................................
Less: Intartund transactions ......
,
... , ........
Trust fund receipts and outlays on the basis
of Tables 4 & 5 . . . . . . . .. ... . . . . . . . . . . . . . . . .
37.365
42,057
-4,691
399,089
318,936
80.153
Totsl Federal fund receipts and outiays
Less: Interfund transactionS ..............
46,247
192
81,133
192
-34,886
565,719
620
886,042
620
-320,323
Federal fund receipts and outlays on the
basis of Table 4 & 5 ...
-34.886
565,099
885.422
-320.323
24.661
24.661
46.055
80.941
...........
2.781
2.781
. .............
80,639
120,216
Less: offsetting proprietary receipts
Net budget receipts " outiays
~
-39,577
No transactionS.
Note: Interlund rec<lipts and outlays are transactions between Federal funds and trust funds
sUCh 8S Federal payments and contributions. and interest and prOfits on investments in Federal
securtties. They have no net effect on ove<all budget receipts and outlays since the receipts side of
sUCh transactions is offsat against bugdet outlays. In this table. Interlund recetpts are shown as an
adlustment to arrive at total receipts and outlays 01 trust funds respectively
939,527 1,179,697
15,090
13.358
13.275
12.918
18.598
290.626
120.647
306.524
18,534
20.962
11.511
19.915
300.670
128.222
350.251
22.850
23.698
11.102
20,107
299.009
126.381
352.045
22,883
23.350
11.527
87,753
35,133
12.850
8.556
11.870
99.847
35.656
13.448
10.780
98.ns
35,117
959,719
1,042,077
1,038,240
-240,170
Note: Details may not add to totals due to rounding.
28
11,912
13.391
10.827
'able 9. Summary of Receipts by Source, and Outlays by Function of the U.S. Government, July 1993
and Other Periods
[$ millions)
Classification
This Month
Fiscal Year
To Date
Comparable Period
Prior Fiscal Year
ldividual income taxes
.................................... ..
orporation income taxes ........................................ ..
ocial insurance taxes and contributions:
Employment taxes and contributions ........................... .
Unemployment insurance ....................................... .
Other retirement contributions .................................. .
xcise taxes .
. ............................................... .
state and gift taxes
.......................................... .
. ......................................... .
ustoms ....
liscellaneous
.................................... ..
37,489
2,695
415,149
91,067
385,758
78,795
30,156
1,709
419
4,214
944
1,761
1,252
328,584
21,333
3,957
39,377
10,378
15,329
14,353
323,898
19,332
3,995
37,426
9,313
14,228
21,419
Total , .. ,., .... , ..... " ..................................... ..
80,639
939,527
894,163
~tional defense
............................................... .
temational affairs ............................................... ..
eneral science, space, and technology ......................... .
. ........................................ ..
lergy .........
~tural resources and environment ............................... .
~riculture
.......................................... .
~mmerce and housing credit .................................... .
'ansportation .................................................... .
~mmunity and Regional Development ........................... .
jucation, training, employment and social services ............ .
~alth ........
.. ........................................ .
edicare ........................................................... .
come security
......................................... ..
)Cial Security
......................................... ..
lterans benefits and services .................................. ..
jministration of justice ........................................... .
lOeral government ............................................... .
terest
........................................................ .
ldistributed offsetting receipts ................................. ..
25,916
1,241
1,521
198
1,421
206
-2,014
3,250
962
3,113
8,023
12,103
18,665
25,567
4,289
1,350
340
17,159
-3,094
244,407
15,126
14,110
4,321
16,695
19,880
-23,680
28,207
8,351
39,609
81,537
108,596
177,878
253,511
30,642
12,445
10,479
165,958
-28,376
251,107
14,194
13,724
3,346
16,752
14,392
11,891
27,262
6,589
38,456
73,141
99,220
168,093
239,296
29,390
11,995
10,151
166,569
-30,496
Total ., ....... , .. , .......................................... ..
120,216
1,179,697
1,165,071
IECEIPTS
ET OUTLAYS
Note: Details may not add to totals due to rounding.
29
Explanatory Notes
the employee and credits for whatever purpose the money was with/lerj
Outlays are stated net of offsetting collections (including receipts 01
revolving and management funds) and of refunds. Interest on the pu~
debt (publiC issues) is recognized on the accrual basis. Federal credit
programs subject to the Federal Credit Reform Act of 1990 use the cash
basis of accounting and are divided into two components The POrtIOn of
the credit activities that involve a cost to the Government (millnly
subsidies) is included within the budget program accounts. The remalllmg
portion of the credit activities are in non-budget finanCing aCCOunts
Outlays of off-budget Federal entities are excluded by law from budget
totals. However, they are shown separately and combined with the 00budget outlays to display total Federal outlays.
1. Flow of Data Into Monthly Treasury Statement
The Monthly Treasury Statement (MTS) IS assembled from data in the
central accounting system The major sources of data include monthly
accounltng reports by Federal entitles and disbursing officers. and daily
reports from the Federal Reserve banks These reports detail accounting
transactions affecltng receipts and outlays of the Federal Government
and off-budget Federal entilies. and their related effect on the assets and
liabllilies of the U.S Government. Information IS presented in the MTS on
a modified cash basIs
2. Noles on Receipts
Receipts Included in the report are classified into the following major
categories (1) budget receipts and (2) offsetting collections (also called
applicable receipts). Budget receipts are collections from the public that
result from the exercise of the Government's sovereign or governmental
powers. excluding receipts offset against outlays. These collections, also
called governmental receipts. consist mainly of tax receipts (including
socia! insurance taxes). receipts from court fines, certain licenses, and
depoSits of earnings by the Federal Reserve System. Refunds of receipts
are treated as deductions from gross receipts.
Offsetting collections are from other Govemment accounts or the
public that are of a business-type or market-oriented nature. They are
classified into two major categories: (1) offsetting collections credited to
appropriations or fund accounts, and (2) offsetting receipts (I.e., amounts
deposited in receipt accounts). Collections credited to appropriation or
fund accounts normally can be used without appropriation action by
Congress. These occur in two instances: (1) when authorized by law,
amounts collected for materials or services are treated as reimbursements to appropriations and (2) in the three types of revolving funds
(public enterprise, intragovernmental. and trust); collections are netted
against spending, and outlays are reported as the net amount.
Offsetting receipts in receipt accounts cannot be used without being
appropriated. They are subdivided into two categories: (1) proprietary
receipts-these collections are from the public and they are offset against
outlays by agency and by function, and (2) intragovernmental fundsthese are payments into receipt accounts from Governmental appropriation or funds accounts. They finance operations within and between
Government agencies and are credited with collections from other
Government accounts. The transactions may be intrabudgetary when the
payment and receipt both occur within the budget or from receipts from
off-budget Federal entities in those cases where payment is made by a
Federal entity whose budget authority and outlays are excluded from the
budget totals.
Intrabudgetary transactions are subdivided into three categories:
(1) Intertund transactions, where the payments are from one fund group
(either Federal funds or trust funds) to a receipt account in the other fund
group: (2) Federal intrafund transactions, where the payments and
receipts both occur within the Federal fund group; and (3) trust intra fund
transactions. where the payments and receipts both occur within the trust
fund group.
Offsetting receipts are generally deducted from budget authority and
outlays by function. by subfunction. or by agency. There are four types of
receipts. however. that are deducted from budget totals as undistributed
offsetting receipts. They are: (1) agencies' payments (including payments
by off-budget Federal entities) as employers into employees retirement
funds. (2) interest received by trust funds, (3) rents and royalties on the
Outer Continental Shelf lands. and (4) other interest (I.e., interest collected
on Outer Continental Shelf money In deposit funds when such money is
transferred into the budget).
4. Processing
The data on payments and collections are reported by account symbol
into the central accounting system. In turn, the data are extracted from
this system for use in the preparation of the MTS.
There are two major checks which are conducted to assure the
consistency of the data reported:
1. Verification of payment data. The monthly payment activity reported by
Federal entities on their Statements of Transactions is compared to the
payment activity of Federal entities as reported by disbursing officers.
2. Verification of collection data. Reported collections appearing on
Statements of Transactions are compared to depOSits as reported by
Federal Reserve banks.
5. Other Sources of Information About Federal Government
Financial Activities
• A Glossary of Terms Used in the Federal Budget Process, March
1981 (Available from the U.S. General Accounting Office, Gaithersburg
Md. 20760). This glossary provides a basic reference document of
standardized definitions of terms used by the Federal Government in the
budget making process.
• Daily Treasury Statement (Available from GPO, Washington, D.C
20402, on a subscription basis only). The Daily Treasury Statement is
published each working day of the Federal Government and provides data
on the cash and debt operations of the Treasury.
• Monthly Statement of the Public Debt of the United Stales
(Available from GPO, Washington, D.C. 20402 on a subscription baSIS
only). This publication provides detailed information concerning the publ~
debt.
• Treasury Bulletin (Available from GPO, Washington, D.C. 20402. by
subscription or single copy). Quarterly. Contains a mix of narrative. tables
and charts on Treasury issues, Federal financial operations, intematlon~
statistics, and special reports.
• Budget of the United States Government, Fiscal Year 19 (Available from GPO, Washington, D.C. 20402). This publication IS a
single volume which provides budget information and contains:
-Appendix, The Budget of the United States Government, FY 19_
-The United States Budget in Brief, FY 19 _
-Special Analyses
-Historical Tables
-Management of the United States Government
-Major Policy Initiatives
3. Notes on Outlays
Outlays are generally accounted for on the basis of checks issued,
electrOniC funds transferred. or cash payments made. Certain outlays do
not reqUire Issuance of cash or checks. An example is charges made
against appropriations for that part of employees' salaries Withheld for
taxes or savings bond allotments - these are counted as payments to
• United States Government Annual Report and Appendix (Availab'€
from Financial Management Service, U.S. Department of the TreaM
Washington, D.C. 20227). This annual report represents budgetar!
results at the summary level. The appendix presents the individual rere~
and appropriation accounts at the detail level.
30
Scheduled Release
The release date for the August 1993 Statement will be 2:00 pm EST September 22, 1993.
For sale by the Superintendent of Documents, U.S. Government Printing
Office, Washington, D.C. 20402 (202) 783-3238. The subscription price is
$27.00 per year (domestic), $33.73 per year (foreign).
No single copies are sold.
FOR IMMEDIATE RELEASE
August 20, 1993
CONTACT: Michelle Smith
(202) 622-2960
STATEMENT OF RICHARD NEWCOMB, DIRECTOR OF THE OFFICE OF FOREIGN
ASSETS CONTROL, U.S. TREASURY:
Consistent with United States policy and procedures and following discussions with
the Pastors for Peace, Treasury's Office of Foreign Assets Control has authorized the group
to donate and deliver a school bus to Havana, Cuba. Treasury has been assured that the
World Council of Churches will oversee the delivery of the school bus as humanitarian aid to
the Ebeneezer Baptist Church in Havana.
We are pleased we have been able to work constructively with the Pastors for Peace
to resolve the situation on the border at Laredo, Texas.
-30-
LB-332
UBLIC DEBT NEWS
, ~"
J
_
• ..,
- -' < I
:,
j
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Tenders for $12,365 million of 13-week bills to be issued
August 26, 1993 and to mature November 26, 1993 were
accepted today (CUSIP: 912794G65).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
3.00%
3.02%
3.02%
Investment
Rate
3.07%
3.09%
3.09%
Price
99.233
99.228
99.228
Tenders at the high discount rate were allotted 35%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
29,331
52,452,346
5,560
28,262
230,539
13,006
3,061,895
9,905
6,151
26,797
13,523
1,093,113
727,087
$57,697,515
Accegted
29,331
10,731,535
5,560
28,262
65,539
11,706
491,545
9,905
6,151
26,797
13,523
218,113
727,087
$12,365,054
Type
Competitive
Noncompetitive
Subtotal, Public
$52,799,091
1,192,124
$53,991,215
$7,466,630
1,192,124
$8,658,754
2,976,100
2,976,100
730 1 200
$57,697,515
730,200
$12,365,054
Federal Reserve
Foreign Official
Institutions
TOTALS
LB-333
UBLIC DEBT NEWS
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Tenders for $12,232 million of 26-week bills to be issued
August 26, 1993 and to mature February 24, 1994 were
accepted today (CUSIP: 912794J21).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
3.11%
3.13%
3.12%
Investment
Rate
3.20%
3.22%
3.21%
Price
98.428
98.418
98.423
Tenders at the high discount rate were allotted 4%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
29,502
53,286,769
4,276
23,066
19,987
18,906
2,422,553
11,878
3,802
21,018
8,160
879,249
548,507
$57,277,673
29,502
11,042,289
4,276
23,066
19,987
18,906
211,173
11,878
3,802
21,018
8,160
289,249
548,507
$12,231,813
Type
Competitive
Noncompetitive
Subtotal, Public
$52,328,404
871,769
$53,200,173
$7,282,544
871,769
$8,154,313
3,100,000
3,100,000
977,500
$57,277,673
977,500
$12,231,813
Federal Reserve
Foreign Official
Institutions
TOTALS
LB-334
Acce~ted
UBLIC DEBT NEWS
Dq~artmcnt
of the Treasury- •
FOR IMMEDIATE RELEASE
August 24, 1993
RESULTS OF TREASURY'S AUCTION OF 2-YEAR NOTES
Tenders for $16,091 million of 2-year notes, Series Z-1995,
to be issued August 31, 1993 and to mature August 31, 1995
were accepted today (CUSIP: 912827L91).
The interest rate on the notes will be 3 7/8%. All
competitive tenders at yields lower than 3.94% were accepted in
full.
Tenders at 3.94% were allotted 38%. All noncompetitive and
sucessful competitive bidders were allotted securities at the yield
of 3.94%, with an equivalent price of 99.876. The median yield
was 3.93%; that is, 50% of the amount of accepted competitive bids
were tendered at or below that yield. The low yield was 3.90%;
that is, 5% of the amount of accepted competitive bids were
tendered at or below that yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
30,331
53,008,153
21,044
61,187
80,002
46,193
1,615,837
39,340
15,484
55,909
21,335
890,785
267,077
$56,152,677
Accepted
30,331
15,030,542
21,044
61,187
63,002
21,193
355,837
32,340
14,984
55,909
21,335
115,785
267,077
$16,090,566
The $16,091 million of accepted tenders includes $804
million of noncompetitive tenders and $15,287 million of
competitive tenders from the public.
In addition, $955 million of tenders was awarded at the
high yield to Federal Reserve Banks as agents for foreign and
international monetary authorities. An additional $517 million
of tenders was also accepted at the high yield from Federal
Reserve Banks for their own account in exchange for maturing
securities.
LB-33S
TREASURY NEWS
Department of the Treasury
Washington, D.C.
FOR RELEASE AT 2:30 P.M.
August 24, 1993
CONTACT:
"~"'--',",-
a
i"
,
w-o
Office of Financing
202/219-3350
The Treasury will auction two series of Treasury bills
totaling approximately $23,600 million, to be issued September 2,
1993. This offering will result in a paydown for the Treasury of
about $175 million, as the maturing weekly bills are outstanding
in the amount of $23,780 million.
Federal Reserve Banks hold $5,790 million of the maturing
bills for their own accounts, which may be refunded within the
offering amount at the weighted average discount rate of accepted
competitive tenders.
Federal Reserve Banks hold $1,873 million as agents for
foreign and international monetary authorities, which may be
refunded within the offering amount at the weighted average
discount rate of accepted competitive tenders. Additional
amounts may be issued for such accounts if the aggregate amount
of new bids exceeds the aggregate amount of maturing bills.
Tenders for the bills will be received at Federal
Reserve Banks and Branches and at the Bureau of the Public
Debt, Washington, D. C. This offering of Treasury securities
is governed by the terms and conditions set forth in the Uniform
Offering Circular (31 CFR Part 356, published as a final rule on
January 5, 1993, and effective March 1, 1993) for the sale and
issue by the Treasury to the public of marketable Treasury bills,
notes, and bonds.
Details about each of the new securities are given in the
attached offering highlights.
Attachment
LB-336
.,
'
Telepllone 202-622-2960
TREASURY'S WEEKLY BILL OFFERING
000
",i
HIGHLIGHTS OF TREASURY OFFERINGS OF WEEKLY BILLS
TO BE ISSUED SEPTEMBER 2, 1993
August 24, 1993
Offering Amount .
$11,800 million
$11,800 million
Description of Offering:
Term and type of security
CUSIP number
. . . .
Auction date
.....
Issue date
Maturity date
Original issue date .
Currently outstanding
Minimum bid amount
Multiples .
91-day bill
912794 G7 3
August 30, 1993
September 2, 1993
December 2, 1993
June 3, 1993
$12,040 million
$10,000
$ 1,000
182-day bill
912794 J3 9
August 30, 1993
September 2, 1993
March 3, 1994
September 2, 1993
$10,000
$ 1,000
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids .
Accepted in full up to $1,000,000 at the average
discount rate of accepted competitive bids
(1) Must be expressed as a discount rate with
two decimals, e.g., 7.10%.
(2) Net long position for each bidder must be
reported when the sum of the total bid
amount, at all discount rates, and the net
long position is $2 billion or greater.
(3) Net long position must be determined as of
one half-hour prior to the closing time for
receipt of competitive tenders.
competitive bids
Maximum Recognized Bid
at a Single yield
Maximum Award .
.
.
.
Receipt of Tenders:
Noncompetitive tenders
Competitive tenders .
Payment Terms .
35% of public offering
.
35% of public offering
Prior to 12:00 noon Eastern Daylight Saving time
on auction day
Prior to 1:00 p.m. Eastern Daylight Saving time
on auction day
Full payment with tender or by charge to a funds
account at a Federal Reserve Bank on issue date
CYNTHIA GIBSON BEERBOWER
International Tax Counsel
Cynthia Gibson Beerbower was appointed International Tax Counsel (lTC) at the
Treasury Department on August 23, 1993.
In that position she is responsible for advising the Assistant Secretary (Tax Policy) in
connection with the formulation of the Administration's international tax initiatives. Her office
is responsible for negotiating and reviewing income tax and estate and gift tax treaties with
foreign countries and coordinating tax treaty matters with the State Department and Congress.
ITC attorneys develop international tax legislation proposals, review and assess international tax
bills, prepare background information, produce testimony for Treasury officials, and coordinate
with Congressional staffs and other agencies on matters related to U. S. international tax policy.
Before joining Treasury Mrs. Beerbower was a partner (1981-1993) and an Associate
(1977-1981) in the New York law firm Simpson Thacher and Bartlett.
She has been a member of the Executive Committee of the New York State Bar
Association's Taxation Section over the past seven years. She co-chaired its Committee on
Foreign Activities of U.S. Taxpayers and the Committee on U.S. Activities of Foreign
Taxpayers. She has written and lectured extensively on the international tax aspects of financial
instruments and serves on the advisory board of the Journal of International Taxation.
Mrs. Beerbower has an LL.B. with honors from Cambridge University, a J.D. from
Boston University and a B.A. magna cum laude from Mount Holyoke College, where she is
currently a trustee.
She is married to John E. Beerbower and has a son and daughter. She was born
Dayton, Ohio on June 25, 1949.
-30-
In
Dc~artmcnt of the Treasury
FOR IMMEDIATE RELEASE
August 25, 1993
•
RESULTS OF TREASURY'S AUCTION OF 5-YEAR NOTES
Tenders for $11,000 million of 5-year notes, Series R-1998,
to be issued August 31, 1993 and to mature August 31, 1998
were accepted today (CUSIP: 912827M25).
The interest rate on the notes will be 4 3/4%. All
competitive tenders at yields lower than 4.87% were accepted in
full.
Tenders at 4.87% were allotted 59%. All noncompetitive and
sucessful competitive bidders were allotted securities at the yield
of 4.87%, with an equivalent price of 99.473. The median yield
was 4.84%; that is, 50% of the amount of accepted competitive bids
were tendered at or below that yield. The low yield was 4.80%;
that is, 5% of the amount of accepted competitive bids were
tendered at or below that yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
23,950
26,362,509
15,734
35,071
17,585
31,671
1,346,847
23,275
7,193
26,526
7,636
692,220
53,419
$28,643,636
Accepted
23,950
10,271,029
15,734
35,071
17,585
21,651
327,167
23,275
7,193
26,526
7,636
170,170
53,419
$11,000,406
The $11,000 million of accepted tenders includes $570
million of noncompetitive tenders and $10,430 million of
competitive tenders from the public.
In addition, $1,550 million of
high yield to Federal Reserve Banks
international monetary authorities.
of tenders was also accepted at the
Reserve Banks for their own account
securities.
LB-337
tenders was awarded at the
as agents for foreign and
An additional $450 million
high yield from Federal
in exchange for maturing
o
<D
m
C';J
federal financing bankNEWS
WASHINGTON, D.C.
20220
For Immediate Release
August 26,
1993
FEDERAL FINANCING BANK
Charles D. Haworth, Secretary, Federal Financing Bank (FFB),
announced the following activity for the month of July 1993.
FFB holdings of obligations issued, sold or guaranteed by
other Federal agencies totaled $132.3 billion on July 31, 1993,
posting a decrease of $645.2 million from the level on
June 30, 1993. This net change was the result of decreases in
holdings of agency assets of $611.6 million, and in holdings of
agency-guaranteed loans of $33.5 million.
FFB made 22
disbursements, 3 maturity extensions, and 15 repricings in July.
FFB also received 38 prepayments in July.
Attached to this release are tables presenting FFB July loan
activity and FFB holdings as of July 31, 1993.
LB-338
N
N
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0
L()
<j"
N
N
N
N
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N
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LL
h91J 1 of 4
~BDBRAL ~INANCI.G
BAHX
JULY 1993 ACTIVITY
BORROWER
DATE
AMOUNT
OF ADVANCE
FINAL
INTEREST
MATURITY
RATE
(semiannual)
INTEREST
RATE
(not semiannual)
AGENCY PEBT
FEDERAL DEPOSIT INSURANCE CORPORATION
Note No. OOlQ
Advance #1
7/1 $ 2,500,000,000.00 10/01/93
3.222\
RESOLUTION TRUST CORPORATION
Note No. 0019
Advance #1
7/1
29,087,710,737.98 10/01/93
3.222\
GOYERNMENT - GUARANTEED LOANS
RHODE ISLAND DEpoSITORS ECONOMIC PROTECTION CORPORATION
*DEPCO
7/1
30,385,955.72 10/01/93
3.222\
8,142,307.00
354,470.00
418,280.66
11,943,484.00
44,399.21
10,505,397.64
149,414.14
2,656,584.00
8,268,511.00
89,730,000.00
01/03/22
01/31/94
12/11/95
12/11/95
01/03/95
11/15/93
04/01/97
01/31/94
12/11/95
01/31/01
6.376\
3.310\
4.281\
4.281\
3.832\
3.298\
5.000\
3.482\
4.490\
5.238\
838,000.00
220,000.00
1,128,000.00
1,359,912.45
2,905,472.44
1,853,837.33
4,749,183.57
2,691,284.37
7,147,514.82
6,251,480.47
15,250,612.34
12,532,865.01
9,842,286.12
8,996,452.27
6,314,837.12
5,397,871.59
1,062,112.87
15,567,844.21
3,045,000.00
01/03/22
01/03/22
12/31/25
12/31/09
12/31/09
12/31/09
12/31/09
12/31/12
12/31/12
12/31/12
12/31/12
12/31/12
12/31/12
12/31/12
12/31/12
12/31/12
12/31/12
12/31/12
12/31/25
6.372\
6.372\
6.309\
5.800\
5.800\
5.800\
5.800\
5.931\
5.931\
5.931\
5.931\
5.931\
5.931\
5.931\
5.931\
5.931\
5.931\
5.931\
6.436\
GEN~RAt ~EBYI~E~ APMINI~TRATIQN
Miami Law Enforcement
Oakland Office Building
Foley Services Contract
Foley Square Courthouse
Memphis IRS Service center
ICTC Building
Chamblee Office Building
Oakland Office Building
Foley Square Office Bldg.
GSA Refinancing
7/1
7/6
7/16
7/19
7/20
7/21
7/23
7/23
7/27
7/30
EURAt EL£QIBIEICATIQN APMIHIS~RA~IQH
*Northwest Electric #176
*Northwest Electric #176
WHECI Electric Coop. #353
@Coop. Power Assoc. '001
@Coop. Power Assoc. '001
@Coop. Power Assoc. '001
@Coop. Power Assoc. #001
@Coop. Power Assoc. #005
@Coop. Power Assoc. '070A
@Coop. Power Assoc. '070A
@Coop. Power Assoc. '070A
@Coop. Power Assoc. #070A
@Coop. Power Assoc. '070A
@Coop. Power Assoc. #070A
@Coop. Power Assoc. '070A
@Coop. Power Assoc. 1121
@Coop. Power Assoc. #121
@Pacific N.W. Electric #118
Florida Keys Electric #383
* maturity extension
@ interest rate buydown
7/1
7/1
7/1
7/16
7/16
7/16
7/16
7/16
7/16
7/16
7/16
7/16
7/16
7/16
7/16
7/16
7/16
7/16
7/30
6.322\
6.322\
6.260\
5.759%
5.759l
5.759\
5.759%
5.888\
5.888%
5.88U
5.888'
5.888l
5.888'
5.888\
5.888%
5.888'
5.888\
5.888'
6.385'
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
qtr.
Page 3 of 4
FBDBRAL FINANCING BARK
JULY 1993 ACTIVITY
BORROWER
DATE
AMOUNT
OF ADVANCE
FINAL
INTEREST
MATURITY
RATE
(semiannual)
TENNESSEE YALLEY AUTHORITY
Seven States Energy Corporation
Note
Note
Note
Note
Note
Note
Note
Note
A-93-14
A-93-15
A-93-16
A-93-17
A-93-18
A-93-19
A-93-20
A-93-21
7/30
7/30
7/30
7/30
7/30
7/30
7/30
7/30
$161,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
150,000,000.00
125,000,000.00
125,000,000.00
08/03/93
08/10/93
08/20/93
09/07/93
09/14/93
09/21/93
09/28/93
09/30/93
3.272%
3.272%
3.272%
3.272%
3.272%
3.272%
3.272%
3.272%
INTEREST
RATE
(not semiannual)
Page 4 of 4
FEDERAL FINANCING BANK
(in millions)
Program
Agency Debt:
Export-Import Bank
Federal Deposit Insurance Corporation
Resolution Trust Corporation
Tennessee Valley Authority
U.S. Postal Service
sub-total·
$ 6,252.3
2,500.0
29,087.7
6,575.0
10.).81.5
54,596.6
Net Change
FY '93 Net Change
7/1/93-7 131/93
10/1/92-7/31/93
54,596.6
0.0
0.0
0.0
0.0
0.0
0.0
$-1,440.2
-7,660.0
-17,448.2
-600.0
278,1
-26,870.2
June 30. 1993
$
6,252.3
2,500.0
29,087.7
6,575.0
lQ.18lt~
$
Agency Assets:
Farmers Home Administration
DHHS-Health Maintenance Org.
DHHS-Medical Facilities
Rural Electrification Admin.-CBO
Small Business Administration
sub-total·
39,129.0
30.9
51.3
4,598.9
Lt.Q
43,813.1
39,729.0
36.0
57.7
4,598.9
3.J.
44,424.8
-600.0
-5.2
-6.4
0.0
-0,;).
-611. 6
-3,850.0
-24.3
-13.0
0.0
-1.1
-3,888.4
Government-Guaranteed Loans:
DOD-Foreign Military Sales
DEd.-Student Loan Marketing Assn.
DEPCO-Rhode Island
DHUD-Community Dev. Block Grant
DHUD-Public Housing Notes
General Services Administration +
DOl-Guam Power Authority
DOl-Virgin Islands
DON-Ship Lease Financing
Rural Electrification Administration
SSA-Small Business Investment Cos.
SSA-State/Local Development Cos.
TVA-Seven States Energy Corp.
DOT-Section 511
DOT-WMATA
sub-total*
4,145.0
4,790.0
30.4
138.8
1,801.0
1,521.9
0.0
22.9
1,528.3
17,882.5
95.2
586.2
1,161.0
17.5
117.0
33,897.6
4,159.1
4,790.0
52.8
139.6
1,801. 0
1,397.8
0.0
23.1
1,528.3
17,895.2
103.7
592.1
1,254.2
17.5
177,0
33,931.2
-14 .0
0.0
-22.4
-0.7
0.0
124.1
0.0
-0.2
0.0
-12.7
-8.5
-5.8
-93.2
0.0
0,0
-33.5
========
-199.2
-30.0
-94.6
-35.6
-52.3
745.0
-27.0
-0.9
-47.9
-260.5
-48.3
-47.5
-1,255.8
-1.6
0.0
-1,356.0
1In::===-===-=
...... &:&::&a:::w
$132,952.5
$-645.2
$132,307.3
grand-total·
I
July 3l. 1993
•
•
*f1gures may not total due to round1ng
+does not include capitalized interest
-
$-32,114.6
August 27, 1993
Monthly Release of U.S. Reserve Assets
The Treasury Department today released U.S. reserve assets data for the month of
July 1993.
As indicated in this table, U.S. reserve assets amounted to $74,139 million at the end
of July 1993, up from $73,968 million in June 1993.
U.S. Reserve Assets
(in millions of dollars)
End
of
Month
Total
Reserve
Assets
June
July
Foreign
Currencies
Gold
Stock 1/
Special
Drawing
Rights 1/1/
1/
Reserve
Position in
IMF1/
73,968
11,057
8,987
41,998
11,926
74,139
11,057
8,905
42,094
12,083
1993
1/
1/
Valued at $42.2222 per fine troy ounce.
Beginning July 1974, the IMF adopted a technique for valuing the SDR based on
weighted average of exchange rates for the currencies of selected member countries. The
U.S. SDR holdings and reserve position in the IMF also are valued on this basis
beginning July 1974.
1/
Includes allocations of SDRs by the IMF plus transactions in SDRs.
~/
Valued at current market exchange rates.
LB-339
UBLIC DEBT NEWS
RESULTS OF TREASURY'S AUCTION OF 13-WEEK BILLS
Tenders for $11,969 million of 13-week bills to be issued
September 2, 1993 and to mature December 2, 1993 were
accepted today (CUSIP: 912794G73)
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
3.00%
3.02%
3.02%
Investment
Rate
3.06%
3.08%
3.08%
Price
99.242
99.237
99.237
Tenders at the high discount rate were allotted 15%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED ( in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
28,720
54,353,891
4,990
37,733
94,795
21,437
2,961,851
6,878
5,957
22,124
21,121
561,853
743,269
$58,864,619
Accegted
28,720
10,765,693
4,990
37,733
33,545
17,187
226,251
6,878
5,957
22,124
21,121
55,503
743,269
$11,968,971
Type
Competitive
Noncompetitive
Subtotal, Public
$54,581,935
1,202,854
$55,784,789
$7,686,287
1,202,854
$8,889,141
2,889,630
2,889,630
190,200
$58,864,619
190,200
$11,968,971
Federal Reserve
Foreign Official
Institutions
TOTALS
LB-340
UBLIC DEBJ;luNEWS
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
/I
~. "'~
_'
r ;"
.. ':
:, ~~;; It
Tenders for $11,895 million of 26-week bills to be issued
September 2, 1993 and to mature March 3, 1994 were
accepted today (CUSIP: 912794J39).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
3.09%
3.11%
3.11%
Investment
Rate
3.18%
3.20%
3.20%
Price
98.438
98.428
98.428
Tenders at the high discount rate were allotted 17%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
29,423
48,335,582
5,006
37,253
128,311
18,320
2,067,027
7,692
6,242
21,589
8,951
483,808
587,032
$51,736,236
AcceQted
29,423
10,902,262
5,006
37,253
32,621
16,162
181,847
7,692
6,242
21,589
8,951
59,308
587,032
$11,895,388
Type
Competitive
Noncompetitive
Subtotal, Public
$47,069,523
944,513
$48,014,036
$7,228,675
944,513
$8,173,188
2,900,000
2,900,000
822,200
$51,736,236
822,200
$11,895,388
Federal Reserve
Foreign Official
Institutions
TOTALS
LB-341
TREASURY NEWS
FOR RELEASE AT 2:30 P.M.
August 31, 1993
CONTACT:
·.l,
Telepllone 202-622-2960
Washington. D.C.
Department of the Treasury
A.··•.
V
Office of Financing
202/219-3350
TREASURY'S WEEKLY BILL OFFERING
TIle Treasury will auction two series of Treas~ry bills
totaling approximately $22,400 million, to be iSSUGd September 9,
1993. This offering will result in a paydown for the Treasury of
about $1,300 million, as the maturing weekly bills are
outstanding in the amount of $23,707 million.
Federal Reserve Banks hold $5,685 million of ~he maturing
bills for their own accounts, which may be refunded within the
offering amount at the weighted average discount rute of accepted
competitive tenders.
Federal Reserve Banks hold $1,695 million do agents for
foreign and international monetary authorities, which may be
refunded within the offering amount at the weighted average
discount rate ot accepted competitive tenders. Additional
amounts may be issued for such acoounts if the aggregate amount
of new bids exceeds the agg!egate amount of maturing bills.
Tenders for the bills will be received at Federal
Reserve Banks and Branches and at the Bureau of the Public
Debt, Washington, D. c. This offering of Treasury securities
is governed by the terms and conditions set forth in the Uniform
Offering Circular (Jl eFR Part 356, published as a final rule on
January 5,~ 1993, and effective March 1, 1993) for the sale and
issue by the Treasury to the public of marketable Treasury bills,
notes, and bonds.
Details about each of the new securities are given in the
attached offering highlights.
000
Attachment
LB-342
HIGHLIGHTS OF TREASURY OFFERINGS OF WEEKLY BILLS
TO BE ISSUED SEPTEMBER 9, 1993
August )1,
Offering Amount .
Description of Offering:
Term and type of security
CUSIP number
...
Auction date
. . .
Issue date
Maturity date .
.
original issue date.
.
c~rrently outstanding .
.
Minimum bid amount
..
Multiples.
.... .
.
•.
..
. .
.
'rhe following rules apply to
submission of Bids:
~oncompetitive bids .
competitive bids
~ll
$11,200 million
$11,200 million
91-day bill
912794 G8 1
September 7, 199)
September 9, 1993
December 9, 1993
June 10, 1993 .
$12,085 million
$10,000
$ 1,000
182-day bill
912794 J4 7
Septemeer 7, 1993
September ~, 1993
March 10, 1994
March 11, 1993
$1-4,829 million
$10,00:)
$ 1,000
securities mentioned above:
Accepted in full up to $1,000,000 at the average
discount rate of accept,~d competitive bids
(1) Must be expressed ~,s a discount rate wi th
two decimals, e.g., 7.10%.
(2) Net long position for each bidder must be
reported when the s;um of the total bid
amount, at all discount rates, and the net
long position is $2 billion or greater.
(3) Net long position Dust be determined as of
one half-hour prior to the closing time for
receipt of competitive tenders.
Maximum Recognized Bid
at a Single Yield
J5t of public offering
Maximum Award •
35% of public offering
Receipt of Tenders:
Noncompetitive tenders
competitive tenders .
'-
Payment Terms
.
1993
Prior to 12:00 noon Eastern Daylight Saving time
on auction day
Prior to 1:00 p.m. Eastern Daylight Saving time
on ,auction day
Full payment with tender' or by charge to a
account
at
a
Federa~
Reserve
Bank
on
funds
issue de.
•
FOR IMMEDIATE RELEASE
August 31, 1993
Contact: Michelle Smith
(202) 622-2960
TREASURY PROPOSES WIRE TRANSFER REGULATIONS
The Treasury Department and the Board of Governors of the Federal Reserve System
on Tuesday proposed joint regulations requiring banks and nonbank financial institutions to
collect identifying information about wire transfers and to maintain these records for at least
five years.
Treasury also proposed a separate regulation which requires this information be
transmitted, or "travel," through payment orders to all affected financial institutions in the
funds payment process.
Ronald Noble, Assistant Secretary for Enforcement, said the proposed regulations
reflect Treasury's commitment to serve the needs of law enforcement without imposing
unnecessary burdens on the financial services industry. "We developed these regulations
with the benefit of hundreds of comments from the industry because we wanted to have
responsive, sensible and effective regulations," he said.
The proposed rules, published in the Federal Register, would apply to all financial
institutions subject to the Bank Secrecy Act (BSA) and are intended to improve the
government's ability to identify and trace transactions that may involve money laundering
and other financial crimes.
Information to be collected includes identification of the transmittor, the amount and
LB-343
(MORE)
date of each transfer, the recipient's financial institution, and the recipient's name and
address or account number, if received with the payment order.
The Annunzio-Wylie Anti-Money Laundering Act requires that certain aspects of the
joint regulations be effective by December 31, 1993. The proposed effective date for the
travel notice is one year following the publication date of a final joint rule.
While the joint notice proposes standardized recordkeeping for funds transfers by
banks and nonbank financial institutions, additional collection and verification requirements
are proposed for transactions which involve persons without an account at the financial
institution involved.
Both the joint and travel notices invite comments on all aspects of the rules by
October 4.
Both proposed rules are available by computer modem on Treasury's BSA Electronic
Bulletin Board at (313) 961-4704.
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TREASURY NEWS
Department of the Treasury
Washington, D.C.
. . . ·cn ...
ft-O
•
.....
I I
TelepllOne 202-622-2960
JEAN E. HANSON
General Counsel, Department of the Treasury
Jean E. Hanson was sworn
In
as General Counsel for the Department of the
Treasury, on June 1, 1993.
As General Counsel she furnishes legal advice to the Secretary with respect to his
responsibilities as chief financial officer of the government and as chief law officer at
Treasury. The General Counsel is the head of the Legal Division, which is composed of all
attorneys providing legal service
to
all of the Department's offices and bureaus.
From 1976 until she joined Treasury Ms. Hanson was with the law firm of Fried,
Frank, Harris, Shriver & Jacobson in New York, becoming a partner in 1983.
In 1975 to 1976 she was a law clerk with the Office of the Minnesota State Public
Defender. In 1972 to 1973 she was a probation officer in Hennepin County, Minneapolis.
She has a cum laude J.D. (1976) from the University of Minnesota and a magna cum
laude B.A. (1971) from Luther College in Decorah, Iowa.
Ms. Hanson was born on June 28, 1949 in Alexandria, Minnesota, is married to H.
Barndt Hauptfuhrer and has nine-year old twins.
-30-
FAITH SHAPIRO HOCHBERG
Deputy Assistant Secretary (Law Enforcement)
Faith Shapiro Hochberg of Short Hills, New Jersey, has been appointed Deputy
Assistant Secretary of the Treasury (Law Enforcement).
She is responsible for oversight of Treasury's law enforcement bureaus, including
the U.S. Secret Service, the Bureau of Alcohol, Tobacco and Firearms and the Customs
Service. Their activities include protecting high U.S. and visiting foreign officials, combatting
counterfeiting, trade fraud, money laundering, computer fraud and narcotics traffic,
overseeing the Federal Law Enforcement Training Center and the Financial Crimes
Enforcement Network. She also oversees the Office of Financial Enforcement, which
administers the Bank Secrecy Act.
From 1990 until appointed to her present position she was semor deputy chief
counsel in the Office of Thrift Supervision, where she created and developed an
enforcement office to combat savings and loan fraud.
From 1987 to 1990 Ms. Hochberg was a litigation partner with Cole, Schotz,
Bernstein, Meisel & Forman, P.A.
From 1983 to 1987 she was in the United States Attorney's office in New Jersey,
becoming head of the Securities Fraud Section in 1986.
Between 1977 and 19H3 she practiced with private law firms in Washington, D.C.,
New Jersey and Massachusetts. In 1976 she served as special assistant to the chairman of
the Securities and Exchange Commission in Washington, D.C.
In 1975-76 she clerked for the Honorable Spottswood W. Robinson III, United States
Court of Appeals, District of Columbia Circuit in Washington, D.C.
Ms. Hochberg is a summa cum laude graduate of Tufts University, and graduated
magna cum laude from the Harvard University Law School where she was an editor of the
Harvard Law Review. She is married to Dr. Mark S. Hochberg M.D. and has two children.
-30-
SUSAN B. LEVINE
Deputy Assistant Secretary (International Development,
Debt and Environment Policy)
Susan B. Levine was appointed Deputy Assistant Secretary for International Debt,
Development and Environment Policy on April 26, 1993.
From 1984 until she joined the Treasury Department she was with Lehman Brothers
in New York City, ultimately as a senior vice president in charge of equity private placement
in the Investment Banking Department. Before that she was part of the Global Finance
Department at Lehman Brothers. She worked on raising money for U.S. and Canadian
institutions in Japanese capital markets. She also worked to develop Lehman's business
effort in the People's Republic of China.
From 1983 to 1984 she was wi th Bank America International in New York as an
account associate marketing banking products to financial institutions in China, Taiwan and
Hong Kong.
Prior to that she held jobs with First Chicago International in New York and with the
National Geographic Society in Washington. She was an escort interpreter in Taiwan and
China for National Geographic journalists and for Chinese delegations visiting the U.S.
From 1978 to 1980 she was an associate editor for the Echo Magazine Company in
Taiwan.
Ms. Levine has an M.B.A. from the Columbia University Graduate School of
Business and a B.A. in political science from Swarthmore College. She graduated with
distinction and did substantial course work in Chinese language and Asian studies. She is
fluent in Mandarin Chinese.
Ms. Levine was horn in Cleveland. Ohio on May 8, 1956, and was raised in Fargo,
North Dakota.
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MICHAEL LEVY
Assistant Secretary (Legislative Affairs)
Michael Levy was sworn in as Assistant Secretary of the Treasury (Legislative Affairs)
on May 21, 1993.
In this position Levy advises the Secretary and all sub-Cabinet officers on
Congressional relations policy. He is the principal contact and coordinator at Treasury for
Congres~ and for Congressiv .. al relations activities at the \Vhite House and other
departments.
Prior to his nomination, Levy had been Administrative Assistant to Senator Lloyd
Bentsen from 1987 to 1993. Before that he was a staff economist on the Joint Economic
Committee for a year and a half.
Levy was an associate professor of political science for seven years at Texas A & M
University in College Station, Texas from 1978 to 1985. From 1986 to 1993 he was an
adjunct instructor at Georgetown University.
He edited with Edward Portis the The Handbook of Political Theory and Policy
Sciences in 1989 and edited in 1988 Political Thought in America: An Anthology. He wrote
a number of papers on political science subjects for scholarly magazines and conferences.
Levy received his Ph.D. in political science from Rutgers University and his B.A. in
political science from Brown University. Among awards he received was the University
Bevier fellowship, and the departmental award for the outstanding political science
dissertation at Rutgers in 1979.
Levy w,,-s born July 12, 1947, in Baltimore, Md. He and his wife, Bonny Wolf, have
a son, Jonathan Levy.
-30-
TREASURY NEWS
Department of the
Tr~.asury
Washington, D.C.
•
Telepllone 202-622-2960
DA VID A. LIPTON
Deputy Assistant Secretary (Eastern Europe
and the Former Soviet Union)
David A. Lipton was appointed Deputy Assistant Secretary for Eastern Europe and the
Former Soviet Union on June 6, 1993.
From September 1992 to May 1993, Lipton was a fellow at the Woodrow Wilson
International Center for Scholars. He worked on the economic and political consequences of the
transformation in Poland and the Soviet Union.
From 1989 to 1992 he was vice president of Jeffrey D. Sachs and Associates where he
served as a senior advisor to the governments of Russia, Poland and Slovenia, providing advice
on economic stabilization and transformation to market economies. In 1989 he also advised the
governments of Bolivia and Venezuela.
From 1981 to 1989 Lipton served on the staff of the International Monetary Fund (IMF).
As senior economist from 1987 to 1989, he analyzed economic policy making in Japan. From
1981 to 1987 he was an economist in the IMF's Exchange and Trade Relations and Western
Hemisphere Departments.
From 1990 to 1992 he was a semor fellow in the World Institute for Development
Economics Research in Helsinki. In 1990 he was a member of the Brookings Institution Panel
of Economists.
He has published articles in economic journals and delivered speeches and papers to
conferences primarily on economic reform in Russia and Eastern Europe, but also on the IMF
and the Japanese economy.
Lipton has an M.A. and a Ph.D. in economics from Harvard and a B.A. in economics
from Wesleyan, where he was elected a member of Phi Beta Kappa.
He is married to Susan Galbraith. They have two children. Lipton was born in Boston,
Massachusetts, on Nov. 9, 1953.
-30-
TREASURY NEWS
Department of the Treasury
Washington, D.C.
A
. ··~.
VI
···.·i
Telepllone 202-622-296~
ALICIA H. MUNNELL
Assistant Secretary (Economic Policy)
Alicia H. Munnell was sworn in as Assistant Secretary for Economic Policy on May
20, 1993.
In that position Ms. Munnell is a key player on the Administration's economic team.
She advises the Secretary on the economic effects of tax and budgetary policy; she develops
official economic projections; and she works closely with the Office of Management and
Budget, the Council of Economic Advisers, and other government agencies on the economic
forecasts underlying the yearly budget process.
Before joining Treasury, Ms. Munnell served as Senior Vice President and Director
of Research at the Federal Reserve Bank of Boston. At the Boston Fed, she initiated and
directed a comprehensive analysis of the extent of racial discrimination in home mortgage
lending in the Boston area. Federal regulators, community groups, and financial institutions
have used this study to focus their efforts to combat discrimination. Ms. Munnell also
conducted extensive research at the Boston Fed in the areas of tax policy, social security,
public and private pensions, and public capital spending.
Ms. Munnell is the author of a wealth of articles and books on a variety of policy
issues. Her books include The Economics of Private Pensions and The Future of Social
Security.
Among her many other affiliations, Ms. Munnell is co-founder and the first president
of the National Academy of Social Insurance. She is a member of the Institute of Medicine,
the National Academy of Public Administration, and the Pension Research Council of the
Wharton School.
Ms. Munnell earned a Ph.D. in Economics from Harvard University. She is married
to Henry Healy and has two sons, Hamilton and Clark.
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CD
DEPARTMENT OF THE TREASURY
WASHINGTON, D,C,
SAMUEL Y. SESSIONS
DEPUTY ASSISTANT SECRETARY (TAX POLICY)
Samuel Y. Sessions was appointed Deputy Assistant Secretary of the Treasury (Tax
Policy) on March 26, 1993.
He was chief tax counsel with the United States Senate Committee on Finance from
1990 to 1993. From 1988 to 1990 he was tax counsel with the Senate Finance Commitee.
From 1987 to 1988 he was a legislative assistant on Senator Lloyd Bentsen's staff.
Sessions was an assistant professor of law at the University of Missouri (Kansas City)
School of Law from 1986 to 1987. From 1982 to 1986 he was an associate at the law firm
of Cleary, Gottlieb, Steen and Hamilton in New York City.
He was Jervey Fellow in Foreign and Comparative Law at the Columbia University
School of Law where he received an LL.M. in 1981. He spent the second year of his J ervey
Program at Hamburg University in Germany in 1981-1982.
Sessions has a J.D. from the University of Virginia School of Law in 1980. He was
on the editorial board of the Virginia Law Review. In 1976-1977 he studied at EberhardKarls Universitat in Tubingen, Germany.
He received a B.A with high honors from the University of Virginia in 1976, is a Phi
Beta Kappa and was an Echols Scholar. He was born in Enterprise, Alabama on June 20,
1954.
FOR IMMEDIATE RELEASE
September 2, 1993
CONTACT: Michelle Smith
(202) 622-2960
BENTSEN, RENO NAME NEW HEAD OF INTERPOL WASHINGTON
Treasury Secretary Lloyd Bentsen and Attorney General Janet Reno on Thursday
named Shelley Altenstadter as Chief of the U.S. National Central Bureau-INTERPOL.
Altenstadter, who is the first woman law enforcement agent named director of a
federal law enforcement bureau, served for four years as Deputy Director of Treasury's
Financial Crimes Enforcement Network (FinCEN). She also was director of the Office of
Commercial Fraud Enforcement at the U.S. Customs Service from 1987-89.
Altenstadter, 44, served as the U.S. Customs Service Assistant Attache in Italy from
1984-87, where she was responsible for overseeing a wide range of criminal investigation
activity covering several countries. Before that she was the lead agent for the Financial Task
Force in Los Angeles, where she initiated, implemented and managed a multi-agency task
force.
She began her career with the Customs Service in 1975 as a Customs inspector in San
Ysidro, CA. Altenstadter in 1977 began serving as an import specialist, and from 1978-82
she was a Special Agent in the Office of Enforcement and Internal Affairs.
The U.S. National Central Bureau, or INTERPOL Washington, represents the United
States in INTERPOL, the International Criminal Police Organization. INTERPOL's purpose
is to ensure and promote the widest possible mutual assistance between all criminal police
authorities within the laws of different countries. INTERPOL Washington is a component of
the U.S. Department of Justice that serves federal and state law enforcement agencies. By
agreement, the selection of the head alternates between Treasury and Justice.
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LB-344
TREASURY NEWS
Department of the Treasury
Washington. D.C.
A.~
.
V
Telephone 202-622-2960
STATEMENT BY THE HONORABLE
LAWRENCE H. SUMMERS
UNDER SECRETARY FOR INTERNATIONAL AFFAIRS
U.S. TREASURY DEPARTMENT
BEFORE THE COMMIITEE ON FOREIGN RELATIONS
OF THE U.S. SENATE
SEPTEMBER 7, 1993
Multilateral Assistance for Russia and
the Other States of the Former Soviet Union
Introduction
Thank you Chairman Pell and Members of the Committee on Foreign Relations. It is a
pleasure to testify today on multilateral support for market reform in Russia and the other
states of the Former Soviet Union (FSU).
The transformation of the nations of the FSU to market-based democracies is the greatest
challenge of our lifetime to secure the fruits of world peace and prosperity. Integrating these
nations, with 300 million people and a vast wealth of natural resources, into the world
economy could provide an engine of growth for the next generation. The Administration is
fully committed to working closely with Congress on a bipartisan basis to ensure that we
seize this opportunity, that our assistance advances reform and that it commands the support
of the American people. As President Clinton has stated, our support for reform is not an
act of charity, it is an investment in America's future.
The Strategy of Reform
The challenge facing the nations of the FSU is unprecedented. It is not a challenge of "redevelopment" as was faced in Western Europe after World War II. Nor is it one of "underdevelopment" as is faced in African and other less developed countries.
LP-345
2
It is a problem of "mis-development." For too many years, the Soviet Union directed
excessive resources into its military industrial complex without regard to the aspirations and
needs of its people. This factor, coupled with social ownership of the means of production
and rigid price controls, led to over-industrialization, inefficiency, and a system based on
privilege, not profitability. Industry accounted for nearly half of Soviet output, in comparison
with one-fourth in the United States. For every $1 billion of GDP, the Soviet Union
consumed six times as much energy and produced 15 times more steel than in the United
States.
The multilateral strategy for support was best captured by our German colleagues at the
Munich Summit -- "Help for Self-Help." The FSU states must assume the primary
responsibility for their transformation. But support from bilateral donors and the
international financial community -- both technical assistance and financial -- is also critical.
Technical assistance plays an essential role in establishing the building blocks for a market
economy. It is at the core of our assistance efforts. But multilateral financial support has as
its chief strength the ability to leverage fundamental reform. It can energize reforming
countries in taking the necessary policy changes to facilitate stabilization and structural
reform. And it can help catalyze resources from the private sector, which is the key to the
needed long term inflow of investment, technology and know-how.
Bold reform, supported by the international financial community, is a sure-fire recipe for
success. We should bear in mind that Poland, which unshackled itself from central planning
through its "big bang" stabilization program, is this year the most rapidly growing economy in
Europe.
Russian Progress toward Reform
The battle for reform is fought every day in the FSU. We should not under-estimate the
enormous economic, social, and political complexity of the transformation. Nor should we
expect the process to proceed smoothly or to occur overnight. Rather, the transformation
will exhibit fits and starts. Success cannot be gauged by week-to-week scrutiny of economic
and political tea leaves. We are better advised to compare where we stand now, with where
we stood upon the break-up of the Soviet Union.
RU,ssia !s still at the b~g~nnin~ of its transformation. Hard work, sweat, and perseverance lies
betore It. Moreover, It IS facmg thorny difficulties at this time in formulating a coherent set
of m~croeconomic policies. Against this background, we should not overemphasize the
posItive. Nonetheless, we must also recognize that already much has been achieved in a
short span of time and that the Russian marketplace is emerging.
3
Russia freed prices on 90% of retail items and 80% of wholesale goods in January, 1992.
Now, price controls only remain for a handful of items such as energy, bread, and housing.
What is the upshot of these reforms?
o
Where price controls have been kept, problems remain. Energy use in Russia is still
highly inefficient -- opening and closing windows remains the thermostat of choice in
Moscow winters. The cheapest form of subsidized bread is available in only some
20% of Russian cities. Russia's housing stock is grossly inadequate.
o
But where prices have been liberalized, the supply of goods is greatly improved. It is
easy to forget that we used to hear about Russian citizens wasting three hours or
more per day in lines. Academic studies suggest the cost in wasted time to Russia of
long queues in 1985 alone was on the order of 5% of total income and 6% of
consumer expenditures. We no longer hear about Russian citizens complaining that
goods are not available in stores. Recent Russian reports indicate most food products
were available in more than four-fifths of surveyed cities.
o
A simple tour of Moscow streets confirms these changes. Throughout the city, small
kiosks have sprouted up, where entrepreneurs sell domestic and foreign goods at
market prices, interestingly enough, in dollars or in rubles. Now, Russian statistics
suggest street vendors account for some 8% of total retail trade. And, most retail
stores have a wide variety of high-quality goods.
Market economies can only thrive in a low inflation environment. Savings and investment
decisions hinge critically on the expected value of money. Debauching the currency is the
best way to destroy confidence in government.
o
Last year, the Russian Central Bank pumped out massive credits to Russian stateowned firms in the mistaken belief that it could boost production. Production
collapsed, reflecting the legacy of the USSR's command economy -- its tremendous
waste of resources, its excessive defense expenditure -- and the collapse in inter-state
trade. But what the Central Bank's money printing did achieve was to push Russia to
the verge of hyper-inflation. Monthly inflation in Russia reached 25 to 30% from
October 1992 through early 1993.
4
o
Russia's current inflation is still excessive, impeding development of a free market
economy, But in recent months, Russia has been pulled back from the brink of hyperinflation, Earlier this year, the Russian Finance Ministry secured the Central Bank's
agreement on restrained credit targets for the second quarter. These targets were
mel, And recently, the Finance Ministry played a key role in securing the Central
Bank's cooperation to undertake new monetary policy measures that made possible a
$ 1.5 billion IMF loan. Included among these measures, Russia raised its official
interest rate from 80% per annum toward 170%, while agreeing to tighten credit
targets for the rest of the year.
o
These measures have had positive results, showing the virtue of anti-inflationary
monetary policy. The free-fall in the ruble has stopped. The ruble, which had fallen
from 125 rubles per dollar last July to a low of Rl,115 per dollar in June of this year,
has since risen some 13% to R985. In addition, reports indicate that the Central
Bank has added some $2 billion to its reserves as the ruble has appreciated,
suggesting a reversal in the large capital flight from Russia heretofore witnessed.
Sound public finances are necessary to limit the role of government in economic life and to
curb inflation. In a country such as Russia where there is virtually no government securities
market, deficits must be financed by printing money.
o
Last year, Russia's government deficit equalled 20% of GDP, reflecting large and
wasteful subsidies, especially for imports, agriculture, and the energy sector. Some
two-thirds of the deficit was financed by foreign official inflows. External support on
this scale is simply not sustainable.
o
As we know in this country, it is not easy to pare deficits. But Russia is making some
progress, and a lower deficit should be achieved in 1993. The progress we have
witnessed is due to efforts by the Finance Ministry to cut subsidies for imports and
grains, to free coal prices, and to sequester across-the-board some 15 to 20% of
discretionary spending. The budgetary situation is highly clouded, however, influenced
by recent Parliamentary actions, a subject I will return to shortly.
Russia's privatization program has been an extraordinary success, led by the Privatization
Ministry and its energetic head, Anatoly Chubais. The pace of privatization has surpassed
even that registered in the most reform-minded Eastern European countries. And the public
strongly supports the program. It has given every citizen a direct stake in free markets by
providing each one with vouchers with which to purchase shares in privatized firms. It has
emphasized decentralization and the grass roots.
o
In 1991, virtually all small shops were state-owned. Privatization of medium and large
firms didn't begin until the very end of 1992.
5
a
Now, over 70 thousand small shops are in private hands, about one-half of all such
shops. As of end-July, nearly 3,500 thousand medium and large firms had been
privatized, accounting for over 4 million workers, or more than 5 % of the labor force.
Included among the privatized are such mega-firms as Zil (the huge automobile
manufacturer), Uralmash (heavy industry equipment), and Kalashnikov (firearms). By
end-year, one-third of the large firms will likely be in private hands.
a
The Russian Parliament has tried to stop the privatization program at every turn. But
after President Yeltsin's April referendum victory, the pace of privatization was
stepped up, and Privatization Minister Chubais has declared that the momentum for
privatization is "irreversible." Even Chubais' conservative opponents accept this
judgment. Reflecting these developments, voucher prices shot up from a low around
4,000 rubles per voucher in April before the referendum to 9,900 rubles per voucher
currently.
Multilateral Support for Russian Reform
At the turn of this year, the prospects for significant market reform in Russia seemed dim.
President Yeltsin and the Parliament were locked in an epic struggle over the reins of
economic power. True economic reform had stalled, hyper-inflation loomed large, and easy
solutions to Russia's complex problems were sought.
President Clinton's first major foreign policy initiative was to call for deepening our
engagement with Russia and Russian reformers. He challenged our allies to join us in an
effort to support those in Russia advocating democracy and market reform.
The United States can stand proud of the support we have provided and of our leadership in
mobilizing multilateral support for Russian reform. We have made a critical difference.
Our approach is based on the reality that neither the United States nor, for that matter, the
international community can rebuild Russia with aid. Rather, our support must leverage
reform. With this principle in mind, the G-7 recast its multilateral support for Russian
reform. We have attempted to offer support at each step of the reform ladder, rather than
holding back on support until Russia scales the entire wall.
In early April, the G-7 agreed on a debt rescheduling package which afforded Russia $15
billion in relief from payments that otherwise would have been due this year. This package,
which had been under negotiation since July 1992, fulfilled the 1992 Munich Summit
commitment to President Yeltsin to provide Russia with breathing space from its debts.
Then, at a historic first joint meeting of G-7 Finance and Foreign Ministers in Tokyo this
April, the 0-7 developed a $28.4 billion multilateral support package for Russian reform.
This package was specially designed to reinforce each step in the reform process.
6
First, the G-7 package included support for initial Russian steps toward stabilization. At
U.S. urging, the IMF created a new Systemic Transformation Facility (STF) to encourage
FSU nations to begin undertaking the reform measures needed to move toward full
stabilization. Many of Russia's reforms discussed above were taken in conjunction with the
IMF's initial $1.5 billion loan under the STF. Another $1.5 billion loan under the STF may
be possible.
The World Bank also pledged $1.1 billion in support for initial stabilization through import
rehabilitation loans. Last year, it approved a $600 million import rehabilitation loan for
Russia toprovide hard currency for essential imports. But by April 1993, only $100 million
had been disbursed. At the April G-7 Ministerial in Tokyo, we urged the Bank and Russia
to accelerate disbursement of this loan and to reach agreement on a second one. The first
loan has now been fully obligated and the Bank's work on the second loan is well advanced.
The second element of the G-Ts Tokyo package was support for a full stabilization program.
This element included $4.1 billion in support for a full Russian program with the IMF and
$6.0 billion in support for activation of the Russian currency stabilization fund once Russia
has demonstrated its ability to implement a tough IMF program for several months. The G7 remains fully committed to backing a full stabilization program for Russia as it takes the
necessary steps to merit this support.
The third element included support for structural reforms and essential imports.
At the April G-7 Ministerial, the World Bank expanded its pipeline for Russia to provide
support for key sectors such as energy, agriculture, private sector development and
infrastructure. Recently, the World Bank Board approved a $610 million oil rehabilitation
loan, which catalyzed additional co-financing of $420 million.
Such rehabilitation loans are among the most cost-effective we can make. Some estimates
suggest that 20% of Russia's producing oil wells are idle, simply because they need spare
parts. Oil production is down by a third from four years ago. Against this background, small
rehabilitation investments can have a quick pay-off. For example, there are estimates that a
dollar invested this summer in well rehabilitation will generate eighty cents in foreign
exchange earnings this winter alone. Others suggest one dollar invested now will generate
four dollars of return.
The World Bank is also deepening its support for privatization, the development of a social
sa~ety net, financial sector, improvement of the transportation system, and agricultural
reform.
7
Responding to a request from Russian Finance Minister Fedorov, the EBRD is working to
create a $300 million small and medium-sized enterprise fund. This multilateral fund is to
be modelled after the enterprise funds the United States has created in Eastern Europe.
Half of the financing will come from G-7 countries and the other half from the EBRD. The
fund will make very small scale loans -- perhaps up to $50,000 -- to Russian entrepreneurs
who lack start-up capital.
G-7 export credit agencies will also playa critical role in financing capital imports that are
needed to help modernize outdated production processes, especially in the energy sector.
The United States Export-Import Bank for its part has negotiated a framework for lending
up to $2 billion to Russia's oil and gas sector. The support from our Export-Import Bank
will not only help promote a more robust Russian economy, it will also boost U.S. exports
and jobs at home.
Finally, there is one aspect of G-7 support not included in the Tokyo package that I wish to
bring to your attention -- the $3 billion Special Privatization and Restructuring Program
(SPRP). The SPRP was proposed by President Clinton and endorsed by G-7 Heads of State
at the Tokyo Summit. It represents a significant initiative to advance the cause of market
reform in Russia. You have before you legislation that could permit us to contribute $125
million in bilateral grants for privatization and related technical assistance. In addition,
Eximbank will make available $250 million in export credit support.
I have already described Russia's success in privatizing large state-owned firms. But
changing ownership from public to private hands alone will not suffice. Unless privatized
firms restructure, they will continue to demand large subsidies from the government, which
are one of the root causes of Russia's inflation problem.
For restructuring to occur, however, privatized Russian firms will need capital -- both loans
and equity -- to modernize obsolete physical plants and to upgrade their production
processes. They will need technical assistance to help prepare appropriate financial
statements, business plans, and investment programs. And they will need the World Bank's
support to spin off many social burdens they now bear -- the costs of running schools, clinics,
day-care centers, worker housing, and basic sanitation services -- that are beyond their means
in making the transition to a market economy.
The SPRP is being designed to address these needs. The United States is presently leading
international negotiations among the G-7, the international institutions (the World Bank, the
EBRD, and the IFC) and the Russian Government on the design of the SPRP. We hope to
achieve international agreement on the operational structure and modalities of the SPRP
shortly.
In the coming weeks, Congress will be considering legislation that includes our contribution
to the SPRP. I strongly urge you to support this critical initiative.
8
The Current Situation
Despite these significant accomplishments, much more remains to be done. Indeed, the
battle for economic reform in Russia has now entered a new and critical phase in which
many of Russia's accomplishments on the economic front are being put at serious risk. The
momentum for Russian reform must be reinvigorated and intensified to ensure sustained
multilateral support.
o
Averting hyper-inflation in Russia is clearly a welcome development. But the current
underlying monthly inflation of 15 to 20% is simply too high. Bold measures are
needed now to achieve a decisive breakthrough to a path of sustainable low inflation.
Earlier this year, Russia agreed with the IMF on a set of fiscal and monetary policies
that would bring inflation down to 5% monthly by the end of this year. We urge
Russia to ensure that these policies are implemented.
o
But on the fiscal policy front, preliminary indications suggest the Government will face
difficulties in meeting its objective of a 1993 deficit of 10% of GDP. It is also not at
all clear that the measures recently adopted by the Cabinet will get Russia back on
track. These difficulties are being exacerbated by an anti-reformist Parliament, which
passed over 400 budget amendments that would have the effect of raising the deficit
to 25% of GOP.
o
The Central Bank's recent ruble banknote exchange may have undermined public
trust in the Government's ability to carry out stability-oriented monetary policies.
This action was undertaken without consultation of the IMF, as should have occured
when the IMF is providing financial support.
o
Russia remains in arrears to the United States and other bilateral creditor nations. It
has not moved quickly enough to sign bilateral agreements to implement April's debt
rescheduling agreement. If these debt issues are not soon resolved, Russia faces a
possible slowdown or cutoff of new credits. We strongly encourage Russia to act
urgently and expeditiously as a matter of high priority to normalize its relations with
the international financial community.
o
The battle for privatization goes on. The United States commends President Yeltsin
for his resolute defense of Russia's cutting edge privatization program.
Our task in the West in this unfolding drama is to continue to reinforce reform and its flag
bearers. If Russia proceeds along the reform path, we should be ready with our support.
But if the momentum toward reform slows, we must resist providing support that cannot be
productively used and that will put our taxpayers' money at jeopardy.
9
The Other States of the FSU
I have focussed on Russia because of its dominant position in the FSU and its impact on
reform throughout the region. But we should not, and cannot, lose sight of the other states
of the FSU.
The international community stands ready to help these countries advance through the
transformation process. Technical assistance is available to help them begin putting in place
the necessary building blocks for a market economy. The financial support of the
international financial institutions is also available for those nations that are prepared to
implement bold -- but essential --reforms.
In surveying the region, the first country I wish to highlight is Kyrgyzstan. It is a small landlocked country that is very poor. But under the bold leadership of its reform-minded
President, Askar Akayev, Kyrgyzstan has introduced its own currency and started
implementing tough fiscal and monetary policies. It is the only FSU country to have secured
IMF loans under a full stabilization program as well as loans under the STF.
Kazakhstan and Belarus are now receiving IMF support under the STF. Kazakhstan, in
particular, has perhaps the greatest potential among the FSU states to make a rapid
transformation to a strong market economy and improved living standards. It is a stable
country with vast mineral wealth and is already able to feed itself. Its leadership has shown
a genuine willingness to tackle macroeconomic imbalances, to consult closely with the IMF
and World Bank, and to encourage foreign direct investment.
The issue that stands before Kazakhstan on the road to full stabilization is whether to
introduce its own currency. So long as Kazakhstan remains in th.e ruble zone, the question of
whether it achieves low inflation will be largely determined in Moscow. If Russia stabilizes,
so will Kazakhstan. If Russia does not, neither will Kazakhstan. One central reality is clear.
If Kazakhstan wishes to control its own destiny in achieving low inflation and fully utilizing
available multilateral support, it must introduce its own currency and implement strong
stabilization policies.
Belarus has been able to maintain macroeconomic balance, in part due to continued
transfers from Russia. These transfers are now decreasing and adherence to the STF
program and further policy reform will be needed to maintain discipline. Progress on
structural reform has also not been rapid. Moldova is soon expected to have an STF
program approved by the IMF Board.
The economic situation in Ukraine is a matter of serious concern. Ukraine left the ruble
zone nearly one year ago. But its economic policies have failed to protect the new currency
and to advance necessary structural reforms. As a result, Ukraine is beginning to experience
the first stages of hyper-inflation, as evidenced by the recent collapse in its currency.
10
Turkmenistan and Uzbekistan are countries with great potential due to strong natural
resource endowments. But the movement toward reform has been gradual at best and they
have not sought to engage the IMF and World Bank in a meaningful dialogue on reform.
Other countries in the FSU, especially in the Caucasus, have been beset with domestic
instability, sharply limiting their capacity to design reforms or to carry them out.
Conclusion
The nations of the FSU are now well into the second year of their historic transformation to
free markets. Much has been accomplished in many of the countries, especially Russia, and
the results are clear. However, much more remains to be done.
The United States remains committed as one of its top foreign economic policy priorities to
supporting fundamental transformation. In Russia, a critical moment has arrived for the
battle of reform. The G-Ts multilateral support package for Russian reform has been
designed with the goal of being able to encourage Russia to pursue the path of reform in just
such an instance. We urge Russia to reinvigorate and intensify it reform process and to
secure the support of the international financial community.
We also urge the other nations of the FSU to deepen and accelerate their reform efforts,
and we urge the international financial institutions to work with these nations in intensifying
international support for market reform. Thank you.
-30-
Department of the Treas\.Iry •
FOR IMMEDIATE RELEASE
September 7, 1993
RESULTS OF TREASURY' S
AUyT.~9N·,RF (l:3.~W~\EK
BILLS
Tenders for $11,422 million of 13-week bills to be issued
September 9, 1993 and to mature December 9, 1993 were
accepted today (CUSIP: 912794G81).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
2.93%
2.95%
2.95%
Investment
Rate
2.99%
3.01%
3.01%
Price
99.259
99.254
99.254
Tenders at the high discount rate were allotted 19%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
32,571
52,120,279
5,846
31,501
84,715
25,960
3,101,420
10,376
5,368
19,285
12,586
413,833
799,700
$56,663,440
Accepted
32,571
10,127,796
5,846
31,501
36,115
23,530
275,810
10,376
5,368
19,285
12,586
41,963
799,700
$11,422,447
$51,585,795
1, 251, 225
$52,837,020
$6,344,802
1,251, 225
$7,596,027
2,884,655
2,884,655
941,765
$56,663,440
941,765
$11,422,447
Type
Competitive
Noncompetitive
Subtotal, Public
Federal Reserve
Foreign Official
Institutions
TOTALS
An additional $179,735 thousand of bills will be
issued to foreign official institutions for new cash.
LB-346
UBLIC':"DEBT NEWS
r " .'
I
.~
I
-;;
-
,
•
RESULTS OF TREASURY'S AUCTION OF 26-WEEK BILLS
Tenders for $11,249 million of 26-week bills to be issued
September 9, 1993 and to mature March 10, 1994 were
accepted tOday (CUSIP: 912794J47).
RANGE OF ACCEPTED
COMPETITIVE BIDS:
Low
High
Average
Discount
Rate
3.01%
3.03%
3.03%
Investment
Rate
3.10%
3.12%
3.12%
Price
98.478
98.468
98.468
Tenders at the high discount rate were allotted 56%.
The investment rate is the equivalent coupon-issue yield.
TENDERS RECEIVED AND ACCEPTED (in thousands)
Location
Boston
New York
Philadelphia
Cleveland
Richmond
Atlanta
Chicago
St. Louis
Minneapolis
Kansas City
Dallas
San Francisco
Treasury
TOTALS
Received
33,599
43,460,629
9,034
26,342
91,228
33,976
2,077,965
10,626
9,412
20,454
6,890
687,203
580,681
$47,048,039
Accepted
33,599
10,131,318
9,034
26,342
49,228
30,096
192,465
10,626
9,412
20,454
6,890
149,203
580,681
$11,249,348
$42,735,835
952,669
$43,688,504
$6,937,144
952,669
$7,889,813
2,800,000
2,800,000
559,535
$47,048,039
559,535
$11,249,348
Type
Competitive
Noncompetitive
Subtotal, Public
Federal Reserve
Foreign Official
Institutions
TOTALS
An additional $106,765 thousand of bills will be
issued to foreign official institutions for new cash.
LB-347
('
FOR RELEASE AT 2:30 P.M.
September 7, 1993
JEf'
C~~~k'l'AtrJ: 7 :Pff ice
of Financing
202/219-3350
TREASURY'S vtEEK"L'y' inLL. O'FFERING
The Treasury will auction two series of Treasury bills
totaling approximately $22,400 million, to be issued September
16, 1993. This offering will result in a paydown for the
Treasury of about $1,275 million, as the maturing weekly bills
are outstanding in the amount of $23,668 million.
Federal Reserve Banks hold $5,497 million of the maturing
bills for their own accounts, which may be refunded within the
offering amount at the weighted average discount rate of accepted
competitive tenders.
Federal Reserve Banks hold $2,076 million as agents for
foreign and international monetary authorities, which may be
refunded within the offering amount at the weighted average
discount rate of accepted competitive tenders.
Additional
amounts may be issued for such accounts if the aggregate amount
of new bids exceeds the aggregate amount of maturing bills.
Tenders for the bills will be received at Federal
Reserve Banks and Branches and at the Bureau of the Public
Debt, Washington, D. C.
This offering of Treasury securities
is governed by the terms and conditions set forth in the Uniform
Offering Circular (31 CFR Part 356, published as a final rule on
January 5, 1993, and effective March 1, 1993) for the sale and
issue by the Treasury to the public of marketable Treasury bills,
notes, and bonds.
Details about each of the new securities are given in the
attached offering highlights.
000
Attachment
LB-)41~8----------------
HIGHLIGHTS OF TREASURY OFFERINGS OF WEEKLY BILLS
TO BE ISSUED SEPTEMBER 16, 1993
September 7, 1993
Offering Amount .
$11,200 million
$11,200 million
Description of Offering:
Term and type of security
CUSIP number
Auction date
Issue date
Maturity date
original issue date
Currently outstanding
Minimum bid amount
Multiples .
91-day bill
912794 E6 7
September 13, 1993
September 16, 1993
December 16, 1993
December 17, 1992
$26,806 million
$10,000
$ 1,000
182-day bill
912794 J5 4
September 13, 1993
September 16, 1993
March 17, 1994
September 16, 1993
$10,000
$ 1,000
The following rules apply to all securities mentioned above:
Submission of Bids:
Noncompetitive bids
Accepted in full up to $1,000,000 at the average
discount rate of accepted competitive bids
competitive bids
(1) Must be expressed as a discount rate with
two decimals, e.g., 7.10%.
(2) Net long position for each bidder must be
reported when the sum of the total bid
amount, at all discount rates, and the net
long position is $2 billion or greater.
(3) Net long position must be determined as of
one half-hour prior to the closing time for
receipt of competitive tenders.
Maximum Recognized Bid
at a Single Yield
35% of pUblic offering
Maximum Award .
35% of pUblic offering
Receipt of Tenders:
Noncompetitive tenders
Competitive tenders
Payment Terms .
Prior to 12:00 noon Eastern Daylight saving time
on auction day
Prior to 1:00 p.m. Eastern Daylight Saving time
on auction day
Full payment with tender or by charge to a funds
account at a Federal Reserve Bank on issue date
· Dcoartmcnt of the Treasury • Bureau ofth~ Pubijc Oebt • Washington, DC 20239
~EI
U ~~
FOR RELEASE AT 3 :00 PM
September i. 1993
1..1 u
J "i 8 I
Contact: Pete: Holienoacn
.." ., \. 1202; 219-3302
.J
I
I ~ 1:"'_
.,'
~ ;
PUBUC DEBT ANNOUNCES ACTMTY FOR
SECURITIES IN THE STRIPS PROGRAM: FOR AUGUST 1993
Treasury's Bureau of the Public Debt announced activity figures for the month of August 1993, of
securities within the Se~arate Trading of Registered Interest and Princioal of Securities ~rogram
:STRIPS).
::)ollar Amounts :r.
~ousands
Principal Outstanding
(Eligible Securities)
$724. i40.321
Held in _Unstripped Fonn
$520.208,255
Held in $tripped Form
$204 .532,066
Reconstituted in August
$17,482,200
The accompanying table gives a breakdown of STRIPS activity by individual loan description. The
balances in this table are subject to audit and subsequent revision. These monthly figures are
included in Table VI of the Monthly Statement of the Public Debt, entitled "Holdings of Treasury
Securities in Stripped Fonn. n
Infonnation about "Holdings of Treasury Securities in Stripped Fonn" is now available on the
Department of Commerce's Economic Bulletin Board (EBB). The EBB, which can be accessed
using persoruu computers, is an inexpensive service provided by the Department of Commerce.
For more information concerning this service call 202-482-1986.
000
PA-129
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TABU V1-HOLDINGS OF TREASURY SECURmES IN STRIPPED FORM, AUGUST 31, 1t13-Continued
(In thouunds)
I'
Poroon Held on
MaluntY Dale
unstnppe(l Form
•
~
8.... Bono 2022
11 15.22
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204 .532066 II
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"E "ectl'o'e May' 1 1987 seo..tTtes hetd In strIPPed torm were etI(Jlble for reconstrtutlon to then unstnpped torm
• ;ole On !he 4th wOO<dav O' eaCh month Tat>Ie VI WII' Oe aV8J<aOIe ahe< 3 00 pm eastern "me on tne Commerce Departmenl s EconorT1lC Bulletin Board (EBS) The tetepnone number tor more 1II1ormabOn
aoout EBB '5 1202\ 482·'986 The DaJanceS In IhlS taDle are suo.ect to audrt and suosequent adlustments
Statement
of the
Honorable Frank N. Newman
Under Secretary of the Treasury
before the
Senate Committee on Banking, Housing and Urban Affairs
September 8, 1993
Mr. Chairman and members of the Committee, I am pleased to appear before you
today, joining Secretary Cisneros, to discuss further the Administration's program to
assist community development financial institutions. Thanks in part to our common
efforts these nontraditional financial institutions are widely recognized as having an
important part to play in revitalizing economically distressed areas of our country.
Community development financial institutions are driven by public purposes and
social values, as well as traditional marketplace factors. They specialize in providing
capital, credit, and other financial services to distressed communities and populations.
And a large part of their mission involves developing human capital through technical
assistance and other means intended to promote community self-sufficiency.
LB-349
2
The Administration's community development bank program seeks to strengthen
non-traditional financial institution,> that have long worked to promote community
d~wlopm~nt.
I. Principles Underlying the Administration's Proposal
The best starting point for di,>cussing our program is to review the principles that
have guided the Administration I n this effort. Secretary Bentsen outlined these
principles in testimony before this Committee on July 15, 1993. First, use private capital
to
leverage any Federal funds provided. Second, give preference to those institutions
that can become self-sustaining. Third, allow program managers the flexibility needed to
experiment and develop the most effective programs. Fourth, have the program
administered by a separate agency with dedicated funding and a primary focus on
revitalizing distressed areas. Fifth, view community development banks as a supplement
to, and not a substitute for, active community lending by institutions subject to the eRA.
Pri\ale Capital
The success of the community development financial institutions initiative will, to
J
significant extent. depend on attracting private capital to the effort. Private capital will
Ie\erage the assistance prmided by the Fund. and thereby amplify CDFIs' overall
3
lending capacity. And raising private capital provides a form of market discipline,
requiring any given CDFI
to
demonstrate its effectiveness and financial viability to
prospective donors and investors.
Self-Sustaining Institutions
This program focuses on establishing and strengthening financial intermediaries
that have a good chance of becoming self-sustaining. In view of the numerous and
conflicting demands for scarce public resources, one cannot realistically expect the
program to serve as the primary, permanent source of funding for non-traditional
lenders. Nor would one make optimal use of these scarce resources if this program
became another source of Federal dollars for state and local governments, much less if
those governments could simply repackage their existing efforts. To the maximum extent
possible, we want to support those community development financial institutions adept at
securing long-term, non-governmental equity and working capital.
Independent Administration
We think the community development initiative is too important simply to be
added to some government agency's long list of other responsibilities. A separate entity
has the best chance of dedicating its full-time energy and resources to the task of
4
community development, while serving as an institutional voice and focal point for the
concerns of the parties affected.
Management Flexibilit)
In managing the program, the new agency will need flexibility precisely because
the program is new and innovative. One cannot say with certainty and in detail what will
work and what will not. Hence we generally believe it best to have statutory operating
guidelines govern the provision of assistanct! rather than rigid, mandatory requirements.
II. Major Provisions of S. 1275
The Administratiun's program would support a wide variety of community
development financial instItutions. Those institutions' primary mission would be to
provide lending, e4uity investment, and development services to targeted areas and
populations. The core of the program involves establishing a Community Development
Banking and Financial Institutions Fund (the Fund) to provide financial and technical
assistance to newly establ ished and existing CDFIs.l The Administration is requesting
$3~2
million through FY 1.)7
to
support the Fund.
To qualify for assistance a CDFr must have as its primary
mission providing capital, credit, or development services in
investment areas or to populations that are low-income, or
disadvantaged and underserved by existing financial institutions.
The CDFr must also encourage community input through
representation on its governing board or otherwise.
5
The criteria for awarding assistance give priority to applicants that: (1) are likely
to become self-sustaining; (2) provide a broad array of services; (3) serve targeted areas
or populations of greatest need; (4) provide significant broad-based benefits; (5)
demonstrate community support and involve the community in governance; and (6) show
legally enforceable matching commitments.
The Fund could provide qualified CDFIs a wide range of assistance in the form of
equity investments, loans, deposits or credit union shares, grants, and technical assistance
(including training). Through such assistance the Fund could support the formation of
new institutions and could enable existing institutions to expand their current activities.
Any equity investment must be structured so that the Fund does not control the assisted
institution. Limits are placed on the amounts of assistance CDFIs may receive from the
Fund and matching requirements apply.2 Moreover, assistance may be used only for
activities consistent with the purposes of the Act.
2
The Fund may provide up to $5 million of assistance per
application to anyone qualified insured depository COFI and up
to $2 million per application to any other qualified COFI.
Moreover, insured depository COFls must match Fund assistance
with at least one dollar of private money for each dollar
received from the Fund; the Board will determine matching
requirements for other CDFls.
CDFls are not required to match
technical assistance; and insured depository COFIs need not match
assistance in the form of deposits or credit union shares of
$100,000 or less.
b
III. Comments on Certain Outstanding Issues
A numher of
que~tions
and issues have heen raised since the President announced
this program on July 15, and I would like
to
take this opportunity to discuss some of
these issues. Most important among the latter are (1) the program's relationship to
CRA, (2) the program's relationship to the Bank Enterprise Act, (3) the role of
commercial banks, and (4) the governance of the Fund.
Relationship to Community Reinvestment Act
Some hankers and others have advocated giving banks that invest in community
development financial institutions a safe harbor from CRA challenges, or the same CRA
rating as the CDFI they invest in. However, we view the CDFI initiative as
complementary
to
the CRA, and not as a trade-off for CRA ohligations. While the CRA
requires hanks and thrifts to help meet the credit needs of the entire community in
which they do business, the primary market of the typical bank or thrift remains
mainstream America, not distressed America.
To make the CRA more responsive to the needs of low- and moderate-income
populations. some revisions ill its implementation are required. The current CRA system
relies too heavily on documentation rather than actual performance. Accordingly, the
President has requested that the four bank regulators issue, by the beginning of next
7
year, new CRA regulations emphasizing actual performance in providing lending,
investment, and banking services to low- and moderate-income people.
On balance, CRA reform should extend banks' activities deeper into needy sectors
01 their communities, while, at the same time, the CDFI program strengthens nontraditional lenders, helping to bring distressed communities more into mainstream
America.
Relationship to Bank Enterprise Act
Some members of the Committee have expressed an interest in using the Bank
Enterprise Act to promote community lending. In brief, the Act would reduce deposit
insurance premiums for institutions that make qualified loans and investments in
distressed communities. A Community Enterprise Assessment Credit Board would
determine the amount of money necessary to provide credits that will induce the desired
loans and investments.
We are looking carefully at the steps necessary to implement the BEA, including
planning how it would operate and determining what it could achieve in a reasonable
period of time. We intend to have more specifics to share with you later.
Role or Commercial Banks
Many bankers and others have advocated expanding the eligibility of institutions
that may receive funding under the CDFI program to include commercial banks whose
primary mission is nut prul11uting cummunity L1evelopment. We find this argument
L1ifficult
to
accept for a number of reasons.
The primary intent of the CDFI program is to provide assistance to nontraditional lenders that have long had a primary mission of providing capital, credit, and
other financial services
to
underserved populations and distressed areas. With funding
for the program limited, we believe it is important that the program focus on institutions
whose primary purpose is community development.
Also, lenders that do not have community development as their primary mission
may still take advantage of other puhlic sector programs designed to promote community
development through
~mall husine~:-.
amJ affordahle housing financing. Included among
these are SBA loan guarantees, low income housing tax credits, HUD loan guarantees
for community development activities, and various affordable housing programs, which
Secretary Cisneros is making more effective, among others.
9
Finally, commercial hanks' financial capacity to support community development
has seldom been greater. Banks as a group have returned to robust financial health
following the difficulties of the past decade.'
Governance of the Fund
The Banking Committee's staff asked us
the governance of the Fund.
to
comment on an alternative model for
Under the alternative, the Fund would be headed by a
single Administrator, similar to the Administrator of the Small Business Administration.
The Administrator would be appointed hy the President, with the advice and consent of
the Senate. The Administrator would work with a 1S-member Community Development
Advisory Board, consisting of the Secretaries of Agriculture, Commerce, Housing and
Urhan Development, and Treasury; the Administrator of the Small Business
Administration; and 10 private citizens, with relevant knowledge and experience,
appointed by the President.
The FDIC reports that commercial bank net income for the
first quarter 1993 reached a record high $10.9 billion; average
ROA rose to 1.24 percent; ROE reached a record 16.2 percent; and
equity capital registered its largest quarterly increase since
1973 -- up $10.1 billion to 7.8 percent of total assets.
According to the FDIC, the improvement in profitability was
widespread:
banks in all six regions of the country and in all
four size groups had ROA averages exceeding 1 percent.
3
10
Thi~
structure, although different from that originally proposed by the
Administration, accords with our objectives. The Fund remains a separate agency within
the Executive Branch. The advisory board would provide the Fund with a balance of
viewpoints between public and private interests. Because there would be fewer
individuals involved in the direct management of the Fund, the alternative structure
might reduce the Fund's administrative expenses without compromising major goals.
IV. Conclusion
As Secretary Benhen noted in his testimony before this Committee in July,
c~tablishing
a separate entity
focu~ed
on community development financing would
constitute an important step in responding to a demonstrable and critical need in
distressed communities. This Administration is committed to empowering communities
and individuals to help themselves. This legislation will help to turn that commitment
into action.
Mr. Chairman, I want
to
take this opportunity to commend you, Senator
D'Amato, and other members of the Committee for the seriousness and energy you are
bringing
to
this effort. I want to assure you that the Administration looks forward to
\" orking with you
to
achieve our common objectives on a timely basis.
I would be pleased to respond
to
any questions you might have.
-30-
FROM RED TAPE TO RESULTS
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FROM RED TAPE TO RESULTS
CREATING A
GOVERNMENT
THAT
WORKS BETTER
& CoSTS LESS
Report of
the National
Performance Review
Vice President AI Gore
September 7, 1993
For oaIe by the U.S. Government Printing Office
Superintendent of Document.e. Mail Stop: SSOP. Wuhington. DC 20402-9328
:~:
THE VICE PRESIDENT
WASHINGTON
September 7, 1993
The President
The White House
Washington, DC
Dear Mr. President,
The National Performance Review, the intensive, 6-month study of the
federal government that you requested, has completed its work. This report
represents the beginning of what must be, and - with your leadership will be, a long-term commitment to change. The title of this report reflects
our goals: moving from red tape to results to create a government that works
better and costs less.
Many talented federal employees contributed to this report, bringing
their experience and insight to a difficult and urgent task. We sought ideas
and advice from all across America: from other federal workers, from state
and local government officials, from management experts, from business
leaders, and from private citizens eager for change. This report benefitted
greatly from their involvement. and we intend for them to benefit from the
reforms we are proposing here.
It is your vision of a government that works for people. cleared of
useless bureaucracy and waste and freed from red tape and senseless rules.
that continues to be the catalyst for our efforts. We present this report to you
confident that it will provide an effective and innovative plan to make that
vision a reality.
Sincerely.
!1tA
Al Gore
Vice President
CONTENTS
PREFACE ......................................................................................................................... i
INTRODUCTION ............................................................................................................. 1
Chapter 1 CUTTING
RED TAPE..... !!
STEP 1: STREAMLINING THE BUDGET PROCESS ..................................................................................... 14
STEP 2: DECENTRALIZING PERSONNEL POLICY ...................................................................................... 20
STEP 3: STREAMLINING PROCUREMENT .....•......................................................•.................................... 26
STEP 4: REORIENTING THE INSPECTORS GENERAL ................................................................................ 31
STEP 5: ELIMINATING REGULATORY OVERKILL ...................................................................................... 32
STEP 6: EMPOWER STATE AND LOCAL GOVERNMENTS .......................................................................... 35
CONCLUSION ........................................................................................................................................ 41
Chapter 2 PUTTING
CUSTOMERS FIRST ..... 43
STEP 1: GIVING CUSTOMERS A VOICE-AND A CHOICE ...................................................................... 44
STEP 2: MAKING SERVICE ORGANIZATIONS COMPETE ........................................................................... 54
STEP 3: CREATING MARKET DYNAMICS ................................................................................................. 60
STEP 4: USING MARKET MECHANISMS To SOLVE PROBLEMS ................................................................. 62
CONCLUSION ........................................................................................................................................ 64
Chapter 3 EMPOWERING EMPLOYEES To
GET RESULTS ..... 65
STEP 1: DECENTRALIZING DECISIONMAKING POWER ............................................................................ 69
STEP 2: HOLD ALL FEDERAL EMPLOYEES ACCOUNTABLE FOR RESULTS .................................................. 72
STEP 3: GIVING FEDERAL WORKERS THE TOOLS THEY NEED To Do THEIR JOBS ............................... 77
STEP 4: ENHANCING THE QUALITY OF WORKLIFE ............................................................................... 84
STEP 5: FORMING A LABOR-MANAGEMENT PARTNERSHIP ..................................................................... 87
STEP 6: EXERT LEADERSHIP ................................................................................................................... 88
CONCLUSION ........................................................................................................................................ 91
Chapter 4 CUTTING
BACK
To BASICS ..... 93
STEP 1: ELIMINATE WHAT WE DON'T NEED ........................................................................................ 94
STEP 2: COLLECTING MORE ................................................................................................................ 104
STEP 3: INVESTING IN GREATER PRODUCTIVITY ................................................................................... 110
STEP 4: REENGINEERING PROGRAMS To CUT COSTS ........................................................................... 112
CONCLUSION ....................................................................................................................................... 120
CONCLUSION ................................................................................................................................... 121
ENDNOTES .................................................................................................... :.................................. 125
APPENDIX A: NATIONAL PERFORMANCE REvIEW
MAJOR RECOMMENDATIONS By AGENCY.......................................................... 133
ApPENDIX B: NATIONAL PERFORMANCE REvIEW SUMMARY OF SAVINGS ............................. 155
APPENDIX C: NATIONAL PERFORMANCE REVIEW
MAJOR RECOMMENDATIONS AFFECTING GOVERNMENTAl SYSTEMS .......... 159
PREFACE
we can no longer afford to pay more flr-and get lessfrom~ur government. The answer for
every problem cannot always be another program or more money. It is time to radicaUy
change the way the government operates-to shift.from top-down bureaucracy to entrepreneurial
government that empowers citizens and communities to change our country.from the bottom up.
we must reward the people and ideas that work and get rid o/those that don't.
Bill Ointon and AI Gore
Putting People Fiml
he National Performance
R~~isaboutchange-
historic change--in the
way the government
works. The Clinton
administration believes it is
time for a n~ customer service contract
with the American people, a n~ guarantee
of effective, efficient, and responsive
government. As our title makes clear, the
National Performance Revi~ is about
moving from red tape to results to create a
government that works better and COSts less.
These are our twin missions: to make
government work better and cost less. The
President has already addressed the federal
deficit with the largest deficit reduction
package in history. The National
Performance Revi~ can reduce the deficit
further, but it is not just about cutting
spending. It is also about dosing the trust
deficit: proving to the American people that
their taX dollars will be treated with respect
for the hard work that earned them. We are
taking action to put America's house in
order.
The National Performance Revi~ began
on March 3, 1993, when President Clinton
announced a 6-month revi~ of the federal
government and asked me to lead the
effon. We organized a team of experienced
federal employees from all comers of the
government-a marked change from past
efforts, which relied on outsiders.
We turned to the people who know
government best-who know what works,
what doesn't, and how things ought to be
changed. We organized these people into a
series of teams, to examine both agencies
and cross-cutting systems, such as
budgeting, procurement, and personnel.
The President also asked all cabinet
members to create Reinvention Teams to
lead transformations at their depanments,
and Reinvention Laboratories, to begin
experimenting with n~ ways of doing
business. Thousands of federal employees
joined these two efforts.
But the National Performance Revi~
did not stop there. From the beginning, I
wanted to hear from as many Americans as
possible. I spoke with federal employees at
every major agency and at federal centers
across the country-seeking their ideas,
their input, and their inspiration. I visited
programs that work: a Miami school that
also serves as a community center, a
Minnesota pilot program that provides
FRO~I RED TAPE TO RESl'LTS • CREATIC\G A GOVERNMENT THAT WORKS BETTER & COSTS LESS
benefits more efficiently by using
technology and debit cards, a Chicago
neighborhood that has put community
policing to work, a U.S. Air Force base that
has made quality management a way of life.
We also heard from citizens all across
America, in more than 30,000 letters and
phone calls. We sought the views of
hundreds of different organizations, large
and small. We learned from the experience
of state and local leaders who have
restructured their organizations. And we
listened to business leaders who have used
innm'atiye management practices to turn
their companies around.
At a national conference in Tennessee,
we brought together experts to explore how
best to apply the principles of reinventing
government to improving family services.
In Philadelphia's Independence Square,
where our gm"ernment was born, we
gathered fo~r a day-Ion av "Reinventinav
Go'"ernment Summit" with the best minds
L
II
•
from business, government, and the
academic community.
This report is the first product of our
effortS. It describes roughly 100 of our most
important actions and recommendations,
while hundreds more are listed in the
appendices at the end of this report. In the
coming months, we will publish additional
information providing more detail on
those recommendations.
This report represents the beginning of
what will be-what must be-an ongoing
commitment to change. It includes actions
that will be taken now, bv directive of the
President; actions that will be taken by the
cabinet secretaries and agency heads; and
recommendations for congressional action.
The National Performance Review
focused primarily on how government
should work, not on what it should do.
Our job was to improve performance in
areas where policymakers had already
decided government should playa role.
PREFACE
We examined every cabinet depanment
and 10 agencies. At two depanments,
Defense and Health and Human Services,
our work paralleled other large-scale reviews
already under way. Defense had launched a
Bottom-Up Review to meet the President's
1994-1997 spending reduction target. In
addition, comprehensive health and welfare
reform taSk forces had been established to
make large-scale changes in significant
parts of Health and Human Services.
Nevertheless, we made additional
recommendations in both these
deparunents and passed other findings on
to the relevant taSk force for review.
The National Performance Review
recommendations, if enacted, would
produce savings of $1 08.0 billion over 5
years. As the table below indicates, $37
billion of these savings come from specific
changes proposed in the agencies and
deparunents of the government.
We also expect that the reinventions we
propose will allow us to reduce the size of
the civilian, non-postal workforce by 12
percent over the next 5 years. This will
bring the federal workforce below two
million employees for the first time since
1967. This reduction in the workforce will
total 252,000 positions-152,000 over and
above the 100,000 already promised by
President Clinton.
Most of the personnel reductions will be
concentrated in the structures of overcontrol and micromanagement that now
bind the federal government: supervisors,
headquarters staffs, personnel specialists,
budget analysts, procurement specialists,
accountants, and auditors. These central
control structures not only stifle the
Clinton/Gore NPR Savings
(FY-1995-1999 $ in Billions)
AGENCIES
36.4
STREAMUNING THE BUREAUCRACY
THROUGH REENGINEERING
40.4
PROCUREMENT
22.5
5% annual savings in total
procurement spending
INFORMATION TECHNOLOGY
5.4
Savings due to consolidation and
modernization of the information
infrastructure
3.3
INTERGOVERNMENTAL
Offer fee-For-service option in lieu
of existing administrative costs
TOTAL
108.0
(For a fuller description see Appendix A andAppmdix B.)
111
FROM RED TAPE TO RESellS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
creativiry of line managers and workers,
they consume billions per year in salary,
benefits, and administrative costs.
Additional personnel cuts will result as each
agency reengineers its basic work processes
to achieve higher productiviry at lower
coru-eliminating unnecessary layers of
management and nonessential staff.
We will accomplish as much of this as
possible through anrition, early retirement,
and a time-limited program of cash
incentives to leave federal service. If an
employee whose job is eliminated cannot
take early retirement and electS not to take a
cash incentive to leave government service,
we will help that employee find another job
offer through out-placement assistance.
In addition to savings from the agencies
and savings in personnel we expect that
systematic reform of the procurement
process should reduce the cost of everything
the government buys. Our antiquated
procurement system COSts the government
in two ways: first, we pay for all the
bureaucracy we have created to buy things,
and second, manufacturers build the price
of dealing with this bureaucracy into the
prices they charge us. If we reform the
procurement system, we should be able to
save $22 billion over 5 years.
As everyone knows, the computer
revolution allows us to do things f.Jsrer
and more cheaply than we ever have
before. Savings due to consolidation and
modernization of the information
infrastrucrure amount to $5.4 billion over
5 years.
Finally, by simplifying paperwork and
reducing administrative costs, we expect to
save $3.3 billion over 5 years in the cost of
IV
administering grant programs to state and
local governments.
Many of the spending cuts we propose
can be done by simplifYing the internal
organization of our deparunents and
agencies. Others will require legislation. We
recognize that there is broad support in
Congress for both spending CUts and
government reforms, and we look forward
to working with Congress to pass this
package of recommendations. As President
Clinton said when he announced the
National Performance Review:
This performance review is not about
politics. Programs passed by both
Democratic presidents and Republican
presidents, voted on by members of
Congress ofboth parties, and supported
by the American people at the time, are
being undermined by an inefficient and
outdated bureaucracy, and by our huge
debt. For too long the basic fonctioning
ofthe government has gone unexamined
we want to make improving the way
government does business a permanent
part ofhow government works, regardless
ofwhich party is in power.
We have not a moment to lose. President
Kennedy once told a story about a French
general who asked his gardener to plant a
tree. "Oh, this tree grows slowly," the
gardener said. "It won't mature for a
hundred years."
"Then there's no time to lose," the
general answered. "Plant it this afternoon."
AI Gore
Vice President of the United States
INTRODUCTION
t,
Our goal is to make the entire federal government both less expensive and more efficien
and to change the culture ofour national bureaucracy away from complacency
and entitlement toward initiative and empowerment. ~ intend to redesign,
to reinvent, to reinvigorate the entire national government. "
President Bill Clinton
Remarks annou ncing the National Performance Review
March 3, 1993
ublic confid ence in the
federal gover nment has never
been lower. The average
Ameri can believes we waste
48 cents of every tax dollar.
Five of every six want
"funda menta l chang e" in Washi ngton.
Only 20 percen t of Ameri cans trust the
federal gover nment to do the right thing
most of the time- down from 76 percen t
30 years ago. 1
We aU know why. Washington's failures
are large and obvious. For a decade, the
deficit has run out of control. The national
debt now exceeds $4 trillio n-$16 ,600 for
every man, woma n, and child in America.
But the deficit is only the tip of the
iceberg. Below the surface, Americans
believe, lies enorm ous unseen waste. The
Defense Depar tment owns more than $40
2
billion in unnecessary supplies. The
Internal Revenue Service struggles to collect
billions in unpaid bills. A centur y after
industry replaced farming as America's
principal business, the Agriculture
Depar tment still operates more than 12,000
field service offices, an average of nearly 4
for every county in the nation -rural ,
urban, or suburban. The federal
govern ment seems unable to aband on the
obsolete. It knows how to add, but not to
subtract.
And yet, waste is not the only problem.
The federal government is not simply
broke; it is broken. Ineffective regulation of
the financial industry brought us the savings
and loan debacle. Ineffective education and
training programs jeopardize our
competitive edge. Ineffective welfare and
housing programs undermine our families
and cities.
We spend $25 billion a year on welfare,
$27 billion on food stamps, and $13 billion
on public housi ng-ye t more Americans
3
faU into poverty every year. We spend $12
billion a year waging war on drugs -yet see
few signs of victory. We fund 150 different
employment and training progra ms--y et
the average American has no idea where to
get job training, and the skills of our
workforce faU further behind those of our
competitors. 4
It is almost as if federal programs were
designed not to work. In truth, few are
"designed" at aU; the legislative process
simply churns them out, one after another,
year after year. It's little wonder that when
asked if "government always manages to
mess thinf up," two-thirds of Americans
say "yes."
1
FROM RED TArE TO RESVlTS • CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
To borrow the words of a recent
Brookings Institution book, we suffer not
only a budget deficit but a performance
deficit. 6 Indeed, public opinion expertS
argue that we are suffering the deepest crisis
of faith in government in our lifetimes. In
past crises--Watergate or the Vietnam War,
for example-Americans doubted their
leaders on moral or ideological grounds.
They felt their government was deceiving
them or failing to represent their values.
Today's crisis is different: people simply feel
that government doesn't work"?
In Washington, debate rarely focuses on
the performance deficit. Our leaders spend
most of their time debating policy issues.
But if the vehicle designed to carry out
policy is broken, new policies won't take us
anywhere. If the car won't run, it hardly
matters where we point it; we won't get
there. Today, the central issue we face is not
what government does, but how it works.
We need afedera/ government that delivers
more for less. ~ need a federal government
that treats its taxpayers as ifthey were
customers and treats taxpayer dollars with
respect for the sweat and sacrifice that earned
them.
Vice Praident AI Gore
May 24,1993
We have spent too much money for
programs that don't work. It's time to make
our government work for the people, learn
to do more with less, and treat taxpayers like
customers.
President Clinton created the National
Performance Review to do just that. In
this report we make hundreds of
recommendations for actions that, if
implemented, will revolutionize the way
the federal government does business.
They will reduce waste, eliminate
unneeded bureaucracy, improve service to
,
taxpayers, and create a leaner but more
productive government. As noted in the
preface, they can save $108 billion over 5
years if those which will be enacted by the
President and his cabinet are added to those
we propose for enactment by Congress.
Some of these proposals can be enacted by
the President and his cabinet, others will
require legislative action. We are going to
fight for these changes. We are determined
to create a government that works better
and costs less.
A Cure Worse Than The Disease
Government is not alone in its troubles.
As the Industrial Era has given way to the
Information Age, institutions-bom public
and private-have come face to face with
obsolescence. The past decade has witnessed
profound restructuring: In the 1980s, major
American corporations reinvented
themselves; in the 1990s, governments are
struggling to do the same.
In recent years, our national leaders
responded to the growing crisis with
traditional medicine. They blamed the
bureaucrats. They railed against "fraud.
waste. and abuse." And they slapped ever
more controls on the bureaucracy to
prevent It.
But the cure has become indistinguishable from the disease. The problem is not
lazy or incompetent people; it is red tape
and regulation so suffocating that they stifle
every ounce of creativity. No one would
offer a drowning man a drink of water. And
yet. for more than a decade, we have added
red tape to a system already strangling in it.
The federal government is filled with
good people trapped in bad systems: budget
systems, personnel systems, procurement
systems, financial management systems,
information systems. When we blame the
people and impose more controls. we make
the systems worse. Over the past 15 years.
for example, Congress has created within
each agency an independent office of the
inspector general. The idea was to root out
fraud, waste, and abuse. The inspectors
INTRODUcnON
general have certainly uncovered imponant
problems. But as we learned in conversation
after conversation, they have so intimidated
federal employees that many are now afraid
to deviate even slightly from standard
operating procedure.
Yet innovation, by its nature, requires
deviation. Unfortunately, faced with so
many controls, many employees have
simply given up. They do everything by the
book-whether it makes sense or not. They
fill out forms that should never have been
created, follow rules that should never have
been imposed, and prepare reports that
serve no purpose-and are often never even
read. In the name of controlling waste, we
have created paralyzing inefficiency. It's time
we found a way to get rid of waste and
encourage efficiency.
The Root Problem:
Industrial-Era Bureaucracies
in an Infonnation Age
Is government inherently incompetent?
Absolutely not. Are federal agencies filled
with incompetent people? No. The
problem is much deeper: Washington is
filled with organizations designed for an
environment that no longer exists-bureaucracies so big and wasteful they can
no longer serve the American people.
From the 1930s through the 1960s,
we built large, top-down, centralized
bureaucracies to do the public's business.
They were patterned after the corporate
structures of the age: hierarchical
bureaucracies in which tasks were broken
into simple pans, each the responsibility of
a different layer of employees, each defined
by specific rules and regulations. With
their rigid preoccupation with standard
operating procedure, their vertical chains of
command, and their standardized services,
these bureaucracies were steady-but slow
and cumbersome. And in today's world of
rapid change, lightning-quick information
technologies, tough global competition, and
demanding customers, large, top-down
bureaucracies-public or private-don't
Our people, ofcourse, work hardfor their
money.... They want quality in the cars they
buy. They want quality in their local schools.
And they want quality in their federal
government and in ftderal programs.
Senator John Glenn
Remarks introducing a hearing
on federal planning and performance
May 5,1992
work very well. Saturn isn't run the way
General Motors was. Intel isn't run the way
IBM was.
Many federal organizations are also
monopolies, with few incentives to innovate
or improve. Employees have vinuallifetime
tenure, regardless of their performance.
Success offers few rewards; failure, few
penalties. And customers are captive; they
can't walk away from the air traffic control
system or the Internal Revenue Service and
sign up with a competitor. Worse, most
federal monopolies receive their money
without any direct input fro~ their
customers. Consequently, they try a lot
harder to please Congressional appropriations subcommittees than the people they
are meant to serve. Taxpayers pay more
than they should and get poorer service.
Politics intensifies the problem. In
Washington's highly politicized world, the
greatest risk is not that a program will
perform poorly, but that a scandal will
erupt. Scandals are front-page news, while
routine failure is ignored. Hence control
system after control system is piled up
to minimize the risk of scandal. The
budget system, the personnel rules, the
procurement process, the inspectors
general-all are designed to prevent the
tiniest misstep. We assume that we can't
trust employees to make decisions, so we
spell out in precise detail how they must do
virtually everything, then audit them to
ensure that they have obeyed every rule.
3
FROM RED TAPE TO RESelTS • CREATING A GOVERNMENT THAT WORKS BETTER
D
uring Vice President Gore's town hall meeting
with employees of the Deparanent of Housing
and Urban Development (HUD), the following
exchange took p1ac:c:
Participant:
wt hmi an artick in our newsidtzr
snltTal months ago that said- the kad story was «rd
rllth" haw a lobotomy than haw anotM- idea. ..AnJ
that was ,qkcting the problnn ofour ItUas Program
hminHUD.
Many ofthe tmployets haVf: wondnfol was about
how to saw monty and so on, but tht way it works is
that ithas to be approvtd by the suptrVisor and the
suptrvisor's suptrVisor and the supmJisor's supmJisor's
supmJisor bifure it tvtr g~ to the Ideas Program ...
Many ofthe suptrVisors fitl thrttamed btclluse they
didn! think ofthis wa, and this monty is w~d in
thrir office, and they didn't be!inJe or didn't know it was
happming and didn't catch it. So they art thrtatmed
andfiel that it wiD make thmz look bad ifthey
rtcogniu the idea.
Vice President Gore: So they rtrangk that itkIJ in
the crib, tkJn't they?
Panicipant: And thm they strangk the pmon that
had the itka.
The slightest deviation prompts new
regulations and even more audits.
Before long, simple procedures are too
complex for employees to navigate, so we
hire more budget analysts, more personnel
experts, and more procurement officers to
make things work. By then, the process
involves so much red tape that the smallest
action takes far longer and Costs far more
than it should. Simple travel arrangements
require endless forms and numerous
signatures. Straightforward purchases take
months; larger ones take years. Routine
printing jobs can take dozens of approvals.
This emphasis on process steals resources
from the real job: serving the customer.
4
&
COSTS LESS
Indeed, the federal government spends
billions paying people who control, check
up on, or investigate others--supervisors,
headquarters staffs, budget officers,
personnel officers, procurement officers,
and staffs of the General Accounting Office
(GAO) and the inspectors general.s Not all
this money is wasted, of course. But the real
waste is no doubt larger, because the endless
regulations and layers of control consume
every employee's time. Who pays? The
taxpayer.
Consider but one example, shared with
Vice President Gore at a meeting of federal
employees in Atlanta. After federal marshals
seize drug dealers' homes, they are allowed
to sell them and use the money to help
finance the war on drugs. To sell the houses,
they must keep them presentable, which
includes keeping the lawns mowed.
In Atlanta, the employee explained, most
organizations would hire neighborhood
teenagers to mow a lawn for $10. But
procurement regulations require the U.S.
Marshals Service to bid out all work
competitively, and neighborhood teenagers
don't compete for contracts. So the federal
government pays $40 a lawn to professional
landscape firms. Regulations designed to
save money. waste it, because they take
decisions out of the hands of those
responsible for doing the work. And
taXpayers lose $30 for every lawn mowed.
What would happen if the marshals
used their common sense and hired
neighborhood teenagers? Someone would
notice-perhaps the Washington office,
perhaps the inspector general's office,
perhaps even the GAO. An investigation
might well follow-hindering a career or
damaging a reputation.
In this way, federal employees quickly
learn that common sense is risky-and
creativity is downright dangerous. They
learn that the goal is not to produce results,
please customers, or save taxpayers' money,
but to avoid mistakes. Those who dare to
innovate do so quietly.
This is perhaps the saddest lesson learned
by those who worked on the National
Performance Review: Yes, innovators exist
INTRODUCTION
within the federal government, but many
work hard to keep their innovations quiet.
By its nature, innovation requires
departure from standard operating
procedure. In the federal government, such
departures invite repercussions.
The result is a culture of fear and
resignation. To survive, employees keep a
low profile. They decide that the safest
answer in any given situation is a firm
"maybe." They follow the rules, pass the
buck, and keep their heads down. They
develop what one employee, speaking with
Vice President Gore at a Department of
Veterans Affairs meeting, called "a
governmen t attitude."
a
The Solution: Creating
Entrepreneurial Organizations
How do we solve these problems? It
won't be easy. We know all about
government's problems, but little about
solutions. The National Performance
Review began by compiling a
comprehensive list of problems. We had the
GAO's 28-volume report on federal
management problems, published last fall.
We had GAO's High-Risk Series, a 17volume series of pamphlets on troubled
programs and agencies. We had the House
Government Operations Committee's
report on federal mismanagement, called
Managing the Federal Government: A Decade
ofDecline. And we had 83 notebooks
summarizing just the tables of contents of
reports published by the inspectors general,
the Congressional Budget Office, the
agencies, and think ranks.
Unfortunately, few of these studies
helped us design solutions. Few of the
investigating bodies had studied success
stories---organizations that had solved their
problems. And without studying success, it
is hard to devise real solutions. For years, the
federal government has studied failure, and
for years, failure has endured. Six of every
ten major agencies have programs on the
Office of Management and Budget's "highrisk" list, meaning they carry a significant
risk of runaway spending or fraud.
The National Performance Review
approached its task differently. Not only did
we look for potential savings and
efficiencies, we searched for success. We
looked for organizations that produced
results, satisfied customers, and increased
productivity. We looked for organizations
that constantly learned, innovated, and
improved. We looked for effective,
entrepreneurial public organizations. And
we found them: in local government, in
state government, in other countries--and
right here in our federal government.
At the Air Combat Command, for
example, we found units that had doubled
their productivity in 5 years. Why?
Because the command measured
performance everywhere; squadrons and
bases competed proudly for the best
maintenance, flight, and safety records; and
top management had empowered
employees to strip away red tape and
redesign work processes. A supply system
that had once required 243 entries by 22
people on 13 forms to get one spare part
into an F-15 had been radically simplified
and decentralized. Teams of employees were
saving millions of dollars by moving supply
operations to the front line, developing their
own flight schedules, and repairing parts
that were once discarded. 9
At the Internal Revenue Service, we
found tax return centers competing for the
best productivity records. Performance on
key customer service criteria-such as the
accuracy of answers provided to
taxpayers-had improved dramatically.
Utah's Ogden Service Center, to cite but
one example, had more than 50
"productivity improvement teams"
simplifying forms and reengineering work
processes. Not only had employees saved
more than $11 million, they had won the
1992 Presidential Award for Quality. 10
At the Forest Service, we found a pilot
project in the 22-state Eastern Region that
had increased productivity by 15 percent in
just 2 years. The region had simplified its
budget systems, eliminated layers of middle
management, pared central headqUarters
5
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
Americans votedfor a change last November.
They want better schools and health care and
better roads and more jobs, but they want us
to do it aD with a government that works
better on less monry and that is more
responsIVe.
President Bill Clinton
Remarks announcing the
National Performance Review
March 3, 1993
staff by a fifth, and empowered front-line
employees to make their own decisions. At
the Mark Twain National Forest, for
instance, the time needed to grant a grazing
permit had shrunk from 30 days to a few
hours-because employees could grant
permits themselves rather than process them
through headquaners. 11
We discovered that several other
governments were also reinventing
themselves, from Australia to Great Britain,
Singapore to Sweden, the Netherlands to
New Zealand. Throughout the developed
world, the needs of information-age
societies were colliding with the limits of
industrial-era government. Regardless of
party, regardless of ideology, these
governments were responding. In Great
Britain, conservatives led the way. In New
Zealand, the Labor Party revolutionized
government. In Australia and Sweden, both
conservative and liberal parties embraced
fundamental change.
In the Uniced States, we found the same
phenomenon at the state and local levels.
The movement to reinvent government is as
bipartisan as it is widespread. It is driven not
by policical ideology, bur by absolute
necessity. Governors, mayors, and legislators
of both parties have reached the same
conclusion: Government is broken, and it is
time to fix it.
Where we found success, we found many
common characteristics. Early on, we
6
articulated these in a one-page scatemem of
our commitment. In organizing this repon.
we have boiled these characteristics down to
four key principles.
1. Cutting Red Tape
Effective. entrepreneurial governments
cast aside red tape, shifting from systems in
which people are accountable for following
rules to systems in which they are
accountable for achieving results. They
streamline their budget, personnel, and
procurement systems-liberating
organizations to pursue their missions.
They reorient their control systems to
prevent problems rather than simply
punish those who make mistakes. They
strip away unnecessary layers of regulation
that stifle innovation. And they deregulate
organizations that depend upon them for
funding, such as lower levels of
government.
2. Putting Customers First
Effective, entrepreneurial governments
insist on customer satisfaction. They listen
carefully to their customers-using surveys,
focus groups, and the like. They restructUre
their basic operations to meet customers'
needs. And they use market dynamics such
as competition and customer choice to
create incentives that drive their employees
to put customers first.
By "customer," we do not mean "citizen."
A citizen can participate in democratic
decision making; a customer receives
benefits from a specific service. All
Americans are citizens. Most are also
customers: of the U.S. Postal Service, the
Social Security Administration, the
Department of Veterans Affairs, the
National Park Service, and scores of other
federal organizations.
In a democracy, citizens and customers
both matter. But when they vote, citizens
seldom have much chance to influence the
behavior of public institutions that directly
affect their lives: schools, hospitals, farm
service agencies, social security offices. It is a
INTRODUCTION
sad irony: citizens own their government,
but private businesses they do not own
work much harder to cater to their needs.
PrinCiples of the National
Performance Review
3. Empowering Employees to Get Results
Effective, entrepreneurial governments
transform their cultures by decentralizing
authority. They empower those who work
on the front lines to make more of their
own decisions and solve more of their
own problems. They embrace labormanagement cooperation, provide training
and other tools employees need to be
effective, and humanize the workplace.
While stripping away layers and
empowering front-line employees, they
hold organizations accountable for
producing results.
4. Cutting Back to Basics: Producing
Better Government for Less
lVfi will invent a govmzmmt that puts peopk
W
fint, by:
• Cutting unnecessary spending
• Serving its customers
• Empowering its employees
• Helping communities solve their
own problems
• Fostering excellence
Heres how.
m wiD:
• Create a dear sense of mission
• Steer more, row less
• Ddegate authority and responsibility
• Replace regulations with incentives
Effective, entrepreneurial governments
constantly find ways to make government
work better and cost less-reengineering
how they do their work and reexamining
programs and processes. They abandon the
obsolete, eliminate duplication, and end
special interest privileges. They invest in
greater productivity, through loan funds
and long-term capital investments. And
they embrace advanced technologies to cut
costs.
These are the bedrock principles on
which the reinvention of the federal
bureaucracy must build-and the principles
around which we have organized our
actions. They fit together much like the
pieces of a puzzle: if one is missing, the
others lose their power. To create
organizations that deliver value to American
taxpayers, we must embrace all four.
Our approach goes far beyond fixing
specific problems in specific agencies.
Piecemeal efforts have been under way for
years, but they have not delivered what
Americans demand. The failure in
Washington is embedded in the very systems
by which we organize the federal
bureaucracy. In recent years, Congress has
• Devdop budgets based on outcomes
• Expose federal operations to competition
• Search for market, not administtative,
solutions
• Measure our success by customer satisfaction
taken the lead in reinventing these systems.
In 1990, it passed the Chief Financial
Officers Aa, designed to overhaul financial
management systems; in July 1993, it passed
the Government Performance and Results
Act, which will introduce performance
measurement throughout the federal
government. With Congress's leadership, we
hope to reinvent government's other basic
systems, such as budget, personnel,
information, and procurement.
Our approach has much in common
with other management philosophies, such
as quality management and business process
reengineering. But these management
disciplines were developed for the private
sector, where conditions are quite different.
In business, red tape may be bad, but it
is nor the suffocating presence it is in
7
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
government. In business, ~arket incentives
already exist; no one need Invent them.
Powerful incentives are always at work,
forcing organizations to do more with less.
Indeed, businesses that fail to increase their
producrivity-or that tie themselves up in
red tape-shrink or die. Hence, private
sector management doctrines tend to
overlook some central problems of
government: its monopolies, its lack of a
bottom line, its obsession with process
rather than results. Consequently, our
approach goes beyond private sector
methods. It is aimed at the heart and soul
of government.
The National Performance Review also
shares certain goals with past effortS to cut
costs in government. Bur our mission goes
beyond cost-cutting. Our goal is not simply
to weed the federal garden; it is to create a
regimen that will keep the garden free of
weeds. It is not simply to trim pieces of
government, but to reinvent the way
government does everything. It is not
simply to produce a more efficient
government, but to create a more effective
one. After all, Americans don't want a
government that fails more efficiently. They
want a government that works.
To deliver what the people want, we need
not jettison the traditional values that
underlie democratic governance--values
such as equal opportunity, justice, diversity,
and democracy. We hold these values dear.
We seek to transform bureaucracies
precisely because they have failed to nurture
these values. We believe that those who
resist change for fear of jeopardizing our
democratic values doom us to a government
that continues--through its failures--to
subvert those very values.
Our Commitment: A Long-Term
Investment in Change
This is not the first time Americans have
felt compelled to reinvent their government.
In 1n6, our founding fathers rejected the
old model of a central power issuing edicts
for all to obey. In its place, they created a
8
government that broadly distributed power.
Their vision of democracy, which gave
citizens a voice in managing the United
States, was untried and untested in 1776.
It required a tremendous leap of faith.
But it worked.
Later generations extended this
experiment in democracy to those not yet
enfranchised. As the 20th century dawned,
a generation of "Progressives" such as Teddy
Roosevelt and Woodrow W1lson invented
the modem bureaucratic state, designed
to meet the needs of a new industrial
society. Franklin Roosevelt brought it to
full flower. Indeed, Roosevelt's 1937
announcement of his Committee on
Administrative Management sounds as if
it were written today:
The time has come to set our house in
order. The administrative management
ofthe government needs overhauling.
The executive structure ofthe
government is sadly out ofdate .... Ifwe
have faith in our republican form of
gOVffnment ... we must devote ourselves
energeticaUy and courageously to the task
ofmaking that government efficient.
Through the ages, public management
has tended to follow the prevailing
paradigm of private management. The
1930s were no exception. Roosevelt's
committee--and the twO Hoover
commissions that followed-recommended
a structure patterned largely after those of
corporate America in the 19305. In a sense,
they brought to government the GM model
of organization.
By the 1980s, even GM recognized that
this model no longer worked. When it
created Saturn, irs first new division in 67
years, GM embraced a very different model.
It picked its best and brightest and asked
them to create a more entrepreneurial
organization, with fewer layers, fewer rules,
and employees empowered to do whatever
was necessary to satisfy the customer. Faced
with the very real threat of bankruptcy,
major American corporations have
revolutionized the way they do business.
INTRODUCTION
Confronted with our twin budget and
performance deficits-which so undermine
public trust in government-President
Clinton intends to do the same thing. He
did not staff the Performance Review
primarily with outside consultants or
corporate experts, as past presidents have.
Instead, he chose federal employees to take
the lead. They consulted with experts from
state government, local government, and
the private sector. But as Vice President
Gore said over and over at his meetings with
federal employees: "The people who work
closest to the problem know the most about
how to solve the problem."
Nor did the effon stop with the men
and women who staffed the Performance
Review. President Clinton asked every .
cabinet member to create a Reinvention
Team to redesign his or her department,
and Reinvention Laboratories to begin
experimenting immediately. Since April,
people all across our government have been
working full time to reinvent the federal
bureaucracy.
The process is not easy, nor will it be
quick. There are changes we can make
immediately, but even if all of our actions
are enacted, we will only have begun to
reinvent the federal government. Our
efforts are but a down payment-the first
installment of a long-term investment in
change. Every expen with whom we talked
reminded us that change takes time. In a
large corporation, transformation takes 6 to
8 years at best. In the federal government,
which has more than 7 times as many
employees as America's largest corporation,
it will undoubtedly take longer to brin?
about the historic changes we propose. 2
Along the way, we will make mistakes.
Some reforms will succeed beyond our
wildest dreams; others will not. As in any
experimental process, we will need to
monitor results and correct as we go. But we
must not confuse mistakes with failure. As
Tom Peters and Roben Waterman wrote in
In Search ofExcellence, any organization that
is not making mistakes is not trying hard
enough. Babe Ruth, the Sultan of Swat,
struck out 1,330 times.
I
would invite those who are cynical about the
possibility ofthis change to ask themselves this
question: What wouldyour reaction have
been 10 years ago ifsomeone had said that in
the summer of1993 American automobile
companies would be making the highest quality,
most competitively priced cars in
the world?
I know my reaction would have been, "No
way. I am sorry, but I've bought too many
clunkers. They can't do it. The momentum
toward mediocrity is just too powerfol "
But that change has taken place. And ifan
industry as large and as stodgy as the automobile
industry can undergo that kind of
transformation, then the federal government can
as well.
Vice President AI Gore
Town Hall Meeting,
Department of Energy
July 13, 1993
With this repon, then, we begin a
decade-long process of reinvention. We
hope this process will involve not only the
thousands of federal employees now at work
on Reinvention Teams and in Reinvention
Labs, but millions more who are not yet
engaged. We hope it will transform the
habits, culture, and performance of all
federal organizations.
Some may say that the task is too large;
that we should not attempt it because we
are bound to make mistakes; that it cannot
be done. But we have no choice. Our
government is in trouble. It has lost its sense
of mission; it has lost its ethic of public
service; and, most imponantly, it has lost
the faith of the American people.
In times such as these, the most
dangerous course is to do nothing. We must
have the courage to risk change.
9
Chapter 1
CUTTING
RED TAPE
About 10 years ago, two foresters returned from a hard day in the
field to make plans for the coming week. Searchingfor a detail ofagency policy.
they found themselves overwhelmed by voluminous editions ofpolicy manuals,
reports, and binders filled with thousands ofdirectz'ves. One forester recalled the very first
Forest Servz'ce manual-small enough to fit into every rangers shirt pocket, yet
contaz'nz'ng everythz'ngforesters needed to know to do their jobs.
"Wiry is it that when we have a problem, " the other forester asked, "the solution is always to add
something-a report, a system, a policy--but never take something away?"
The first replied· "What if... we couldjust start over?" I
-
.... he federal government
does at least one thing
well: It generates red tape.
But not one inch of that
red tape appears by
accident. In fact, the
government creates it all with the best of
intentions. It is time now to put aside our
reverence for those good intentions and
examine what they have created-a
system that makes it hard for our civil
servants to do what we pay them for, and
frustrates taxpayers who rightfully expect
their money's worth.
Because we don't want politicians'
families, friends, and supponers placed in
"no-show" jobs, we have more than
100,000 pages of personnel rules and
regulations defining in exquisite detail how
to hire, promote, or fire federal employees. 2
Because we don't want employees or private
companies profiteering from federal
contractS, we create procurement processes
that require endless signatures and long
months to buy almost anything. Because we
don't want agencies using tax dollars for any
unapproved purpose, we dictate precisely
how much they can spend on everything
from Staff to telephones to travel.
And because we don't want state and
local governments using federal funds for
purposes that Congress did not intend, we
write regulations telling them exactly how
to run most programs that receive federal
funds. We call for their partnership in
dealing with our country's most urgent
domestic problems, yet we do not treat
them as equal partners.
Consider some examples from the daily
lives of federal workers, people for whom
red tape means being unable to do their
jobs as well as they can--or as well as we
deserve.
The district managers of Oregon's
million-acre Ochoco National Forest have
53 separate budgets--one for fence
maintenance, one for fence construction,
one for brush burning--divided into 557
management codes and 1,769 accounting
lines. To transfer money between accounts,
they need approval from headquarters.
They estimate the task of tracking spending
11
FROM RED TAPE TO RESelTS • CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
in each account consumes at least 30 days
of their time every year, days they could
spend doing their real jobs. 3 Jt also sends a
message: You are not trusted with even the
simplest responsibilities.
Or consider the federal employees who
repair cars and trucks at naval bases. Each
time they need a spare part, they order it
through a central purchasing office-a
procedure that can keep vehicles in the shop
for a month. This keeps one-tenth of the
fleet out of commission, so the Navy buys
10 percent more vehicles than it needs. 4
Or how about the new Energy
Department petroleum engineer who
requested a specific kind of calculator to do
her job? Three months later, she received an
adding machine. Six months after that, the
procurement office got her a calculator-a
tiny, hand-held model that could not
perform the complex calculations her work
required. Disgusted, she bought her own. s
Federal managers read the same books
and attend the same conferences as private
sector managers. They know what good
management looks like. They just can't put
it into practice-because they face
consuaints few managers in the private
sector could imagine.
Hamstrung by rules and regulations,
federal managers simply do not have the
power to shape their organizations enjoyed
Never teU people how to do things. TeO thmz
what you want to achieve, and they wiD
surprise you with their ingenuity.
General George S. Patton
1944
by private sector managers. Their job is to
make sure that every dollar is spent in the
budget category and the year for which it
was appropriated, that every promotion is
consistent with central guidelines, and that
every piece of equipment is bought through
competitive bidding. In an age of personal
12
computers, they are asked to write with
quill pens.
This thicket of rules and regulations has
layer upon layer of additional oversight.
Each new procedure necessitates someone's
approval. The result is fewer people doing
real work, more people getting in their way.
As management sage Peter Drucker once
said, "So much of what we call
management consists of making it difficult
for people to work."6
As Robert Tobias, president of the
National Treasury Employees Union, told
participants at the Philadelphia Summit on
Reinventing Government, "The regulations
and statutes that bind federal employees
from exercising discretion available in the
private sector all come about as a response
to the humiliations, mistakes,
embarrassments of the past." Even though,
as Tobias noted, "those problems are 15,20,
30 years old," and "the regulations and the
statutes don't change." The need to enforce
the regulations and statutes, in rum, creates
needless layers of bureaucracy.
The layers begin with "staff" agencies,
such as the General Services Administration
(GSA) and the Office of Personnel
Management (OPM). These staff agencies
were designed originally to provide
specialized support for "line" agencies,
such as the Interior and Commerce
Departments, that do government's real
work. But as rules and regulations began to
proliferate, support turned into control.
The Office of Management and Budget
(OMB) which serves the President in the
budget process, runs more than 50
compliance, clearance, and review processes.
Some of this review is necessary to ensure
budget control and consistency of agency
actions-with each other and with the
President's program-but much of it is
overkill.
Line agencies then wrap themselves in
even more red tape by creating their own
budget offices, personnel offices, and
procurement offices. Largely in response to
appropriations committees, budget offices
divide congressional budgets into
increasingly tiny line items. A few years ago,
CU1TING RED TAPE
for example, base managers in one branch
of the military had 26 line items for
housing repairs alone. 7 Personnel offices tell
managers when they can and cannot
promote, reward, or move employees. And
procurement offices force managers to buy
through a central monopoly, precluding
agencies from getting what they need, when
they need it.
What the staff agencies don't control,
Congress does. Congressional
appropriations often come with hundreds
of strings attached. The Interior
Department found that language in its
1992 House, Senate, and conference
committee reports included some 2,150
directives, earmarks, instructions, and
prohibitions. 8 As the federal budget
tightens, lawmakers request increasingly
specific report language to protect activities
in their districts. Indeed, 1993 was a
record year for such requests. In one
appropriations bill alone, senators required
the u.S. Customs Service to add new
employees to its Honolulu office,
prohibited closing any small or rural post
office or U.S. Forest Service offices; and
forbade the U.S. Mint and the Bureau of
Engraving and Printing from even studying
the idea of contracting out guard duties.
Even worse, Congress often gives a single
agency multiple missions, some of which
are contradictory. The Agency for
International Development has more than
40 different objectives, disposing of
American farm surpluses, building
democratic institutions, and even
strengthening the American land grant
college system. 9 No wonder it has trouble
accomplishing its real mission-promoting
international development.
In Washington, we must work together
to untangle the knots of red tape that
prevent government from serving the
American people well. We must give
cabinet secretaries, program directors and
line managers much greater authority to
pursue their real purposes.
As Theodore Roosevelt said: "The best
executive is the one who has the sense to
pick good men to do what he wants done,
and self-restraint enough to keep from
meddling with them while they do it."
Our path is clear: We must shift from
systems that hold people accountable for
process to systems that hold them
accountable for results. We discuss
accountability for results in chapter 3. In
this chapter, we focus on six steps necessary
to strip away the red tape that so engulfs our
federal employees and frustrates the
American people.
First, we will streamline the budget
process, to remove the manifold restrictions
that consume managers' time and literally
force them to waste money.
Second, we will decentralize personnel
policy, to give managers the tools they need
to manage effectively-the authority to
hire, promote, reward, and fire.
Third, we will streamline procurement,
to reduce the enormous waste built into the
process we use to buy $200 billion a year in
goods and services.
Fourth, we will reorient the inspectors
general, to shift their focus from punishing
those who violate rules and regulations to
helping agencies learn to perform better.
Fifth, we will eliminate thousands of
other regulations that hamstring federal
employees, to cut the final Lilliputian ropes
on the federal giant.
FinaUy, we will deregulate state and local
governments, to empower them to spend
more time meeting customer needsparticularly with their 600 federal grant
programs--and less time jumping through
bureaucratic hoops.
As we pare down the systems of overcontrol and micro management in
government, we must also pare down the
structures that go with them: the oversized
headquarters, multiple layers of supervisors
and auditors, and offices specializing in the
arcane rules of budgeting, personnel,
procurement, and finance. We cannot
entirely do without headquarters,
supervisors, auditors, or specialists, but these
structures have grown twice as large as they
should be.
Counting all personnel, budget,
procurement, accounting, auditing, and
13
FROM RED TArE TO RESULTS • CREATING A GOVERNMENT THAT WORKS BETTER
headquarters staff, plus supervisory
personnel in field offices, there are roughly
700,000 federal employees whose job it is to
manage, control, check up on or audit
others. IO This is one third ofall federal
civilian employees.
Not counting the suffocating impact
these management control srrucrures have
on line managers and workers, they
consume $35 billion a year in salary and
benefits alone. I I IfCongress enacts the
management reforms outlined in this report,
we will dramatically cut the cost of these
strucrures. We will reinvest some of the
savings in the new management tools we
need, including performance measurement,
quality management, and training. Overall,
these reforms will result in the net
elimination of approximately 252,000
positions. (This will include the 100,000
position reduction the President has already
set in motion.)
A reduction of252,000 positions will
reduce the civilian, non-postal work force
by almost 12 percent-bringing it below
two million for the first time since the
1966. 12
This reduction, targeted at the strucrures
of control and micromanagement, is
designed to improve working conditions for
the average federal employee. We cannot
empower employees to give us their best
work unless we eliminate much of the red
tape that now prevents it. We will do
everything in the government's power to
ease the transition for workers, whether they
choose to stay with government, retire, or
move to the private sector.
Our commitment is this: Ifan employee
& COSTS LESS
whose job is eliminated cannot retire through
our early retirnnmt program, and does not
elect to take a cash incmtive to leave
government service, we will help that employee
find another job o./for; either with govmzmmt
or in the private sector.
Normal attrition will contribute to the
reduction. In addition, we will introduce
legislation to permit all agencies to offer
cash payments to those who leave federal
service voluntarily, whether by retirement or
resignation. The Depanment of Defense
(DOD) and intelligence community
already have this "buy-out" authority; we
will ask Congress to extend it to all agencies.
We will also give agencies broad authority
to offer early retirement and to expand their
retraining, out-placement efforts, and other
tools as necessary to accomplish the 12%
reduction. Agencies will be able to use these
tools as long as they meet their cost
reduction targets.
These gptions will give federal managers
the same tools commonly used to downsize
private businesses. Even with these
investments, the downsizing we propose
will save the taxpayer billions over the next
5 years.
None of this will be easy. Downsizing
never is. But the result will not only be a
smaller workforce, it will also be a more
empowered, more inspired, and more
productive workforce.
As one federal employee told Vice
President Gore at one of his many town
meetings, "If you always do what you've
always done, you'll always get what you
always got." We can no longer afford to get
what we've always got.
STEP 1: S1RFAMLINING THE BUDGET PROCESS
M
ost people can't get excited about
the federal budget process, with
its green-eyeshade analysts,
complicated procedures, byzantine
language, and reams of minutiae. Beyond
such elements, however, lies a basic,
unalterable reality. For organizations of all
kinds, nothing is more important than the
14
process of resource allocation: what goal is
sought, how much money they have, what
strings are attached to it, and what hurdles
are placed before managers who must
spend it.
In government, budgeting is never easy.
After all, the budget is the most political of
documents. If, as the political scientist
Harold D. Lasswell once said, politics is
CUTfING
"who gets what, when, how," the budget
answers that question. 13 By crafting a
budget, public officials decide who pays
what taxes and who receives what benefits.
The public's largesse to children, the elderly,
the poor, the middle class, and others is
shaped by the budgets that support cities,
states, and the federal government.
But ifbudgeting is inherently messy, such
messiness is costly. Optimally, the budget
would be more than the product of srruggIes
among competing interests. It also would
reflect the thoughtful planning of our public
leaders. No one can improve quality and cut
costs without planning to do so.
Unfortunately, the most deliberate
planning is often subordinated to politics,
and is perhaps the last thing we do in
constructing a budget. Consider our
process. Early in the year, each agency
estimates what it will need to run its
programs in the fiscal year that begins
almost 2 years later. This is like asking
someone to figure out not only what they
will be doing, but how much it will cost
3 years later--since that's when the money
will be spent. Bureau and program
managers typically examine the previous
year's activity data and project the figures 3
years out, with no word from top political
leaders on their priorities, or even on the
total amount that they want to spend. In
other words, planning budgets is like
playing "pin the tail on the donkey."
Blindfolded managers are asked to hit an
unknown target.
OMB, acting for the President, then
crafts a proposed budget through back-and
forth negotiations with departments and
agencies, still a year before the fiscal year
it will govern. Decisions are struck on
dollars--dollars that, to agencies, mean
people, equipment, and everything else they
need for their jobs. OMB's examiners may
question agency staff as they develop
options papers, OMB's director considers
the options during his Director's Review
meetings, 0 MB "passes back"
recommended funding levels for the
agencies, and final figures are worked out
during a final appeals process.
RED
TAPE
Early the next year, the President presents
a budget proposal to Congress for the fiscal
year beginning the following October 1.
Lawmakers, the media, and interest groups
pore over the document, searching for
winners and losers, new spending proposals,
and changes in tax laws. In the ensuing
months, Congress puts its own stamp on
the plan. Although House and Senate
budget committees, guide Congress' action,
every committee plays a role.
Authorizing committees debate the
merits of existing programs and the
President's proposals for changes within
their subject areas. While they decide which
programs should continue and recommend
funding levels, separate appropriations
committees draft the 13 annual spending
bills that acrually comprise the budget.
Congressional debates over a budget
resolution, authorization bills, and
appropriations drag on, often into the fall.
Frequently the President and Congress don't
finish by October 1, so Congress passes one
or more "continuing resolutions" to keep
the money flowing, often at the previous
year's level. Until the end, agency officials
troop back and forth to OMB and to the
Hill to make their case. States and localities,
organizations and advocates seek time to
argue their cause. Budget staffs work nonstop, preparing estimates and projections on
how this or that change will affect revenues
or spending. All this work is focused on
making a budget-not planning or
delivering programs.
Ironies riddle the process.
• Uncertainty reigns: Although they
begin calculating their budget 2 years
ahead, agency officials do not always
know by October 1 how much they
will have to spend and frequently don't
even receive their money until well into
the fiscal year.
• OMB is especially prone to question
unspent funds-and reduce the ensuing
year's budget by that amount. Agency
officials inflate their estimates, driving
15
FROM RED TArE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
budget numbers higher and higher.
One bureau budget director claims that
many regularly ask for 90 percent more
than they evenrually receive.
• Despite months of debate, Congress
compresses its acrual decision-making
on the budget into such a short time
frame that many of the public's highest
priorities--what to do about drug
addiction, for example, or how to
prepare workers for jobs in the 21st
century-are discussed only briefly. if at
all.
• The process is devoid of the most useful
information. We do nor know what last
year's money, or that of the year before,
acrua11y accomplished. Agency officials
devise their funding requests based on
what they got before, not whether it
produced results.
In sum, the budget process is
characterized by fictional requests and
promises, an obsession with inputs rather
than outcomes, and a shortage of debate
about critical national needs. We must start
to plan strategically-linking our spending
with priorities and performance. First, we
must create a rational budgeting system.
Action: The PresiJent shou/J begin the
budget process with an executive lnulget
Then> are two ways to reduce exproditures.
Then> is the intelligent way. ..going through
each tkpartmmt and questioning each
program Then thn-e is the stupid way:
announcing how much you wiD cut and
getting each departmmt to cut that amount.
1fovor the stupid wa)£
Michel Belanger
Chairman, Quebec National Bank
May 7,1992
16
&.
COSTS LESS
resolution, setting broad policy priorities
anJ aIlocatingfunds by function for each
agency. 14
Federal managers should focus primarily
on the content of the budget, not on the
process. A new executive budget resolution
will help them do that. The President
should issue a directive in early 1994 to
mandate the use of such a resolution in
developing his fiscal year 1996 budget. It
will rum the executive budget process
upside down.
To develop the resolution, officials from
the White House policy councils will meet
with OMB and agency officials. In those
sessions, the administration's policy
leadership will make decisions on overall
spending and revenue levels, deficit
reduction targets, and funding allocations
for major inter-agency policy initiatives.
The product of these meetings--a
resolution completed by August-will
provide agencies with funding ceilings and
allocations for major policy missions. Then,
bureaus will generate their own budget
estimates, now knowing their agency's
priorities and fisca1limits.
Our own Environmental Protection
Agency (EPA) uied a similar approach in
the 1970s as part of a zero-based budgeting
trial run. Although zero-based budgeting
fell short, participants said, two important
advantages emerged: a new responsiveness
to internal customer needs and a
commitment to final decisions. When
participants voted to cut research and
development funds because they felt
researchers ignored program needs,
researchers began asking programs managers
what kind of research would support their
efforts. EPA also found that, after its leaders
had agonizm over funding, they remained
committed to common decisions.
Critics may view the executive budget
resolution process as a top-down tool that
will stifle creative, bottom-up suggestions
for funding options. We think otherwise.The resolution will render top officials
responsible for budget totals and policy
decisions, but will encourage lower-level
CUlTING RED TAPE
ingenuity to devise funding options within
those guidelines. By adopting this plan, we
will help discourage non-productive micromanagement by senior department and
agency officials.
Action: Institute bienniAl buJgets and
appropriations. 15
We should not ha~e to enact a budget
every year. Twenty states adopt budgets for
2 years. (They retain the power to make
small adjustments in off years if revenues or
expenditures deviate widely from forecasts).
As a result, their governors and legislatures
have much more time to evaluate programs
and develop longer-term plans.
Annual budgets consume an enormous
amount of management time-time not
spent serving customers. With biennial
budgets, rather than losing months to a
frantic "last-year's budget-plus-X-percent"
exercise, we might spend more time
examining which programs actually work.
The idea of biennial budgeting has been
around for some time. Congressman Leon
Panetta, now OMB director, introduced the
first biennial budgeting bill in 1977, and
dozens have been offered since. Although
none have passed, the government has some
experience with budget plans that cover 2
years or more. In 1987, the President and
Congress drafted a budget plan for fiscal
years 1988 and 1989 that set spending
levels for major categories, enabling
Congress to enact all 13 appropriations bills
on time for the first time since 1977.
In addition, Congress directed the
Defense Department to submit a biennial
budget for fiscal 1988 and 1989 to give
Congress more time for broad policy
oversight. At the time, Congress assened
that a biennial budget would "substantially
improve DOD management and
congressional oversight," and that a twoyear DOD budget was an imponant step
toward across-the-board biennial budgeting.
Administrations have continued to submit
biennial budgets for DOD.
The 1990 Budget Enforcement Act and
the 1993 Omnibus Budget Reconciliation
Act set 5-year spending limits for
discretionary spending and pay-as-you-go
requirements for mandatory programs.
With these multi-year caps in place, neither
the President nor Congress has to decide the
total level of discretionary spending each
year. These caps provide even more reason
for biennial budgets and appropriations. In
Congress, 7 out of 10 members favor a
biennial process with a 2-year budget
resolution and multi-year authorizations.
The time is ripe.
We recommend that Congress establish
biennial budget resolutions and
appropriations and multi-year
authorizations. The first biennium should
begin October 1, 1996, to cover fiscal years
1997 and 1998. After that, bienniums
would begin October 1 of each evennumbered year. Such timing would allow
President Clinton to develop the first
comprehensive biennial federal budget,
built on the new executive budget
resolution. In off years, the President would
submit only amendments for exceptional
areas of concern, emergencies, or other
unforeseen circumstances.
Biennial budgeting will not make our
budget decisions easier, for they are shaped
by competing interests and priorities. But it
will eliminate an enormous amount of busy
work that keeps us from evaluating
programs and meeting customer needs.
Action: OMB, departments, and
agencies will minimize budget restrictions
such as apportionments and allotments. 16
Congress typically divides its
appropriations into more than 1,000
accounts. Committee reports specify
thousands of other restrictions on using
money. OMB apponions each account by
quarter or year, and sometimes divides it
into sub-accounts by line-item or object
class-all to control over-spending.
Departmental budget offices funher divide
the money into allotments.
Thus, many managers find their money
fenced into hundreds of separate accounts. In
some agencies, they can move funds among
17
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
accounts. In others, Congress or the agency
limits the transfer of funds, trapping the
money. When that happens, managers must
spend money where they have it, not where
they need it. On one military base, for
example, managers had no line item to
purchase snowplow equipment, but they did
have a maintenance account. When the
snowplow broke down they leased one, using
the maintenance account. Unfortunately, the
I-year lease cost $} OO,OOO-the same as the
full purchase price.
Such stories are a dime a dozen within
the federal bureaucracy. (They may be the
only government cost that is coming
down.) Good managers struggle to make
things work, but, trapped by absurd
constraints, they are driv~n to waste billions
of dollars every year.
Stories about the legendary end-of-theyear spending rush also abound. Managers
who don't exhaust each line item at year's
end usually are told to return the excess.
Typically, they get less the next time around.
The result: the well-known spending frenzy.
The National Performance Review received
more examples of this source of waste-in
letters, in calls, and at town meetings--than
any other.
Most managers know how to save 5 or
10 percent of what they spend. But
knowing they will get less money next year,
they have little reason to save. Instead, smart
managers spend every penny of every line
item. Edwin G. Fleming, chief of the
Resources Management Division of the
Internal Revenue Service's Cleveland
Distria, put it well in a letter to the
Treasury Department's Reinvention Team:
Ellery manager has saved money, only to
have his allocation reduced in the
subsequmt year. This USUIllly happens
only once, then the manager becomes a
spender rather than a planner.
Managing becomes watching after little
pots ofmoney that can't be put where it
makes business sense because of
reprogramming restrictions. So
managers, who are monitors ofthese
little pots ofmoney, are rewardedfor the
18
& COSTS LESS
ability to maneuver, however limitedly,
through the baroque and bizarre world
offlderal finance and procurement.
Solutions to these problems exist. They
have been tested in local governments, in
state governments, even in the federal
government. Essentially, they involve
budget systems with fewer line items, more
authority for managers to move money
among line items, and freedom for agencies
to keep some or all of what they save-thus
minimizing the incentive for year-end
spending sprees.
Typically, federal organizations
experimenting with such budgets have
found that they can achieve better
productivity, sometimes with less money.
During an experiment at Oregon's
Ochoco National Forest in the 1980s, when
dozens of accounts were reduced to six,
productivity jumped 25 percent the first
year and 35 percent more the second. A
1991 Forest Service study indicated that the
experiment had succeeded in bringing gains
in efficiency, productivity, and morale, but
had failed to provide the Forest Service
region with a mechanism for complying
with congressional intent. After 3 years of
negotiations, Washington and Region 6,
where the Ochoco Forest is located, couldn't
agree. The region wanted to retain the
initial emphasis on performance goals and
targets so forest managers could shift money
from one account to another if they met
performance goals and targets. Washington
argued that Congress would not regard such
targets as a serious measure of congressional
intent. The experiment ended in March
1993,17
When the Defense Department allowed
several military bases to experiment with
what was called the Unified Budget Test,
base commanders estimated that they could
accomplish their missions with up to 10
percent less money. If this experience could
be applied to the entire government, it
could mean huge savings.
Beginning with their fiscal year 1995
submissions to OMB, depamnents and
agencies will begin consolidating accounts
CUlTING RED TAPE
to minimize restrictions and manage more
effectively. They will radically Cut the
number of allotments used to subdivide
accounts. In addition, they will consider
using the Defense Depanment's Unified
Budget plan, which permits shifts in funds
between allotments and cost categories to
help accomplish missions.
OMB will simplify the apportionment
process, which hamstrings agencies by
dividing their funding into amounts that
are available, bit by bit, according to
specified time periods, activities, or
projects. Agencies often don't get their
funding on time and, after they do, must
fill out reams of paperwork to show
that they adhered to apportionment
guidelines. OMB will also expedite the
"reprogramming" process, by which
agencies can move funds within
congressionally appropriated accounts.
Currently, OMB and congressional
subcommittees approve all such
reprogrammings. OMB should
automatically approve reprogramming
unless it objects within a set period, such as
five days.
While understandable in some cases,
such earmarks hamper agencies that seek to
manage programs efficiently. Agencies
should work with appropriations
subcommittees on this problem.
Action: OMB and agencies wiD stop
using.full-time equivalent ceilings,
managing and budgeting instead with
ceilings on operating costs to control
spending. IS
In another effort to control spending,
both the executive and legislative branches
often limit the number of each agency's
employees by using full-time equivalent
(PTE) limits. When agencies prepare their
budget estimates, they must state how
many FTEs they need in addition to how
many dollars. Then, each depanment or
agency divides that number into a ceiling
for each bureau, division, branch, or other
unit. Congress occasionally complicates the
situation by legislating PTE floors.
Federal managers often cite FTE
controls as the single most oppressive
restriction on their ability to manage.
Under the existing system, PTE controls
are the only way to make good on the
President's commitment to reduce the
federal bureaucracy by 100,000 positions
through attrition. But as we redesign the
government for greater accountability, we
need to use budgets, rather than FTE
controls, to drive our downsizing. FTE
ceilings are usually imposed independently
of-and often conflict with-budget
allocations. They are frequently arbitrary,
rarely account for changing circumstances,
and are normally imposed as across-theboard percentage cuts in FTEs for all of an
agency's units--regardless of changing
circumstances. Organizations that face new
regulations or a greater workload don't get
new PTE ceilings. Consequently, they must
contract out work that could be done better
and cheaper in-house. One manager at
Vice President Gore's meeting with foreign
affairs community employees at the State
Department in May 1993 offered an
example: his FTE limit had forced him to
contract out for a junior programmer for
the Foreign Service Institute. As it turned
out, the programmer's hourly rate equaled
the Institute Director's, so the move cost
money instead of saving it.
The President should direct OMB and
agency heads to stop setting FTE ceilings in
fiscal year 1995.
For this transition, the agencies'
accounting systems will have to separate
true operating costs from program and
other costs. Some agencies already have
such systems in place; others must develop
financial management systems to allow
them to calculate these costs. We address
this issue in a separate recommendation in
chapter 3.
This recommendation fully supports
the President's commitment to maintain a
reduced federal workforce. Instead of
controlling the size of the federal
workforce by employment ceilingswhich cause inefficiencies and distortions
in managers' personnel and resource
19
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
allocation decisions-this new system will
control the federal workforce by dollars
available in operating funds.
Action: Minimize congressional
restrictions such lIS line items, earmllrks,
anJ eliminllte FJ'EJIoors. 19
Congress should also minimize the
restrictions and earmarks that it imposes on
agencies. With virrually all federal spending
under scrutiny for future cuts, Congress is
increasingly applying earmarks to ensure
that funding flows to favored programs and
homerown projects.
Imagine the surprise ofInterior Secretary
Bruce Babbitt, who a few months after
raking office discovered that he was under
orders from Congress ro maintain 23
positions in the Wilkes-Barre, Pennsylvania,
field office of his department's anthracite
reclamation program. Or that his
department was required to spend
$100,000 to train beagles in Hawaii to sniff
out brown tree snakes. Edward Derwinski,
former secretary of Veteran Affairs, was
once summoned before the Texas
congressional delegation ro explain his plan
to eliminate 38 jobs in that state. 20
Action: Allow agencies to roO over 50
percent ofwhat they do not spend on
internal operations during a focal year. 21
As part of its 13 fiscal year 1995
appropriations bills, Congress should
STEP
&.
COSTS LESS
permanently allow agencies to roll over 50
percent of unobligated year-end balances in
all appropriations for operations. It should
allow agencies to use up to 2 percent of
rolled-over funds ro finance bonuses for
employees involved. This approach, which
the Defense Department and Forest Service
have used successfully, would reward
employees for finding more productive
ways ro work Moreover, it would create
incentives to save the taxpayers' money.
Shared savings incentives work In 1989,
the General Accounting Office (GAO)
discovered that the Veterans
Administration had not recovered $223
million in health payments from third
parties, such as insurers. Congress then
changed the rules, allowing the VA to hire
more staff to keep up with the paperwork
and also to keep a portion of recovered
third-party payments for administrative
costs. VA recoveries soared from $24
million to $530 million. 22
If incentives to save are to be real,
Congress and OMB will have to refrain
from automatically cutting agencies'
budgets by the amount they have saved
when they next budget is prepared. Policy
decisions ro cut spending are one thing;
automatic cuts to take back savings are
quite another. They simply confirm
managers' fears that they will be penalized
for saving money. Agencies' chief financial
officers should intervene in the budget
process to ensure that this does not
happen.
2: DECENTRALIZING PERSONNEL POLICY
ur federal personnel system has
been evolving for more than 100
years-ever since the 1881
assassination of President James A. Garfield
by a disappointed job seeker. And during
that time, according ro a 1988 Office of
Personnel Management publication:
added. Over time... a maze of
regulations and requirements was
created, hamstringing managers... often
impedingfoderal managers and
employees .from achieving their missions
and.from giving the public a high
quality ofservice.
... anecdotal mistakes prompted
additional rules. When the rules led to
new inequities. even more rules were
Year after year, layer after layer, the rules
have piled up. The u.s. Merit Systems
Protection Board reports there are now 850
O
CUTfING RED TAPE
Catch-22
O
ur federal personnd system ought to place
a value on experience. That's not always
the case. Consider the story of Rosalie Tapia.
Ten years ago, fresh from high school, she
joined the Army and was assigned to Germany
as a clerk. She served out her enlistment with an
excellent record, landed a job in Germany as a
civilian secretary for the Army, and worked her
way up to assistant to the division chief When
the Cold War ended, Tapia wanted to return to
the U.S. and transfer to a government job here.
Unforrunately, one of the dictates contained
pages of federal personnel law-augmented
by 1,300 pages of OPM regulations on how
to implement those laws and another
10,000 pages of guidelines from the Federal
Personnel Manual.
On one topic alone--how to complete a
standard form for a notice of a personnel
action-the Federal Personnel Manual
contains 900 pages of
instructions. The full stack of
personnel laws, regulations,
directives, case law and
departmental guidance that
the Agriculture Department
uses weighs 1,088 pounds.
Thousands of pages of
personnel rules prompt
thousands of pages of
personnel forms. In 1991, for
example, the Navy's Human
Resources Office processed
enough forms to create a
"monument" 3,100 feet
tall-six times the height of
the Washington Monument.
Costs to the taxpayer for
this personnel quagmire are
enormous. In total, 54,000
in the government's 10,000 pages of personnel
rules says that an employee hired as a civil
servant overseas is not considered a government
employee once on home soil. Any smart
employer would prefer to hire an experienced
worker with an excellent service record over an
unknown. But our government's policy doesn't
make it easy. Ironically, Tapia landed a job with
a government contractor, making more
money- and probably costing taxpayers
more-than a job in the bureaucracy would
have paid
personnel work in federal personnel
positions. 23 We spend billions of dollars for
these staff to classify each employee within a
highly complex system of some 459 job
series, 15 grades and 10 steps within each
grade.
Does this daborate system work? No.
After surveying managers, supervisors
21
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
and personnel officers in a number of
federal agencies, the U.S. Merit Systems
Proteaion Board recently concluded that
federal personnel rules are too complex, toO
prescriptive, and often counterproductive.
Talk to a federal manager for 10 minutes:
You likely will hear at least one personnel
horror story. The system is so complex and
rule-bound that most managers cannot even
advise an applicant how to get a federal job.
"Even when the public seaor finds
outstanding candidates," In 1989, Paul
Volcker's National Commission on the
Public Service explained, "the complexity of
the hiring process often drives all but the
most dedicated away." Managers who find
it nearly impossible to hire the people they
need sometimes flaunt the system by hiring
people as consultants at higher rates than
those same people would earn as federal
employees. The average manager needs a
year to fire an incompetent employee, even
with solid proof. During layoffs, employees
slated to be laid off can "bump" employees
with less seniority, regardless of their abilities
or performance--putting people in jobs
they don't understand and never wanted.
Vice President Gore heard many stories
of dissatisfaction as he listened to federal
workers at meetings in their agencies. A
supervisor at the Centers for Disease
Control complained that it can take six to
eight months and as many as 15 revisions to
a job description in order to get approval for
a position he needs to fill. A secretary from
the Justice Department told the Vice
President she was discouraged and
overworked in an office where some
secretaries were slacking off-with no
system in place to reward the hard workers
and take action against the slackers.
A worker from the Agency for
International Development expressed her
frustration at being so narrowly "slotted" in
a particular GS series that she wasn't allowed
to apply for a job in a slightly different GS
series -even though she was qualified for
the job. An Air Force lieutenant colonel told
the vice president that her secretary was
abandoning government for the private
seaor because she was blocked from any
&. COSTS LESS
more promotions in her current job series.
The loss would be enormous, the colonel
told Gore, because her secretary was her
"right-hand person". One of the Labor
Department's regional directors for
unemployment insurance complained that
even though he is charged with running a
multimillion a year program, he isn't
allowed to hire a $45,OOO-a-year program
specialist without getting approval from
Washington.
To create an effeaive federal government,
we must reform virtually the entire
personnel system: recruitment, hiring,
classification, promotion, pay, and reward
systems. We must make it easier for federal
managers to hire the workers they need, to
reward those who do good work, and to fire
those who do not. As the National
Academy of Public Administration
concluded in 1993, "It is not a question of
whether the federal government should
change how it manages its human resources.
It must change."
Action: OPM utill Jeregu/Ate personnel
policy by phasing out the lO,OOO-page
Federal PersonJUI Manual and aD agency
implementing directives.24
We must enable all managers to pursue
their missions, freed from the cumbersome
red tape of current personnel rules. The
President should issue a direaive phasing
out the Federal Personnel Manual and all
agency implementing directives. The order
will require that most personnel
management authority be delegated to
agencies' line managers at the lowest level
practical in each agency. It will direct aPM
to work with agencies to determine which
FPM chapters, provisions, or supplements
are essential, which are useful, and which
are unnecessary. OPM will then replace the
FPM and agency directives with manuals
tailored to user needs, automated personnel
processes, and elearonic decision support
systems.
Once some of the paperwork burden is
eased, our next priority must be to give
agency managers more control over who
CUITING RED TAPE
comes to work for them. To accomplish
this, we propose to radically decentralize the
government's hiring process.
.
Action: Give aD departments and
agencies authority to conduct their own
recruiting and examiningfor aD
positions, and abolish aD central registers
and stanJard application forms. 25
We will ask Congress to pass legislation
decentralizing authority over recruitment,
hiring, and promotion. Under the present
system, OPM controls the examination
system for external candidates and recruits
and screens candidates for positions that are
common to all agencies, with agencies then
hiring from among candidates presente4 by
OPM. Under the new system, OPM could
offer to screen candidates for agencies, but
agencies need not accept OPM's offer.
Under this decentralized system, agencies
will also be allowed to make their own
decisions about when to hire candidates
directly-without examinations or rankings
-under guidelines to be drafted by OPM.
Agencies able to do so should also be
permitted to conduct their own background
investigarions of porential candidates.
We will make sure the system is fair and
easy for job applicants ro use, however, by
making information about federal job
openings available in one place. In place of a
central regisrer, OPM will creare a
government-wide, employment
informarion system that allows the public to
go ro one place for informarion about all
job opportuniries in the federal
government.
Next, we must change the classification
system, introduced in 1949 to create
fairness across agencies but now widely
regarded as time-consuming, expensive,
cumbersome, and intensely frustrating-for
both workers and managers.
After an exhaustive 1991 study of the
system, the National Academy of Public
Administrarion recommended a complete
overhaul of the system. Classification
standards, NAPA argued, are "roo complex,
inflexible, our-of-date, and inaccurate,"
First, we must cut the waste and make
government operations more responsive to the
American people. It is time to shiftfrom topdown bureaucracy to entrepreneurial
government that generates change from the
bottom up. Wf must reward the people and
ideas that work and get rid ofthose that don't.
President Bill Clinton
February 17. 1993
creating "rigid job hierarchies that cannot
change with organizational structure." They
drive some of the best employees out of
their fields of expertise and into
management positions, for higher pay. And
managers seeking to create new posirions
often fighr the system for months to get
them classified and filled. 26
There is strong evidence that agencies
given authority to do these things
thernsdves can do better. Using
demonstration authority under the 1978
Civil Service Reform Act, several agencies
have experimented with simpler systems. In
one experiment, at the Naval Weapons
Center in China Lake, California, and the
Naval Oceans Sysrems Center, in San
Diego, the system was simplified to a few
career paths and only four-to-six broad pay
bands within each path. Known as the
"China Lake Experiment," it solved many
of the problems faced by the two naval
facilities. It:
• classified all jobs in just five career
paths--professional, technical,
specialist, administrative and clerical;
• folded all GS (General Schedule) grades
into four, five, or six pay bands within
each career path;
• allowed managers to pay market salaries
to recruit people, ro increase the pay of
23
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
Recognizing the importance ofattracting and
retaining highly qualifiedprofessionals in
government smnce, one ofthe dmzoralizing
andfrustrating aspects is the fact that we are
retained to do ajob but not allowed the
flexibility to carry it out, assume the
responsibLity, and reap the rewards or be
accountable for out actions.
Edith Houston
Town Hall Meeting,
U.S. Agency for International Development
May 26, 1993
outstanding employees without having
to reclassify them, and to give
performance-based bonuses and salary
Increases;
• automatically moved employees with
repeated marginal performance
evaluations down to the next pay band;
and
• limited bumping to one career path,
and based it primarily on performance
ratings, nor senioriry.
Another demonstration at McClellan Air
Force Base, in Sacramento, California,
involved "gainsharing"-allowing
employees to pocket some of the savings
they achieved through cooperative labormanagement efforts to CUt costs. It
generated $5 million in productiviry savings
in four years and saw improved employee
performance; fewer grievances; less sick
leave and absenteeism; and improved labormanagement relations.
A third demonstration at more than 200
Agriculture Department sites tested a
streamlined, agency-based recruiting and
hiring system that replaced aPM's register
process. Under aPM's system, candidates
are arrayed and scored based on aPM's
written tests or other examinations. In
USDXs demonstration, however, the
agency grouped candidates by its own
criteria, such as education, experience or
abiliry, then picked from those candidates.
A candidate might qualify for a job, for
example, with a 2.7 college grade point
average. Agencies could create their own
recruitment incentives, do their own hiring,
and extend the probationary period for
some new hires. Managers were far
more satisfied with this system than the
exIsnng one.
Action: Dra11UlticaOy simplify the
current classification system, to give
agencies greater flexibility in how they
classify and pay their employees.27
We will urge Congress to remove all the
1940s-era grade-level descriptions from the
law and adopt an approach that is more
modem. In addition, Congress should allow
agencies to move from the General
Schedule system to a broad-band system.
aPM should develop such standard
banding patterns, and agencies should be
free to adopt one without seeking aPM's
approval.
When agency proposals do not fit under
a standard pattern, aPM should approve
them as five-year demonstration projects
that would be converted to permanent
"alternative systems" if successful. aPM
should establish criteria for broad-banding
demonstration projects, and agencies'
projects meeting those criteria should
receive automatic approval.
These changes would give agencies
greater flexibility to hire, retain, and
promote the best people they find. They .
would help agencies flatten their hierarc~les
and promote high achievers without havmg
to make them supervisors. They would
eliminate much valuable time now lost to
battles between managers seeking to
promote or reward employees and
personnel specialists administering a
classification system with rigid limits. .
Finally, they would remove aPM from Its
role as "classification police."
CUTTING RED TAPE
To accompany agencies' new flexibility
on classification and pay, they must also be
given authority to set standards for their
own workers and to reward those who do
well.
Action: Agencies should be allowed to
design their own performance
ma1Ulgement and reward systems, with
the objective ofimproving the
performance ofindividuals and
organizations. 28
The current government performance
appraisal process is frequently criticized as a
meaningless exercise in which mosr federal
employees are given above-average ratings.
We believe that agencies will be able ro
develop performance appraisals thar are
more meaningful to their employees. If they
succeed, these new approaches will send a
message thar job performance is directly
linked ro workers' chances for promotion
and higher pay.
Current sysrems to assess on-the-job
performance were designed to serve
mulriple purposes: ro enhance performance,
to authorize higher pay for high performers,
to retain high performers, and to promote
Staff development. Not surprisingly, they
serve none of these purposes well.
Performance management programs
should have a single goal: to improve the
performance of individuals and
organizations. Agencies should be allowed
(0 develop programs that meet their needs
and reflect their cultures, including
incen tive programs, gainsharing programs,
and awards that link pay and performance.
If agencies-in cooperation with
employees--design their own systems,
managers and employees alike should feel
more ownership of them.
Finally, if performance measures are to
be taken seriously, managers must have
authority to fire workers who do not
measure up. It is possible to fire a poor
worker in the federal government, but it
rakes far tOO long. We believe this
undermines good management and
diminishes workers' incentives to improve.
There has to be a clear shared sense ofmission.
There have to be clearly untlerstood goals.
There have to be common values according to
which decisions are made. Th~ has to be
trust placed in the employees who actuaDy do
the work, so that they wiDfeel foe to make
decisions.
They cannot be treated like automatons or
children bound up in straightjackets and rules
and regulations and told to do the same thing
over and over and over again.
Vice President AI Gore
August 4, 1993
Action: Reduce by halfthe time
required to terminate federal managers
and employees for cause and improve the
system for dealing with poor perfOrmers.29
Agencies will reduce the time for
terminating employees for cause by halE For
example, agencies could halve the length of
time during which managers and employees
with unsatisfactory performance ratings are
allowed to demonstrate improved
performance.
To suppon this effon, we will ask aPM
to draft and Congress to pass legislation to
change the required rime for notice of
termination from 30 to 15 days. This
legislation should also require the waiting
period for a within-grade increase to be
extended by the amount of time an
employee's performance does not meet
expectations. In other words, only the time
that an employee is doing satisfactory work
should be credited toward the required
waiting period for a pay raise.
25
FROM RED TArE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
STEP
3: STREAMLINING PROCUREMENT
very year, Washington spends about
$200 billion buying goods and
services. That's $800 per American.
With a price tag like that, taxpayers have a
right to expect prudent spending.
The federal government employs
142,000 workers dedicated to procurement. 30
The Federal Acquisition Regulation (FAR)
ontrolling procurement runs 1,600 pages,
with 2,900 more pages of agency-specific
supplements.
These numbers document what most
federal workers and many taxpayers already
know: Our system relies on rigid rules and
procedures, extensive paperwork, detailed
design specifications, and multiple
inspections and audits. It is an
extraordinary example of bureaucratic red
tape.
Like the budget and personnel systems,
the procurement system was designed with
the best of intentions. To prevent
profiteering and fraud, it includes rigid
safeguards. To take advantage of bulk
purchasing, it is highly centralized. But the
government wrote its procurement rules
when retailing was highly stratified, with
many markups by intermediaries. Today
the game has changed considerably. Retail
giants like Wal-Mart, Office Depot and
Price Club are venically integrated,
eliminating the markups of intermediaries.
Federal managers can buy 90 percent of
what they need over the phone, from mailorder discounters. Bulk purchasing still has
its advantages, but it is not always necessary
to get the best price.
Our overly centralized purchasing system
takes decisions away from managers who
know what they need, and allows
strangers--<>ften thousands of miles
away-to make purchasing decisions. The
frequent result: Procurement officers, who
make their own decisions about what to
buy and how soon to buy it, purchase lowquality items, or even the wrong ones, that
arrive too late.
E
&. COSTS LESS
This "secondhand" approach to
purchasing creates another problem. When
line managers' needs and experiences are
not understood by the procurement officer,
the government is unable to make decisions
that reward good vendors and punish bad
ones. As a result, vendors often "game"
contraru-exploiting loopholes to require
expensive changes. For example, in a major
government contract for a computerized
data network a few years ago, a vendor used
slight underestimates of system demand in
the contract specifications as an excuse to
charge exorbitant prices for system
upgrades. In the private sector, a manager
could have used the incentive of future
contracts to prevent such gaming; in the
government, there is no such leverage.
The symptoms of what's wrong are
apparent, too, from stories about small
purchases.
One story that Vice President Gore has
repeated in Washington over the past six
months concerns steam traps. Steam traps
remove condensation from steam lines in
heating systems. Each costs about $100.
But when one breaks, it leaks as much as
$50 of steam a week. Obviously, a leaking
steam trap should be replaced quickly.
When plumbers at the Sacramento
Army Depot found leaking traps, however,
their manager followed standard operating
procedure. He called the procurement
office, where an officer, who knew nothing
about steam traps, followed common
practice. He waited for enough orders to
buy in bulk, saving the government about
$10 per trap. There was no rule requiring
him to wait- just a powerful tradition. So
the Sacramento Depot didn't get new steam
traps for a year. In the meantime, each of
their leaking traps spewed $2,500 of steam.
To save $10, the central procurement
system wasted $2,500.
As the Vice President visited government
agencies, he heard many more stories of
wasteful spending-most of them
CUTIlNG
RED TAPE
"Ash receivers, tobacco (desk type) ..."
O
ur federal procurement system leaves
little to chance.
"When the General Services Adminisuation
wanted to buy ashuays, it has some very
specific ideas how those ashtrays-better
known to GSA as "ash receivers, tobacco (desk
type)," should be constructed.
In March 1993, the GSA outlined, in nine
full pages of specifications and drawings, the
precise dimensions, color, polish and markings
required for simple glass ashtrays that would
pass U.S. government standards.
A Type I, glass, square, 41h inch (I 14.3
mm) ash receiver must include several features:
"A minimum of four cigarette rests, spaced
equidistant around the periphery and aimed at
the center of the receiver, molded into the top.
The cigarette rests shall be sloped toward the
center of the ash receiver. The rests shall be
parallel to the outside top edge of the receiver
or in each comer, at the manufacturer's option.
All surfaces shall be smooth."
Government ashtrays must be sturdy too. To
produced by the very rules we have
designed ro prevent it. Take the case of
government travel.
Because GSA selects a "contract airline"
for each route, federal employees have few
choices. If Northwest has the WashingtonTampa route, for instance, federal
employees get routed through Detroit. If
Northwest has the Boston-Washington
route, employees have to use Northwesteven ifUSAir has more frequent flights at
more convenient times. Workers told the
Vice President of being routed through
thousands of miles out of their way even if
guard ~ the purchase of defective ash
receivers, the GSA required that all ashtrays be
tested. "The test shall be made by placing the
specimen on its base upon a solid support (a 1
3/4 inch, 44.5mm maple plank), placing a steel
center punch {point ground to a 60-degree
included angle} in contact with the center of
the inside surface of the bottom and striking
with a hammer in successive blows of
increasing severity until breakage occurs."
Then, according to paragraph 4.5.2., "The
specimen should break into a small number of
irregular shaped pieces not greater in number
than 35, and it must not dice." What does
"dice" mean? The paragraph goes on to
explain: "Any piece 114 inch (6.4 mm) or more
on any three of its adjacent edges (excluding
the thickness dimension) shall be included in
the number counted. Smaller fragments shall
not be counted."
~onM-A-71OE,
(superseding Regu1arion M-A-710D).
it cost them a day's worth of time-and a
day's worth of taxpayers' money. Others
told of being unable to take advantage of
cheap "special fares" because they were not
"government fares." And one worker
showed the National Performance Review a
memo from the Resolution Trust
Corporation explaining that RTC workers
would not be reimbursed for any travel
expenses unless they signed their travel
vouchers in blue ink!
Beyond travel, at every federal agency the
Vice President visited, employees told
stories about not getting supplies and
27
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
equipment they needed, getting them late,
or watching the government spend too
much for them. At the Depanment of
Health and Human Services, a worker told
the Vice President that no matter how
much his office needed a FAX machineand how much time the machine would
save workers-the purchase wouldn't be
possible "without the signarure of everyone
in this room." An engineer from the
National Institutes of Health added that in
his agency, it takes more than a year to buy
a computer, not a mainframe, but a
personal computer! At the Transportation
Department, a hearing-impaired employee
told the Vice President of watching with
dismay as her agency spent $600 to buy her
a Telephone Device for the Deaf (TDD),
when she knew she could buy one off the
shelf for $300.
Anecdotes like these were documented in
January 1993, when the Office of Federal
Procurement Policy and the U.S. Merit
Systems Protection Board collaborated on a
survey of the procurement system's
customers: federal managers. More than
1,000 responded. Their message: The
system is not achieving what irs customers
want. It ignores its customers' needs, pays
higher prices than necessary, is filled with
peripheral objectives, and assumes that line
managers cannot be trusted.
A study by the Center for Strategic and
International Studies added several other
conclusions. The procurement system adds
costs without adding value; it impedes
government's access to state-of-the-an
commercial technology; and its complexity
forces businesses to alter standard
procedures and raise prices when dealing
with the government. 31
There is little disagreement that federal
procurement must be reconfigured. We
must radically decentralize authority to line
managers, letting them buy much of what
they need. We must radically simplify
procurement regulations and processes.
We must empower the system's customers
by ending most government service
monopolies, including those of the General
Services Administration. As we derailed in
& COSTS LESS
Chapter 1, we must make the system
competitive by allowing managers to use
any procurement office that meets their
needs.
As we take these actions, we must
embrace these fundamental principles:
integrity, accountability, professionalism,
openness, competition-and value.
Action: Simplify the procurement
process by rewritingfetleral regulAtions-shiftingfrom rigid rules to guUling
principks.32
The Federal Acquisition Regulation
(FAR), the government's principal set of
procurement regulations, COntains too
many rules. Rules are changed too often
and are so process-oriented that they
minimize discretion and stifle innovation,
according to a Merit Systems Protection
Board survey.33 As one frustrated manager
noted, the FAR does not even clearly state
the main goal of procurement policy: "Is it
to avoid waste, fraud, and abuse? Is it to
implement a social-economic agenda? Is it
to procure the government's requirements at
a fair and reasonable cost?"
This administration will rewrite the
1,600-page FAR, the 2,900 pages of agency
supplements that accompany it, and
Executive Order 12352, which governs
federal procurement. The new regulations
will:
• shift from rigid rules to guiding
principles;
• promote decision making at the lowest
possible level;
• end ~necessary regulatory
reqwrements;
• foster competitiveness and commercial
practices;
• shift to a new emphasis on choosing
"best val"
ue prod uers;
CUTIING RED TAPE
• facilitate innovative contracting
approaches; and
• recommend acquisition methods that
reflect information technology's short
life cycle.
• develop a more effective process to
listen to its customers: line managers,
government procurement officers and
vendors who do business with the
government.
Action: The GSA wiD significantly
increase its delegated authority to federal
agencies for the purchase ofinfo17lUltion
technology, including hardware, software,
and services.34
In 1965, when "automated data
processing" meant large, mainframe
computers --often developed specifically
for one customer-Congress passed the
Brooks Act. It directed GSA to purchase,
lease, and maintain such equipment for the
entire federal government. The Act also
gave GSA authority to delegate to agencies
these same authorities. In 1986, Congress
extended the requirement to software and
support servICes.
Today, with most computer equipment
commercially available in highly
competitive markets, the advantages of
centralized purchasing have faded and the
disadvantages grown. The federal
government takes, on average, more than
four years to buy major information
technology systems; the private sector takes
13 months. Due to rapidly changing
technology, the government often buys
computers that are state-of-the-art when the
purchase process begins and when prices are
negotiated, but which are almost obsolete
when computers are delivered. The
phenomenon is what one observer calls
"getting a 286 at a 486 price."
Currently, the GSA authorizes agencies
to make individual purchases up to $2.5
million in equipment and services on their
own. The GSA Administrator will raise
authorization levels to $50 million, $20
million and $5 million. These levels will be
calculated according to each agency's size,
the size of its information technology
budget, and its management record. In
some cases, GSA may grant an agency
greater or unlimited delegation.
GSA will also waive requirements that
agencies justify their decisions to buy
information technology items under
$500,000 that are mass-produced and
offered on the open market.
Action: GSA wiD simplify the .
procurement process by allowing agencies
to buy where they want, and testing a
fuOy t'electronic marketplace. "35
The government buys everything from
forklifts and snowplows to flak jackets and
test rubes through a system called the
Multiple Award Schedule program, which
includes more than one million separate
items.
Under this program, GSA negotiates and
awards contractS to multiple vendors of
comparable productS and services, at
varying prices. GSA then creates a "supply
schedule" for a particular good or service,
identifying all vendors that have won
contractS as well as the negotiated prices. Of
GSA's 154 schedules, civilian agencies must
must buy from 117. In ordering from
schedules, agencies still must comply-in
addition-with the Federal Acquisition
Regulation, Federal Information Resources
Management Regulation, and Federal
Property Management Regulation.
In most cases, we should not limit
managers to items on the supply schedules.
If they can find the same or a comparable
product for less, they should be free to buy
it. Mandatory schedules should apply only
when required by law, to ensure
standardization, or when agencies
voluntarily create tearn pools that buy in
bulk for lower prices. In addition, GSA
should revise regulations that currently limit
agencies from buying more than $300,000
of information technology items on supply
29
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
schedules, raise them to $500,000 and
provide a higher limit for individual items
costing more than $500,000.
To make supply schedules more userfriendly, GSA should conduct several pilot
tests. One should test an "electronic
marketplace," in which GSA would not
negotiate prices. Instead, suppliers would
list products and prices electronically, and
agencies would electronically order the
lowest-priced item that met their needs.
Suppliers, at any time, would be able to add
new products and change prices. Such a
pilot would test whether visible price
competition will cut prices and give line
managers easier access to rapidly changing
products.
Action: Allow agencies to mAke
purchases uruler $1{)(),(}{)()
simplified purchase procedures.
throT
Under current law, agencies are allowed
to make purchases ofless than $25,000 on
their own, using simple procurement
procedures. These small purchases, on
average, take less than a month to complete;
purchases of more than $25,000 normally
take more than three months. If Congress
raised the threshold to $100,000, agencies
could use simplified procedures on another
45,550 procurements-with a total value of
$2.5 billion.
Congress should keep current rules that
reserve small purchases for small businesses
and should improve access to information
on procurements of more than $25,000. To
ensure that small business receives adequate
notice of possible procurements, the federal
government, with OMB as the lead agency,
should adopt an electronic notification
system.
Action: Rely more on the commercUJ
marketplace.37
The government can save enormous
amounts of money by buying more
commercial products instead of requiring
products to be designed to governmentunique specifications. Our government
buys such items as integrated circuits,
pillows, and oil pans, designed to
government specifications--even when
there are equally good commercial products
available.
We recommend that all agency heads be
instructed to review and revise internal
purchasing procedures and rules to allow
their agencies to buy commercial products
whenever practical and to cake advantage of
market conditions.
We will ask the Office of Management
and Budget to draft a new federal
commercial code with commercial-style
procedures, and then ask Congress to adopt
the new code and remove impediments to
this money-saving approach to
procurement.
Action: Bringfederal procurement Itzws
up to d4te.38
There are four federal labor laws
implemented through the federal
procurement process. Each was passed
because of valid and well founded concerns
about the welfare of working Americans.
But as part of our effort to make the
government's procurement process work
more efficiently, we must consider whether
those laws are still necessary-and whether
the burdens they impose on the
procurement system are reasonable ones.
The Davis-Bacon Act of 1931 requires
that each repair or construction contract in
excess of $2,000 for work on a public
building specify that the prevailing area
minimum wage be paid to workers on that
contract. The law was passed because
Congress feared that without it, federal
contracts awarded through a sealed bid
process could undermine local prevailing
wages. While Congress shifted the
government's focus to an open bidding
process in 1984, we acknowledge that
concerns about the impact of government
contracts on prevailing wages are still valid.
Recognizing that the original $2,000
threshold in the law was set more than 60
years ago, we recommend that Congress
modify the Davis-Bacon Act by raising the
CUTIlNG
threshold for compliance to $100,000, a
change similar to that proposed by Senator
Kennedy in March 1993.
The Service Contract Act of 1965 has
purposes similar to those of the Davis-Bacon
Act, and applies to service contracts in excess
of $2,500. It requires contractors to pay the
minimum prevailing wage and specified
fringe benefits. To keep contractors from
"locking in" their wage agreements at low
levels, the law imposes a five-year limit on
service contracts and requires new wage
determinations every two years.
We suggest that the five-year limit is
inconsistent with the government's interest
in entering into long-range contracts. We
will urge Congress to increase the limit up
to 10 years while retaining the two-year
wage adjustment requirement.
The Copeland Anti-Kickback Act of
1934 regulates payroll deductions on federal
and federally assisted construction. The law
prohibits anyone from inducing employees
to give up any pan of their compensation
and requires contractors to submit weekly
statements of compliance and detailed
weekly payroll reports to the Labor
Depanment.
We suggest that such detailed reporting is
STEP
RED
TAPE
an unreasonable burden on federal
contractors, and we will urge Congress to
modify the act. We suggest eliminating
requirements for weekly reports and
requiring contractors instead to certify with
each payment that they have complied with
the law. Contractors would also be required
to keep records to prove their compliance
for three years.
The Walsh-Healey Public Contracts Act
requires contractors that supply materials to
the federal government through contracts in
excess of $1 0,000 to pay all workers the
federal minimum wage, to agree that no
employee is required to work more than 40
hours a week, and to avoid using convict
labor or workers under the age of 16.
Over time, each of the requirements of
the Walsh-Healey Act-with the exception
of the provision relating to convict laborhas been superseded by other federal
legislation. We therefore urge Congress to
remove the burden of certifying compliance
with redundant laws from federal
contractors. Within 30 days of the repeal of
that law, the President should amend
Executive Order 11755 to include the
convict labor provisions of the WalshHealey Act.
4: REORIENTING THE INSPECTORS
GENERAL
esponding to growing concern
about waste, fraud, and abuse in
government, Congress passed the
Inspector General Act in 1978. This act
and subsequent amendments created the 60
Inspectors General offices that today
employ 15,000 federal workers, including
postal inspectors.
The act was broad in scope, requiring
I Gs to promote the efficiency, economy and
integrity of federal programs with auditing
program expenditures, and investigating
possible fraud and abuse.
The inspectors general, who are
independent of the agencies in which they
operate, report to Congress twice a year.
R
These reports detail how much money IG
audits have recovered or put to better use
and the number of convictions resulting
from their criminal investigations. The IGs
also send the audit reports to the heads of
their agencies and forward investigations for
criminal prosecution to the U.S. Attorney
General.
The Inspector General Act's two central
mandates, combined with the last two
administrations' eagerness to highlight
"waste, fraud and abuse," have shaped the
evolution of the IG offices. The standard bv
which they are evaluated is finding error or'
fraud: The more frequently they find
mistakes, the more successful, they are
31
FROM RED TArE TO RESULTS • CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
judged to be. As a result, the IG sraffi often
develop adversarial relations with agency
managers--who, in trying to do things
better, may break rules.
At vinually every agency he visited, the
Vice President heard federal employees
complain that the IGs' basic approach
inhibits innovation and risk taking. Heavyhanded enforcement-with the IG
watchfulness compelling employees to
follow every rule, document every decision,
and fill out every form-has had a negative
effect in some agencies.
Action: Broatkn the focus ofthe
Inspectors Genn-alfrom stria compliAnce
auditing to evalUtlting mIl1Ulgement
control systems.39
.
In a government focused on results, the
Inspectors General can playa key role not
only in controlling managers' behavior by
monitoring it, but in helping to improve it.
Today, they audit for strict compliance with
rules and regulations. In the furure, they
should help managers evaluate their
management control systems. Today, they
look for "waste, fraud, and abuse." In the
future, they should also help improve
systems to prevent waste, fraud and abuse,
and ensure efficient, effective service.
Many IGs have already begun to help
their agencies this way. At the Justice
STEP
R
Deparunent, for example some offices were
inefficient in completing background and
security clearances. The Inspector General's
office examined the problem, then
recommended setting up a central database
to manage the clearance process and warn
officials automatically when they are about
to miss deadlines for completing
investigations. Similarly, the Inspector
General of the Department of Health and
Human Services has long been engaged in
program evaluations to help agencies
uncover inefficiencies. While the Inspector
General's office retains the right to conduct
formal audits ;md criminal investigations, it
also uses its role as a neutral observer to
collaborate on making programs work
better.
Congress need pass no legislation to
make this happen. Promoting the efficiency
and integrity of government programs was
pan of the IGs' original mandate. But such
change will require a cultural revolution
within many IG offices, and we
recommend two steps to help guide such a
change. First-line managers, who are the IG
front-line customers, should be surveyed
periodically to see whether they believe the
IGs are helping them improve performance.
Second, criteria should be established for
judging IG performance.
5: EUMINATING REGUlATORY OVERKILL
einventing our budget, personnel
and procurement systems will strip
away much--but not all-of the
red tape that makes our governing processes
so cumbersome. Thousands upon thousands
of outdated, overlapping regulations remain
in place. These regulations affect the people
inside government and those who deal with
it from the outside. Inside government, we
have no precise measurement of how much
regulation coSts or how much time it steals
from productive work. But there's no
disagreement that the CoSts are enormous.
And on the matter of external regulation, a
1993 study concluded that the cost to the
private sector of complying with regulations
is at least $430 billion annually-9 percent
of our gross domestic product! 40
We must clear the thicket of regulation
by undertaking a thorough review of the
regulations already in place and redesigning
regulatory processes to end the proliferation
of unnecessary and unproductive rules. We
have worked closely with administration
officials responsible for developing a new
approach to regulatory review, and
incorporated that work into the following
actIon.
CU1TING
Action: The President should issue a
directive requiring aDfederal agencies to
review internAl government regulations
over the next 3 years, with a goal of
ellm~g50p~entoftho~
regulations.41
Can regulations be eliminated? The
answer is yes, as evidenced by promising
experiments in several federal agencies.
In the Management Efficiency Pilot
Program (MEPP) in five of the Department
of Veterans' Affairs regional benefits offices,
the offices were encouraged to do away with
red tape.42 At several benefits offices, 895 of
1,969 regulations were dropped, saving the
staff more than 3,000 hours and $640,000
in one year. And productivity at MEPP
centers increased by 35 percent in one year
(1988-89), more than double the increase at
other centers. A similar effort by five VA
medical centers redirected $13.1 million to
much-needed funding for acute care centers.
An even more sweeping example of a
fresh stan in internal regulations comes
from the Air Force, where the Chief of Staff
has established a servicewide program to
streamline the organization and cut out
bureaucracy. Under the Policy Review
Initiative begun in 1992, the Air Force is
replacing 1,510 regulations with 165 policy
directives and 750 sets of instructions. This
effort will cut 55,000 pages of intermingled
policy and procedure to about 18,000 pages
clearly separating policy from procedure.
This deregulation effort, managed by a staff
of 10, is expected to be completed in fiscal
year 1994.
Over the next 3 years, each federal
agency will undertake a thorough and
systematic review of its internal regulations.
Agencies may choose their own strategies
for reaching the goal of reducing internal
regulations by 50 percent.
Action: Improve inter-agency
coordination ofregulations to reduce
unnecessary regulation and red tape. 43
In 1981, frustrated at the inconsistencies
and duplication among federal regulatory
RED
TAPE
efforts and their burden on government and
the private sector, President Reagan required
the Office of Management and Budget
specifically, the Office of Information and
Regulatory Affairs (OIRA) to review all
regulations proposed by executive agencies.
With a limited staff, many of whom are
also involved with paperwork reduction
issues, the review process for proposed
regulations can be lengthy. And while a
lengthy review process may be appropriate
for significant rules, it is a waste of time
for others.
We can lick gravity, but sometimes the
papmoork is ovnwhelming.
Wemher von Braun
In early 1993, Vice President Gore
convened an informal working group to
recommend changes in the regulatory
review process. The working group and the
National Performance Review coordinated
their efforts closely. We endorse the
recommendations of the working group
and the President's executive order, which
will implement those changes and
strearnline the regulatory review process.
The order will enhance the planning
process and encourage agencies to consult
with the public early in that process. In
addition, in an effort to coordinate the
regulatory actions of all executive agencies, the
Vice President will meet annually with agency
heads, and the Administrator of OIRA will
hold quarterly meetings with representatives
of executive agencies and the administration.
Improving the regulatory review process
also means being selective in reviewing
regulations. Through this order, the
President will instruct OIRA to review only
significant regulations--not, as under the
current process, aU regulations. The new
review process, which will take into account
a broad range of costs and benefits, will be
more useful and realistic.
33
FROM RED TAI'E TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
To ease the adverse effects of regulation
on citizens, businesses, and the economy as
a whole, the executive order also will require
an ongoing review of existing regulations.
Agencies will identify regulations that are
cumulative, obsolete, or inconsistent, and,
where appropriate, eliminate or modify
them. They will also identify legislative
mandates that require them to impose
unnecessary or outdated regulations.
Action: Establish a process by which
agerzcks can more widely obtain waivers
from regulAtions. 44
With the advent of the Government
Performance and Results Act, which
Congress passed in July 1993, we have
begun to acknowledge the important
principle of "flexibility in return for
accountability."
Under the act, some agencies may apply
for waivers from federal regulations if they
meet specific performance targets. In other
words, they will be exempt from some
administrative requirements if they do their
jobs bener. The law applies only to internal
regulations and government agencies, but it
also urges wider waivers authority to test the
potential benefits. In the spirit of that
legislation, we seek to expand the concept of
greater flexibility for greater accountability.
The President should direct each federal
agency to establish and publish, in a timely
manner, an open process through which
other federal agencies can obtain waivers
from that agency's regulations-with an
expedited appeals process.
Rules adopting this new waiver process
would state that all future agency regula-tions
would be subject to the waiver process unless
explicitly prohibited. We will also ask
Congress to specify that legislation would be
subject to waivers unless explicitly prohibited.
Action: Reduce the burden of
congressionally mandated reports. 45
Woodrow Wtlson was right. Our
country's 28th president once wrote that
"there is no distincter tendency in
& COSTS LESS
congressional history than the tendency to
subject even the derails of administration"
to constant congressional supervision.
One place to stan in liberating agencies
from congressional micromanagement is the
issue of reponing requirements. Over the
past decades, we have thrown layer upon
layer of reponing requirements on federal
agencies, creating an almost endless series of
required audits, reports, and exhibits.
Today the annual calendar is jammed with
repon deadlines. On August 31 of each year,
the Chief Financial Officers (CFO) Aa
requires that agencies file a 5-year financial
plan and a CFO annual repon. On
September 1, budget exhibits for financial
management activities and high risk areas are
due. On November 30, IG reports are
expected, along with reports required by the
Prompt Payment Act. On January 31 ,
reports under the Federal Civil Penalties
Inflation Repon Adjustment Act of 1990
come due. On March 31, financial statements are due and on May 1 annual singleaudit reports must be filed. On May 31
another round ofI G reports are due. At the
end oOuly and December, "high-risk"
reports are filed. On August 31, it all begins
again. And these are just the major reports!
In fiscal year 1993, Congress required
executive branch agencies to prepare 5,348
reports. 46 Much of this work is duplicative.
And because there are so many different
sources of information, no one gets an .
integrated view of an agency's conditionleast of all the agency manager who needs
accurate and up to date numbers.
Meanwhile, trapped in this blizzard of
paperwork, no one is looking at results.
We propose to consolidate and simplify
reponing requirements, and to redesign
them so that the manager will have a dear
picture of the agency's financial condition,
the condition of individual programs, and
the extent to which the agency is meeting its
objectives. We will ask Congress to pass
legislation granting OMB the flexibility to
consolidate and simplify statutory reports
and establishing a sunset provision in any
reponing requirements adopted by
Congress in the future.
CU1TING RED TAPE
STEP
6: EMPOWER STATE AND
loCAL GOVERNMENTS
hat we usually call
"government" is, in fact, a
tangle of different levels of
government agencies--some run from
Washington, some in state capitals, and
some by cities and towns. In the United
States, in fact, some 80,000 "governments"
run everything from local schools and water
supply systems to the Defense Depanment
and overseas embassies. Few taxpayers
differentiate among levels of government,
however to the average citizen, a tax is a
tax-and a service a service--regardless of
which level of government is responsible. To
reinvent government in the public's eyes, we
must address the web of federal-state-Iocal
relations.
Washington provides about 16 percent of
the money that states and localities spend
and shapes a much larger share of such
spending through mandates. Much of
Washington's domestic agenda, $226 billion
to be precise, consists of programs acrually
run by states, cities, and counties. But the
federal government doesn't always distribute
its money----or its mandates--wisely.
For starters, Washington allocates federal
money through an array of more than 600
different grant programs. Many are small:
445 of them distribute less than $50 million
a year nationwide; some 275 distribute less
than $10 million. Through grants,
Congress funds some 150 education and
training programs, 100 social service
programs, and more than 80 health care
programs.
Considered individually, many
categorical grant programs make sense. But
together, they often work against the very
purposes for which they were established.
When a depanment operates small grant
programs, it produces more bureaucr~cy,
nor more services. Thousands of public
employees--at all levels of ~~vemment-.
spend millions of hours wntIng regulatIons,
W
writing and reviewing grant applications,
filling out forms, checking on each other,
and avoiding oversight. In this way,
professionals and bureaucrats siphon money
from the programs' intended customers:
students, the poor urban residents and
others. And states, and local governments
find their money fragmented into hundreds
of tiny pots, each with different, often
contradictory rules, procedures, and
program reqwrements.
Henry Cisneros, Secretary of Housing
and Urban Development, likens federal
grants to a system of pipelines spreading out
across the country. The "water," says
Cisneros, reaches states and localities
Wen' we directedfrom Washington when to
sow and when to reap, we should soon want for
bread.
Thomas Jeffenon
1826
through hundreds of individual pipelines.
This means there is little chance for the
water to be mixed, properly calibrated to
local needs, or concentrated to address a
specific problem, geographic area, or
population.
In employment and training, for
example, Washington funds training
programs, literacy programs, adult
education programs, tuition grant
programs, and vocational education
programs. Different programs are designed
for different groups-welfare recipients,
food stamp recipients, displaced
homemakers, youth in school, drop-outs,
"dislocated workers," workers displaced by
foreign trade, and on and on.
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER lie COSTS LESS
At a plant in Pittsfield, Massachusetts,
General Electric recently laid off a large
group of workers. Some workers could get
Trade Adjustment Assistance benefits,
because their jobs were lost to foreign
competition. Others could not; their jobs
fell to defense cutbacks. Because they have a
union, people working in one area began
exercising their seniority rights and
bumping people in other areas. Some
workers bumped from trade-affected jobs to
defense contracting jobs, then lost those a
few weeks later. Under federal regulations,
they could no longer get Trade Adjustment
Assistance. Thus, friends who had spent
years working side by side found themselves
with very different benefits. Some got the
standard 6 months of unemployment
checks. Others got 2 years of
unemployment checks and extensive
retraining support. Try explaining that to
people who have lost the only jobs they've
ever held!
People who run such programs struggle
to knit together funds from three, four, or
five programs, hoping against hope that
workers get enough retraining to land
decent new jobs. But the task is difficult;
each program has its own requirements,
funding cycles, eligibility criteria, and the
like. One employment center in Allegheny
County, New York, has tried hard to bring
several programs together and make them
appear as seamless as possible to the
customers. At the end of the day, to
accommodate reporting requirements, the
staff enters information on each customer at
four different computer terminals: one for
Job Training Pannership Act OTPA)
programs, one for the JOBS program, one
for the Employment Service, and one for
tracking purposes.
When Congress enacted JTPA, it sought
to avoid such problems. It let local areas
tailor their training programs to local needs.
But federal rules and regulations have
gradually undermined the good intentions.
Title III, known as the Economic
Dislocation and Worker Adjustment
Assistance Act (EDWAA), helps states
respond immediately to plant closings and
large layoffs. Yet even EDWMs most
flexible money, the "national reserve fund,"
has become so tangled in red tape that
many states won't use it. As Congress's
Office of Technology Assessment put it,
"the process is simply too obstacle ridden ....
many state EDWM managers cannot
handle the complexities of the grant
application, and those that do know how
are too busy responding to clients' urgent
needs to write demanding, detailed grant
proposals. "
When Congress amended JTPA in 1993,
targeting more funds to those with
"multiple barriers" to employment,
homeless advocates thought the change
would help their clients. After all, who has
more barriers to employment than someone
without an address or phone number? But
the new JTPA formula also emphasized
training over job search assistance. So a local
program in Washington, D.C. that had
won a Labor Department award for placing
70 percent of its clients in jobs--many of
them service sector jobs paying more than
the minimum wage-lost its JTPA funding.
Why? It didn't offer training. It just helped
the homeless find jobs. 47
But federal programs rarely focus on
results. As strucrured by Congress, they pay
more attention to process than outcomesin this case, more to training than to jobs.
Even in auditing state and local programs,
federal overseers often do little more than
check to see whether proper forms are filed
in proper folders.
The rules and regulations behind federal
grant programs were designed with the best
of intentions--to ensure that funds flow for
the purposes Congress intended. Instead,
they often ensure that programs don't work
as well as they could-<>r don't work at all.
Vinually every expert with whom .
we spoke agreed that this system is
fundamentally broken. No one argued for
marginal or incremental change. Everyone
wants dramatic change-state and local
officials, federal managers, congressional
staff. As in managing its own affairs, the
federal government must shift the basic
paradigm it uses in managing state and local
CUTTING RED TAPE
affairs. It must stop holding programs
accountable for process and begin holding
them accountable for results.
• The task is daunting; it will take years
to accomplish. We propose several
significant steps on the journey:
• Establish a Cabinet-level Enterprise
Board to oversee new initiatives in
community empowerment;
• Cut the number of unfunded mandates
that Washington imposes;
Sometimes we need to start out with a blank
slate and SIl}
weve been doing this.for
the last 40, 50 years. It doesn't work. "La's
throw out everything, ckar out minds... Lets
have as a goal doing the right thingfor the
right reasons, tven ifit entails taking risks.
ney,
V"mcent Lane,
Chairman, Chicago Housing Authority,
Reinventing Government Summit
Philaddphia, June 25, 1993
• Consolidate 55 categorical grants into
broader "flexible grants;"
The likely benefits are clear:
administrative savings at all levels; greater
flexibility to design solutions; more effective
concentration of limited resources; and
programs that work for their customers.
rather than "top-down" requirements. It will
focus on the administration's community
empowerment agenda, beginning with the
9 Empowerment Zones and 95 Enterprise
Communities that passed Congress as part
of the President's economic plan.
In participating communities, for
example, federal programs could be
consolidated and plarming requirements
could be simplified; waivers would be
granted to assure maximum flexibility;
federal funding cycles would be
synchronized; and surplus federal properties
could be designated for community use.
Action: The President shou/J establish
Action: The President shou/J issue a
a CAbinet-level Enterprise Board to
oversee new initiatives in community
directive limiting the use ofunfunded
manJAtes by the administration. 49
• Increase state and local flexibility in
using the remaining categorical grants;
.• Let all agencies waive rules and
regulations when they conflict with
results; and
• Deregulate the public housing program.
empowerment. 48
The federal government needs to better
organize itself to improve the way it works
with States and localities. The President
should immediately establish a working
group of cabinet-level officials, with
leadership from the Vice President, the
Domestic Policy Council, and the National
Economic Council.
The Board will look for ways to
empower innovative communities by
reducing red tape and regulation on federal
programs. This group"will be co~i~~d. to
solutions that respect bottom-up mltlanves
As the federal deficit mounted in the
1980s, Congress found it more and more
difficult to spend new money. Instead, it
often turned to "unfunded mandates"passing laws for the states and localities to
follow, but giving them little or no money
to implement those policies. As of
December 1992, there were at least 172
separate pieces of federal legislation in force
that imposed requirements on state and
local governments. Many of these, such as
clean water standards and increased public
access for disabled citizens, are
unquestionably noble goals.
37
FROM RED TArE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
But the question remains: How will state
and local governments pay to meet those
goals? We recommend that Congress refrain
from this practice and that the President's
directive establish that the executive branch
will similarly limit its use of unfunded
mandates in policies, legislative proposals
and regulations.
The directive would narrow the
circumstances under which departments
and agencies could impose new unfunded
burdens on other governments. It also
would direct federal agencies to review their
existing regulations and reduce the number
of mandates that interfere with effective
service delivery. OMB's Office of
Information and Regulatory Affairs (OIRA)
should review all major regulations or
legislation proposed by the executive branch
for possible adverse impaCts on states and
localities. Finally, aIMs director should
& COSTS LESS
create a forum in which federal, state, and
local officials could develop solutions to
problems involving unfunded mandates.
Action: ConsolitUtte 55 categorical grant
programs with fimJing 0/$12.9 biINon
into six broaJ IJlexibIe grllnts"-m joh
trllining, etluctztion, Wilter tpuzlity,
Jefonse conversion, mvironmmtAl
11Ulnllgemmt, muJ motor cll1Tier 1Iljet:y.50
This proposal came from the National
Governors Association (NGA) and
National Conference of State Legislatures
(NCSL), which describe it as "a first step
toward broader, more ambitious reforms."
It would consolidate some 20 education,
employment and training programs, with a
combined $5.5 billion in fiscal year 1993
spending; roughly 10 other education
programs ($1.6 billion); 10 small
How Much Do You Get for a 1983 Toyota?
,,\VJhat does the price of a used car have to
W do with the federal government's &mi.Iy
policies?
More than it should. Caseworkers employed
by state and local government to work with .
poor families are supposed to help those
families become self-sufficient. Their job is to
understand how federal programs work. But as
it rums out, those caseworkers also have to
know someching about used cars. Used cars?
That's right. Consider this example, recounted
to Vice President Gore at a July 1993
Progressive Foundation conference on family
policy in Nashville, Tennessee:
Agencies administering any of the federal
government's programs for the poor must verify
many details about people's lives. For instance,
they must verify that a family receiving funds
under Aid to Families with Dependent
Children (AFDC) does not own a car worth
more than $1,500 in equity value. To give a .
poor family food stamps, it must verify that the
fiunily doesn't own a car worth more than
$4,500 in marka value. Medicaid specifies a
range that it allows for the value of a recipient's
car, depending on the recipient's Medicaid
category. But under food stamp rules, the car is
exempt if it is used for work or training or
transporting a disabled person. And under
AFDC, there is no exemption for the car under
any arcumstances.
Recounting that story to a meeting of the
nation's governors, the Vice President asked this
simple question: "Why can't we talk about the
same car in all three programs?"
CUlTING RED TAPE
environmental programs ($392 million);
six water quality programs ($2.66 billion);
and six defense conversion programs
($460 million).
Action: Congress shouUl alJow states and
localities to consoliJate separate grant
programs from the bottom up.51
Recognizing the political and
administrative obstacles to wholesale reform
of more than 600 existing categorical grants
in the short term, the National Performance
Review focused on an innovative solution
to provide flexibility and to encourage
result-oriented performance at the state and
local levels.
Our proposal calls for Congress to
authorize "bottom-up" grant consolidation
initiatives. Localities would have authority
to mix funding from different programs,
with simple notification to Washington,
when combining grants smaller than $10
million each. For a consolidation involving
any program funded at more than $10
million, the federal awarding office (and
state, if applicable), would have to approve
it before implementation. In return for such
consolidation, the state and local
governments will waive all but one of the
programs' administrative payments from
the federal government.
When different grants' regulations
conflict, the consolidating agency would
select which to follow. States and localities
that demonstrated effective service
integration through consolidation would
receive preference in future grant awards.
Each of the partners in the
intergovernmental system must work
collaboratively with others-federal, state,
and local-to refine this recommendation.
The details of this proposal will be
negotiated with important state and local
organizations, such as the NGA, the NCSL,
u.S. Conference of Mayors, and the
National League of Cities, before legislation
is drafted. Bottom-up consolidation will be
given a high priority by the administration.
It represents a way to improve state and
local performance without tackling the
thorny political problem involved in
consolidating 600 grant programs,
reconciling thousands of rules and
regulations, and anticipating every possible
instance when flexibility might be necessary.
It puts the burden of identifying obstacles
and designing the best solution where it
belongs--on those who must make the
programs work.
Action: Give all cabinet secretaries and
agency heaJs authority to grant states and
localities selective waiversfrom federal
regulations or mandates. 5.
The National Performance Review is not
intended to be the final word on reinventing
government but rather a first step. This long
overdue effort will require continuing
commitmentfrom the very top to trury change
the way government does business.
u.s. Rep. John Conyers (D. Mich.)
August 28, 1993
For federal grant programs to work,
managers must have flexibility to waive
rules that get in the way. Some departments
have this authority; others don't. Federal
decisions on most waivers come very slowly,
and states often must apply to a half-dozen
agencies to get the waivers they need.
Florida, for example, has a two-year waiver
allowing it to provide hospice care to AIDS
patients under Medicaid. Its renewal rakes
18 months. So state officials have to reapply
after only six months. Waiver legislation
should grant broad waiver authority, with
the exception of fair housing, nondiscrimination, environmental, and labor
standards. We will ask Congress to grant
such authority to Cabinet officers. These
waivers, should be granted under limited
circumstances, however. They must be
time-limited and designed to include
performance measures. When each
39
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
experiment is concluded, the granting
agency should decide whether the new way
of doing things should be included in
standard practice.
Action: Give control ofpublic housing
to IoClll public housing authorities with
histories ofexceOent 71Ulnagement and
subSUlntially deregulAte the rest. 53
Public housing is a classic story of good
intentions gone awry. When the program
began in the 1930s, it was hailed as an
enlightened response to European
immigrants' squalid living conditions in
cities across the country. Through an
enormous bureaucracy stretching from
Washington into virrually every city in
America, the public housing program
brought clean, safe, inexpensive living
quaners to people who could not afford
them otherwise.
Now, however, public housing is even
more troubled than our categorical grant
programs. With its tight, centralized
control, it epitomizes the industrial-era
program: hierarchical, rule-bound, and
bureaucratic. HUD's Washington, regional,
and local offices rigidly control local public
housing authorities, who struggle to help
the very poor.
Frustrated by the failure of public
housing, innovative state and local
governments began to experiment with new
models of developing, designing, financing,
managing, and owning low-income
housing. Successful efforts tailored the
housing to the characteristics of the
surrounding community. Local public
housing authorities began to work with
local governments and non-profit
8£ COSTS LESS
. .
...
orgamzatIons to create InnovatIve new
models to serve low-income people.
HUD recognizes that local authorities
with proven records of excellence can serve
their customers far bener if allowed to make
their own decisions. We and the secretary
recommend that Congress give HUD
authority to create demonstration projects
in which local housing authorities would
continue to receive operating subsidies as
long as they met a series of performance
targets, but would be free from other HUD
control. Individual demonstrations could
vary, but all federal rules would be open for
waivers as long as HUn could measure
performance in providing long-term,
affordable housing to those poor enough to
be eligible for public housing.
In addition, HUD should work closely
with local housing authorities, their national
organizations, public housing tenant
organizations, and state and local officials to
eliminate unnecessary rules, requirements,
procedures, and regulations. In particular,
HUD should replace its detailed
procurement and operating manuals and
design and site selection requirements with
performance measures, using annual
ranking of local housing authorities to
encourage better service and greater
accountability. It should eliminate the
annual budget review, an exercise in which
HUn field staff spend thousands of hours
reviewing and approving detailed budgets
from local housing authorities --even
though the reviews do not influence federal
funding decisions. And it should work with
Congress to change current rent rules,
which create strong incentives for people to
move from public housing as soon as they
find jobs.
CUTTING RED TAPE
Conclusion
T
he changes described above are
ambitious. They will take enormous
effon and enormous will. It will be
many years before all of them take root. But
if they succeed, the American people will
have a government capable of attacking
their problems with far more energy, and far
less waste, than they can today imagine.
We must move quickly because the
bureaucracy, by its nature, resists change. As
Tom Peters wrote in Thriving on Chaos,
"Good intentions and brilliant proposals
will be dead-ended, delayed, sabotaged,
massaged to death, or reversed beyond
recognition or usefulness by the overlayered
structures .... "54
But the changes we propose will produce
their own momentum to overcome
bureaucratic resistance. As the red tape is
being cut, federal workers will become more
and more impatient with the red tape that
remains. They will resist any reversal of the
process. And they will be strengthened in
their resistance by the steps we propose in
the next chapters.
41
Chapter 2
PUTTING CUSTOMERS FIRST
~ are going to rationalize the way the federal government relates to the
American people, and we are going to make the federal government customer friendly.
A lot ofpeople don! realize that the federal government has customers.
~ have customers. The American people.
Vice President AI Gore
Town Meeting,
Department of Housing
and Urban Development,
March 26, 1993
11 of us-bureaucrat or
business owner, cabinet
secretary or office
clerk-respond to
incentives. We do more
of what brings us
rewards and recognition, less of what
brings us criticism. But our government,
built around a complex cluster of
monopolies, insulates both managers and
workers from the power of incentives.
We must change the system. We must
force our government to put the customer
first by injecting the dynamics of the
marketplace.
The best way to deal with monopoly is to
expose it to competition. Let us be clear:
this does not mean we should run
government agencies exactly like private
businesses. After all, many of government's
functions are public responsibilities precisely
because the private sector cannot, should
not, or would not manage them. But we
can transplant some aspects of the business
world into the public arena. We can create
an environment that commits federal
managers to the same struggle to cut costs
and improve customer service that compels
private managers. We can imbue the federal
government-from top to bottom-with a
driving sense of accountability.
Is it really possible to reinvent
government in this way? Horror stories
about government waste are so abundant
that many doubt its ability to change. For
some, the only solution is to cut or abolish
programs wholesale. In some instances
those cuts make sense and we are
recommending them. But alone they do not
address the problem we face or move us
decidedly toward a government that works
better and costs less.
We propose a different approach. We
must make cuts where necessary; we also
must make our government effective and
efficient. Some programs clearly should be
eliminated, others streamlined. We will
offer many proposals to do both in chapter
4. But reinventing government isn't just
about trimming programs; it's about
fundamentally changing the way
government does business. By forcing
43
FROM RED TAPE TO RESl:LTS • CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
public agencies to compete for their
customers--between offices, with other
agencies, and with the private sector-we
will create a pennanent pressure to streamline
programs, abandon the obsolete, and
improve what's left.
This process will be neither quick nor
easy. But as it unfolds, a very different
type of government will emerge, one that
is accountable to its true cusromersthe public.
We propose four specific steps to
empower customers, break federal
monopolies, and provide incentives for
federal employees to better serve their
customers.
Fim, we will require that all federal
agencies PUt customers first by regularly
asking them how they view government
services, what problems they encounter, and
how they would like services improved. We
will ensure that all customers have a voice,
and that every voice is heard.
Second, we will make agencies compete
for their customers' business. Wherever
feasible, we will dismantle government's
monopolies, including those that buy goods
STEP 1:
and services, acquire and maintain office
space, and print public documents. These
internal monopolies serve their customersgovernment workers--so poorly, it's no
wonder those workers have such trouble
serving customers outside government.
Third, where competition isn't feasible,
we will rum government monopolies into
more businesslike enterprises-enterprises
in closer touch with both customers and
market incentives.
Fourth, we will shift some federal
functions from old-style bureaucracies to
market mechanisms. We will use federal
powers to structUre private markets in ways
that solve problems and meet citizens'
needs--such as for job training or safe
workplaces--without funding more and
bigger public bureaucracies.
Together, these strategies will enable us to
create a responsive, innovative, and
entrepreneurial government. If we inject
market mechanisms into federal agencies as
we are cutting red tape, we will create new
dynamics--and a new dynamismthroughout the federal government.
GIVING CusroMERSA VOICE-
AND A CHOICE
Setting Customer Service Standards
L
ong lines, busy signals, bad
information, and indifferent workers
at front counters--these are all too
common occurrences when customers corne
in contact with their government. Quite
simply, the quality of government service is
below what its customers deserve.
We propose to set a goal of providing
customer services equal to the b(Sf in business.
Too many agencies have learned to
overlook their customers. After all, most of
government's customers can't really take
their business elsewhere. Veterans who use
veterans' hospitals, companies that seek
environmental permits, or retirees applying
for social security benefits must deal with
public agencies that hold monopolies. And
monopolies, public or private, have little
sensitivity to customer needs.
So government agencies must do what
many of America's best businesses have
done: renew their focus on customers. Some
are already trying. The Internal Revenue
Service (IRS) and Social Security
Administration (SSA) have taken major
steps to improve their tdephone services to
customers. SSA, the U.S. Postal Service
(USPS), and the Department of Veterans
Affairs are developing a combined
government services kiosk, providing a
single point of access for services offered by
the three agencies. The Library of Congress,
the Energy Department, the National
Aeronautics and Space Administration, the
PUTIING CUSTOMERS FIRST
National Science Foundation, and other
federal agencies have placed their materials
on Internet, a worldwide computer
network.!
Good service means giving people what
they need. To do that, however, one must
first find out what they want-a step few
federal agencies have taken. In the future,
federal agencies will ask their customers
what they want, what problems they have,
and .how the agencies can improve their
servICes.
Knowing what customers want, public
agencies must set clear and specific
customer service standards. When Federal
Express promises to deliver a package the
next day by 10:30 a.m., both customers and
employees understand precisely what that
means. Similarly, when the Air Force's
Tactical Air Command discarded its thick
set of specifications about living quaners for
visiting pilots and adopted a simple
standard-equivalent to "a moderately
priced hotel, like Ramada"-employees
understood exactly what it meant. 2
Several federal agencies that frequently
interact with citizens have launched
aggressive customer service initiatives. We
endorse strengthening these initiatives-described below-and expanding them
across the federal government.
IntenuJ Revenue Service. The IRS, the
federal agency most citizens prefer to avoid,
might seem the least likely to develop a
customer focus. But it's working hard to do
JUSt that.
Four years ago, the General Accounting
Office (GAO) discovered that IRS staff gave
a wrong answer to one of every three
taxpayers who called with a question. Since
then, the agency has improved its accuracy
rate to 88 percent. 3 And-in a switch that
signals a basic change in attitude-agency
employees now refer to taxpayers as
customers.
In IRS pilot projects across the country,
employees now have authority to change
work processes on their own in order to
improve productivity. Front-line workers
also have more authority to resolve issues
one-on-one with individual taxpayers. The
agency is fostering competition among its
tax return 'centers, based on customer
service levels and efficiency at handling the
1.7 billion pieces of paper the IRS receives
each year. Centers that perform better get
higher budgets and workloads, and
employees get promotion opportunities.
The IRS was among the first government
agencies to use 800 numbers and
automated voice mail systems to increase
customer access to information. Today, the
IRS is beginning to survey its customers.
Customer Service Standards: IRS
spart ofthe National Pnformance &tMw, the
IRS is publishing curtomn- service standards,
including these:
A
• If you file a paper return, your refund due will
be mailed within 40 days.
• If you file an electronic return, your refund due
will be sent within 14 days when you specify
direct deposit, within 21 days when you
request a check.
• Our goal is to resolve Your account inquiry
with one contact; repeat problems will be
handled by a Problem Resolution Office in an
average of 21 days.
• "When you give our tax assistors sufficient and
accurate information and they give you the
wrong answers, we will cancel related penalties.
• With your feedback, by 1995 IRS forms and
instructions will be so clear that 90 percent of
individual tax returns will be error-free.
In addition, some centers are serving
customers in truly astonishing ways. One
anecdote makes the point. At the Ogden,
Utah Service Center-a winner of the
Presidential Award for Quality-a down-
45
FROM RED TAPE TO RESULTS- CREATING A GOVERNMENT THAT WORKS BETTER
Customer Service Standards:
Social Security Administration
A
spart ofits participation in the NatioNZi
P~nce &view,
the Soci4l S«urity
Administration wiD. pubUsh natWna/Jy, and post in
tach ofits offim, thest ptiformance standards:
• You will be treated with counesy every time
you contaCt us.
• We will tell you what benefits you qualify for
and give you the infonnation you need to use
our programs.
• We will refer you to other programs that may
hdpyou.
• You will reach us the fim rime you tty on our
800 number.
on-his-Iuck man hitchhiked from out of
state to get his refund check. As it rums out,
this center doesn't issue checks. But IRS
employees there discovered that a disbursing
center had sent a check to the hitchhiker's
old address and that it had been returned.
They ordered a new check sent to Ogden
and helped the hitchhiker make ends meet
until the check arrived.
In the end, the IRS's efforts could affect
all of us, not only as filers of rax recums but
as taxpayers. If IRS forms are easier to
understand and use, more taxpayers might
file on time. If the IRS develops an image as
a more effective, user-friendly agency, more
taxpayers might decide to file in the fim
place. A mere I-percent increase in
voluntary compliance would add $7 billion
in government revenue each year. 4
SociAl Security AJministration. Every
year, more than 47 million Americans come
in contact with the Social Security
Administration, which administers old-age
&.
COSTS LESS
pensions, survivors' and disability insurance,
and the supplemental security income (SSI)
program. The agency has 1,300 field offices
and receives 60 million calls a year on its
toll-free lines. As the nation's population
ages, the agency faces an ever-increasing
workload. Recently, an inspector general's
report showed that customer satisfaction
had fallen 4 years in a row due to longer
waiting times in offices and increasing
problems in reaching someone on the
phone.'
Fortunately, the 50cial Security
Administration is strengthening its
customer orientation. When Hurricane
Andrew struck South Florida, where
367,000 people collea social security and
551, agency workers took steps to ensure
that senior citizens would know how to get
their checks despite the devastation. Local
offices used television, radio, and
loudspeaker trucks touring the area with
messages in English, Spanish, and Creole.
The agency also hired an airplane to tow a
banner with 55Xs toll-free 800 telephone
number over the hard-hit Homestead area.
More generally, the Social Security
Administration recently adopted a
customer-oriented strategic plan, which
includes objectives such as issuing social
security numbers orally within 24 hours of
an application. Besides pinpointing some of
their objectives as standards to reach today,
SSA is publishing all 34 of its objectives and
seeking customer feedback on whether it set
the right targets for service.
U.S. PomJ Service. The Postal Service,
which delivered 166 billion pieces of mail in
1992, has begun improving customer
service for a good reason: It has
competition. While most people still use the
Postal Service to deliver first class mail, the
use of private delivery services and
electronic mail is rising quickly.
The Postal Service has decided to meet
its competition head-on. Using focus
groups, the agency identified service areas
where its customers wanted improvement.
It found that people wanted shorter waiting
lines at counters, better access to postal
information, and better responses to their
PUTTING CUSTOMERS FIRST
complaints. Using these standards to
measure performance, the agency set a long
range goal of" 1OO-percent satisfaction" and
developed a customer satisfaction index to
measure progress toward it.
The agency also is providing incentives
for employee performance: In cooperation
with two postal unions, managers now use
customer satisfaction data to help determine
employee bonuses.
Action: The President shouM issue a
directive requiring aDfederal agencies
that deliver services to the public to create
customer service programs that identify
and survey customers. The order will
establish the following SUlnJ4rdfor
quality: Customer service equal to the best
in business.6
The President's directive will lay out
principles to govern the provision of
customer services. For example,
organizations should:
• survey their customers frequently to
find out what kind and quality of
services they want;
• post standards and results measured
against them;
Customer Service
Standards: USPS
spart ofits participation in thf National
P".fOrmance &view, thf USPS will expand its
p14ns to disp14y thfse standards in post offic(S:
A
• Your first class mail will be delivered. anywhere
in the United. States within 3 days.
• Your local first class mail will be delivered.
overnight.
• You will receive service at post office counters
within 5 minutes..
• You can get postal information 24 hours a day
by calling a local number.
• immediately identify who their
customers are;
• survey their customers on services and
results desired, and on satisfaction with
exIsnng services;
• benchmark performance against "the
best in business";
• survey front-line employees on barriers
to, and ideas for, matching the best in
business;
• provide choices in both source of
service and delivery means;
• in 6 months, repon results on these
three steps to the President; and
• make information, services, and
complaint systems easily accessible;
• develop and publish a customer service
plan-including an initial set of
customer service standards-wi thin 1
year.
• handle inquiries and deliver services
with counesy;
• provide pleasant surroundings for
customers; and
• provide redress for poor services.
The order will direct all federal agencies
that deal with the public to:
The customer service plans will address
the need to train front-line employees in
customer service skills. They will also
identify companies that agencies will use to
judge how they compare to the "best in
business." The directive will ask cabinet
secretaries and agency heads to use
improvement in customer satisfaction as a
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
primary criterion in judging the
performance of agency managers and frontline employees.
their focus to customers, they act like
Avis-they try harder.
Action: For voluntAry custOtMr surveys,
the Office ofMatUlgement anti Budget
will delegate its survey approval authority
unJer the Paperwork Reduction Act to
departments that are able to comply with
the act. 7
Crossing Agency Boundaries
The public's input is crucial to improving
customer service. But current law gives the
Office of Management and Budget (OMB)
power to decide on virrually all agency
requests to solicit information from the
public (OMB can delegate this authority).
This law was designed to minimize onerous
paperwork burdens the federal government
imposes on businesses and citizens. But it
also minimizes the number of times
agencies ask customers about their needs. It
often slows agencies down so much that
they abandon the idea of doing a survey
altogether.
For many agencies, customer surveys are
the single most useful way to measure
performance. IfOMB has to approve every
request for a customer survey, however,
neither the directive described above nor the
Government Performance and Results Act,
which the President signed in August 1993,
will work. Citizens do not like to be forced
to ful out forms by their government. But
most Americans would be pleased to receive
a voluntary survey asking how their post
?ffice or social se~ty office could improve
Its customer semce.
We propose to delegate approval of
voluntary customer surveys to departments
with the ability to comply with the law, and
ensure that they create rapid approval
processes so bottlenecks don't develop at
lower levels.
Customer-driven programs rarely cost
more than others; indeed, productivity
gains in past federal experiments have more
than offset cost increases. At the Ogden
Service Center, the IRS office's new
approach helped workers process 5 percent
more tax returns. When organizations shift
48
Unforrunately, even agencies that try
harder find very real obstacles in the way of
putting their customers first. Perhaps the
worst is Washington's organizational chan.
TIme and again, agencies find it impossible
to meet their customers' needs, because
organizational boundaries stand in the way.
Sometimes, programs housed in the same
agency are o~y tangentially related. While
most Agriculture Department programs
relate to food, for instance, its customers
range from farmers who grow it to poor
children whose families use food stamps. At
other times, programs dealing with the
same customers are located in a dozen
different agencies. Rather than make people
jump over organizational boundaries on
their own, we must remove the boundaries
at the point of customer contact. We must
make the delivery of services "seamless."
The traditional solution is to shuffle the
organizational chart. But in Washington,
such proposals set off monumental turf
wars between agencies in the executive
branch, and between committees in
Congress. After years of struggle, one or twO
agencies are reorganized - or a new
department is created. Meanwhile, the
nation's problems keep changing, so the
new structure is soon out of date.
In a rapidly changing world, the best
solution is not to keep redesigning the
organizational chart; it is to melt the rigid
boundaries between organizations. The
federal government should organize work
according to customers' needs and
anticipated outcomes, not bureaucratic turf
It should learn from America's best-run
companies, in which employees no longer
work in separate, isolated divisions, but in
project- or product-oriented teams.
To do so, the government must make
three changes. It must give federal workers
greater decision making authority, allowing
them to operate effectively in cross-cutting
PUTIING CUSTOMERS FIRST
ventures. It must strip federal laws of
prohibitions against such cooperation. And
it must order agencies to reconsider their
own regulations and tradition-bound
thinking. For example, the Forest Service
found that 70 percent of its regulatory
barriers to new, creative ways of doing
business were self-imposed. 8
Despite these barriers, some noteworthy
initiatives are underway. Rural
Development Councils, under the
Agriculture Department's direction, work
with several federal· departments as well as
states and localities to better coordinate
rural aid programs. At the Federal Aviation
Administration (FAA), a systems manager
helps coordinate the activities of the FAA,
Defense Department, international aviation
organizations, and various private interests
on matters involving satellites, data links,
and traffic flow management. 9
We should bring the same approach to
other parts of government. The following
examples illustrate the problems we face and
the solutions we must create.
Action: C1Y!ate a system ofcompetitive,
one-stop, ca1Y!e1' development centers open
to aD Americans. 10
Our nation's economic future depends
on the quality of our workforce. Our
individual futures, too, depend on whether
we have marketable, flexible skills with
which to adapt to the changing demands of
new technologies. In a country where the
average worker changes jobs seven times in
a lifetime, those skills are more than
desirable; they are crucial.
Our government invests heavily in
education and training. Together, 14
separate government departments and
agencies invest $24 billion a year, through
150 employment and training programs. II
But we do not invest this money well
enough. For one thing, our system is
organized for the convenience of those who
deliver services, not those who use them.
For another, the system lacks competition
and incentives for improvement.
"The United States has a worldwide
reputation for providing its youth extensive
opportunity to attend college," the General
Accounting Office noted recendy.
"However, our country falls short in
employment preparation of many
noncollege-youth." Unlike our competitors,
GAO said, we have no national policy to
systematically prepare non-college educated
youth for jobs. 12
Our system is badly fragmented. Each
service - from job referral to retraining is designed for different people, with
different rules, regulations, and reporting
requirements. Bewildered, often dispirited,
job seekers must trudge from office to
office, trying to fit themselves into a
program. When they find a program, they
may find that they aren't eligible, that it's all
filled up, or that the classroom is across
town.
American workers deserve a better deal.
Nowhere on the government reinvention
front is action more urgendy needed or are
potential rewards greater. We envision a
new workforce development system,
focused on the needs of workers and
employers. We will organize it around the
customer - whether an individual or a
business - then provide that customer
with good information about the
performance of different providers and
plenty of choices. If we do this, career
centers and training providers will have to
compete for their customers' business, based
on the quality of their services.
Specifically, we propose one-stop career
management centers across the country,
open to all Americans - regardless of race,
gender, age, income, employment
experience, or skills. (One-stop centers are
also a key feature of the Workforce
Investment Strategy the Labor Department
is developing.) Our centers would offer
skills assessment, information on jobs,
access to education and training everything people needed to make career
decisions. The centers would be linked to
all federal, state, and local workforce
development programs, and to many
private ones (which are, after all, the source
of most job-training money). Core services
49
FROM RED TAl'[ TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
such as labor market information and job
search help would be offered free. Some
centers might offer other services, from
comprehensive testing to career counseling
and workshops, on a fee-for-service basis.
These centers would help their customers
get access to funds from any of the 150
programs for which they qualified. To make
this possible, the federal government would
eliminate or waive many rules and
regulations that keep our workforce
development programs separate. The
centers would also be allowed to generate
their own revenues, including fees collected
from employers and employees would could
afford to pay. Any organization, public or
private, would be allowed to seek a chaner
to operate one or more one-stop career
centers. The process would be performancedriven, with contracts renewed only if
centers met customers' demands. The
federal government would establish national
chanering standards for the centers, bur
states and local employment boards would
decide which organizations met the
standards.
Today, local organizations such as U S
Employment Service and Service Delivery
Areas get most of their federal funds almost
as a maner of entitlement. They account for
the money, but we do not hold them
accountable for whether they spend it
effectively. We would make funding for
these new centers more competitive,
opening the process to public and private,
nonprofit and for-profit, entities.
We would judge these centers in pan by
how many people sought help at them on the theory that centers anracting the
most customers were clearly doing
something right. Bur we would focus as well
on what happened after the customers left.
Did they enroll in meaningful training
programs? Did they find jobs? Did they
keep their jobs? Did they increase their
incomes? Finally, we would give customers
the necessary information to decide the
same thing for themselves: Which training
program would meet their needs best?
We believe that the central problem in
the Employment Service is not the line
50
workers, but the many rules and regulations
that prevent them from doing their jobs.
Waiver of these antiquated rules will free up
these workers to perform well. In order for
state Employment Services to compete on a
level playing field - particularly after the
negative effects of the last decade of
spending cuts and over-regulation -line
workers must be given the opporrunity to
retool. The Labor Department should
ensure that they receive the necessary
training to enable them to participate in the
process.
The biggest single barrier to creating an
integrated system of one-stop career centers
is the fragmented nature of federal funds.
The 150 federal programs have different
rules, different reporting requirements, even
different fiscal years. To synchronize these
- and to break down the walls between
categorical programs - the National
Economic Council should convene a
Workforce Development Council, with
members from the Departments of Labor,
Education, and Health and Human
Services; the Office of Management and
Budget; and other departments and
agencies with employment and training
programs. This council should standardize
fiscal and administrative procedures,
develop a standard set of terms and
definitions between programs, develop a
comprehensive set of results-oriented
performance standards, and improve the
qualitative evaluation of program
performance.
Action: The PresiJent shoutl issue II
directive that requires collAborative
efforts across the government to
empower communities and strengthen
families. 13
At Vice President Gore's recent
conference on family policy in Nashville,
experts agreed that effective family policy
requires new approaches at the federal, state,
and local levels. We should stop dividing up
families' needs into health, education,
welfare, and shelter, each with its own set of
agencies and programs, many of which
PUTTING CUSTOMERS FIRST
contradict one another and work at crosspurposes. Instead, across all levels of
government, we need collaborative,
community-based, customer-driven
approaches through which providers can
integrate the full network of services.
For instance, we spend about $60 billion
a year on the well-being of children. But we
have created at least 340 separate programs
for families and children, administered by 11
different federal agencies and departments. 14
Thus, a poor family may need to seek help
from several departments--Agriculture for
food stamps, Housing and Urban
Development for rental support, Health and
Human Services for health care and chasing
down dead-beat parents. For each program,
they will have to visit different offices, learn
about services, fill out forms to establish .
eligibility-and wait.
The system is fragmented and illogical.
In Texas, where the immunization rate
among poor children is about 30 percent,
the state Health Department sought
permission to have nurses who run the
Agriculture Department's Women, Infants
and Children supplemental food program
also give immunization. The Agriculture
Department said no--unless Texas
developed an elaborate cost allocation plan.
Consequently, mothers and children will
have to continue visiting more than one
agency. IS
A few years ago, Governing magazine
described a teenage girl who was pregnant,
had a juvenile record and was on welfare.
Between the three problems, she had more
than six caseworkers-each from a different
agency. As one put it: "The kid has all these
people providing services, and everybody's
doing their own thing and Tasha's not
getting better. We need to have one person
who says, 'Now look, let's talk about a plan
of action for Tasha."'16 President Clinton's
directive will help remove obstacles that
agencies face in trying to serve Tasha and
others like her.
Action: The President shou/J is~ a
directive and propose legislAtion to
reconstitute the Federal Coordinating
Councilfor Science, Engineering, and
Technology as the National Science and
Technology Council, giving it a broader
role in setting science and technology
pOlicy.I7
Progress in science and technology is a
key ingredient of national economic
success. President Clinton's A Vision of
Change for America, released in February,
cites studies showing that "investments in
research and development (R&D) tend to
be the strongest and most consistent
positive influence on productivity
growth."18 In an increasingly competitive
world economy, the American people need
~e best possible return on federal R&D
Investments.
The Federal Coordinating Council for
Science, Engineering, and Technology
(FCCSET) is a White House-managed
team that helps set policy for technology
development. With representatives from
more than a dozen agencies, it develops
interagency projects, such as
biotechnology research and the highperformance computing initiative.
Unfortunately, FCCSET lacks the teeth to
set priorities, direct policy, and participate
fully i? the bud~~t pro~es~. It ~'t compel
agencies to partiCipate In Its projects, nor
can it tell agencies how to spend funds. Its
six funded projects will account for just
16 percent ofWashingron's $76 billion
R&D budget in 1994. At a time of
declining federal resources, experts in
business, academia, and government
recognize the need for one-stop shopping
for science and technology policy.
A new National Science and Technology
Council would direct science and
technology policy more forcefully, and
would streamline the White House's
advisory apparatus by combining the
functions of FCCSET, the National Space
Council, and the National Critical
Materials Council.
51
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
Action: The President should issue a
directive to give the TraJe Promotion
Coordinating Committee greater
authority to controlfederal export
promotion qJorts. 19
Unlike most of our economic
competitors, the United States has no
national export strategy. Our export
programs are fragmented among 19
separate organizations-including the
Agriculture and Commerce Departments
and the Small Business Administration. The
U.S. and Foreign Commercial Service, in
Commerce's International Trade
Administration, is the lead agency for trade
promotion overseas. But dozens of other
entities--many within Commerce-also
have trade promotion roles.
Our export programs provide little
benefit to all but our nation's largest
businesses. The economic implications of
such selective assistance are serious.
Exports are among our most effective jobcreating tools. They create about 20,000
new jobs for every $1 billion in exports.
Thousands of small and mid-sized
companies make products attractive for
overseas markets, but are discouraged by
high transaction costs and a lack of
information. According to trade experts,
the United States may be the "world's
biggest export underachiever. "20
The President's directive will give the
Trade Promotion Coordinating Committee
(TPCC), chaired by the Commerce
Secretary and including representatives from
19 departments, agencies, and executive
offices, broader authority to create
performance measures and set allocation
criteria for the nation's export promotion
programs. Working with the National
Economic Council, TPCC will ensure that
such progpms better serve the exporting
communIty.
52
lie COSTS LESS
Action: The President shouM issue Il
directive to est4blish ecosystem
mIl1Ulgementr0licies across the
govemment. 2
"For too long, contradictory policies
from feuding agencies have blocked
progress, creating uncenainty, confusion,
controversy, and pain throughout the
region," President Clinton declared at the
Forest Conference held in Pordand,
Oregon in April 1993. Shordy thereafter,
the President announced his Forest
Plan-a proactive approach to ensuring a
sustainable economy and a sustainable
environment through ecosystem
management. We recommend extending
the concept of ecosystem management
across the federal government.
Although economic growth has strained
our ecological systems, our government
lacks a coordinated approach to ecosystem
management. A host of agencies have
jurisdiction over individual pieces of our
natural heritage. The Bureau of Land
Management oversees more than 60
percent of all public lands; the Forest
Service manages our national forests and
grasslands; the Fish and W.tldlife Service
manages our National W.tldlife Refuge
System; the National Park Service oversees
the national parks; the Environmental
Protection Agency implements laws to
regulate air and water quality; the National
Oceanic and Atmospheric Administration
(NOAA) manages marine resources; and
various other agencies run programs that
affect the environment. Different agencies,
with jurisdictions over the same ecosystem,
do not work well together. Even within the
same agency, bureaus fight one another.
At the local level, a hodge podge of
government agencies control activities that
affect the environment. Consider, for
instance, the San Francisco Bay delta esruary
One of the most human-altered estuaries on
the west coast of North or South America, il
is governed by a complex array of agencies,
plans, and laws. One mile of the delta may
be affected by decisions of more than 400
agencies. 22
PUTIlNG CUSTOMERS FIRST
The White House Office on
Environmental Policy has convened an
interagency task force of appropriate
assistant secretaries to develop and
implement cross-agency ecosystem
management projects. The Office of
Management and Budget will review the
plans as pan of the fiscal 1995 budget
process. In 1994, the assistant secretaries
will establish cross-agency teams to develop
initial ecosystem management plans for
implementation in fiscal year 1995. Also in
1994, the President should issue a directive
that will declare sustainable ecosystem
management across the federal government.
Action: The PresUlent shoultl create a
Federal Coordinating Councilfor
Economic Development.23
The federal government has no coherent
policy for regional development and
community dislocation. Instead, it offers a
fragmented and bureaucratic system of seven
programs to assist states and localities. The
major programs are the Commerce
Department's Economic Development
Administration, the Housing and Urban
Development Department's Community
Development Block Grant Program, and the
Agriculture Department's Rural Development
Administration and Rural Electrification
Administration. The Defense Depamnent,
Tennessee Valley Authority, and Appalachian
Regional Commission run smaller programs.
Thus, states and communities must rum to
many different agencies and programs, rather
than a single coordinated system.
Communities find it hard to get help, and the
dispersion of effort limits overall funding.
Washington's economic and regional
development activities should be
reconfigured to suit its customers-states
and communities. We propose a Federal
Coordinating Council for Economic
Development, comprising the appropriate
cabinet secretaries and agency heads, to
coordinate such activities and provide a
central source of information for states and
localities. The council will provide a
unifying framework for economic and
regional development effortS, develop a
governmentwide strategic plan and unified
budget to support the framework, prevent
duplication in the various programs, and
assess appropriate funding levels for the
agencies involved.
Action: Eliminate statutory restrictions
. on cross-agency activities that are in the
public interest.24
A series of legislative restrictions make it
particularly difficult to pursue solutions to
problems that span agency boundaries. For
instance, to put together a working group
on an issue that cuts across agency lines,
one agency has to fund all coSts for the
group. Several agencies cannot combine
their funds to finance collaborative effortS.
Rather than discourage cross-agency
operations, the federal government should
encourage them. Congress should repeal
the restrictions that stand in the way of
cross-agency collaboration, and refrain
from putting future restrictions in
appropriations bills. In addition, Congress
should modify the Intergovernmental
Personnel Act to give cabinet members and
those working for them greater authority
to enter into cooperative agreements with
other federal, state, and local agencies.
53
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
STEP 2: MAKING SERVICE ORGANIZATIONS
CoMPEIE
hile our federal government has
long opposed private
monopolies, it has deliberately
created public ones. For instance, most
federal managers must use monopolies to
W
handle their printing, real estate, and
suppon services. Originally, this approach
was supposed to offer economies of scale
and protect against profiteering and
corruption. In an earlier time--of primitive
The Air Combat Command-Flying High
With Incentives and Competition
T
he military: the most conservative,
hierarchical and traditional branch of the
government and the bureaucracy least likely to
behave like a cutting-edge private company,
right? Wrong.
One ofWashingron's most promising
reinvention stories comes from the Air Combat
Command. With 175,000 employees at 45
bases across the country, the ACC owns and
operates all of the Air Force's combat a.ircraft.
Says its commander, General John Michael loh,
"We manage big, but we operate small. "
How? The ACe adopted overall performance
standards. called quality performance measures.
Each ACC unit decides for itself how to meet
them. Generalloh then provides lots of
incentives and a healthy dose of competition.
The most powerful incentive is the chance to
do creative work, General Loh told the National
Performance Review's Reinventing Government
Summit in Philadelphia. For instance, the Air
Combat Command allows maintenance workers
ro fix pans that otherwise would have been
discarded or returned to the depot for repair
"under the thesis that our people aren't sman
enough ro repair pans at the local level. " The
54
results have been astonishing. Young mechanics
are taking pans from B-ls, F-15s, and F-16ssome of which cost $30,000 to $40,000-and
fixing them for as little as $10. The savings are
expected to reach $100 million this year. ACC
managers have an incentive, too: Because they
control their own operating budgets, these
savings accrue to their units.
General Loh instilled competition by using
benchmarking, which measures performance
against the ACC ~dard and shows
commanders cxacdy how their units compare to
others. The ACC also compares its air wings to
similar units in the Anny, Navy, and Marine
Corps; units in other Air forces; and even the
private sector. Before competition, the average
F-16 refueling took 45 minutes. With
competition, teams cut that rime to 36 minutes,
then 28.
The competition is against a standard, not a
fellow ACC unit. "If you meet the standard, you
win," says Generalloh. "There aren't 50 percent
winners and 50 percent losers. We keep the
improvement up by just doing that-by just
measuring. If it doesn't get measured, it doesn't
get improved."
PUTTING CUSTOMERS FIRST
recordkeeping, less access to information,
and industrial-era retail systems-it may
have offered some advantages.
.
But not today. Economists don't agree on
much, but they do concur that monopolies
provide poorer service at higher prices than
competitive companies. Our public
monopolies have brought us higher costs,
endless delays, and reduced flexibility.
Monopolies don't suffer the full costs of
their inefficiency. With nowhere else to go,
customers absorb them. A monopoly's
managers don't even know when they are
providing poor service or failing to take
advantage of new, cost-cutting technologies,
because they don't get signals from their
customers. In contrast, competitive firms
get instant feedback when customers go
elsewhere. No wonder the bureaucracy
defends the status quo, even when the quo
has lost its status.
As for economies of scale, the realities
have changed. The philosophy when these
procurement systems were set up was that if
the government bought in bulk, costs
would be lower, and taXpayers would get
the savings. But it no longer works that way.
As we discuss more fully in chapter 1, we
no longer need to buy in bulk to buy
cheaply. The last decade has brought more
and more discount stores, which sell
everything from groceries to office supplies
to electronic equipment at a discount. The
Vice President heard story after story from
federal workers who had found equipment
and supplies at discount stores--even local
hardware stores-at two-thirds the price the
government paid.
Not all federal operations should be
forced to compete, of course. Competition
between regulatory agencies is a terrible
idea. (Witness the regulation of banks,
which can decide to charter with the state
or federal government, depending on where
they can find the most lenient regulations.)
Nor should policy agencies compete. In the
development of policy, cooperation between
different units of government is essential.
Competition creates turf wars, which get in
the way of creating rational policies and
programs. It is in service delivery that
"I t is better to abolish monopolies in aD cases
than not to do it in any. "
.Thomas JdI'enoa
letter to James Madison. 1788
competition yields results-because
competition is the one force that gives
public agencies no choice but to improve.
The Government Printing Office
Perhaps the oddest federal monopoly is
the Government Printing Office.
In 1846, Congress established a Joint
Committee on Printing OCP) to promote
efficiency and protect agencies from
profiteering and abuse by commercial
printers. The JCP sets standards for all
agency activities-including printing,
photocopying, and color and paper quality.
When the Naval Academy wants to use
parchment paper for graduation certificates,
for instance, the J CP must approve the
decision.
The JCP also supervises the Government
Printing Office, the mandatory source of
most government printing-a whopping $1
billion a year. Along with printing federal
publications, the GPO must approve all
privately contracted government printing
jobs. This even includes printing orders less
than $1 ,00~f which there were 270,000
in 1992. Simply for processing orders to
private companies, GPO charges 6 to 9
percent.
Such oversight doesn't work in an age of
computers and advanced
telecommunications. Desktop publishing
has replaced the traditional cutting and
pasting with computer graphics and
automated design. In private business, inhouse printing flourishes. Small printing
companies specialize in strategic market
niches.
55
FROM RED TAJ'[ TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
&. COSTS LESS
The "government look"
ere's a sad story about the Government
Printing Office, multiple signarures, and
$20,000 of wastcd. raxpayer money.
Vitt President Gore heard it from an
employee at the Transportation Department's
National Highway Traffic Safety
Administration, which promotes highway
safety. Hoping to convey safety messages to
young drivers, her office tries to make its
matcrials ~slick"-to compete with
sophisticated advertising aimed at that
audience. Sound simple? Read on.
After the agency decides what it wants, it
goes through multiple approvals at the GPO
and the Department of Transportation. In the
H
process, the material can change substantially.
Orders often tum out f.u differendy than
NHTSA wanted. But under the GPO's policy,
agencies must accept any printing order that the
GPO deems "usable."
"I can cite one example where more than
$20,000 has been spent and we still do not
have the product that we originally requested,"
the employee explained, "because GPO
decided on its own that it did not have a
'government' look.. We were not attempting to
produce a government look.. We were trying to
produce something that the general public
would like to use."
Action: Eliminate the Government
Printing Office's monopOly.25
For all executive branch printing,
Congress should end the JCP's oversight
role. Congressional control of executive
branch printing may have made sense in the
18405, when printing was in its infancy, the
government was tiny, there was no civil
service, and corruption flourished. But it
makes much less sense today. We want to
encourage competition between GPO,
private companies, and agencies' in-house
publishing operations. If GPO can
compete, it will win contracts. If it can't,
government will print for less, and taxpayers
will benefit.
The General Services
Administration
Among government's more cumbersome
bureaucracies is the General Services
56
Administration (GSA), which runs a host of
federal support services-from acquiring
and managing 250 million square feet of
office space to managing $188 billion of
real estate, from brokering office furniture
and supplies to disposing of the
government's car and truck fleets.
With its monopoly, GSA can pass
whatever costs it wants on to tenants and
customers. Often it rents the cheapest space
it can find, then orders federal agencies
tooccupy it-regardless of location or
quality. (Occasionally an agency with
enough clout refuses, and GSA ends up
paying to rent empty space.) And this is not
all GSA's fault. Frequently, the agency is
hemmed in by federal budget and personnel
rules. GSA admits that many of its
customers are unhappy. It has already
permitted some agencies to make their own
real estate deals. We propose to open that
door fanher.
PurnNG CUSTOMERS FIRST
Action: The PresiJent shou/J nul GSAs
real estate monopoly and make the agency
compete for business. GSA wiD seek
legislation, revise regu/Iltions, and
transfer authority to its customers,
empowering them to choose among
competing real estate management
enterprises, including those in the private
sector.26
Dialing for Dollars:
How Competition Cut the
Federal Phone Bill
I
n the mid 1980s, a long-distance call on the
federal system, which the General Services
Adminisuation manages, cost 30 to 40 cents a
Specifically, GSA will create one or more
property enterprises, with separate budgets.
The enterprises will compete with private
companies-real estate developers and
rental firms--to provide and manage space
for federal agencies. Agencies, in tum, will
lease general purpose space and procure, at
the lowest cost, real property services-acquisition, design, management, and
construction. Such competition should
lower costs for federal office space.
All other federal agencies with real estate
holdings, including the Defense and
Veterans Affairs Departments, will adopt
similarly competitive approaches.
minute, the "special government rate." AT&T's
regular commercial customers normally paid 20
cents a minute. The Defense Depanment, citing
GSKs rates, would not use the government-wide
system.
Spurred by complaints about high costs and the
loss of customers, GSA put the government's
contract up for bid among long-distance phone
companies. It offered 60 percent of the business to
the winner, 40 percent to the runner up.
Today, the government pays 8 cents a minute
for long-distance calls. More agencies-including
the Defense Depamnent-are using the system.
Competition in Support Services
Every federal agency needs "support
. "-accountIng,
. property
servIces
management, payroll processing, legal
advice, and so on. Currently, most
managers have little choice about where to
get them; they must use what's available inhouse. But no manager should be confined
to an agency monopoly. Nor should
agencies provide services in-house unless the
services can compete with those of other
agencies and private companies.
Over the past decade, a few federal
entrepreneurs have created support service
enterprises, which offer their expenise to
other agencies for a fee. Consider the Center
for Applied Financial Management, in the
Treasury Department's Financial
Management Service. A few years ago,
Treasury officials realized that many agencies
reporting to their central accounting system
And taxpayers are saving a bundle.
had problems meeting the Treasury's
reponing standards. Rather than send nasty
letters, they decided to offer help.
The Treasury established a consulting
business. The center includes a small
group of people who offer training,
technical assistance, and even a system for
accounting programs so that agencies need
not own the software. The center markets
.
.
.
Its servIces to government agenCIes,
aggressively and successfully, competing
with accounting and consulting firms for
agency business and dollars. Its clients
include the Small Business Administration
and the Nuclear Regulatory Commission.
Already, the center's work has reduced the
errors in reports submitted to the Treasury
and reduced agencies' accounting costs.
Opened 2 years ago, the center plans to be
57
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
profitable by 1995; if not, the Treasury will
close it.
Action: The administration shou/J
encourage operatWns ofone agency to
compete for work in other agencies.27
We want to expand the approach
exemplified by Treasury's Center for
Applied Financial Management throughOUt
government. Just as in business,
competition is the surest way to CUt costs
and improve customer service.
Competing with the Private Sector
Forcing government's internal service
bureaus to compete to please their
customers is one strategy. Forcing
government's external service organizations
to do the same is another. In a time of
scarce public resources, we can no longer
afford so many service monopolies. Many
federal organizations should begin to
compete with private companies. Consider
the National Oceanic and Atmospheric
Administration.
Action: The National Oceanic anti
Atmospheric A4ministratWn (NOAA) will
experiment with a program ofpublicprivate competitWn to helpfoJfiO its
mission.28
NOAA, a part of the Commerce
Department, maintains a fleet of ships to
sUppOrt its research on oceans and marine
life and irs nautical charring. But irs fleet is
reaching the end of its projected life
expectancy. And even with the fleet, NOAA
has consistently fallen far shon of the 5,000
days at sea that it claims to need each year
to fulfill its mission. NOAA faces a basic
question-whether to undertake a total
fleer replacement and modernization plan,
estimated to cost more than $1.6 billion in
the next 15 years, or charter some privatdy
owned ships.
The experience of the U.S. Army Corps
of Engineers, which contracts our 30 to 40
58
&
COSTS LESS
percent of its ocean floor charting to private
firms, shows that the private scaor can and
will do this kind of work. Competition
among private companies for these services
also might reduce costs.
Action: The Defense Department will
implement a comp7Yhensive program of
competitive contracting non-core
fonctions competitively.29
The Defense Department is another
agency in which necessity is becoming the
mother of invention. Facing a swiftly falling
budget, the department literally can't afford
to do things in its usual way-especially
when private firms can perform DOD's
non-core functions better, cheaper, and
faster. Functions such as command,
deployment, or rotation of troops cannot be
contracted, of course. But data processing,
billing, payroll, and the like certainly can.
Private firms--including many defense
contractors--contract out such functions.
General Dynamics, for instance, has
contracted with Computer Services
Corporation to provide all its information
technology functions, data center
operations, and networking. But at the
Pentagon, a bias against out-sourcing
remains strong. Only a commitment by
senior leaders will overcome that bias.
In addition to the cultural barriers at the
Pentagon, numerous statutory roadblocks
exist. In section 312 of the ftscal year 1993
DO D Authorization Act, for example,
Congress stopped DOD from shifting any
more in-house work to contractors. Another
law requires agencies to obtain their
construction and design services from the
Army Corps of Engineers or Naval Facilities
Engineering Command. The
administration should draft legislation to
remove both of these roadblocks. It will also
make contracting easier by rescinding its
orders on the performance of commercial
activities and issuing a new order, to
establish a policy supponing the acquisition
of goods and services in the most
economical manner possible. OMB will
review Circular A-76, which governs
PUTIlNG CUSTOMERS FIRST
contracting out, for potential changes that
would simplify the contracting process and
increase the flexibility of managers.
Action: Amend the Job Training
Partnership Act to authorize public ana
private competition for the operation of
Job Corps Civilian Conservation
Centers.3D
The Labor Department's Employment
and Training Administration (ETA)
supervises 108 Job Corps Centers, which
provide training and work experience to
poor youth. The ETA contracts with forprofit and non-profit corporations to
operate 78 of the centers. The department
has long sought to contract out the other
30, now run by the Agriculture and Interior
Departments as Civilian Conservation
Centers. But Congress under the Job
Training Partnership Act, has passed
legislation barring such action.
Because they are insulated from
competition, CCC managers have few
incentives to cut costS and boost quality. For
the past 5 years, average per-trainee costS at
a CCC have run about $2,000 higher than
at centers run by contractors. Competition
would force the Interior and Agriculture
Departments to operate the rural centers
more efficiencly--or risk losing their
operations to private competitors.
Truth in Budgeting
If federal organizations are to compete for
their customers, they must do so on a level
playing field. That means they must include
their full costs in the price they charge
customers. Businesses do this, but federal
agencies hide many costS in overhead, which
is paid by a central office. Things like rent,
utilities, staff suppon, and the retirement
benefits of employees are often assigned to
the overall agency rather than the unit that
incurred them. In this way, governmental
accounting typically understates the true
cost of any service.
With a new accounting system that
recognizes full cosrs--and assigns rent,
utilities, staff suppon, retirement benefits,
and all other costs to the unit that actually
incurs them-we can determine the true
costs of what government produces. At that
point, we can compare costs across agencies,
make agencies compete on a level playing
field, and decide whether we are getting
what we pay for.
Action: By the enJ of1994, the Federal
Accounting Stanti4rds Advisory Board
wiD issue a set ofcost accounting
stanti4rds for aDfederal activities. These
stanti4rds wiD provide a methodfor
identifying the true unit cost ofaD
government activities.31
Some government agencies have already
moved in this direction. Others have gone
even funher. The Defense Department is
experimenting with what it calls a Unit
Cost Budget. It calculates the COSts of
delivering a unit of service, then budgets for
the desired service levels.
The Defense Logistics Agency (DLA)
began this experiment, hoping to ease
pressures to contract out its supply depots
to private companies. DLA.examined the
cost of receiving and delivering shipments,
then attached a dollar figure to each item
received and another to each item delivered.
All money was then appropriated according
to the number of items shipped or received.
Line items disappeared, incentives grew.
The more boxes a depot shipped or
received, the more money that depot
brought in. For the first time, DLA could
calculate its true costs, compare those of
various installations, and pinpoint
problems. This approach, which enables
managers to set productivity targets, is now
spreading to other military installations.
59
FROM RED TAPE TO RESULTS • CREATING A GOVERNMENT THAT WORKS BETTER
STEP
3: CRFATING MARKEr DYNAMIcs
at all public activities should be
subject to competition, as noted
above. In some cases, even service
delivery operations are better off as
monopolies. In the private sector, we call
these utilities and regulate them to protect
the consumer. They are run in a
businesslike fashion, and they respond to
the marker. (For instance, they have
srockholders and boards, and they can
borrow on the capital markets.) They
simply don't face competition.
Many governments, including our
federal government, do something very
similar. They creare goye~ent-owned
corporarions ro undertake specific tasks.
The Postal Service and Tennessee Valley
Authority are two examples. Such
corporations are free from many restrictions
and much of the red tape facing public
agencies, bur mosr of them remain
monopolies-m, as with the Postal Service,
pamal monopolies.
At other times governments subject
public organizations to market dynamics,
stimulate the creation of private enterprises,
or spin off public enterprises to the private
sector. To get the best value for the
taxpayer's dollar, the federal government
needs to use these options more often.
Consider the National Technical
Information Service (NTIS), a once-failing
agency in the Commerce Department that
turned itself around in a brief year's time.
Established to disseminate federally funded
scientific and technical information, NTIS
was, until recently, not meeting its mission.
The agency, which receives no congressional
appropriations, was suffering serious
financial problems, selling fewer documents
each year to its mostly private sector
customers, and charging higher and higher
prices on those ir did sell.
Commerce-not surprisinglyconsidered abolishing the agency. A year
earlier, the department's inspector general
had concluded that NTIS's reported
earnings of $3.7 million were vastly
N
60
& COSTS LESS
overstated, that it suffered $674,000 in
additional operating losses in 1989, and
that its procedures in handling such losses
and cash shortfalls violated government
accounting principles and standards.
Commerce instead decided to turn the
agency around. The effort worked. NTIS's
revenues and sales are both up. Why?
Because the agency was forced to respond ro
its customers' unhappiness. NTIS reduced
the turnaround time on its orders, cut
complaints about incorrect orders, and
dramatically slashed the percentage of
unanswered phone calls. Consequently,
most business customers who turned away
in the 1980s have returned. NTIS's
turnaround shows what can happen when
public organizations face the pressure of
customer demands. 32
Other agencies may require a structural
change to enhance their customer service.
Because it's run as a public agency, for
instance, the Federal Aviation
Administration's air traffic control (ATe)
system is constantly hamstrung by budget,
personnel, and procurement restrictions. To
ensure the safety of those who fly, the FAA
must frequently modernize air traffic
control technology. But this has been
virtually impossible, because the FMs
money comes in annual appropriations.
How can the FAA maintain a massive, stateof-the-art, nationwide computer system
when it doesn't know what its appropriation
for next year or the years beyond will be?
As a result, the 10-year National Airspace
Plan, begun in 1981, is now 10 years
behind schedule and 32 percent over
budget. Federal personnel rules aggravate
the problems: The FAA has trouble
attracting experienced controllers to highcost cities. With no recent expansion, the
system lacks the capacity to handle all air
travel demands. Consequently, airlines lose
about $2 billion annually in costs for
additional personnel, equipment, and excess
fuel. Passengers lose an estimated $1 billion
annually in delays.
PUTTING CUSTOMERS FIRST
America needs one seamless air traffic
control system from coast to coast. It should
be run in a businesslike fashion-able to
borrow on the capital markets, to do longterm financial planning, to buy equipment
it needs when it needs it, and to hire and
fire in reasonable fashion. The solution is a
government-owned corporation.
Action: Restructure the 'nation's air
traffic control system into a corporatiorr33
"There is an overwhelming consensus in
the aviation community that the ATC
system requires fundamental change if
aviation's positive contribution to trade and
tourism is to be sustained," one study
concluded earlier this year. 34
The ATC's problems can't be fixed
without a major reorganization. Under its
current structure, the system is subject to
federal budget, procurement, and personnel
rules designed to prevent mismanagement
and the misuse of funds. The rules,
however, prevent the system from reacting
quickly to events, such as buying the most
up-to-date technology. In its recent repon,
Change, Challenge, and Competition, the
National Commission to Ensure a Strong
Competitive Airline Industry, (chaired by
former Virginia Governor Gerald Baliles),
recommended the creation of an
independent federal corporate entity within
the Transportation Department. We agree.
We should restructure the ATC into
a government-owned corporation,
supponed by user fees and governed by a
board of directors that represents the
system's customers. As customer use rises,
so will revenues, providing the funds
needed to answer rising customer
demands and finance new technologies to
improve safety. Relieved of its operational
role, the FAA would focus on regulating
safety. With better, safer service, we all
would benefit. This approach has already
worked in Great Britain, New Zealand,
and other countries.
Action: The General Services
Administration will create a Real Property
Asset Managemmt Enterprise, separating
GSA's responsibility for settingpolUy on
federaOy owned real estatefrom that of
providing and managing office space.35
In asset management, too, government
could take a few lessons from business. We
must begin to manage assets based on their
rates of return. A good place to stan is in
the General Services Administration.
The federal government owns assetsland, buildings, equipment-that are
enormous in number and value. But it
manages them poorly. Like several other
agencies, GSA wears two hats: with one, it
must provide office space to federal
agencies. With the other, it serves as
manager and trustee of huge real estate
holdings for American taxpayers. It cannot
do both-at least not well. Should it
maximize returns for taxpayers by selling a
valuable asset? Or, as the office space
provider, should it require an agency to
occupy one of its own buildings when less
expensive leased space is available?
GSA will create a Real Propeny Asset
Management Enterprise, solely responsible
for managing federally owned real.estate to
optimize the highest rate of return for
taxpayers, while competing with the private
sector and better serving tenants' needs.
Action: The Department ofHousing
and Urban Development will turn over
managemmt ofits l'market rate" rental
properties and mortgage loans to the
private sector. 36
The Department of Housing and Urban
Development has a growing workload of
problem multi-family loans and foreclosed
properties. In addition, restrictive rules and
outdated practices hamper its management
of these assets. Rather than more staff,
HUD needs a new approach.
HUD, which oversees the Federal
Housing Administration, owns many loans
and properties it acquired from the FHA
when owners defaulted on their loans.
61
FROM RED TAPE TO RESl'LTS • CREATING A GOVERNMENT THAT WORKS BETTER
These "market-rate" assets-which were
never set aside for low-income people-have fewer restrictions on disposal than
most HUD-subsidized propenies. But in
trying to sell the assets, HUD still faces a
variety of legal and political pressures. If the
&
COSTS LESS
depanment entered into limited
pannerships with real estate firms, it could
retain most profits from any sales and let a
private business entity perform the sales in
the most economically beneficial way.
STEP 4: USING MARKEr MEcHANISMS
To SOLVE PROBIEMS
overnment cannot create a
program for every problem facing
the nation. It cannot simply raise
taXes and spend more money. We need
more than government programs to solve
our problems. We need govmuznce.
Governance means setting priorities,
then using the federal government's
immense power to steer what happens in
the private sector. Governance can take
many forms: setting regulations, providing
financial incentives, or ensuring that
consumers have the information they need
to drive the market.
When the Roosevelt administration
made home ownership a national priority,
the government didn't build millions of
homes or distribute money so families could
buy them. Instead, the Federal Housing
Administration helped to create a new kind
of mortgage loan. Rather than put down 50
percent, buyers could put down just 20
percent; rather than repay mortgages in 5
years, borrowers could stretch the payments
over 30 years. The government also helped
to create a secondary market for mortgages,
helping even more Americans buy homes.
As we reinvent the federal government,
we, tOO, must rely more on market
incentives and less on new programs.
G
Worker Safety and Health
Today, 2,400 inspectors from the
Occupational Safery and Health
Administration (OSHA) and approved state
programs try to ensure the safety and health
of93 million workers at 6.2 million
62
worksites. The system doesn't work well
enough. There are only enough inspectors
to visit even .the most hazardous workplace
once every several years. And OSHA has the
personnel to follow up on only 3 percent of
its inspections.
Action: The Secretllry ofLabor will
issue new regulations for worksite strfoty
anJ health, relying on private inspection
companies or non-mIlnllgement
employees.37
Government should assume a more
appropriate and effective role: setting
standards and imposing penalties on
workplaces that don't comply. In this way,
OSHA could ensure that all workplaces are
regularly inspected, without hiring
thousands of new employees. It would use
the same basic technique the federal
government uses to force companies to keep
honest financial books: setting standards
and requiring periodic certification of the
books by expert financial auditors. No army
of federal auditors descends upon American
businesses to audit their books; the
government forces them to have the job
done themselves. In the same way, no army
of OSHA inspectors need descend upon
corporate America. The health and safety of
American workers could be vastly
improved-without bankrupting the
federal treasury.
The Labor Secretary already is authorized
to require employers to conduct cenified
self-inspections. OSHA should give
employers two options with which to do so:
They could hire third parties, such as
PUTIlNG CUSTOMERS FIRST
private inspection companies; or they could
authorize non-management employees, after
training and certification, to condua
inspections. In either ClSe, OSHA would set
inspection and reporting standards and
condua random reviews, audits, and
inspections to ensure quality.
Within a year or two of issuing the new
regulations, OSHA should establish a sliding
scale of incentives designed to encourage
workplaces to comply. Worksites with good
health, safety, and compliance records would
be allowed to repon less frequendy to the
Labor Deparonent, to undergo fewer audits,
and to submit less paperwork. OSHA could
also impose higher fines for employers whose
health and safety records worsened or did not
unprove.
Environmental Protection
As governments across the globe have
begun to explore better ways to protea the
environment, they have discovered that
market mechanisms-fees on pollution,
pollution trading systems, and deposit-rebate
systems-can be effective alternatives to
regulation. But while the idea of "making the
polluter pay" is widdy accepted in this
counoy, our governments have not widdy
applied it. Many federal, state, and local
regulations rely on an earlier approach to
environmental control: stipulating treaonent,
not outcomes. Their wholesale shift to a new
approach will take time.
Action: Encourage market-based
approaches to reduce poOution.38
Many federal agencies, lawmakers, and
environmental groups endorse using marketbased incentives to meet environmental goals.
We propose that both EPA and Congress use
administrative and legislative measures, for
example, the Clean Water Act, to promote
market mechanisms to stop pollution.
One route is allowing polluters to "trade"
pollution rights. This would reward
companies that not only meet l~
requirements-but for the exua mile to reduce
pollution by more than the law requires.
Rather than diaating exaaly which
technologies indusny should use to reduce
pollution, the government would set standards
and let the market handle the details. The
government could also assess fees based on the
amount and nature of pollution emissions or
discharges. Fees could reB.ea the quality,
toxicity, and other adverse characteristics of
pollutants.
The federal government has used this
approach before. In the 1970s, the
Environmental Protection Agency (EPA)
disttibuted credits to companies that cut air
pollution and let them trade credits between
different sources of their own pollution or sell
them to other companies located nearby. In
the 1980s, the EPA used a similar approach as
it forced indusny to remove lead from
gasoline. Both efforts were successful: indusny
met its targets, while spending billions of
dollars less than otherwise would have been
required. Then, as part of the 1990 Clean Air
Act, the President and Congress agreed to give
credits to coal-burning dearic power plants
for their allowable emissions of sulfur dioxide,
to cut down on acid rain. Power plants that
cut their emissions bdow a certain levd can
sell unused credits to other plants. Experts
estimate that this will cut the cost of reducing
sulfur dioxide emissions by several billion
dollars a year.39
Public Housing
Public housing is a classic story of good
intentions gone awry. When the program
began in the 1930s, it was hailed as an
enlightened response to European immigrants'
squalid living conditions in cities across the
nation. Through an enormous bureaucracy
stretching from Washington into virrually
every city in America, the public housing
program brought dean, safe, inexpensive
living quarters to people who could not
otherwise afford them.
For two decades, public housing was a
success. But by the 1970s, it had come to
symbolize everything wrong with the
"liberal" approach to social problems.
63
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER 8( COSTS LESS
Inflexible federal standards, an overly
centralized administrative strucrure, and
local political pressures combined to
produce cookie-cutter high-rise projectS in
our worst urban areas. Over time, many
projectS degenerated into hopeless
concentrations of welfare families beset by
violence and crime.
We spend $13 billion a year on public
housing, but we create few incentives for
better management. In local housing
agencies, managers are hamstrung by
endless federal regulations that offer little
flexibility. Any savings they generate are
simply returned to the government.
Tenants enjoy even less flexibility. With
housing subsidies attached to buildings, not
people, the program's clients have no choice
about where to live. They, therefore, have
absolutely no leverage--as customers--over
the managers.
Action: Authorize the Department of
Housing and Urban DevelDpment to
create demonstration projects that free
71Ulnagers.from regulations and give
teNlnts new 11I4rket powers, such as
freedom ofchoice to move out ofoM
public housing builJings. 40
We want to let public housing
authorities, through not-for-profit
subsidiaries, compete for new construction
and modernization funds that they would
use to create market-rate housing. The
managers would manage this new housing
free of most regulations, provided they met
performance standards set by Hun. They
would rent to a mix of publicly subsidized
and market-rate tenants. The rents of
unsubsidized tenants would help to finance
the subsidies of assisted tenants.
With ponable subsidies, publicly assisted
tenants could look for housing wherever
they could find it. Rather than dependent
beneficiaries, forced to live where the
government says, they would become
"paying customers," able to choose where to
live. Thus, public housing managers would
no longer have guaranteed tenants in their
buildings; they would have to compete for
them.
Conclusion
W
e know from experience that
monopolies do not serve
customers well. It is an odd fact
of American life that we attack monopolies
harshly when they are businesses, but
embrace them warmly when they are public
institutions. In recent years, as fiscal
pressures have forced governments at all
levels to streamline their operations, this
attitude has begun to break down.
Governments have begun to contract
services competitively; school districtS have
begun to give their customers a choice;
public managers have begun to ask their
customers what they want.
This trend will not be reversed. The
quality revolution sweeping through
64
American businesses-and now penetrating
the public sector-has brought the issue of
customer service front and center. Some
federal agencies have already begun to
respond: the IRS, the Social Security
Administration, and others. But there is
much, much more to be done. By creating
competi~ion be~een public ~rganizations,
contractIng servICes Out to pnvate
organizations, listening to our customers,
and embracing market incentives wherever
appropriate, we can transform the quality of
services delivered to the American people.
In our democratic form of government,
we have long sought to give people a voice.
As we reinvent government, it is time we
also gave them a choice.
Chapter 3
EMPOWERING EMPLOYEES TO
GET REsULTS
Take two managers and give to each the same number oflaborers and let those laborers be equal
in all respects. La both managers rise equally early, go equally late to rest, be equally active, sober,
and industrious, andyet, in the course ofthe year, one ofthem, without pushing the hands that
are under him more than the other, shall have performed infinitely more work.
George Washington
W'hm Nature has work to be done, she creates a genius to do it.
Ralph Waldo Emerson
~~ wo hundred years ago,
George Washington
recognized the common
sense in hiring and
promoting productive
managers-and taking
authority away from unproductive ones.
One hundred years ago, Emerson
observed that we all share a common
genius, ignited simply by the work at
hand. These American originals defined
the basic ingredients of a healthy, productive
work environment: managers who
innovate and motivate, and workers who
are free to improvise and make decisions.
Today, our federal government's executive
branch includes 14 cabinet departments,
135 agencies and hundreds of boards and
commissions. These entities employ more
than 2.1 million civilians (not counting the
Postal Service), and 1.9 million members of
the military, spend $1.5 trillion a year, and,
directly or indirectly, account for one third
of our national economy). Their tasks are
both massive and difficult. As the National
Academy of Public Administration wrote
not long ago, "The federal government now
manages ... some of the most important and
complex enterprises in the world."2 But it
does not manage them well.
Admittedly, "management" is a fuzzy
concept, hard to recognize or define. But
poor management has real consequences.
Money is wasted. Programs don't work.
People aren't helped. That's what taxpayers
and customers see.
Inside government, bad management
stifles the morale of workers. The "system"
kills initiative. As Vice President Gore,
responding to the concerns of Transportation
Department employees, put it:
One ofthe problems with a centralized
bureaucracy is that people get placed in
these rigid categories, regulations bind
them, procedures bind them, the
organizational chart binds them to the
old ways ofthe past... The message over
time to... employees becomes: Don't try to
do something new. Don't try to change
65
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
tstllblishtd procedures. Don't try to adapt
to the new circumstances your office or
agmry confronts. Because you re going to
gn in trouble ifyou try to do things
diffrmztly. "3
Cutting red rape, organizing services
around customers, and creating
competition will start to generate an
environment that rewards success. Now, we
must encourage those within government to
change their ways. We must create a culture
of public entrepreneurship.
Our long-term goal is to change the very
culture ofthe jedmzl government... A
government that puts people first, puts its
employees first, too. It empowers them, foeing
them from mind-numbingruks and
regulations. It delegates authority and
responsibility. And it provir.ks for them a clear
sense ofmission.
Viele President AI Gore
Speech to National Performance Review members
May 24. 1993
But changing culture is a lot harder than
changing rules and regulations. An attitude
of powerlessness and complacency pervades
the federal workplace. As one veteran of
many government reform initiatives
observed, "Changing government is a bit
like moving the town cemetery. It's much
harder to deal with the feelings it arouses
than with the relocation itself"
The Quality Imperative
Of course, many thought that turning
General Motors around would be
impossible. If you talked to their employees,
the same undoubtedly was true of General
66
&
COSTS LESS
Electric, Motorola, Harley-Davidson, and
scores of leading corporations before they
embraced a new management philosophy.
In the 19705 and 19805, as technology
began to revolutionize everything and
global competitors began to take away
market share, firms that had grown fat and
happy had to face the facts: This wasn't the
19505 anymore.
These firms quickly discovered that
economists can be wrong: More isn't always
better: better is better. One by one, they
began to pursue a new goal-qualityand to reorganize their entire businesses
around it.
The quality imperative is simple: Do
everything smarter, better, fastn; cheaptr. It is
not simple, however, to obey. It means
dismantling the old ways of doing business.
The same tired command hierarchies that
continue to bind government are being
scrapped daily by companies on the rise. In
their place, firms seek new ways to manage
and organize work that develop and use the
full talents of every employee. They want
everyone to contribute to the bottom linethat is, to produce goods and services that
match customer needs at the lowest COSt
and bstest delivery time.
The quality movement has spawned
many proven methods and mantraS, each
with its loyal fans: management by results;
total quality management; high-performance
organization; business process reengineering.
Bur the quest for quality-in performance,
product, and service-unifies them all.
Government has recognized the quality
imperative. In 1987, the U.S. Department
of Commerce instituted the Malcolm
Baldrige National Quality Award. Now the
object of fierce competition, it recognizes
private firms that achieve excellence by
pursuing quality management. In 1988, the
Federal Quality Institute began awarding
the Presidential Award for Quality to federal
agencies that do the same. The Presidential
Award criteria, modeled on Baldrige, set
new standards for federal government
performance. The President should
encourage all department and agency heads
to manage with these criteria in mind.
EMPOWERING EMPLOYEES TO GET REsULTS
Changing the Culture: Power and
Acrountability
Companies do not achieve high quality
simply by announcing it. Nor can they get
to quality by hiring the services of the
roving bands of consultants who promise to
tum businesses around overnight. They do
it by turning their entire management
systems upside down-shedding the power
to make decisions from the sedimentary
layers of management and giving it to the
people on the ground who do the work.
This rewrites the relationship between
managers and the managed. The bright line
that separates the two vanishes as everyone
is given greater authority over how to get
their job done.
But with greater authority comes greater
responsibility. People must be accountable
for the results they achieve when they
exercise authority. Of course, we can only
hold people accountable if they know what
is expected of them. The powerless know
The Federal Quality Imperative
potential and to pursue performance
goals? Are you building and maintaining
T
he Presidential Quality Award sets forth
seven prihciples to identify excellent
government agenCIes:
an environment for workforce excellence
that increases worker involvement,
education and training, employee
performance and recognition systems, and
employee well-being and satisfaction?
• LuJerJnp: Are your top leaders and
managers personally committed to
aeating and sustaining your organizations
vision and aJStomer foals? Does your
dfon c:xtend to the management system,
labor relations, external partnerships, and
the fulfillment of public responsibilities?
• Information anJAnIzlysis: Do your data,
information, and analysis systems help you
improve customer satisfaction, products,
services, and processes?
• Strategic Q!uJity PlAnning: Do you have
shon-term and long-term plans that
address customer requirements; the
capabilities necessary to meet key
requirements or rechnological
opponunities; the capacities of external
suppliers; and changing work ~~ to
improve performance, produ~ty
improVement, and waste reducnon?
• Hunum Resource Development anJ
Mmulgrnnmt: Is your agency's entire
workforce enabled to develop its full
..
~ IIjProeas Q!uJity:
Does your agency~cally and
amtinually imp1'OYe quality. and
.pedOrmance? Is cverywodc unit
redesigning its process to improve quality?
AJ:e internal and mcmal customersupplier relationships managed better?
• .Q!uJity mul 0peratimuJl RenJa: Are
you measuring and continuously
improving the trends and quality of your
products and services, your business
processes andsuppon services, and the
goods and services of your suppliers? Are
you comparing your data against
.competitorS and world-cl.ass standards?
.. Customer Focus mul St#is/1lCtion: Do
you know what your customers need? Do
you relate well to your customers? Do you
have a method to determine customer
satisfaction?
67
FROM RED TArE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
they are expected only to obey the rules.
But with many rules swept away, what is
expected from the empowered?
The answer is rtSUlts. Results measured as
the customer would-by better and more
efficiently ddivered services. If the staff in
Our bedrock premise is that ineffective
government is not the foult ofpeople in it.
Our government is foD ofweD-intentioned
hard-working, inteDigent people-managers
and staff. we intend to let our workers pursue
exceUmce.
VKle President AI Gore
Reinventing Government Summit
Philaddp~June25,
1993
an agency fidd office are given greater voice
over how their workplace and their work are
organized, then the customer deserves to
spend less time waiting in line, to receive a
prompt answer-and everything else we
expect from a responsive government.
So how do we change culture? The
answer is as broad as the system that now
holds us hostage. Part of it, outlined in
chapter 1 , lies in liberating agencies from
the cumbersome burden of over-regulation
and central control. Part of it, detailed in
chapter 2 , hinges on creating new
incentives to accomplish more through
competition and customer choice. And
part of it depends on shifting the focus of
control: empowering employees to use their
judgment; supponing them with the tools
and training they need; and holding them
68
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COSTS LESS
accountable for producing results. Six steps,
described in this chapter, will stan us down
that road:
First, we must give decisionmaking
power to those who do the work, pruning
layer upon layer of managerial overgrowth.
Second, we must hold every organization
and individual accountable for clearly
understood, feasible outcomes.
Accountability for results will replace
"command and control" as the way we
manage government.
Third, we must give federal employees
better tools for the job--the training to
handle their own work and to make
decisions cooperatively, good information,
and the skills to take advantage of modem
computer and telecommunications
technologies.
Fourth, we must make federal offices a
better place to work. Flexibility must extend
not only to the definition of job tasks but
also to those workplace rules and conditions
that still convey the message that workers
aren't trusted.
Fifth, labor and management must forge
a new partnership. Government must learn
a lesson from business: Change will never
happen unless unions and employers work
together. .'
Sixth, we must offer top-down support
for bottom-up decisionmaking. Large
private corporations that have answered the
call for quality have succeeded only with the
full backing of top management. Chief
Executive Officers--from the White House
to agency heads--must ensure that
everyone understands that power will never
flow through the old channels again. That's
how GE did it; that's how we must do it as
well.
EMPOWERING EMPLOYEES TO GET REsULTS
STEP
T
1: DECENTRALIZING DECISIONMAKING
POWER
o people working in any large
organization-public or private-"headquarters" can be a dreaded
word. It's where cumbersome rules and
regulations are created and good ideas are
buried. Headquarters never understands
problems, never listens to employees. When
the Office of Personnel Management
(OPM) surveyed federal employees, fewer
than half expressed any confidence in
supervisors two layers above them--or any
confidence at all in their organization's
overall structure. 4
Yet everyone knows the truth:
Management too often is happily unaware
of what occurs at the frOnt desk or in the
field. In fact, it's the people who work
closest to problems who know the most
about solving them. As one federal
employee asked Vice President Gore, "If we
can't tell what we're doing right and wrong,
who better can?"
The Social Security Administration's
Atlanta field office has shown the wisdom
of empowering workers to fulfill their
mission. Since 1990, disability benefit
claims have risen 40 percent, keeping folks
in the Atlanta office busy. So workers
created a reinvention team. They quickly
realized that if they asked customers to
bring along medical records when filing
claims, workers could reduce the time they
spent contacting doctors and requesting the
records. That idea alone saved 60 days on
the average claim. Even better, it saved
taxpayers $351,000 in 1993, and will save
half a million dollars in 1994. The same
workers also found a better, cheaper way to
process disability claims in cases reviewed by
administrative law judges. Instead of asking
judges to send them written decisions, they
created a system for judges to send decisions
electronically. It's quicker, and it eliminates
paperwork, too. 5
Now here's the other side of the coin. A
Denver Post reporter recently uncovered this
bureaucracy-shaking news: It takes 43
people to change a light bulb.
An internal memo written by a
manager at the u.s. Department
ofEnergy {Rocky Fltztsj pltznt
recommended a new safety procedure for
"the repltzcement ofa light bulb in a
criticality beacon. " The beacon, similtzr
to the revolving red Itzmp atop a police
car, warns workers ofnuclear accidents.
The memo said that the job should. take
at least 43 people over 1,087.1 hours to
repltzce the light. It added that the same
job used to take 12 workers 4.15 hours.
The memo calledfor a pltznner to meet
with six others at a work-control
meetinr; talk with other workers who
have done the job before; meet again; get
signatures from five people at that workcontrol meeting; get the project pltzns
approved by separate officials overseeing
safety, logistics, waste management and
pltznt scheduling; waitfor a monthly
criticality-beacon test,' direct electricians
to repltzce the bulb; and then test and
verify the repair.6
I had seven uams ofpeople each restructure
our business... After the thirdpresentation, my
executive assistant...said to me, "Bill, this stuff
is fabulous. In fact, -we never would have
thought ofthese thing.r.
Butyou've got to trust. People don't come
to work with the intent ofscrewing it up
~ -day. They come here to make it better.
Bill Goins, President
Xerox Inrcgrated Systems Operations,
Reinventing Government Swnmit,
June 25, 1993
69
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
This example drives the point home: Too
many rules have created too many layers of
supervisors and controllers who, however
well-intentioned, wind up "managing"
simple tasks into complex processes. They
waste workers'
time and squander the
,
taxpayers money.
Decentralizing the power to make
decisions will energize government to do
everything smaner, better, faster, and
cheaper-if only because there will be more
hands and heads on the taSk at the same
time. Vice President Gore likens the effect
of decentralization to the advent of "massive
parallelism"-the technology used in the
world's fastest supercomputers. Standard
computers ·with central processors solve
problems in sequence: One by one, each
element of information travels back and
Roam on the Range
anchers, allowed to graze their cattle in
Missouri's Mark Twain National Forest,
regularly must move their herds to avoid overgrazing any plot of land. Until recently, ranchers
had to apply at the local ForeSt Service office for
permits to move the cattle. Typically, the local
office sent them on to the regional office for
approval, which, in some cases, sent them on to the
national office in Washington. Approval could take
up to 60 days-long enough, in a dry season, to
hun the forest, leave the cows hungry. and annoy
the rancher.
Thanks to an employee suggestion, the local
staffer now can settle the details of moving the herd
directly with the rancher. If the rancher comes in
by 10 a.m., the cattle can be on the move by noon.
Ranchers are happier, cattle are fatter, the
environment is better protected-all because local
workers now make decisions well within their
judgment.
R
-:-0
forth from the machine's central processor.
It's like running six errands on Saturday, but
going home between each Stop. Even at the
speed of light, that takes time. In massively
parallel computers, hundreds of smaller
processors solve different elements of the
same problem simultaneously. It's the
equivalent of a team of six people each
deciding to take on one of the Saturday
errands.
America's best-run businesses are realizing
enormous COSt savings and improving the
quality of their produCts by pushing
decisions down as far as possible and
eliminating unnecessary management
layers. The federal government will adopt
this decentralized approach as its new
standard operating procedure. This
technique can unearth hundreds of good
ideas, eliminate employee frustration, and
raise the morale and productivity of an
entire organization.
If offered greater responsibility, will
employees rise to the taSk? We are confident
they will. After all, few people take up
federal work for the money. Our interviews
with hundreds of federal workers suppon
what survey after survey of public service
workers have found: People wam
challenging jobs.? Yet, that's exactly what
our rule-bound and over-managed system
too often denies them.
Action: Over the nextfive ]eIlTS, the
executive branch will decentralize
decisionmAking, and increiUe the average
span ofa 11Ulnager's controL8
Currently, the federal government
averages one manager or supervisor for
every seven employees. 9 Management
expert Tom Peters recommends that wellperforming organizations should operate in
a range of 25 to 75 workers for every one
supervisor. 10 One "best company" puts
Peters' principle to shame: "Never have so
many been managed by so few," RiczCarlton Vice President Patrick Mene told
Vice President Gore at the Philaddphia
Summit. "There's only about 12 of us back
in Atlanta for 11,500 employees. And it
EMpOWERING EMPWYEES TO GET REsULTS
really stans with passionate leadership." I I
Working toward a quality government
means reducing the power of headquarters
vis-a-vis field operations. As our reinvented
government begins to liberate agencies from
over-regulation, we no longer will need
280,000 separate supervisory staff and
420,000 "systems control" staff to support
them. 12 Instead, we will encourage more of
our 2.1 million federal employees to
become managers of their own work.
Put simply, all federal agencies will
delegate, decentralize, and empower
employees to make decisions. This will let
front-line and front-office workers use their
creative judgment as they offer service to
customers and solve problems.
As part of their performance agreements
with the President, cabinet secretaries and
agency CEOs will set goals for increasing
the span of control for every manager. (See
Step 3.) The federal government should
seek to double its managerial span of
control in the coming years.
Some employees may view such pruning
as threatening-to their jobs or their
chances for promotion. It is true that the
size of the federal workforce will decrease.
But our goal is to make jobs meaningful
and challenging. Removing a layer of
oversight that adds no value to customers
does more than save money: It
demonstrates trust in our workers. It offers
employees in dead-end or deadly dull jobs a
chance to use all their abilities. It makes the
federal government a better place to workwhich will in rum make federal workers
more productive.
As private companies have found, the
key to improving service while redeploying
staff and resources is thinking about the
organization's staffing and operating needs
from the perspective of customer needs.
What does each person's task add in value
to the customer? The Postal Service has
developed a single criterion: It asks, "Do
they touch the mail?" Where possible, other
agencies should develop similar simple,
easy-to-understand criteria.
Pioneering federal offices have used the
full variety of quality management
techniques to decentralize. Many focus on
passing decisions on to the work teams that
deal directly with the customer. Some have
produced impressive results, both in
productivity and management delayering.
The Internal Revenue Service's Hartford
district office slashed the time required to
process a form on "currently noncollectible" taXes from 14.6 days to 1.4
days. Then it replaced time-consuming case
reviews with an automated case
management system and began using the
manager's time to upgrade employees' skills.
Delinquent taX dollars collected rose by 22
percent. The office chose not to fill vacant
management positions, investing part of its
staff savings in new technology to boost
productivity further. Evenrually, it cut
overall case processing time from 40 to 21.6
weeks. 13
At the Robins Air Force Base, the 1926th
Communications-Computer Systems
Group cut itS supervisory staff in half by
organizing into teams. 14 An Agriculture
Department personnel office that convened
to self-managed work teams beefed up
customer satisfaction and now uses only
one manager for every 23 employees. At the
Defense Logistics Agency, self-managing
teams in the Defense Distribution Region
Central eliminated an entire level of
management, saving more than $2.5
million a year. 15 In 1990, the Airways
Facilities Division of the Federal Aviation
Administration maintained approximately
16,000 airspace facilities, with roughly
14,000 employees. Today its workforce is
organized in self-managed teams instead of
units with supervisors. They now maintain
more than 26,000 facilities with only 9,000
employees. 16
Other decentralization and delayering
plans are in the works. After a successful
pilot program in 11 field service sites, the
Department of Veterans Affairs is
recommending an agencywide effort. 17
Over the next 5 years, the Department of
Housing and Urban Development (HUD)
plans to convert HUD's field structure from
three to two levels, eliminating the regional
offices. HUD will free its five assistant
71
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
secreraries CO organize their own functions
in the field. It will transfer many of irs
application and loan processing functions
co privare firms. While letting staff
attririon dictate staff reductions-HUD promises no layoffs-HUD plans co
retrain and redeploy people into more
&.
COSTS LESS
interesting jobs, with better career ladders
and better access to managers. HUD
believes irs restructUring effon will improve
customer service while saving $157.4
million in personnel and overhead costs. 18
STEP 2: HOLD ALL FEDERAL EMPLOYEES
ACCOUNTABLE FOR REsULTS
r's easy co understand why federal
employees-including the hundreds
who aired their deep frustrations to the
Narional Performance Review-would care
abour empowerment. It adds new, positive
dimensions to their jobs.
Bur why should taXpayers or social
security recipients care? Taxpayers aren't
interested in what rules bureaucracy
follows. But they do care, deeply, about
how well government serves them. They
want education programs to give young
people basic skills and teach them how co
think, anti-poveny programs that bring the
unemployed into the economic mainstream
for good, anti-crime programs that keep
criminals off the streers, and environmental
programs that preserve clean air and water.
In other words, they want programs that
work.
Bur management in government does
nor judge most programs by whether they
work or not. Instead, government typically
measures program activity-how much it
spends on them, or how many people it has
assigned co staff them. Because government
focuses on these "inputs" instead of real
results, ir tends co throw good money after
mediocre. Ir pours more dollars into the old
I
What you do thunders so loudly, I cannot
hear what you say to the contrary.
Ralph Waldo Emerson
education programs even as student
performance sinks. It enrolls jobless people
in training programs that teach by the
book, but places few graduates in well-paid
jobs.
A recenr management survey of the
largest 103 federal agencies sketches in stark
relief this lack of focus on real resulrs. Twothirds of the agencies reponed that they
had strategic plans. But only nine said they
could link those plans to intended results. 19
In other words, many had planned, but few
knew where they were going. That's a bit
like trying to steer a ship by looking at its
wake. As a result, some of our worst
examples of "waste" are not rooted in
corruption or incompetence, but rather in
the simple lack of knowing what we are
actually trying to accomplish. As one
despairing federal employee told us,
"Process is our most imponant produce."
Recommendations by the National
Performance Review aim co revolutionize
our method of navigation. "Today," Vice
President Gore told one depanmental
meeting, "all we measure is inpurs. We
don't measure outputs--and that's one of
the things we're going to change
throughout the federal government."
Measuring outpurs is easy in principle. It
means measuring how many unemployed
people get jobs, not how many people look
for help at local Employment Service
offices. Or it means measuring how many
people received their social security checks
on time, not how many checks were sent
Out from a local office. "Outpurs" are, quite
simply, measures of how government
EMPOWERING EMPLOYEFS TO GET REsULTS
programs and policies affect their
customers. The importance of pursuing the
correct measures cannot be underestimated.
As Craig Holt, an Oregon Department of
Transportation employee who has worked
with the ground:-breaking Oregon Progress
Board~ur nation's first statewide
experiment in comprehensive performance
accountability--cautions: "Our focus has
occurred through our indicators, not
through our strategic plans."20
Implementing the Government
Perfonnance and Results Act
To its credit, Congress has begun to
recognize this need. In July 1993, it passed
the Government Performance and Results
Act-a pivotal first step toward measuring
whether federal programs are meeting their
intended objectives. The act requires that at
least 10 federal agencies launch 3-year pilot
projects, beginning in fiscal 1994, to
develop measures of progress. Each agency
pilot will develop annual performance plans
that specify measurable goals. They then
must produce annual reports showing how
they are doing on those measures. At least
five pilots will also test "managerial
flexibility waivers"-which exempt them
from some administrative regulations-to
help them perform even better. In exchange
for greater flexibility, they must set higher
performance targets. This is exactly the
process of measured deregulation-"we
agree to deregulate you if you agree to be
held accountable"-that must be the basis
of an empowered and accountable
government.
At the beginning of fiscal 1998, after
learning from the pilot programs, all federal
agencies must develop 5-year strategic
plans-linked, this time, to measurable
outcomes! By the next year, every agency
will be crafting detailed annual performance
plans-that is, plans that describe what they
intend to achieve, not plans that detail how
many pencils they will buy or people they
will hire. And they will have to report their
succesSes and failures in meeting those
It may seem amazing to sa} but like many
big organizations, ours is primarily dominated
by considerations ofinput-how much money
do wt spend on aprogram, how 1TlIZ1JY P(()pie
do you haVe on th~ siaff, what kind of
regulAtions and rules are going to govern it;
and much less by output---dDes this work, is it
changingp~op/e's lives for th~ bater?
President Bill Clinton
Remarks at the signing of the Government
Performance And Results Act
August 3, 1993
goals. The Office ofManagenent and
Budget may exempt very small agencies,
and those agencies that cannot easily
measure their outcomes will use qualitative
rather than quantitative goals and
measurements. After all, any agency can, at
the very least, survey their customers and
report the rating they are given.
Setting goals is not somet4ing that
agencies do once. It is a continual process in
which goals are raised higher and higher to
push agency managers and staff harder and
harder to improve. As the old business
adage states, "If you're standing still, you're
falling behind."
That is why we strongly support the act.
But agencies should not wait until fiscal
1999 to start integrating performance
measurement into their operations. Nor
should they limit themselves to the
minimum mandates of the new law. The
President, through OMB, is encouraging
every federal program and agency to begin
strategic planning and performance
measurement, whether it is selected as a
pilot or not.
73
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
Ifgovernment is to become customer-oriented,
then 71U17Ulgers cwsest to the citizens must be
empowered to act quickly. WJ.ry must every
tkcision /J( signed-offon by so many peopk? If
program 71U17Ulgm tUm instead held
accountable for the ~ts they achieve, thry
could be given more authority to be innovative
and responsive.
Senator Wdliam V. Roth, Jr.
Congressional Record, July 30,1993
Action: All agencies will begin
developing and using measurable
objectives and reporting results. 21
In early 1994-in time to prepare the
fiscal 1996 budget-OMB will revise the
budget instructions it gives agencies to
incorporate performance objectives and
results, to the greatest extent possible.
Agencies will stan measuring and reporting
on their past goals and performance as part
of their 1996 budget requests. The OMB
instructions, along with executive office
policy guidance, will guide agencies as they
develop full-fledged goal-sening and
performance-monitoring systems for the
first time.
At the outset, managers may feel
unprepared to set reasonable performance
targets. Some will lack any program data
worth its salt on which to base any future
goals or performance projections. Others,
overwhelmed with "input" indicators about
program staffing and spending, will find it
difficult to figure out whether-or howthose measures directly relate to achieving
desired outcomes. Agencies will start
preparing themselves by reallocating enough
resources toward performance planning and
measurement over the long term.
OMB will help. Its budget analysts will
be trained to provide feedback and broad
oversight to help craft an effective system,
and encourage agencies to improve
measures that are clearly ineffective. OMB
will negotiate stronger goals for agencies
that set their sights too low or perform
poorly against their indicators.
Agencies will gradually build
performance information into their own
budget guidance and review procedures,
into their strategic and operational plans,
and into revised position descriptions for
their budget, management, and program
analysts. Nothing, however, will replace peer
pressure as agencies vie for performance
awards or seek public recognition for their
achievements.
Action: ClArify the objectives ofjetImJ
programs. 22
Many agencies will be unable to set clear
measurable goals until Congress simplifies
their responsibilities. Programs are bound
by multiple, often conflicting, legislative
objectives. The complex politics of passing
enabling legislation and then negotiating
annual appropriations forces some programs
to be all things to all people.
For example, a training program targeted
at unemployed steel workers soon is
required to serve unemployed farm workers,
the disabled, and displaced homemakers.
Originally, the program's purpose may have
been to refer people to jobs. But
congressional maneuvers first force it to
offer them training; then to help them find
transportation and daycare. All these are
important activities. But, by now, the
original appropriation is hopelessly
inadequate, reporting requirements have
multiplied geomeuically along with the
multiplicity of goals, and the program is not
simply unmanaged-it's unmanageable. ~
agencies are to set measurable goals for meJr
programs, Congress must demand less and
clarify priorities more.
In the private sector, leaders do not
simply drop goals on their organizations
from above. Hewlen-Packard, Microsoft,
Xerox, and others involve their full
workforces in identifying a few goals that
EMPOWERING EMPWYEES TO GET RESULTS
have top priority, and then demand smaller
work teams to translate those overall goals
into specific team measures. This process
enables the people directly responsible for
meeting the goals to help set them. It also
ensures that every part of an organization
aims at the same goals, and that everyone
understands where they fit in. It may seem a
time consuming process, but boats travel
much faster when everyone is pulling their
oar in the same direction.
With a new joint spirit of accountability,
the executive branch plans to work with
Congress to clarify program goals and
objectives, and to identify programs where
lack of clarity is making it difficult to get
results.
Holding Top Management
Accountable
When General Eisenhower took
command of the Allied Expeditionary Force
in World War II, he was given a mission
statement that clearly delineated goals for
his vast organization of more than a million
and a half men and women: "You will
enter the continent of Europe and, in
conjunction with the other uniced nations,
undertake operations aimed at the heart
of Germany and the destruction of her
armed forces."
In 1961, President Kennedy gave NASA
an even dearer mission: Put a man on the
moon and return him safely to earth by the
end of the decade. As Vice President AI
Gore told his audience at a meecing with
Vecerans Affairs Department employees:
"There has to be a clear, shared sense of
mission. There have to be clearly
understood goals. There have to be
common values according to which
decisions are made. There has to be trust
placed in the employees who acrually do
the work."
In Great Britain, Australia, and New
Zealand, many department and agency
heads are appointed for limited terms and
given performance agreements ..T~eir
reappointments depend on achlevmg
measurable outcomes. Senior officials from
these countries say that these agreements
have improved organizational performance
more than any other aspect of their
reinventing government efforts. In the
United States, many local governments do
much the same: In Sunnyvale, California,
managers can earn bonuses of up to 10
percent if their agencies exceed performance
targets.
Action: The President shou/J devekJp
written performance agreements with
department and agency heatls.23
Past efforts to institute management by
objectives have collapsed under the weight
. of coo many objectives and too much
reporting. The President should craft
agreements with cabinet secretaries and
agency heads to focus on the administration's
strategy and policy objectives. These
agreements should not "micro-manage" the
work of the agency heads. They do not row
the boat. They should set a course.
These agreements will begin with the top
24 agency heads. In Fact, Secretaries Mike
Espy at the Agriculture Depamnent and
Henry Cisneros at the Depamnent of
Housing and Urban Development, as well
as Roger Johnson at the General Services
Administration (GSA), and Administrator
J. Brian Atwood of the Agency for
International Development are already
working with their top managers on
agreements.
Not everyone will welcome outcome
measures. People will have trouble
developing them. Public employees
generally don't focus on the outcomes of
their work. For one thing, they've been
conditioned to think about process; for
another, measures aren't always easy to
develop. Consequently, they tend to measure
their work volume, not their results. If they
are working hard, they believe they are doing
all they can. Public organizations will need
the several years envisioned under the
Government Performance and Results Act
to develop useful outcome measures and
outcome reportmg.
75
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
& COSTS LESS
Measuring Outcomes
utcome-based management is new in the
public sector. Some U.S. cities have
developed it over the past two decades; some
states are beginning to; and foreign counoies
such as Great Britain, Australia, and New
Zealand are on their way.
Sunnyvale, California, a city of 120,000 in
the heart of the Silicon Valley, began the
experiment 20 years ago. In each policy area,
the city defines setS of "goals," "community
condition indicators," "objectives," and
"perfonnance indicators." "In a nonna!
political process, most decisionmakers never
spend much time talking about the results they
want from the money they spend," says Oty
Manager Tom Lewcock. "With this system, for
the first time they understand what the money
is acrually buying, and they can "say yes or
no."24
Sunnyvale measures performance to reward
successful managers. If a program exceeds its
objectives for quality and productivity, its
manager can receive a bonus of up to 10
percenr. This generates pressure for ever-higher
productivity. The result: average annual
productivity increases offour percent. From
1985 to 1990, the city's average cost of service
dropped 20 percent, in inflation-adjusted
dollars. According to a 1990 comparison,
Sunnyvale used 35 to 45 percent fewer people
to deliver more services than other cities of
similar size and type.
At least a half-dozen states hope to follow in
Sunnyvale's footsteps. Oregon has gone
farthest. In the late 19805, Governor Neil
Goldschmidt dereloped long term goals, with
significant citizen input. He set up the Oregon
Progress Board, comprising public and private
leaders, to manage the process. The board
developed goals and benchmarks through 12
statewide meetings and written materials &om
over 200 groups and organizations. "Oregon,"
O
the board stated. "will have the best chance of
achieving an amactive future if Oregonians
agree clearly on where we want to go and then
join together to accomplish those goals."25
The legislature approved the board's
recommended 160 benchmarks, measuring
how Oregon is &ring on three general goals:
exceptional individuals; outstanding quality of
life; and a diverse, robust economy. Seventeen
measures are deemed. short-tenn "lead"
benchmarks, related to urgent problems on
which the board seeks progress within 5 years.
They include reducing the teen pregnancy
rares, enrolling people in vocational programs,
expanding access to basic health care, and
cutting worker compensation coSts.
Another 13 benchmarks are listed. as "key"fundamental, enduring measures of Oregon's
vitality and health. These include improving
basic student skills, reducing the crime rate,
and raising Oregon's per capita income as a
percentage of the U.S. average.
Barbara Roberts, today's governor, has
translated the broad goals and benchmarks into
specific objectives for each agency. This year,
for the first time, objectMs were integrated
into the budget-giving Oregon the first
performance-based budget among the states.
Great Britain has instituted performance
measurement throughout its national
government. In addition, the government has
begun writing 3-year performance contraCtS,
called "Framework Agreements," with about
half its agencies. These agencies are run by chief
executive officers, many &om the private sector,
who are hired in competitive searches and then
negotiate agreements specifying objectives and
performance measures. If they don't reach
their objectives, the CEOs are told, their
agencies' services may be competitively bid
after the 3 years.
EMPOWERING EMPLOYEES TO GET REsULTS
Ultimately, no one can generate results
without knowing how the "bottom line" is
defined. Without a performance target,
managers manage blindly, employees have
no guidance, policymakers don't know
what's working, and customers have no idea
where they may be served best. If, for
example, jobless people know how well
graduates oflocal training programs fare
when looking for work, they can better
choose which new careers and programs
offer the best prospectS. Informed
consumers are the strongest enforcers of
accountability in government.
Action: The administration wiD issue
one set ofBaldrige Awards for quality in
the federal government.26
For years, the executive branch has taken
steps to recognize and suppon good.
performance. In typical fashion, however,
STEP
we have created three different award
systems, each administered by a different
organization. The Federal Quality Institute
(FQI) administers the Presidential Award
for Quality; the Presidem's Council on
Management Improvemem administers the
Award for Management Excellence; and the
Office of Personnel Management awards
the Presidential Quality and Management
Improvemem Awards for tangible savings to
the government of more than $250,000.
The administration will issue one set of
presidential awards for quality. The Baldrige
Award Office of the National Institute for
Standards and Technology will combine the
existing awards imo a new set of Baldrige
Awards for public service-to go along with
its private sector award. The new award will
recognize agency and work unit quality
initiatives and ideas, based on program
performance, cost savings, innovation, and
customer satisfaction.
3: GIVING FEDERAL WORKERS THE TOOLS THEY
NEED TO DO THEIR JOBS
A
mericans today demand a more
responsive, more humane
government that costs less. Their
expectations are neither irrational nor
whimsical. Over the past 20 years, the entire
way we do things, make things, even
contact one another, has changed around
us. Businesses have no guarantees, no
captive markets. To compete, they must
make things and deliver service better and
faster, and get their message out sooner. No
one benefits more than customers. It's no
wonder these same people now turn to
government and ask, "Why can't you do
things better too?"
Transforming our federal governmem to
do better will mean recasting what people
do as they work. They will turn from bosses
imo coaches, from directors imo
negotiators, from employees imo thinkers
and doers. Governmem has access to the
same tools that have helped business make
this transformation; it's just been slower to
acquire and use them. We must change
that. We must give workers the tools they
need to get results--then make sure they
use them.
Employee Training
After two decades of organizing for
quality, business knows one thing for sure:
Empowered people need new skills--to
work as teams, use new computer software,
interpret financial and statistical
information, cooperate with and manage
other people, and adapt. Indeed, business
calks about a new breed of "knowledge
worker"-people who understand that,
throughout their careers, their most
important task is to continue learning and
applying new knowledge to the challenge at
hand. Knowledgeable workers are our most
important source of progress. They are,
77
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
quire simply, the currency of 21st century
commerce.
Business teaches us that ongoing training
for every worker is essential for
organizations to work well. Not surprisingly,
the federal government under-spends on
training and education, just as it does on
most other productivity-enhancing
investments. In 1989, the National
Commission on the Public Service, headed
by Paul Volcker, estimated that while
leading private firms spend 3 to 5 percent of
their budgets on training, retraining, and
upgrading employee skills, the federal
government spends less than one percent. 27
And the little we do spend is not always
allocated wisely. A well-promoted 4-day
training seminar packaged to appeal to
federal agency managers may seem like a
good deal. It is not, however, always what
the agency needs. The Volcker Commission
concluded:
Federal training is su./frringftom an
identity crisis. Agmcies a" not su" what
they should train for (short term or long
term), who should get the lion's share of
resources (mtry level or smior
Ievel)...and whether mid-career
education is ofvalue... Ca"" paths are
poorly designed, ~ecutive succession is
accidental and unplanned, and realtime trainingfor pressured managers is
virtually non-existent. At both the career
and presidential level training is all-toooften ad hoc and self-initiated. 28
Perhaps most striking is the paucity of
career training for people on the lowest
rungs of the civil service ladder, or for people
without the leg-up of university degrees.
These valued employees may have the most
tenure in an office. They may see and know
everything. Frequently, they are indispensable,
because only they know how the system
works-and how to work the system.
Unfortunately, their abilities are rarely
rewarded, despite their desire to advance.
One staffer in the Justice Department's
Civil Division alerted Vice President Gore
to her quandary:
78
1m watching the rok ofour legal
secretaries change. uss and kss ofthe
typical secretarial duties are being
performed, simply because the attorneys
do a lot oftheir own drafting of
documents... However, for a secmary to
start to move into a kgal assistant
position... or into a parakgal rok, is
frowned upon... As for as training goes
it's impossibk... That prevents a lot of
peopk from ... moving into new jobs that
are going to be ofmore benefit to the
department... ~ve lost a good number
ofsecretaries who have moved elsewhere,
because they cannot go any forther here. 29
Employees at the top rung, too, must
keep learning. Managers and executives face
the same hurdles in keeping up with
technology as do front-line workers.
Technicians must stay up to date with
system advances and new techniques. The
growing band of federal export and trade
personnel must learn more than foreign
languages--they need to master the
language of negotiation as well. Indeed,
employees in the Office of the U.S. Trade
Representative currently receive no
systematic training in negotiation skills or
the cross-cultural styles and patterns they
are likely to encounter in their work-a
situation the office is now planning to
correa. 3D
Perhaps most important, training is the
key that unlocks the power of bottom-up
decisionmaking. At the Reinventing
Government Summit, General Electric
Executive Vice President Frank Doyle
derailed the GE experience: "We had to
educate our entire workforce to give them
the tools to become meaningfully involved
in all aspeCts of work. Empowerment... is a
disorderly and almost meaningless gesture
unless people doing the actual work are
given the tools and knowledge that selfdirection demands."31
During the National Performance
Review process, almost every one of the
agency teams identified a specific learning
need critical to their agency's quality
improvement and mission. In addition,
EMPOWERING EMPWYEES TO GET REsULTS
several common training concerns demand
governmentwide action.
Action: The mlministration will grant
agencies the flexibility to finance training
neeJs.32
Leading corporations view training as a
strategic resource, an investment. Federal
managers tend to view it as a cost. So in
government, worker training isn't even
included in most budget estimates for new
systems or programs. This is puzzling and
quite shon-sighted, since new workplace
innovations, like advanced software, won't
transform employee productivity unless
those employees know how to use them.
Although training may be the best and least
costly way to improve worker performance,
government executives view it as a "quick
fix," unworthy of any planning effort.
Perceptions are changing, however.
Today's management literature is full of talk
about the value of on-the-job-training,
computer-based instruction, expen systems,
work exchange, mentors and other tools for
learning. Since 1992, OPM has been
steering agencies toward more
comprehensive training initiatives.
We will grant agencies a substantial
portion of the savings they realize from
decentralizing staff and reducing operating
costs (see chapter 1) to invest in worker
training, performance measurement, and
benchmarking.
Budget directives further complicate an
agency's ability to train workers effectively,
particularly when its own budget office,
OMB, or Congress cut line items for
employee training. Such over-specified
reductions deny employees the access to
skills they need to be productive, to advance
in their careers, and to adapt to new
technology.
Action: The federal government will
upgrade information technology training
for all employees.33
Every year, more and more federal
workers must use computer-based
information technology in their jobs. If
business is any guide, our government
reinvention efforts will only quicken the
trend. Pen and paper exercises keep moving
to the screen. Lateral files now form
database records. Video- and computerbased courses make learning possible
anytime, anywhere. Money no longer
changes hands; it's transmitted digitally.
People nor only talk, they "message." A
meeting of the minds can take place
without the bodies present.
Other chapters discuss how we will speed
the procurement process for technology and
how we will deploy technology to alter what
we do and how well we do it. Here, we
want to stress that much of the federal
workforce lacks the training and
background to use advanced information
technologies.
Compared to the private sector, the
federal government invests few dollars and
scant time in technology training. 34 Federal
agencies provide insufficient incentives to
motivate their workforce to seek technology
training, scarce opportunities to obtain
training-even when it's desired and
necessary-and rarely incorporate
technology training in the strategic
planning process. The longer we wait, the
farther behind we fall.
This foot -dragging costs the taxpayer
dearly. We do things the old way, not the
cheaper, more efficient way. Or we start
doing things the new way, but we don't go
far enough: We buy computers for our
workers, but not the training to use them
properly, so the software and hardware
investments are wasted. We invest in new
systems, and our people can't make them
work.
Training should begin with top
nontechnical managers, to help them focus
on uses, management, planning, and
acquisition of state-of-the-art information
technology. By May 1994, OPM and GSA
will jointly develop and administer
information technology training for nontechnical managers and presidential
appointees. The New York City
Department of Personnel, already in the
79
FROM RED TArE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
rechnology training business, offers a useful
model of monthly half-day sessions for
executives covering ten topics: strategic
planning, reengineering, implementing
sysrems, electronic mail, video conferencing,
voice-enhanced technologies, geographic
information systems, database management,
imaging, and multi-agency complaints and
inspection systems. Our effon will help
every senior manager earn a cenificate that
signifies his or her level of technology
competency. Parallel training and
certification effortS will target Senior
Executive Service members and information
resource managers.
Anyone who has grappled with
computers--from the basics of word
processing to the complexity of expen
systems--knows that we often learn best
how to use software by finding a technology
"pal": someone who knows the ins and outs
of a particular software application and is
willing to share that knowledge. To spread
information technology training and use in
the entire federal workforce, the existing
Federal Information Resources Management
Policy Council will help motivated agencies
set up a program of collegial assistance for a
wide range of technology applications. We
will tap the cadre of techno-proficient
individuals spread across the federal
government to provide occasional on-line
help or personal assistance on demand to
their struggling colleagues.
Finally, starting late in 1993, new
contracts for technology acquisition--or
those in early stages-must include a
provision for training. If agencies work
together, they can CUt such training costs
dramatically. When Texas contracted with
four statewide technology training firms to
train state employees, it CUt the price to $60
to $110 a day per worker for a wide range
of skills. An even larger customer, the
federal government should be able to land
an even better bargain.
80
Action: FJiminate narrow restrictions
on employee training to help develop Il
multiskilJeJ workforce.35
The Government Employees Training
Act (GETA), which authorizes agencies to
manage and determine their training needs,
defines training as a tool for "increasing
economy and efficiency in government."
The rules written behind this 1958 wording
severely limit how agencies can use training
today. Training too often is ad hoc and
seldom linked to strategic or human
resource planning. Managers generally are
not able to get the information to
determine the return on their training
investment. Even worse, existing restrictions
dictate that any training be related to an
employee's official duties-thus ensuring
that our Justice Department secretary does
not become a paralegal. These rules keep
federal employees single-skilled in a multiskilled world.
By early 1994, aPM will draft legislation
to amend GETA on three fronts. OPM will
redefine the objective of federal training as
the "improvement of individual and
organizational performance." It will relate
the use of training to achieving an agency's
mission and performance goals, not to a
worker's official duties. And OPM will seek
to end the distinction between government
and nongovernment training, giving public
employees access to the best training services
available, no matter who provides them.
Clarifying the purpose of training in
GETA will reinforce the need to use
training to improve performance and
produce results. Removing the distinction
between government and non-government
training will deregulate the in-government
training monopoly, introducing
competition that will improve the quality of
learning opportunities for federal
employees. And linking training to an
agency's mission will ease employees' effortS
to become adept at all the skills they need a!
empowered workers. We urge Congress to
join in the quality effon by passing these
important amendments early in 1994.
EMPOWERING EMPWYEES TO GET REsULTS
Management Infonnation Systems
Management isn't about guessing, it's
about knowing. Those in positions of
responsibility must have the information
they need to make good decisions. Good
managers have the right information at their
fingertips. Poor managers don't.
Good information comes from good
information systems. Management
information systems have improved in
lockstep with every advance in the
telecommunications revolution. New
management information systems are
transforming government, just as they have
business, in two ways. They can make
government more productive-the benefit
we discuss in this chapter-and let us
deliver services to customers in new ways,
which we take on in chapter 4. Indeed,
today's systems have enabled businesses to
slim down data processing staffs, while
giving more employees access to more
accurate data. This shows up on the bottom
line. If federal decision makers are given the
same type of financial and performance
information that private managers use, it
too will show up on the bottom line-and
Cut the cost of government.
Sheer size alone would make the federal
government difficult to manage, even under
the best of conditions. Unfortunately,
federal employees don't work under the best
of conditions. Indeed, when it comes to
financial information, many are flying
blind. It's not for lack of staffing: Some
120,000 workers-almost 6 percent of
non-postal service civilian employeesperform budget, accounting, auditing, and
financial management taSks. 36 But when
MB surveyed agency financial reporting
systems last year, it found that one-third
were more than a decade old, and only 6
percent were less than 2 years old. Onethird failed to meet Treasury and OMB
reporting standards. Two-fifths did not
meet their own in-house reporting
standards-meaning they did not provide
the information managers wanted. And
more than half simply lacked the computer
power to process the data being entered. 37
o
We all know the potential costs of
lagging syStems: They contributed to the
$300 billion savings and loan bailout,38 $47
billion in nontax delinquent debt, $3.6
billion in student loan defaults, and so on.
Fortunately, the process of updating our
management information systems has
begun. In 1990, Congress passed the Chief
Financial Officers (CFO) Act. 39 Jt
designated an OMB deputy director as the
federal government's chief financial
management officer. The Office of Federal
Financial Management was charged with
establishing financial management policies
across the government and monitoring
agency audits. The act also created chief
financial officers in 23 agencies. The OMB
deputy chairs a CFO Council to deal with
improving financial management across
government.
But we need to do more-and quickly.
Action: The executive branch wiD create
a coherentfinancial 11IItnagement system,
cklrify responsibilities, and raise the
stanJArds for financial officers. 40
Vastly improved financial management is
critical to the overall effort to reform
government. First, it will save taxpayers
money. Trillions of dollars flow through the
federal government in any year; even a small
improvement in managing those funds
could recover billions. Second, we need
accurate and timely financial information if
managers are to have greater authority to
run federal agencies, and decisionmaking
moves to the frOnt lines. Greater
responsibility requires greater accountability,
or the best-intentioned reforms will only
create new problems. Finally, better
financial management will present a more
accurate picture of the federal budget,
enabling the President, Congress, and
agency leaders to make better policy
decisions.
By the end of 1993, OMB and Treasury
will sign a formal agreement to clarify
their respective policymaking and
implementation roles, to eliminate
regulatory confusion and overlap for their
81
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
governmental customers. OMB, working
with Treasury and the CFO Council, will
chaner a governmentwide Budget and
Financial Information Steering Group to
oversee the stewardship of financial
planning and management data for the
federal government. In addition, by Spring,
1994. OMB will work with the existing
Joint Financial Management Improvement
Program. which currently develops and
publishes financial system requirements,
and consult with Treasury and the agencies
to define exactly what constitutes an
integrated budget and financial system. At
the same time, working with Treasury and
the CFO Council, OMB will develop a
long-range strategic plan for linking broad
budget and financial information needs to
the work of agency managers and achieving
performance goals.
Finally, we will insist on higher
qualifications for chief financial officers.
After all, many federal agencies are larger
than Fortune 500 companies. Americans
deserve financial officers with qualifications
that match those in our best companies. By
March 1994, working with accounting and
banking groups, the CFO Council will
create a continuing education program for
federal financial managers. At the same
time, OMB guidelines will clarify the
precise financial functions the CFO should
oversee, trimming responsibilities like
personnel or facilities management that lie
outside the CFO's main mission.
Action: Within 18 months the Federal
Accounting SumJartis Advisory Board
wiD issue a comprehmsive set ofcredible
accounting stanJarJs for the federal
government. 41
A recent GAO audit of the Internal
Revenue Service uneanhed $500,000 of
overpayments to vendors in just 280
transactions and a video display terminal
that cost onlv $752 listed at $5.6 million on
the IRS books. Other GAO efforu found
the Army and Air Force guilty of $200
billion in accounting mistakes, NASA of
$500 million, and widespread
& COSTS LESS
recordkeepin!3 problems across
government. 2 In 1990, Congress
concluded that "current financial reporting
standards of the federal government do not
accurately disclose the current and probable
future cost of operating and investment
decisions including the future needs for cash
and other resources." In other words, if a
publicly-traded corporation kept its books
the way the federal government does, the
Securities and Exchange Commission
would close it down immediately.
It's not that we have no accounting
procedures and standards. It's that we have
too many, and too many of them conflict.
Even worse, some budget and accounting
practices obscure the amount and type of
resources managers might leverage to
produce savings and increase productivity.
We must agree on stricter accounting
standards for the federal books. We require
corporations to meet strict standards of
financial management before their stocks
can be publicly traded. They must fully
disclose their financial condition, operating
results, cash flows, long-term obligations,
and contingent liabilities. Independent
cenified public accountants audit their
accounts. But we exempt the $1.5 trillion
federal government from comparable
standards.
Currently, the Federal Accounting
Standards Advisory Board (FASAB),
established in October 1990, develops and
recommends federal accounting standards
for OMB, Treasury, and GAO-which
together must approve them. Although we
need almost a dozen sets of standards, only
one has been approved using this process in
more than two and a half years. We need to
quicken the pace.
The administration will give the Federal
Accounting Standards Advisory Board an
I8-month deadline to release and get
approval of all 11 sets of standards. If it fails,
the administration will replace it with a new,
independent board with greater powers.
EMPOWERING EMPLOYEES TO GET REsULTS
Action: The Administration should issue
an AnnUAl Accountability Report to the
43
C· .
,tJzens.
The ultimate consumer of information
about the performance of federal
organizations should be the American
public. As agencies develop output and
outcome measures, they should publish
them. The customer service standards
required by the President's directive on
improving customer service, outlined in
chapter 2, will be a first step.
A second step will be a new repon card
on the financial condition of the federal
government. For the last 20 years, our
government has issued "prototype" financial
statements, but no one can assure their
accuracy. Put simply, they would never pass
an audit. We believe Americans deserve
numbers they can trust. By 1997, we will
require the Department of the Treasury to
provide an audited consolidated annual
repon on federal finances-including tax
expenditures, hidden subsidies, and hidden
contingent liabilities such as trust funds and
government-sponsored enterprises. 44
The Treasury and OMB will develop a
simplified version of the government's
financial condition, to be published for
public consumption in 1995. Rather than a
detailed, unreadable financial account, it will
be a straightforward description of the
money spent and its effects on achieving
goals. We will call this the Annual
Accountability Report to the Citizens.
beating the mainframe. His state
administrator took notice, and managed to
squeak through a request to the Department
of Labor's Veterans Employment and
Training Service for grant funding and
permission to reprogram dollars in the fall
of 1990. Soon after, 40 Massachusetts
caseworkers were working with laptops. In
just one year, Massachusetts jumped from
47th in the nation for its veterans job
placement rate to 23rd.
Although this story screams success, it is
unfortunately the exception, not the rule.
Normally, the Labor Department has to
approve the purchase of something as small
as a $30 modem in the field. Massachusetts
got the funding only because it was the end
of the fiscal year and money had to be
spent. 45
The point stands: When workers have
current and flexible technology to do their
jobs, they improve performance. We need
to get more computers off the shelf and into
the hands of federal employees.
Action: The administration will develop
a strategic pIAn for using information
technology throughout the federal
government. 46
Transforming the federal government is
an enormous, complex undenaking that
begins with leadership, not technology. Yet,
I n short, its time our government adjusted to
Infonnation Technology
A few years ago in Massachusetts, a
disabled veterans caseworker who worked to
match veterans with available jobs took
some initiative. He decided to abandon his
sole reliance on the state's central office
mainframe computer and take his personal
laptop, loaded with readily available
software, on the road. Suddenly, he was able
to check a database, make a match, and
print a resume all during his first contact
with an employer. Quickly, he started
the real world, tightened its belt, managed its
affairs in the context ofan economy that is
information-based, rapidly changing, and puts
a premium on speed andfonction and seroice,
not rules and regultztions.
President Bill Clinton
Remarks announcing the
National Performance Review
March 3. 1993
83
FROM RED TAPE TO RESULTS- CREATING A GOVERNMENT THAT WORKS BETTER &. COSTS LESS
in helping to break down organizational
boundaries and speed service delivery,
information technology can be a powerful
tool for reinvention. To use that tool,
government employees must have a clear
vision of its benefits and a commitment to
Its use.
Washington's attempts to integrate
information technology into the business of
government have produced some successes
but many costly failures. Many federal
executives continue to overlook information
technology's strategic role in reengineering
agency practices. Agency information
resource management plans aren't
integrated, and their managers often aren't
brought into the top realm of agency
decisionrnaking. Modernization programs
tend to degenerate into loose collections of
independent systems solving unique
problems. Or they simply automate, instead
of improve, how we do business.
The President should exparId the work of
the existing Information InfrastrUcrure Task
Force to include a Government Information
Technology Services Working Group. This
working group will develop a strategic
vision for using government information
services arId propose strategies to improve
information resource marIagement. Also
beginning in October 1993, OMS will
convene interagency teams to share
information arId solve common
information technology problems. In
addition, OMS will work with each agency
to develop strategic plans and performance
measures that tie technology use to the
agency's mission and budget.
STEP 4: ENHANCING THE QUALITY
OFWORKLIFE
W
hen it comes to the quality of
worklife, as measured by
employee pay, benefits, schedule
flexibility, and working conditions, the .
federal government usually gets good
marks. Uncle Sam is a family-friendly
employer, offering plenty of options that
help employees balance their life and work
responsibilities. Flextime, pan-time, leavesharing, and unpaid family and medical
leave are all available. Pilot projects in
telecommuting allow some workers who
travel long distarIces to work at locations
closer to home.
The federal government would be smart
to keep abreast of workplace trends. Our
increasingly diverse workforce struggles to
manage child care, elder care, family
emergencies, and other personal
commitments, while working conditions
become ever more irnponant. Recent
studies suggest that our ability to recruit
and retain the best employees-and
motivate them to be productive--depends
on our ability to create a satisfying work
environment. Johnson & Johnson, for
example, reported that its employees who
84
used flextime and family leave were absent
50 percent fewer days than its regular
workforce. Moreover, 71 percent of those
workers using benefits said that the policies
were "very imponant" to their decision to
stay with the company, as compared to 58
percent of the employees overall.46
The federal government must maintain
its "model employer" status and keep the
workplace a humane and healthy place. It
must also ensure that, as we move toward
improving performance and begin to rely
on every worker for valuable ideas, we
create a workplace culture in which
employees are trusted to do their best.
Action: The federal government will
uptime anJ expanJfamily-friendly
workplAce options. 4
Even under current workplace policies,
federal workers still encounter some
problems. Many agencies do not fully
advocate or implement flexible work
policies. For example, only 53 percent of
our employees with dependent care needs
believe their agencies understand and
EMpOWERING EMpWYEES TO GET REsULTS
support family issues, according to OPM.
Thirty-eight percent indicated that their
agencies do not provide the full range of
dependent-care services available. As one
example, OPM concluded that " ... certain
agencies may have internal barriers that
make supervisors reluctant to approve
employee requests to work part-time. "48
The President should issue a directive
requiring that all agencies adopt
compressed/flexible time, part-time, and
job-sharing work schedules. Agencies will
also be asked to implement flexiplace and
telecommuting policies, where appropriate.
Staning next year, we will allow federal
employees to use accrued sick leave to care
for sick or elderly dependents or for
adoptions. 49 We will also give credit for all
sick leave to employees who have been
separated from and then rejoin federal
employment, no matter how long they were
out of government service.
Congress has written into law some
barriers to improving the federal workplace.
It should lift them. By January 1994, OPM
will submit legislation to remove limitations
on dependent-care programs and give
agencies more authority to craft employeefriendly programs, such as employee benefit
packages. By March 1994, OPM and GSA
will propose legislation to enable flexiplace
and telecommuting arrangements.
Finally, we urge Congress to reauthorize
the Federal Employees Leave Sharing Act
which expires October 31, 1993 with a few
changes to improve program operations and
allow interagency transfers of annual leave.
Voluntary leave enables employees with
family medical emergencies, who have
exhausted all their available annual leave, to
receive donated annual leave from their
fellow federal workers. In just the last two
years, voluntary leave served more than
23,000 federal employees with more than
3,742,600 hours of donated annual leave.
The dependent-care needs of more than 96
percent of federal employees are met by the
leave-sharing program. so
One ofthe thing; we learned .. is that there's a
strong correlAtion betwem employee satisfaction
and customer satisfaction. !flour employees are
unhappy and worried about the various
baseline, basic needs, you know, ofthe quality
oftheir work lifo, they won't wony about
customers.
Rosetta Riley
Director of Customer Satisfaction
General Motors
Action: The executive branch will
abolish employee time sheets and time
cards for the standArd work week. 51
In a productive workplace, where
employees clearly understand their agency's
mission, how they fit into it, and what they
must accomplish to fulfill it, everyone is a
professional. The work culture must send
this message in every way possible. One easy
way is to put an end--once and for all-to
meaningless employee sign-ins and signouts on time sheets.
Many may consider this a trivial matter.
But consider the salaried Health and
Human Services (HHS) employee who
must still sign in at a central location in her
office every morning-and sign out exactly
811z hours later. She must do this no matter
how many more hours she really works, and
every employee in her branch must sign the
same list, in order of appearance.
Occasionally, when she gets caught up in a
meeting or lost in concentration at her desk,
she forgets to sign the book at her appointed
hour. Supervisors have "guided" her to avoid
this problem. She tells her supervisor, who
agrees that the practice is senseless, that it
discourages her from working longer hours.
"What about us overachievers?" she asks him.
"V
IOU Iose, " he answers.
85
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
The trum is, we all lose. Yet HHS
continues to spend dollars training
timekeepers. 5
The Department of Labor, by contrast,
listened to complaints from its employees
about the needless paper-pushing and use
of administrative time that repetitive
timekeeping required. Under the leadership
of Secretary Robert Reich, and with full
backing of union presidents who represent
department employees, Labor has begun to
dump the standard time card. After
realizing that nearly 14,000 of its 18,000
employees work a standard 40-hour week,
department leaders decided to trust their
workers to report only exceptions, such as
overtime and sick and annual leave. Since
only one third of Labor's workforce reports
any exception in the average week, the
department is already saving paper and
time--and money. Standard rime records
are now submitted electronically, without
bothering employees. 56
The President should encourage all
departments and agencies to follow the
Department of Labor's lead. The new policy
will allow for exceptions-for example,
when labor contracts or matters of public
safety require them. But if we truly seek the
highest productivity from our workers, we
must treat them like responsible adults. In
today's work environment, time cards are a
useless annoyance.
Action: The President should issue a
directive committing the administration
to greater e'lum opportunity and diversity
in the federal workforce.54
President Clinton launched his
adminiStration by appointing cabinet and
senior officials who, in his words, "look like
America." In doing so, he sent a clear
message: A government that strives for the
86
best must continue to break down stubborn
barriers that too often keep us from
employing, training, or promoting the best
people.
While the President has set the stage, the
current federal workforce does not reflect
the nation's diverse working population.
Overall, the federal government has yet to
successfully eliminate some discriminatory
barriers to attracting and retaining
underrepresented groups at every civil
service grade level, or advancing them into
senior positions. A glass ceiling still hangs
over the employment and career prospects
for women, minorities and people with
disabilities who work in the federal service.
Women account for only 12 percent of the
top tier of the federal employment ladder-the Senior Executive Service--and
minorities, nine percent. 55 Serious disparity
persists for both in promotion rates to
professional and administrative levels
that serve as the gateway to funher
advancement. The numbers for Americans
with disabilities are even worse.
Much can be done to make equal
opportunity an integral part of each agency's
mission and strategic plan. The President
should issue a directive in 1993,
committing the administration to attaining
a diverse federal workforce and increasing
the representation of qualified minorities,
women, and people with disabilities at all
career levels. The order should instruct
agency heads to build equal employment
opportunity and affirmative employment
elements into their agency strategic plans
and performance agreements. In rum,
agency leaders should require managers and
teams throughout their agencies to build
the same goals into their own performance
plans-and should publicly recognize those
who succeed.
EMPOWERING EMPLOYEES TO GET REsULTS
STEP 5: FORMING A LABOR-MANAGEMENT
PARTNERSHIP
T
he federal workforce is changing.
While the number of employees has
remained constant for a decade, the
workforce is much more diverse, with more
minorities and women. It is better educated
and more mobile. And more employees
work in professional, scientific, and highly
technical jobs than ever before.
Today, more than 125 federal unions
represent about 60 percent of the federal
workforce. That's 1.3 million civilian, nonpostal employees, or 80 percent of the
workforce eligible to panicipate in federal
unions. The three largest federal employee
unions are the American Federation of
Government Employees (AFGE), the
National Treasury Employees Union
(NTEU), and the National Federation of
Federal Employees (NFFE).
Federal employees and their unions are as
aware of the quality revolution as are federal
managers. Consistent with the quality push,
federal employees want to panicipate in
decisions that affect their work. Indeed,
GAO estimates that 13 percent of federal
workers already are involved in formal
quality management processes. 56 At the
IRS, for example, a Joint Quality
Improvement Process with the NTEU has
spread throughout the agency-saving
money, producing better service, and
improving labor-management relations.
Corporate executives from unionized
firms declare this truth from experience: No
move to reorganize for quality can succeed
without the full and equal panicipation of
workers and their unions. Indeed, a
unionized workplace can provide a leg up
because forums already exist for labor and
management exchange. The primary barrier
that unions and employers must surmount
is the adversarial relationship that binds
them to noncooperation. Based on
mistrust, traditional union-employer
relations are not well-suited to handle a
culture change that asks workers and
managers to think first about the customer
W
want to befoB partners. we want to
work. 'We want governmmt to work better.
we want to be there in partnership to help
identifY the problems. we want to be there in
partnership to help craft the solution. we want
to be there in partnership to help implement
together the solution that this government
needs.
And were prepared to work in partnership
to make some bold leaps to turn this
government around and make it work the
way it should work.
John Sturdivant, President
American Federation of Government Employees
Reinventing Government Summit,
Philadelphia June 25,1993
and to work hand-in-hand to improve
quality.
The current context for federal labormanagement relations, title VII of the 1978
Civil Service Reform Act, presents such a
barrier. In 1991, the GAO concluded after
an exhaustive survey of union leaders,
government managers, federal employees
and neutral expertS, that the federal labormanagement relations program embodied
in title VII "is not working well." GAO
characterized the existing bargaining
processes as too adversarial, bogged down
by litigation over minute details, plagued by
slow and lengthy dispute resolution, and
weakened by poor management. One
expert interviewed by GAO summed up
the prevailing view: "We have never had so
many people and agencies spend so much
time, blood, sweat, and tears on so little. In
other words, I am saying I think it is an
87
FROM RED TAI'E TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
awful waste of time and money on very
lime results." Indeed, the cost of handling
unfair labor practice disputes using this
system runs into tens of millions of dollars
every year. 57
We can only tranSform government if we
tranSform the adversarial relationship that
dominates federal union-management
interaction into a partnership for
reinvention and change.
Action: The PresiJent shoultl issue a
tIirrrtive that est4b1ishes fAbor..manAgement
partnership lIS an executive branch goal
and establishes a National Partnership
Council to help implement it.58
The President's executive order will
articulate a new vision of labormanagement relations. It will outline the
roles of managers and unions in creating a
high-performance, high-quality
government. It will call for systematic·
training in alternative dispute resolution
and other joint problem-solving approaches
for managers, supervisors and union
officials. And it will call for agencies to form
their own internal councils.
By October, 1993, the President should
appoint the National Partnership Council
and charge it with the task of championing
these efforts and developing the next steps.
The council will include appropriate federal
cabinet secretaries, deputy secretaries, and
agency directors; the presidents of AFGE,
NTEU, and NFFE; and a representative of
the Public Employee Depanrnent of the
AFL-CIO. Federal agencies and unions will
assign existing personnel to staff the council.
Action: The National Partnership
Council will propose the statutory changes
needed to make Itzhor-matulgement
partnership a reality. 59
GAO cited the need for a new labormanagement relations framework that
"motivates labor and management to form
productive relationships to improve the
public service."6O The Federal Labor
Relations Authority, The Federal Mediation
and Conciliation Service, and several
agencies have been encouraging and
facilitating new labor-management
cooperation efforts. However, their efforts
are being hampered by legal restrictions thac
focus on the traditional adversarial models.
The council will recommend legislation to
the President to create a better framework.
STEP 6: ExERTING lEADERSHIP
espite the federal government's
solid core of capable employees, it
lacks effective leadership and
management strategies. In 1992, GAO
delivered a stark diagnosis of the
situation. Our government, GAO
reported, lacks the "processes and systems
fundamental to a well-run organization.
Most agencies have not created a vision of
their futures, most lack good systems to
collect and use financial information or
to gauge operational success and
accountability, and many people do not
have the skills to accomplish their
missions." This situation, GAO
concluded in a burst of understatement,
d "61
was "not goo.
D
88
The sweeping change in work culture
that quality government promises won't
happen by itself Power won't decentralize of
its own accord. It must be pushed and
pulled out of dle hands of the people who
have wielded it for so long. It will be a
struggle.
We must look to the nation's top leaders
and managers to break new ground. The
President, the Vice President, cabinet
secretaries, and agency heads are pivotal to
bringing about governmentwide change. It
is they who must lead the charge. Under
President Clinton's leadership they are
determined to make it happen.
If we want to make the federal
government a better place, our current
EMPOWERING EMPWYEES TO GET REsULTS
leadership must make it clear by what we do
that, when we offer change, we mean
business. That is a promise we must make
to the entire community of hardworking,
commined federal workers. It is a promise
we must keep.
Action: The PresUlent shoukl issue a
directive detailing his vision, plan, and
commitment to creating qwzlity
government. 62
Graham Scon, who as Secretary of
Treasury for New Zealand helped shepherd
reinvention of that country's government,
cautioned Vice President Gore, "Our
experience is that government won't change
unless the chief executive is absolutely 100
percent commined to making it change. "63
CEOs of corporations the world over echo
Scon's call.
The first directive issued along with this
report will clarify the President's vision of a
quality federal government. It will commit
the administration to the principles of
reinventing government, quality
management, and perpetual reengineering,
as well as the National Performance
Review's other recommendations. In
addition, it will detail the strategic
leadership roles of the cabinet and agencies
in implementing them.
Action: Every federal department and
agency will designAte a chiefoperating
officer. 64
Transforming federal management
systems and spreading the culture of quality
throughout the federal government is no
small task. To accomplish it, at least one
senior official with agencywide
management authority from every agency
will be needed to make it happen.
Every cabinet-level department and
federal agency will designate a chief
operating officer (COO). In addition to
ensuring that the President's and agency
heads' priorities are implemented, COOs
will be responsible for applying quality
principles in transforming the agencies' day-
to-day management cultures, for improving
performance to achieve agencies' goals, for
reengineering administrative processes, and
for implementing other National
Performance Review recommendations.
The COO will not add an additional
position in the secretary's or director's staff.
Secretaries and agency directors should
designate the deputy secretary or under
secretary with agencywide authority as the
COO. The COO will report directly to the
agency's top official.
Action: The PresUlent shoukl appoint a
PresUlent's Management Council to lead
the qwzlity revolution and ensure the
implementation ofNational PerfOnnance
. Review plans. 65
A new President's Management Council
(PMC) will be the President's chief
instrument to retool management systems
throughout the executive branch. It will act
as the institutional lever to drive
management and cultural changes
throughout the bureaucracy. The PMC will
ensure that quality management principles
are adopted, processes are reengineered,
performance is assessed, and other National
Performance Review recommendations are
implemented.
Unle.£r everyone understands what a work
process is, how to map it, how to analyze and
quantifY its essential elmzents, no organization
wiD be able to reap the enormous gains in
performance that come with an involved and
empowered workforce.
Frank Doyle
Executive Vice President, General Electric
Reinventing Government Summit, Philadelphia
June 25, 1993
89
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
The President should appoint the
Deputy Director for Management of OMB
to chair the PMC, and its progress will be
overseen by the Vice President. The council
will include the COOs from 15 major
agencies and three other agencies designated
by the chairperson, the heads of GSA and
OPM, and the President's Director of
Cabinet Affairs (ex officio). Its agenda will
include setting priorities, identifying and
resolving cross-agency management issues;
establishing interagency taSk forces to
transform governmentwide systems such as
personnel, budget, procurement, and
information technology; and soliciting
feedback from the public and government
employees. It will secure assistance from the
CEOs, officials and consultants who have
helped transform major American
corporations, states and local governments,
and non-profit organizations. In addition,
the PMC will conduct an annual
performance review of the federal
government and issue an annual report to
the public on its findings.
Working together, the President, Vice
President, PMC and every agency head will
carry the quality message into the sleepiest
corners of the bureaucracy. Successful and
innovative agencies will be cheered; slower
moving organizations will be prodded and
encouraged until change occurs.
Action: The President's Management
Council wiD launch qUAlity management
"basic training"for aD employees,
starting with top officials and cascading
through the entire executive branch.66
However pressing the need, we cannot
expect leaders, managers and employees
caught up in old ways to change overnight.
To nunure a quality culture within
government, we must help the entire
workforce understand the President's vision.
Unless we train everyone in the new skills
they need-and help them understand the
new roles they are expected to play-they
can, through passive or active resistance,
90
&. COSTS LESS
frustrate well-intentioned attempts to
progress. So first and foremost, everyone
will need to learn what working and
managing for quality is all about.
The President and agency heads must
send a clear message about their
commitment by becoming directly involved
in the design and delivery of quality training
in their agencies. Therefore, the PMC,
working with the Federal Quality Institute,
will begin quality training with the cabinet
secretaries and agency heads. Training
sessions will focus on defining a shared
vision, developing a strategy to embed that
vision in the each depanment, committing
participants to lead and be responsible for
change, and establishing a process for
training the next level of management.
Even as agencies reorganize around
quality and cusromers, their staff may need
training to fulfill expanded job
responsibilities. Line staff may need to learn
budget and procurement processes.
Managers may need help in becoming
coaches rather than commanders. We will
pursue the goal of reaching the entire
federal workforce with quality training.
It is worth noting that some cabinet
secretaries already are up on the quality
learning curve. During the past few
months, more than 60 top field managers,
contract lab directors, and assistant
secretaries have joined Energy Secretary
Hazel O'leary for 6 days of total quality
management training at Motorola
University in Chicago. They've agreed on a
mission statement, set the department's core
values, and put strategic planning in
motion. In the process, skeptics have
become energized, egos have been
subsumed, hidden agendas unearthed and
dispensed. In the words of one participant,
"Everyone is working as a team. We're
incredibly excited about doing better. In JUS!
6 days of quality training, we have moved
from 'I' to ,we.'''67
Other depanments are hot on Energy's
heels. Such agency leadership is pivotal to
moving quality forward. As quality
EMPOWERING EMPWYEES TO GET REsULTS
innovator Dr. Joseph Juran told Vice
President Gore, ''As we go at it energetically
in the federal government ... we're still going
to see some of the agencies step out in front
and everybody else is going to watch. And
as they get results and nobody's hun in the
process, others will be stimulated to do the
same thing. "68
Conclusion
T
o change the employee culture in
government, to bring about a
democracy of leadership within our
bureaucracies, we need more than a leap of
faith. We need a leap of practice. We must
move from control to collaboration, from
headquaners to every quaner. We must
allow the people who face decisions to
make decisions. We must do everything we
can to make sure that when our federal
workers exercise their judgment, they are
prepared with the best information, the
best analysis, and the best tools we have to
offer. We must then trust that they will do
their best-and measure the results.
Indeed, we must let our managers and
workers fail, rather than hold them up to
public ridicule when they do. Only if they .
fail from time to time on their way to
success will we be sure they are even trying
to succeed. Someone once asked an old
man known for his wisdom why he was so
sman. "Good judgment comes frO!TI
experience," he said. And experience?
"Well, that comes from badjudgment."
To transform the culture of our
government, we must learn to let go. When
we do, we will release the same kind of
creativity, energy, productivity, and
performance in government service that
was unleashed 200 years ago, and that
continues to guide us today.
91
Chapter 4
CUTTING BACK TO BASICS
I feel like that person in the old movie who writes in lipstick on bathroom mirrors, "Stop me before I
kiD again. "However, in my case, the legend should be, "Stop me before I steal some more. "
Letter from Bruce Bair of Schoenchen, Kansas,
to Vice President AI Gore, May 24, 1993
ruce Bair admitted to
"stealing" from the federal
government-at a rate of
about $11 an hour. His job
was checking the weather in
Russell, Kansas, every hour,
and reporting to the Federal Aviation
Administration. The FAA used his
information to warn planes in the area
about bad weather. But Russell isn't a busy
flight station any more. Bair saw just two
landings in more than a year during his
night shift. Days were only slightly busier.
Before the advent of automated weather
gathering devices, human weather watchers
at Russell and at other small stations
throughout the Midwest were vital for
aircraft safety. Today, they could be replaced
with machines. "From my experience with
the machine," wrote Bair, "it is very
adequate to protect the air space over
Russell." In fact, Russell has had a machine
for some time, but the FAA had not yet
eliminated the human staff.
Bair concluded his letter to Vice
President Gore with these words: "I feel
there is very little doubt among
professionals that we are basically useless
here." A few months later, he quit. Now he
says, ''I'm no longer stealing from the
government. "1
Bruce Bair's story tells us much about our
federal government: its entrenchment in old
ways, its reluctance ro question procedures,
and its resistance to change. Its inflexibility
has preserved scores of obsolete programs.
This is not news to most of us-obsolescence is part of our stereotype of
government.
Why is it so difficult to close unneeded
programs? Because those who benefit from
them fight ro keep them alive. While the
savings from killing a program may be large,
they are spread over many taXpayers. In
contraSt, the benefits of keeping the
program are concentrated in a few hands.
So special interests often prevail over the
general interest.
That's why we can't eliminate
unnecessary programs simply by making
lists. Politicians, task forces, commissions,
and newspaper articles have been ridiculing
wasteful programs for as long as we have
enjoyed democratic government. But most
programs survive attack. After a decade of
tight budget talk, for example, federal
budget expen Allen Schick says he can
identify just three major nondefense
programs eliminated since 1980: general
revenue sharing, urban development action
grants, and the fast breeder reactor
program. 2
To shut down programs, therefore, we
must change the underlying culture of
93
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
government. As we described in the
preceding chapters, we will do this by
introducing market dynamics, sharing
savings from cuts with agencies, exposing
unnecessary programs to the spotlight of
annual performance measures, and giving
customers the power to reject what they do
not need. As government begins operating
under these new rules, we are confident that
agencies will request the consolidation and
elimination of programs. Billions of dollars
will be returned to taxpayers or passed on to
customers.
We will begin this process today.
First, we will eliminate programs we do
not need-the obsolete, the duplicative,
and those that serve special, not national
mterests.
Second, we will collect more--through
imposing or increasing user fees where
STEP
94
COSTS LESS
pricing makes economic sense, and by
collecting what the government is owed in
delinquent debt or fraudulent overpayment
of benefits.
Third, we will reengineer government
activities, making full use of computer
systems and telecommunications to
revolutionize how we deliver services.
The actions and recommendations
described in this Chapter are the first
dividend on what we can earn from
streamlining government. They won't be
the last--or even the largest. The strategy
of the National Performance Review differs
from that of previous budget cutting efforts.
Our recommendations have been discussed
thoroughly with agency heads to determine
which cuts are warranted, feasible, and can
be done quickly. We are ready to act with
the full force of the cabinet.
1: EilMlNATEWHATWEDON'TNEED
frer World War II, a British
commission on modernizing
government discovered that the
civil service was paying a full-time worker to
light bonfires along the Dover cliffs if a
Spanish Armada was sighted. The last
Spanish Armada had been defeated some
years before--in 1588, to be precise.
This story may be apocryphal. But not
all such stories are. In Brooklyn, New York,
there is a Federal Tea Room where a federal
employee sips imponed tea to test its
quality.3 For one hundred years, taxpayers
paid for the position. It was not until press
coverage angered enough members of
Congress that things were changed: now, tea
imponers pay to have their tea testedalthough the raster remains a government
employee.
These stories capture an essential truth
about governments; they rarely abandon
anything. Like the FM that employed
Bruce Bair to check the weather, federal
agencies do many things not because they
make sense, but because they have always
been done that way. They become like the
furniture: They are simply there.
A
Be
Other programs are not so much
obsolete as duplicative. When confronted
with new problems, we instinctively create
new programs. But we seldom eliminate the
old programs that have failed us in the first
place. Still other programs were never
needed in the first place. They were created
to benefit influential industries or interest
groups. The National Performance Review
has targeted several programs in each of
these categories for immediate elimination.
Although we make specific
recommendations in the pages that follow,
we believe the government must tackle the
problem systematically. The single best
method would be to give the President
greater power to eliminate pork that creeps
into federal budgets.
Action: Give the President greater
power to cut items from spending bilJs f
Today, the President's powers to cut
spending are limited-more limited than
most of the nation's fifty governors. He can
either sign or veto appropriations bills; he
can't veto individual items-a power most
CUITING BACK TO BASICS
governors have. For the President to Cut
wasteful spending, he needs the power of
what is called, in Washington, "expedited
rescission." Under current law, the President
can submit proposed rescissions to
Congress, which then has 45 legislative days
to act. If Congress does not act, proposals
are rejected. The President should have
greater authority to reject individual items.
Broader rescission powers were
envisioned in HR 1578, which the House
passed in late April 1993. This bill would
force Congress to vote on the President's
proposals to cancel funding, rather than let
it kill those requests by ignoring them, as
under current procedures. If enacted, the
new procedure would, as President Clinton
wrote in a letter to House Speaker Thomas
S. Foley, "provide an effective means for
curbing unnecessary or inappropriate
expenditures without blocking enactment
of critical appropriations bills."
Eliminate the Obsolete
Not all employees of useless programs act
with Bruce Bair's forthrighmess. But that
doesn't mean their offices or programs are
any more useful. The vast nationwide
network of 30,000 federal government
offices, for example, reflects an era when
America was a rural country and the word
"telecommunications" was not yet in the
dictionary. While circumstances have
changed, the government hasn't. As a result,
workloads are unevenly distributed-some
field offices are underworked, others are
overworked, some are located too far from
their customers to serve them well, and few
are connected to customers through
modern communications systems.
Action: Within 18 months, the
PresiJent's Management Council will
review and submit to Congress a report
on closing and consoliJAtingjederaJ
civilian facilities 5
All agencies will develop strategies to cut
back or consolidate their field office systems
Thir' ir a precious opportunity to make
fondamental change in gov~mmt. I look
forward to working together on areas of
mutual agreement.
u.s. Rep. William F. <linger (R. Pam.)
in ways that are compatible with our
principle of better services to customers.
The President's Management Council will
submit the report to Congress within 18
months showing which offices may be
closed, which can be consolidated and
which can be slimmed. We urge Congress
to act quickly on this package.
We are confident that the savings will be
large because several agencies are already
committed to far-reaching reforms in their
field office systems. Their efforts will be
models for those that haven't moved as
quickly as they prepare their plans for the
President's Management Council.
Action: The Department ofAgriculture
will close or consoliJAte 1,200jielJ
offices. 6
The Department of Agriculture (USDA)
operates the most elaborate and extensive
set of field offices-more than 12,000
across the country. Under Secretary Mike
Espy's leadership, the department is
planning dramatic reforms. USDA runs
250 programs in such vital but diverse areas
as farm productivity, nutrition, food safety,
and conservation. Its focus has shifted
dramatically since the 1930s, when its
present structure evolved: 60 percent of its
budget now deals with nutrition; less than
30 percent with agriculture.
As the basis for reorganization, USDA
will concentrate its activities on six key
functions: commodity programs, rural
development, nutrition, conservation, food
quality, and research. This focus will allow it
95
FROM RED TArE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER 8( COSTS LESS
to consolidate from 42 to 30 agencies and
from 14 to six support staffs, cutting
administrative costs by more than $200
million over five years.
As pan of this process, USDA will
consolidate or close about 1,200 field offices
within the Agricultural Stabilization and
Conservation Service, the Soil Conservation
Service, the Farmers Home Administration,
the Cooperative Extension System, and the
Federal Crop Inswance Corporation. Some
of these offices now serve suburban
counties, others have few rural customers
left. In 1991, the General Accounting
Office reported that in Gregg County,
Texas, the Agriculrural Stabilization and
Conservation Service office served only 15
farmers; in Douglass County, Georgia, two
USDA ~rograms served a toral of 17
farmers.
Field office closings will be determined
by a six-pan scoring system developed to
evaluate each office. Once in place, this
restructuring will save more than $1.6
billion over five years and eliminate the
equivalent of7,500 full time employees.
Customers will be better served because
operations will be combined in multipurpose USDA field service offices.
Action: The Department ofHousing
and Urban Devewpment wiD streamline
its regional office system. 8
The Department of Housing and Urban
Development (HUD) has also developed a
strategy to close offices without cutting
customer services. Roughly 10,000 of
HUD's 13,500 employees work in field
offices, but their workloads vary: the New
York regional office monitors 238,000
federal public housing units, the Seattle
office only 30,000 units. Management
restructuring, described in the previous
chapter, will streamline HUD's field
operations. 9 Under a five-year plan, HUD
will eliminate all regional offices, pare down
its 80-field office system, and cut its field
staff by 1,500 people.
96
Action: The Department ofEnergy wiJJ
consoliJme and redirect the mission ofits
laboratories, production, and testing
facilities to meet post-CoM m,r natio1llll
priorities. 10
For the first time in 50 years, the United
States is not engaged in producing or testing
nuclear weapons. Significant reductions in
funding for these programs are already
underway-$1.25 billion in fiscal year
1994 alone. Yet, the Department of
Energy's weapons laboratories and
production plants represent an irreplaceable
investment in world-class research and
development, intellectual, and computing
capabilities, carefully cultivated over five
decades. As the department redirects its
facilities, the challenge is to eliminate
unnecessary activities, while shifting
appropriate resources to meet non-defense
objectives.
Under Secretary of Energy Hazel
O'leary's leadership, DOE will review its
labs, weapons production facilities, and
testing sites in the context of its missionand will recommend the phased
consolidation or closure of obsolete or
redundant facilities. The secretary will also
identify facilities that other government
agencies may find useful, encourage
laboratory managers to bid on contraCts
with other agencies, and increase
cooperation with the private sector.
Action: The u.s. Army Corps of
Engineers will reduce the number of
regional offices. 11
The U.S. Army Corps of Engineers, tOO,
has a plan: it will cut its divisional offices
from 11 to 6. It cannot, however, close
district offices because Congress prevenred
such actions by law-an example of costly
congressional micro-managing. The Corps
has carried out the nation's largest civil
works projects. But its role is changing:
Fewer large projects, more complex
environmental projects.
ClfITING BACK TO BASICS
Action: The STtUZll Business
AJministration will reduce the number of
jiekl offices and consoliJate services. 12
We'll challenge the basic JJSSUmptions ofnI"J
The Small Business Administration is
developing criteria for consolidating field
offices based on the customer load. It has
already demonstrated in pilot prpgrams
how to cut local office staffby providing
routine loan servicing for several local
SBA offices and by adopting automated
procedures for processing applications for
the agency's many different loan programs.
program, asking do~it work, does it provide
quality service~ does it mcouragt innovation
Il1lIi mlJarrJ:hllrtl:work.1f,the Il1lSUJD' is no,Dr
it there's a bater wav to tID it or ifthere's
something that ih~fit1eralgovernment is
doing, -it shoublsimply stop,Joing, wlll try to
make the chang~ needed. »
Action: The u.s. Agent)' for
International Development will reduce
the number ofits overseas missions. 13
With the dramatic changes in U.S.
foreign policy, agencies with overseas
operations are rethinking their
responsibilities. J. Brian Atwood,
administrator for the U.S. Agency for
International Development (AID), believes
the number of countries in which his
agency operates missions can be cut from
105 to perhaps 50. Cuts will be made in the
number of missions in developed countries
so that the agency's efforts can focus on
those nations that can't absorb or manage
assistance or on truly underdeveloped
countnes.
Action: The United States Information
Agent)' will cut the number oflibraries
and reje,mce centers it paysfor overseas. 14
Savings are also possible in overseas
facilities maintained by the United States
Information Agency. USIA maintains
libraries and other facilities in many
developed countries, as well as in emerging
countries. While facilities in the latter are
often crowded, those in developed countries
attract few customers: In Canada, for
example, a USIA library attracted only 568
walk-in visitors in a year. Eliminating some
of these facilities or turning them over to
their host countries could save an estimated
$51.5 million through 1999. 15
Praideat Bill Clinton
Announcement of initiative 10 streamline govmunent
March 3, 1993
Action: The Department ofState wiD
reduce by 11 the number ofMarine
Guard tktacbments it employs.16
By consolidating the storage of top secret
documents in overseas missions, the
Department of State can reduce the need
for Marine Guard detachments. The
Bureau of Diplomatic Security has
identified 11 posts where the Marine
Security Guard program could be
eliminated simply by moving documents to
other places.
Action: Pass legislation to allow the sale
ofthe Alaska Power AJministration. 17
The federal government once played a
crucial role in financing, developing and
operating the Alaska Power Administration
(APA). No longer. APA was created to
encourage economic development in Alaska
by making low-cost hydro-power available
to industry and to residential customers.
The project has succeeded and can now be
turned over to local ownership.
The federal government retains four
other Power Marketing Administrations
(PMAs) which own hydropower facilities
and sell the power they generate to public,
private, and cooperative utilities at cost.
These PMAs serve customers spread
97
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
throughout many states, SO the facilities
cannot easily be sold to a local entity. APA,
on the other hand, is unique: Its facilities
and customers are located in a single state.
Various public agencies have already urged
the federal government to sell the APA
facilities. APA signed purchase agreements
to do so before 1993.
The sale is supported by state and local
officials, Alaska's congressional delegation,
the Energy Department, the Office of
Management and Budget and the House
Appropriations Committee. But Congress
has yet to pass the necessary authorizing
legislation. We urge it to do so. The sale
would bring $52.5 million into the U.S.
Treasury and save millions more in yearly
operating costs.
Action: Terminate federal grant fonJing
for Federal Aviation Mministration
higher education programs. 18
Success has rendered two FAA federal
subsidies obsolete. They have met the
objectives for which they were established
and can now be terminated. For example, in
1982, the Federal Aviation Administration
(FAA) launched a program to improve the
development and teaching of aviation
curricula at universities and other postsecondary schools. The goal was to produce
graduates better prepared for jobs in the
industry.
So far, the FAA has spent about $4
million on consultants to upgrade schools'
programs and another $100 million was
appropriated-most at Congress' insistence
not at FAA's request-to be given out in
grants so that the schools could buy better
facilities and equipment. Many schools now
offer high quality aviation training
programs without support from the FAA
Since $45 million of the appropriation
remains unspent, stopping the program
now can save this money.
Another program we no longer need is
the Collegiate Training Initiative for Air
Traffic Controllers. It was set up to
determine whether other institutions could
offer the same quality training for
98
controllers as the FAA Academy does. If
they could. it would save the governmem
the $20.000 it costs to train each new
controller at the academy. The answer is
clearly yes. Five schools panicipating in the
program are producing well-qualified
controllers, although only two are receiving
government subsidies. It is now time to
phase out these remaining subsidies.
Action: Close the Uniformed Services
University ofthe Health Sciences. 19
The Department of Defense once faced
shortages of medical personnel, particularly
of physicians. So, in 1972, Congress created
the Uniformed Services University of the
Health Sciences (USUHS). Today, USUHS
provides less than 10 percent of the services'
physicians at a cost much higher than other
programs: USUHS physicians cost the
federal government $562,000 each, while
subsidies under the Health Professionals
Scholarship Program cost onJy $111,000
per physician. Closing the facility and
relying on the scholarship program and
volunteers would save DOD $300 million
over five years.
Action: SuspenJ the acquisition ofnew
federal oJ/ice space.2O
Over the next 5 years, the federal
government is slated to spend more than
$800 million a year acquiring new federal
office space and courthouses. Under current
conditions. however. those acquisitions
don't make sense.
The federal workforce is being reduced,
the Resolution Trust Corporation is
disposing of real estate once held by failed
savings and loans at 10 to 50 cents on the
dollar, commercial office vacancy rates are
running in the 10 to 25 percent range, and
U.S. military bases are being closed. All of
these factors suggest that the government
has many potential sources for office space
without buying any more buildings.
The GSA administrator will place an
immediate hold on GSXs acquisitionthrough construction, purchase, or lease-
CU1TING BACK TO BASICS
of net new office space. The administrator
will begin aggressive negotiations for
existing and new leases to funher reduce
costs. And GSA will reevaluate and reduce
the costs of new courthouse construction.
These actions should save at least $2 billion
over the next 5 years.
Eliminate Duplication
Government programs accumulate like
coral reefs...-the slow and unplanned
accretion of tens of thousands of ideas,
legislative actions, and administrative
initiatives. But, as a panicipant at the Vice
President's HUD meeting told us, "There
isn't always a rational basis for the way we
are set up in this organization. Over the
years, branches have developed; they have
been taken over by divisions; and we don't
look at the organization as a whole." Now
we must clear our way through these reefs.
The National Performance Review has
looked at government as a whole. We have
identified many areas of duplication. What
follow are recommendations for the first
round of cuts and consolidations.
Action: Flimi1Ulte the President's
InteOigence Oversight Board.21
No branch of government-including
the Executive Office of the President-is
free of duplication. We will begin the
streamlining process in the EOP, where
there are two groups intended to oversee
intelligence-tripping over each other and
allowing some issues to fall through
jurisdictional cracks. The President, by
directive, should terminate the President's
Intelligence Oversight Board and assign its
functions to a standing committee of the
President's Foreign Intelligence Advisory
Board.
Action: ConsoliJAte trainingprogra7nS
for unemployedpeople.22
Government's response to changing
circumstance often creates duplication. As
the economy has evolved, for example, we
have created at least four major programs to
help laid-off workers: the Economic
Dislocation and Worker Adjustment
Assistance Act (EDWAA), which spends
$517 million annually for those who lose
their jobs through plant closings or major
layoffs; the Trade Adjustment Assistance
program (TAA), which distributes $170
million through State Employment Security
Agencies for those who lose jobs due to
increased imports; the Defense Conversion
Adjustment program, which dispenses $150
million for those unemployed because of
defense cuts; and a program that allocates
$50 million for those unemployed due to
the enforcement of new clean air standards.
Even more programs are in the pipeline.
But multiple programs aimed at
common goals don't work well.
Administrative overhead is doubled and
services suffer. Because each training
program is intended to help people
rendered jobless for different reasons, people
seeking work must wait for help until the
government determines which program
they are eligible for. The process is slow.
The General Accounting Office estimates
that less than one-tenth ofTAA-eligible
workers receive any benefits within 15
weeks of losing their jobs, for example. 23
The unemployed care less about why
they lost their jobs than about enrolling in
training programs or finding other jobs.
Labor Secretary Robert Reich is proposing
legislative changes to consolidate programs
for workers who lose their jobs, regardless of
the cause. His bill would also allow more
funds to be used before workers lose
their jobs. In Chapter 1, we recommend
the consolidation of 20 education,
employment, and training programs. We
urge Congress to support both initiatives.
99
FROM RED TArE TO RESl'lTS • CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
Action: Consolidate the Veterans'
Employment and Training Service and
the Food Stamp Training Program into
the Empluyment and Training
Administration.24
Several training programs offer similar
services through the same officessometimes even using the same
employees-but requiring separate
management and reponing systems. We can
cut bureaucracy and paperwork while
improving services to the customer by
merging these programs.
Consider the case of the Veterans'
Employment and Training Service (VETS)
in the Depanment of Labor (DOL).
Another operation in DOL, the
Employment and Training Administration
(ETA), funds local Employment Services,
which, in turn, house staff dedicated to
providing veterans with advice on training
programs. But these staff are legally
prohibited from serving non-veterans. So, if
a local office is crowded with non-veterans,
these specialists cannot help out--even if
they have no veterans to serve. Moving
VETS into the ETA will generate much
greater efficiency in the use of staff, leading
to shorter lines and better service.
We also recommend moving the Food
Scamp Training Program into the ETA
Most training under the program is already
performed under contract by ETA staff, by
the Employment Service, or by local
education institutions. Overall, ETA can
offer poor people a much more
comprehensive range of job-search and
training services than can the Food Stamp
Training Program.
Action: &duce the number of
Department ofEducation programsfrom
230 to 189.25
The nation's concern with education has
led to an explosion of programs at all levels
of government. The Education Depanment
now funds 230 programs, many of which
overlap. Since many are grants to state and
local governments, we face duplication in
100
triplicate-multiple administrative systems
at all levels of government.
Of these 230 programs, 160 will award
money through 245 different national
competitions this year. The cumbersome
administrative systems diven money from
activities more central to the department's
mission. These programs should be reduced
in number and their procedures
streamlined.
The department has begun reforming
and streamlining programs, particularly
those under the Elementary and Secondary
Education Act. This will make it easier for
schools to get the money without jwnping
through so many bureaucratic hoops. We
propose to eliminate and consolidate more
programs that have served their original
purpose or would be more appropriately
funded through non-federal sources. The
savings, as much as $515 million over 6
years, can be better used for other
departmental priorities. For example:
• The department administers two
programs-the National Academy
of Space, Science, and Technology
program and the National Science
Scholars program-that give
scholarships to post-secondary math,
science, and engineering students.
These two should be combined.
• State Student Incentives Grants were
created to encourage states to
develop needs-based student aid
programs. Since all states now have
their own programs, the federal
program is no longer needed.
• The Research Libraries' program
funds research libraries to build their
collections. University endowments
could and should suppon these
efforts, without federal subsidy.
CUTTING BACK TO BASICS
Action: Eliminate the Food Safety
anti Inspection Service as a separate
agency by consoliJming allfood safety
responsibilities untler the Food anti Drug
A4ministration.26
Sometimes duplication among federal
programs can make us ill---even kill us.
Take the way we inspect food for
contamination. Several agencies are
involved, each operating under separate
legislation, with different standards, and
with staff trained in different procedures. In
1992, the Food and Drug Administration
(FDA)-part of the Department of Health
and Human Services-devoted about 255
staff years to inspecting 53,000 food stores,
while the Food Safety and Inspection
Service (FSIS)-part of the Department of
Agriculrure-devoted 9,000 staff years to
inspecting 6,100 food processing plants.
But this duplication doesn't mean that
we cover all sources of contamination
thoroughly. Meat and poultry products
must be inspected daily, while shellfish,
which have the same risk of causing food
borne illness, are not required by law to be
federally inspected. Too many items fall
through the bureaucratic cracks. Not only
that, enforcement powers vary among the
different agencies. If the FDA finds
unsanitary plant conditions or
contaminated products, compliance is
usually voluntary because the agency lacks
PSIS's powers to close plants or seize or
detain suspect or known contaminated
products. And if one agency refers a
problem to another, follow up is at best
slow and at worst ignored. 27
With no fewer than 21 agencies engaged
in research on food safety, often duplicating
each other's efforts, we aren't progressing fast
enough in understanding and overcoming
life-threatening illness. As recent and fatal
outbreaks of food-borne illness attest,
multiple agencies aren't adequately
protecting Americans.
Under our recommended streamlining,
the FDA would handle all food safety
regulations and inspection, spanning the
work of the many different agencies now
involved. The new FDA would have the
power to require all food processing plants
to identify the danger points in their
processes on which safety inspections would
focus. Where and how inspections are
carried out, not the number or frequency of
inspections, determines the efficiency of the
system.
The FDA would also develop rigorous,
scientifically based systems for conducting
inspections. Today, we rely, primarily, on
inspection by touch, sight, and smell.
Modem technology allows more reliable
methods. We should employ the full power
of modem technology to detect the
presence of microbes, giving Americans the
best possible protection. Wherever possible,
reporting should be automated so that
high-risk foods and high-risk food
processors can be found quickly.
Enforcement powers should be uniform for
all types of foods, with incentives built in to
reward businesses with strong safety records.
Action: ConsoliJate non-military
international broaJcasting.28
The U.S. government funds several
overseas broadcasting services--including
those operated by the Unite4 States
Information Agency's Bureau of
Broadcasting, which accounts for one-third
of the agency's $1.2 billion budget, and
services such as Radio Free Europe and
Radio Liberty, which have budgets totalling
$220 million a year. All non-military
international broadcasting services should
be consolidated under the USIA. Pan of
this was propsed in the President's budget
request for fiscal year 1994.
Action: Create a single civilian polar
sateUite system.29
Collecting temperature, moisture, and
other weather and environmental
information from polar satellites is a vital
taSk, both for weather forecasting and for
global climate studies. But we have two
different systems, one run by the
Department of Defense and the other by
101
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
the National Oceanic and Atmospheric
Administration. On top of this, the
National Aeronaurics and Space
Administrarion is planning a third. Over
the next ten years these three systems will
cost raxpayers about $6 billion. Congress
should enact legislarion requiring these
agencies to consolidate their efforts into a
single system, saving as much as $1.3 billion
over the same period.
Action: Transfer the functions ofthe
RAilroad Retirement Bmefits Board to
otherag~
The government can operate with fewer
pension management systems. In 1934,
Congress set up the Rail~oad Rerirement
Board to protect railroad workers in the face
of financial problems, to allow workers to
transfer among railroads, and to encourage
early retirement to create jobs for the
millions of younger workers. In those days,
the huge national public pension system,
Social Security, was not yet in place; neither
were the state-federal unemployment
insurance systems nor Medicare.
Today, it makes no sense for a separate
agency to administer benefits for a single
industry. Social Security Administrarion
can administer social security benefits for
railroad workers as it administers them for
everyone else; unemployment insurance
systems can serve unemployed railroad
workers as well as it serves other
unemployed people; and the Health Care
Financing Administration can incorporate
railroad workers' health care benefits into
the Medicare system,31
Action: Transfer lAw enforcement
functions ofthe Drug Enforcement
Administration anJ the Bureau of
Alcoho~ Tobacco, anJ Firearms to the
Federal Bureau ofInvestigation.32
More than 140 federal agencies are
responsible for enforcing 4,100 federal
criminal laws. Most federal crimes involve
violations of several laws and fall under the
jurisdiction of several agencies; a drug case
102
may involve violations of financial, firearms,
immigration and customs laws, as well as
drug statutes. Unfortunately, too many
cooks spoil the broth. Agencies squabble
over rue£, fail to cooperate, or delay matters
while attempring to agree on common
policies.
The first step in consolidating law
enforcement effons will be major srrucrural
changes to integrate drug enforcement
effons of the DEA and FBI. This will create
savings in administrative and suppon
functions such as laboratories, legal services,
training facilities, and administration. Most
important, the federal government will get a
much more powerful weapon in its fight
against crime.
When this has been successfully
accomplished, we will move toward
combining the enforcement functions of
the Bureau of Alcohol, Tobacco and
Firearms (BATF) into the FBI and merge
BATF's regulatory and revenue functions
into the IRS. BATF was originally created as
a revenue collection agency but, as the war
on drugs escalated, it was drafted into the
law enforcement business. We believe that
war would be waged most successfully
under the auspices of a single federal agency.
Eliminate Special Interest Privileges
Some programs were never needed. They
exist only because powerful special interest
groups succeeded in pushing them through
Congress. Claiming to pursue national
objectives, Congress, at times, funds
programs that guarantee profits to specific
industries by restricting impons, raising
prices, or paying direct and unnecessary
subsidies.
Special interest groups come in all shapes
and sizes and their privileges are as diverse.
Producers of crops, residents of cenain
areas, and holders of some occupations have
all succeeded in persuading Congress that
their needs are special and their claim on
special treatment is deserving.
CU1TING BACK TO BASICS
Action: Elimi1Ulte federal support
payments for wool ana mohair.33
During World War II and the Korean
conflict, the U.S. was forced to impon
about half the wool needed for military
uniforms. To cut dependence on foreign
suppliers, Congress in 1954 passed the
National Wool Act, providing direct
payments to American wool producers. The
more wool a producer sold, the greater the
government subsidy. In 1960, the Pentagon
removed wool from its list of strategic
materials. But the Wool Act remained in
effect-a tribute to adept lobbying.
Between 1994 and 1999, wool subsidies
will cost an estimated $923 million. About
half the payments will go to ranchers who
raise Angora goats for mohair-a product
that is 80 percent expo ned. So American
taXpayers will subsidize the price of mohair
sweaters overseas! In some years, subsidies
provide more income than sales. The 1990
mohair checks, for example, totalled $3.87
for every dollar's wonh of mohair sold.
Today, about half the beneficiaries receive
only $44 a year each. But the top one
percent of sheep raisers capture a quaner of
the money-nearly $100,000 each. The
national interest does not require this
program. It provides an unnecessary subsidy
for the wealthy.
Action: Elimi1Ulte federal price supports
for honey.34
World War II also brought us federal
subsidies for honey production. During the
war, honey was declared essential because
the military used bees' wax to wrap
ammunition, and citizens replaced rationed
sugar with honey. When honey prices
dropped after the war, the federal
government began subsidizing honey
production.
The program was intended to be
temporary-to last until there were enough
honeybees available for pollination. But
more than 40 years later, every bee keeper in
the U.S. is eligible for federal loans. In
1992, the federal government paid 7 cents a
pound more to borrow money than it
charged bee keepers. Taxpayers paid the
difference. If it were to scrap the program,
Congress would save taXpayers $15 million
over the next six years.
Action: Rescind
au. unobligated contract
authority ana appropriations for existing
highway demonstration projects.35
The practice of directing federal highway
funds toward spending on specific
demonstration projects-and away from
regular state-level allocations-is increasing.
This is not, for several reasons, a good
trend.
In 1991, the General Accounting Office
(GAO) examined the contributions of
demonstration projects--which range from
paving a gravel road to building a multilane highway-to the nation's overall
highway needs. Looking specifically at the
$1.3 billion authorized to fund 152 projects
under the 1987 Surface Transponation and
Uniform Relocation and Assistance Act,
GAO found that "most of the projects ... did
not respond to states' and regions' most
critical federal-aid needs." Indeed, in more
than half the cases, the projects weren't even
included in regional and state plantypically because officials believed the
projects would provide only limited
benefits. GAO also discovered that 10
projects--wonh $31 million in
demonstration funds-were for local roads
not even entitled to receive federal highway
funding. In other words, many highway
demonstration projects are little more than
federal pork.
Perhaps even worse, there's no guarantee
that all these highway demonstration
projects, once started, will ever be finished.
GAO noted that project completion costs
will greatly exceed authorized federal and
state contributions, and that state officials
are uncenain where they will find more
funding. Funher, only 36 percent of the
project funds GAO reviewed had even been
obligated by the beginning of fiscal year
1991, even though they were authorized in
1987. Some projects with no activity since
10~
FROM RED TAPE TO RESVLTS • CREATING A GOVERNMENT THAT WORKS BETTER
1987 may never use their funds. Finally,
no federal provisions allow for canceling
or redirecting funds, nor can states
redirect demonstration funds to other
transportation projects. 36
We urge Congress to rescind all
unobligated authority and appropriations
for highway demonstration projects. Some
of the savings would go to the taxpayers.
We recommend that all highway projects be
forced [0 compete for any remaining savings
through the normal allocation and planning
processes set up in more recent legislation.
Action: Cut essentiAl Air Service
mbsUlies.37
Sometimes, to push through controversial
changes, Congress grants affected groups
special privileges. This was the case when
airlines were deregulated in 1978. Because
people living in small towns feared the loss
of air service, Congress created the Essential
Air Service program. The program
guaranteed continue services for a decadewith federal subsidies if necessary. The
purpose was to allow these communities to
learn to live in a deregulated environment.
& COSTS LESS
But the program didn't end in 1988 as
scheduled. Quite the opposite. Congress
extended it for another ten years and its
budget has grown-from $30.6 million in
1988 to $38.6 million in 1993.
The program is unneeded: 25 subsidized
communities are less than 75 miles from
hub airports. It is also costly: nine locations,
receiving $3 million in subsidies in 1992,
carried five or fewer passengers a day-one
community, only 60 miles from a hub
airport, received subsidies averaging $433
per passenger.
Opposition to the program is rising. The
Transportation Deparunent's Inspector
General has concluded that the program's
costs outweigh its benefits. And after many
years of resistance, a Congressional
subcommittee agreed this year that the
program lacks merit-based criteria. It's time
to prune these subsidies. We recommend
eliminating subsidies to locations in the 48
contiguous states within 70 miles of a hub
airport; limiting subsidies to no more than
$200 a passenger, and giving the
Transportation Deparunent authority to
establish more restrictive criteria over time.
This would save $13 million a year.
STEP 2: CoLLECI1NG MORE
iven the size of the federal deficit,
government must find better, more
efficient, and more effective ways
to pay for its activities. In Chapter 2, we
showed how government could become
more businesslike. In this section, we
propose three ways to increase federal
revenues: introducing or increasing marketbased user fees, collecting what is due the
government in delinquent loans and in
accidental or fraudulent overpayment of
?enefits, and refinancing debt at lower
Interest rates.
Some people take advantage of
government's largesse. They default on
loans, or they double claim for health
insurance benefits. Government has made it
far too easy for people to get away with
such actions. As a result, honest people are
G
104
subsidizing their less scrupulous neighbors.
Their actions raise the costs of federal
programs, divert money from where it was
intended, and discredit our system of
governance. Here are the first steps we will
take to end these practices.
Raising User Fees
Congress and federal agencies have shied
away from charging for federal services. But
government surely produces many goods
and services for which consumers could,
and should, pay." User fees can serve exaccly
the same function as prices do-providing
federal managers with invaluable
information about their customers. If
customers like the services they are paying
CUITING BACK TO BASICS
for-if they find the experience of visiting a
panicular national park enjoyable, for
example--revenues will increase. If the
agency can keep some of its additional
revenues, it will be able to pay the increased
operating costs associated with its rising
number of customers. It will, as a result,
learn to care about satisfying those
customers.
Paying for the services you receive also is
an issue of fairness. Why should taxpayers
subsidize concessionaires or visitors to
National Parks, or pay the cost of
determining whether a business should
dump sludge into the nation's waterways?
Many services government provides because
they are in the national interest or because
we do not expect people to pay for them.
But the customers of some government
activities could and should pay. Many
agencies, including the Food and Drug
Administration, The Patent and Trademark
Office, the National Technical Information
Service, and the Securities and Exchange
Commission already charge their customers
fees. In some cases, these fees cover the full
cost of operations. Taxpayers are not called
upon to pay for the services that others
receive. But, most agencies aren't allowed to
keep the fees-the revenues are sent to the
Treasury. Under these circumstances,
agencies have no incentive to increase fees if
market conditions merit it.
Where fees are allowed, Congress often
limits them-removing any discretion from
local managers. The National Park Service,
for example, cannot charge more than $5
per car or $3 a visitor at many parks. At
busy Yellowstone, Grand Teton, and the
Grand Canyon, fees are limited to $10 a
vehicle and $5 a visitor. Ending subsidies to
concessionaires and moderately increasing
fees would let the National Park Service
invest more in its crumbling infrastructure,
and spend more to protect America's
priceless natural heritage.
Two-thirds of all the National Park
Services facilities charge no admission fee at
all. Yet the Park Service suffers from a multibillion dollar backlog in infrastrucrure
repair and rehabilitation projects for the
National Park System. One-third of NPS
primary paved roads are in poor or failing
condition; a tenth of employee housing is
obsolete or deteriorated; and 4,700 planned
natural and cultural resource projects are on
the waiting list for funding. Meanwhile,
demands on the parks are rising sharply as
the number of visitors-both American and
foreign~ows each year. 38
Action: Allow aD agencies greater
freedom in settingfees for services and in
how the revenuesfrom these fees may be
useJ.J9
Even with a modest increase in fees, a
family of four will pay less to spend a week
in Yellowstone National Park than they
would to see a first-run movie. The
National Park Service should be allowed to
keep 50 percent of revenues from fees to
pay for vital services and projects.
The natural fear is that federal facilities
are monopolies and, unless their pricing
policies were regulated, they would become
price-gauging profiteers. The concern is
appropriate, but the policies it has led to are
not. We would not recommend that
national parks or documents repositories,
for example, become federal profit
centers-but they could, certainly, cover a
larger pan of their costS. They cannot
charge exorbitant prices-after all, parks are
in competition with each other, and with
many privately owned recreation areas. The
market will control the revenues they can
realistically collect.
Pricing policy is an impOrtant
management tool, and we recommend that
Congress place it in the hands of many
more federal managers. The National
Performance Review recommends
increasing the use of user fees for many
activities. For example:
• The FDA must ensure that 1.5
million food products imponed each
year meet the same safety and
labeling standards as domestic
products. It also cenifies the safety of
exponed foods. Taxpayers, nor
105
FROM RED TAI'E TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
manufacrurers, pay for these
inspections. User fees could save
taxpayers as much as $1.4 billion
over 5 years. 40 The agency should
also have the power to collect fees for
conducting inspections and reviews,
processing petitions and
applications, analyzing samples and
issuing device reports for food,
drugs, devices, and radiological
products.
• The Depanment of Veterans Affairs
runs a program to guarantee home
loans for veterans. It lets them
borrow at lower costs and make
smaller down payments than would
be possible without assisrance,
because the guarantee protects
lenders in the event of foreclosure by
reducing their potential loss. The
depanment collects fees for this
service, yet they are set very low. A
modest increase in fees costing an
extra $6 per month, for example,
would still provide homebuyers with
better-chan-market terms. Yet it
would generate an additional $811.4
million over 6 years. 41
• Under the Clean Water Aer, the
Army Corps of Engineers issues
permits for discharges of dredged or
filled materials into rivers, lakes and
streams. The Corps has processed
15,000 applications at a total cost of
$86 million. Yet it has charged only
token fees for its services, collecting
only $400,000 annually. This
amounts to a $12 million annual
subsidy for commercial customers,
according to Defense Depanment
estimates. Higher fees would help
not only taxpayers but Corps
customers, because additional
revenues could pay for faster
processing of applications. 42
• The Small Business Administration
should have the power to establish
user fees for the services they provide
106
through the nationwide Small
Business Development Center
(SBDC) program. SBDC customers
like the services they get, so the
revenues from fees will enable the
centers to expand successful
programs.
Action: Increase revenues by rejinmu:ing
tkbt or raisingfeJeraJ hyd':7Jower TilUs
to coverfoB operating costs.
The Power Marketing Administrations
(PMAs), such as Alaska Power, were
mandated in 1944 to sell their power at low
rates to help promote development in
sparsely populated areas. Rates are still low
today; in faer, the PMAs sell power to their
public, private and cooperative utility
customers at below market rates. Thus, the
low electricity rates enjoyed by customers in
some areas are subsidized by American
taxpayers in others. Taxpayers subsidize
PMA utility customers through low-interest
loans. The interest rates most PMAs pay the
government are arrifically low. As the
interest on the Treasury's long-term debt
climbed in the 1960s, 1970s, and 1980s,
the differential between those rates and rates
on PMA loans created federal subsidies for
these projects.
The Energy Department will take
immediate steps to increase revenues from
hydropower operations. The department
will set a new rate policy for specified PMAs
to seek recovery of full operating costs. As
an alternative, the Energy Department may
attempt to restructure the financing of the
Bonneville Power Administration's debt,
allowing Bonneville to issue bonds at
market rates and repay its low-interest
Treasury loans. The deparonent will
attempt to achieve such a refinancing with
minimal effects on the near-term rates paid
by its customers by seeking favorable bond
interest rates and lengthening terms of
repayment.
CUTfING BACK TO BASICS
Collecting Debt
At the end of last year the federal
government was owed $241 billion by
former students, small businesses, farmers,
companies developing alternative energy
sources---even foreign companies and
governments. This makes the federal
government the nation's largest lender. Of
this total, a shocking $47 billion-20
percent of the total-was delinquent. 44
To some extent, the federal government's
unpaid debts reflect the fact that some of its
loan programs operate more like grant
programs. They are designed to meet
national policy goals such as increasing the
number of physicians in rural areas and
supporting democratic governments .
overseas. But in other cases agencies have
done a poor job in collecting what they are
owed. After all, agencies are rarely held
accountable for unpaid loans. All too
frequently, neither are delinquent
borrowers.
If agencies were to put a higher priority
on pursuing delinquent debt and if
Congress were to grant them greater
flexibility in their debt collection
operations, the federal government could
collect more of what it is owed. The Office
of Management and Budget will work with
each agency to develop debt collecting
strategies that employ the following
expanded powers.
Action: Give agencies the.flexibility to
use some ofthe money they coOea.from
delinquent debts to pay for further debt
coOection efforts, and to keep a portion of
the increased coOections. 45
Small investments in debt collecting can
yield high returns. In 1989, the GAO
discovered that the Veterans Administration
had not recovered $223 million in health
payments from third parries, such as
insurers. Congress then changed the rules,
allowing the VA to keep a portion of
recovered third-party payments for
administrative costs. With this incentive,
the VA increased its recovery effon. The
result: a four-fold increase in collections
since 1989.
The VA, now called the Depanment of
Veterans Affairs, wants to go even funher by
expanding its cost recovery effons into its
loan programs and establishing cost-sharing,
performance incentives. Local hospitals, for
example, might be allowed to keep some of
the revenues they generate to buy new
medical equipment. Overall, VA believes it
could pull in another $500 million through
1999.
Opportunities like this occur throughout
the federal government. The Education
Deparonent, for example, wants to ,use the
additional repayments it would collect to pay
for further collections of Higher Education
Aa debts. Budget offices tend to oppose the
idea of sharing new earnings with the agency
in question, because they want 100 percent
of the earnings to meet deficit reduction
targets. But unless the agencies have
incentives to generate the earnings, they
rarely produce them in the first place.
The solution is twofold. First, Congress
should allow agencies to use some of the
money they now collect from delinquent
debts to pay for further debt collection
efforts. Second, it should increase the
incentives agencies have to pursue debt
collections, by letting them use a small
ponion of their increased collections to
invest in improving their overall operations.
Action: Eliminate restrictions that
preventfederal agencies.from using
private coOection agencies to coOea
debt. 46
In addition to sharing in their earnings,
agencies would benefit from being able to
use private debt collectors, as the
Department of Education has done. While
we know how cost-effective private
collection agencies are, many agenciesincluding the Farmers Home
Administration, Social Security, the IRS,
and the Customs Service-are statutorily
prohibited from using private agencies fot
the job, even on a contingency-fee basis.
Congress should lift those restrictions.
107
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
Action: Authorize the Department of
Justice to retain up to one percent of
amounts collected through civil debt
collections to cover costs. 47
When borrowers default on their federal
loans, the first step is for the lending agency
to try to collect--or, if permissible, to use a
private debt collection agency. If these
measures fail, agencies refer claims to the
Department ofJustice. While the
Department handles the larger claims itself.
it refers those under $500,OOO--which
constirute 90 percent of all claims--to local
U.S. attorneys' offices. In overworked U.S.
Attorney's offices, debt collection is often a
low priority.
.
To encourage the Department ofJustice
to colleer debts, Congress should allow the
department to retain 1 percent of
everything it collects through litigating civil
debt cases under $500,000. These retained
funds should be used for paying staff
working on debt collection, for paying caserelated costs, and for paying for training and
other invesonents to improve local debt
collection programs.
Action: The Royalty Ma1Ulgement
Program will increase the royalty
payments it collects by developing new
&
COSTS LESS
underpayments and to impose fees on a
broader range of administrative COSts.
Action: HUD shou/J offer incentive
contracts to private companies to help
foderaUy subsidized home owners
refttuznce their mortgages at lower rata. 49
HUD has succeeded in extending the
dream of home ownership to many people.
But the program does not take advantage of
lower interest rates because the assisted
owners do not have enough incentive to
go through the work and bother of
refinancing.
We recommend that HUD offer
incentive contracts to private companies to
let them share a percentage of the savings to
the government of refinancing the
mortgages. They could work with the home
owners to arrange refinancing, doing the
necessary leg work and make cost effective
payments to home owners to induce them
to refinance. Projected savings from this
program could exceed $210 million
over five years. Yet program beneficiaries
would continue to receive exactly the
same benefits.
Eliminating Fraud
computer programs to a7UZlyze mul tross-
verify data. 48
The federal government collects royalty
payments from mining companies
recovering minerals from federal land. The
Interior Department's Minerals
Management Service (MMS), the agency
charged with the job, collects $4.7 billion
annually. But its auditing system is limited
and focuses heavily on the companies
paying the largest royalties-so smaller
companies don't always pay their share. The
Department of the Interior will increase its
collections-by as much as $28 million
over five y~by developing better
accounting and auditing systems. To make
sure MMS can collect its dues, the Interior
Department will ask Congress for
permission to assess penalties on substantial
108
While many think government steals
from people, the reverse is also true: People
steal fror,n government. And, unlike private
comparues, some government agencies
aren't very good at finding and prosecuting
thieves. Moreover, the bureaucracy does tOO
little to deter dishonest people.
Action: Make it afolony to knowingly
lie on an application for benefits unJer
the federal Employees' Compensation Att
anJ amenJ Federal lAw so inJivitJuals
convicted offraud are ineligible for
continued benefits.50
The federal government manages many
programs that provide benefits to people
injured or taken sick. Not all the recipients
are legitimate. When agencies discover
ClTITING BACK TO BASICS
fraud, however, they are often hamstrung in
their ability to terminate benefirs--so they
keep paying fraudulent claims. For example,
under the Federal Employees'
Compensation Act (FECA), the Office of
Workers' Compensation Programs cannot
terminate benefits even after finding that
someone made false statements about a
disability or an illness.
In one case, a former federal employee
collected almost $200,000 in benefits under
the FECA disability program while
working. When a witness told the
government about the fraud, the employee
hired someone to kill him. The employee
was convicted of falsifying his application
for FECA benefits, but the government
could not cut off his compensation on the
basis of his original false statements alone. 51
Action: Improve processes for removing
people who are no longer disabled from
disability insurance rolls. 52
The Social Security Administration
serves more than 10 million people through
two disability programs, Disability
Insurance and Supplemental Security
Income. But the General Accounting Office
has estimated that 30,000 of these recipients
are no longer eligible. Overpayments from
the trust funds to ineligible people are
projected to reach $1.4 billion by 1997. 53
The Social Security Administration faces a
dual problem: overpayment to unlawful
claimants and lengthy delays in providing
benefits to legitimate claimants. Using
present management practices, the agency
lacks the staff to review its rapidly escalating
caseload. The backlog of 700,000 pending
claims is taking priority over reviewing
contmwng cases.
The agency is working to create a single
disability claims processing system, but it
needs greater budget flexibility to invest in
hardware and software and to redeploy staff
to meet growing demands. 54
Action: Create a clearinghouse for the
reporting and disclosure ofdeath data. 55
Obviously, no federal agency should
continue paying benefits after recipients
have died. But stopping payments is not
easy because sharing death information
among different levels of government is
restricted and not always reliable. The Social
Security Administration regularly obtains
death information from states under
agreements with each of them (except
Virginia). But most agreements restrict
SSA's disclosure of death data, so the
information the SSA collects cannot always
be shared with those running other
federally- and state-administered benefits
programs. The result is millions of dollars in
overpayments. For Americans living
overseas, the problem is even worse. SSA
gives benefit checks to overseas embassies to
deliver. The State Department claims that
SSA must check that the recipients are still
alive; SSA says that it's the State
Department's job.
We need not serve customers who are no
longer alive. Congress should amend the
Social Security Act to allow SSA to share
death information with other programs. S6
109
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
STEP
3: INvFsrING IN GREATER PRODUCTIVIlY
ne of the greatest obstacles to
innovation in government is the
absence of investment capital. The
appropriations for most federal agencies last
only one year: anything left over at the end
of the year disappears. So it's difficult for
organizations to scrape together enough
money to make even small investments in
training, technology, new work processes, or
program innovations. We have
recommended that agencies be allowed to
keep half of any savings they can generate.
In addition, we propose a source of
innovation funds from which they can
borrow. When managers and their
employees are allowed to borrow for longterm investments, they have a real incentive
to implement creative new ideas.
The IRS and Interior Depanment
already have innovation funds. 57 Treasury
O
The Productivity Bank: Paying
Big Interest in Philadelphia
Mayor Ed &ndell says it's not hard to
change incentives so that public employees save
money.
"We tell a department, 'You go out th~ and
do good work,' " Rendell [old the National
Performance Review's &inventing Government
Summit in his city. "'You produce more
revenue. You cut waste. And we'll let you keep
some of the savings of the increased revenue.'''
Traditionally, the mayor said, "every nickel
that they would have saved would have gone
right back to the general fund ... Theywould
have gotten a pat on the back, but nothing
else." Now, city employees save because their
departments can keep some of the savings for
projects [0 hdp them perform better.
110
and Justice operate working capital funds
that finance specific innovations, such as
modernizing information technology and
computer systems. And the Commerce
Department has a Pioneer Fund that gives
employees cash grants (rather than loans) of
up to $50,000 to finance quality and
productivity improvements. The money
can be used for supplies, equipment, or
expen services. Some funds have financed
projects related to advanced technology,
such as the development of public
information on CD-ROMs.
State and local governments use this
approach quite often. Many cities have long
had some form of innovation fund. In
Florida, Governor Lawton Chiles cut
departmental budgets by five percent across
the board, then gave half back to agencies
that developed plans to invest in higher
When the Depanment of License and
Inspection beefed up collection and
enforcement effortS and generated $2.8 million
more than expected in 1992, Rendell said, the
city let the deparmi.ent keep $1 million of the
savings to hire more inspectors and, in tum, .
exceed the $2.8 million in 1993.
The city also opened a Productivity Bank,
from which depamnents can borrow for
investment-type projectS-that is, capital
equipment-to produce either savings or
enough revenues to repay the loan in five years.
To ensure that deparonents don't apply
frivolously, the city subtracts loan payments
from annual depamnental budgets.
Successes already abound. The Public
Property Depamnent repaid a $350,000 loan
to buy energy efficient lamps in one year-after
saving $700,000 in energy costs.
CUTIlNG BACK TO BASICS
productivity and effectiveness.
At the federal level, one important use for
such funds would be technology
investments. These are often considered too
expensive for agencies' operating budgets,
even though they save money in the future.
The Agency for International Development,
for instance, needs a centralized information
management system to coordinate its
central office with its international field
offices. Because its information systems lack
essential data and are not coordinated, they
provide inconsistent, inaccurate, and
incomplete reporting that managers
frequently do not trust. Agencies such as
AID should have authority to create
innovation funds for capital investment
loans to reduce future operating costs.
government investments in productive fixed
assets, like computer systems. Right now,
we count a $5 million investment to
purchase a Local Area Network computer
system in exactly the same way as we count
$5 million spent on staff salaries. American
businesses do it differently. Business
depreciates fixed assets over time: If the $5
million computer system has a useful life of
five years, then its $5 million acquisition
costs will be spread out over five years. Poor
choices of capital investment and the
acquisition methods are currently costing
the taXpayer millions of dollars each year.
Listen to Eleanor Travers, the director of
Pathology and Laboratory Medicine for the
Veterans Hospital Administration. She told
the National Performance Review meeting
at the Depanment of Veterans Affairs in
Action: A/Jow aD agencies and
departments to create innovation fonJs58
August 1993:
Congress should authorize a two tier
system of innovation funds: small loan
funds within agencies; larger funds at the
depanmentallevel. These would be
capitalized through retained savings from
operational appropriations. For the new
system to work well, Congress should allow
all new and existing innovation funds to
invest in joint projects with other agency
funds, with state or local governments, or
with industry.
If managed according to market
principles, innovation funds would produce
measurable improvements in agency
efficiency and significant taXpayers savings.
Strict repayment schedules, with interest,
would discourage careless borrowing.
Action: The government shou/J ensure
that there is no budget bias against Iongterm investments.59
Pan of straightening out the government's books will involve adopting some
financial distinctions that business uses.
Federal bookkeeping rules discourage
Procurement ofequipment is heU up
because capital dollars to purchase
equipment are frozen. Andyou asked
what dumb rules there were we couU
change. Allow our hospital directors and
our top managers to use operating dollars
when they find it's necessary to do leasing
rather than purchasing . .. Please help
us loosen up the capitalfund so that we
don't have to go to Congress and wait
two and a halfyears for this line item to
change.
The budget should recognize the
special nature and long-term benefits of
investments in fixed assets through a
separate capital budget, operating budget,
and cash budget. The separate capital
budget will explicitly show expenditures on
fixed assets, and will help to steer our scarce
resources toward the most economical
means of acquisition of the most needed
assets. The cash budget reflects the effect of
both the capital and the operating budget
on the economy. Therefore, the discipline
of the cash outlay caps in the Budget
Enforcement Act must be maintained.
III
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
STEP
4: REENGINEERING PROGRAMS
lDCUrCosrs
n the past turbulent decade, many
companies have been forced to
recognize that they weren't organized in
the right way to do what they were doing.
Their organization structure reflected
history, not current needs. Reform wasn't
easy-too many people had vested interests
in preserving their particular part of the
organization. As a result, most attempts at
reorganization were reduced to shifting
things among different boxes on
organizational charts. Businesses found that
I
W. are determined to movefrom an
industrial age government to information age
gov~mmt, from a government pre-occupied
with sustaining itselfto a government ckarl]
focused on serving the peopk.
VICe Presideat AI Gore
May 24, 1993
the only way to break the mold was to
reengineer-to forget how they were
organized, decide what they needed to do,
and design the best structure to do it. An
obvious insight? Perhaps. But the best ideas
are always the ones that seem obvious-after their discovery.
We will reengineer the work of
government agencies in two ways. First, we
will expand the use of new technologies.
With computers and telecommunications,
we need not do things as we have in the
past. We can design a cUStomer-driven
electronic government that operates in ways
that, 10 years ago, the most visionary
planner could not have imagined.
Second, we will speed up the adoption of
new ways to improve federal operations.
Most of this work will be done by the
federal agencies themselves. An outside
112
performance review could never learn
enough about internal agency work
processes to redesign them intelligendy. But
we can begin to redesign several broad
government-wide processes: The way we
design programs, develop regulations, and
resolve disputes.
Electronic Government
The history of the closing decade of this
century is being written on computer. You
wouldn't know it if you worked for many
federal agencies, however. While private
businesses have spent the past two decades
either getting rich by developing new
computer technologies or frantically trying
to keep up with them, government is still
doing things our parents-perhaps even our
grandparents-would recognize.
Offshoots of the unexpected and fertile
marriage between computers and
telephones have changed just about
everything we do-how we work, where we
work, the design of the workplace, and the
skills we need to continue working.
Organizations don't need as many people
collecting information because computers
can do much of it automatically. They don't
need as many people processing that
information because clever software
programs can give managers what they need
at the press of a button.
Factories don't need to stockpile large
inventories because smart machines on the
assembly lines order components from
equally smart machines working for
suppliers. Yet government agencies stand
guard over warehouses of unused office
furniture. Retailers ship the right size of
clothing to customers as soon as they receive
a telephone order and a credit card number.
Yet we can't pay our taxes that way.
Computer companies give technical
advice for our computers and software over
the telephone 24 hours a day by fax,
CurnNG BACK TO BASICS
· modem, or voice. Yet, the Social Security
Administration can't do the same.
Failure to adapt to the information age
threatens many aspects of government. Take
the State Department, a globe-spanning
organization dependent on fast and accurate
communications. Its equipment is so oldfashioned that the Office of Management
and Budget says "worldwide systems could
suffer from significant downtime and even
failure."60 According to OMB, its systems
are so obsolete and incompatible that
employees often have to re-enter data
several times. These problems jeopardize
our ability to meet our foreign policy
objectives.
Or think about the way our government
sends out checks. For 15 years, electronic
funds transfers have been widely used. They
cost only 6 cents per transfer, compared
with 36 cents per check. Yet each year,
Treasury's Financial Management Service
still disburses some 100 million more
checks than electronic funds transfers.
We still pay about one federal employee
in six by check and reimburse about half of
travel expenses by check. Only one-half of
Social Security payments--which account
for 60 percent of all federal payments--are
made electronically, making SSA the world's
largest issuer of checks. Only 48 percent of
the Veterans Affairs Department's payments
are made electronically. Fewer than one in
five Supplemental Security Income
payments and one in ten tax refunds are
transferred electronically.6) We have only
begurI to think about combining electronic
funds transfers for welfare, food stamps,
subsidies for training programs, and many
other government activities.
Private financial transactions have
become a lot easier in the past decade: bank
cash machines are open 24 hours a day,
credit cards let us avoid carrying cash, and
we can buy goods over the telephone. This
saves many of us a lot of time and money. It
could save the Government a lot of time
and money, too. Consider the paper chase
involved in running the welfare system. The
Food Stamp Program, alone, involves
billions of bits of paper that absorb
thousands of administrative staff years.
More than 3 billion food stamps will be
printed this year and distributed to more
than 10 million households. Each month,
210,000 authorized food retailers receive
these coupons in exchange for food. These
retailers carry stacks of coupons to 10,000
participating financial institutions, which
then exchange them with Federal Reserve
Banks for currency. The Federal Reserve
Banks count the coupons-although they
already have been counted more than a
dozen times-and destroy them. The
administrative cost of this system-shared
equally by federal and state governments-is almost $400 million a year.
We will suppon Agriculture's
commitment to the goal of issuing food
stamps electronically by 1996. Electronic
benefits transfer could eliminate the paper
chase, improve services to customers, and
reduce fraud. At the same time, it could be
used to authorize Medicaid payments,
distribute welfare payments, infant
nutrition suppon, state general assistance,
and housing assistance. It could eliminate
billions of checks, coupons, and all the
other paperwork, record keeping and
eligibility forms that cluner the welfare
system.
Why has business moved faster than
government into the electronic
marketplace? In the first place, government
is a monopoly. Public organizations don't go
out of business if they don't have the latest
and smartest machines or the best approach
to managing resources. In the second,
employees who do want to modernize
management have their hands tied with red
tape-detailed budgets and cumbersome
procurement procedures-that deter
investment. Finally, there is a natural
inclination, familiar to private and public
managers alike, to do things as they've
always been done.
What can we do to help our federal
bureaucracy catch up?
113
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
Action: Support the rapid development
ofa nIltionwUk system to deliver
government benefits electronicaOy.62
OMB has already begun the process. The
electronic benefits transfer sreering
committee, which OMB oversees, will
develop an implementation plan for
electronic benefits transfer by March 1994.
The sysrem is workable with toclay's
technology. For cash programs such as
federal retirement, social security,
unemployment insurance, or AFDC,
benefits would be electronically deposited
directly into recipient bank accounts
electronically. If people didn't have bank
accounts, these could be created once the
individual enrolled in a program. For "noncash" programs such as food stamps,
participants would have accounts through
which they could make purchases at
approved food srores--analogous to credit
cards with credit limits. Stores would debir
accounts as eligible items were purchased.
The entire system could operate on or be
compatible with the existing commercial
infrastructure through which private funds
are transferred electronically.
Agencies have begun experiments with
electronic benefits transfers. Welfare checks,
food Stamps, and state-collected child
support, for example, are distributed
electronically in Maryland. There are test
sites in Iowa, Minnesota, New Mexico,
Ohio, Pennsylvania, Texas, and Wyoming.
We know that a joint federal-state effort to
transfer welfare benefits electronically
works-and works well. The system is
strongly supported by recipients, the stare
welfare agencies, food retailers, banks, and
participating commercial netWorks. We also
know that direct federal delivery of funds by
electronics is cost-effective. We can't yet
project with certainty what the savings
might be, but preliminary estimates suggest
$1 billion over five years once electronic
benefits transfer of food sramps is fully
implemented.
In the future, the concept of electronic
government can go beyond transferring
money and other benefits by issuing plastic,
114
"sman" benefit cards. With a computer
chip in the card, panicipants could receive
public assistan~ benefits, enro~ in training
programs, receive veterans servICes, or pay
for clay care. The card would contain
information abour panicipants' financial
positions and would separately track their
benefit accounts-thus minimizing fraud.
Electronic governmenr will be fairer, more
secure, more responsive to the cusromer,
and more efficient than our present paper
based systems.
Barriers still stand in the way. Agencies
will have to work together to develop a
comprehensive nationwide straregy for
implementation; it will do no good for each
agency to develop its own process. We will
need to strengthen the pannership between
state and federal governments in developing
and operating the system. We will have to
eliminate some regulations that would
prevent this radical change in how
government operates. And the National
Institute of Standards and Technology will
have to issue final standards and protocols
for electronic signatures to facilitate
electronic funds transfers and the electronic
approval of budget and financial
documents.
Action: Federal agencies wiD expand
their use ofelectronic government. ~
Opportunities abound for cutting
operating costs by using
telecommunications technologies. The
National Performance Review has identified
several projects that would improve
government's productivity and reduce the
burden of reporting on individuals and
businesses.
The IRS is introducing an efficient
computer system, automating tax returnS,
and creating a wholly new work
environment for its 115,000 full-time
personnel. The agency currently operates a
computer system PUt together in the
1960s-noc the tool our principal revenue
collector should be using. To make the ne\1
system work, the agency will need to figure
out how to train its staff to operate in a
CU1TING BACK TO BASICS
reengineered agency. We will suppon the
agency's investments in new hardware and
training, as discussed in Chapter 3.
The IRS will also manage the creation of
an integrated electronic system for financial
filing, reporting, and tax payment by 1996.
The system will serve federal, state, and
local taxpayers. It will allow the electronic
filing of tax returns by individuals and
companies, the electronic reporting of
wages and withholding information, and
other data required by all levels of
government. In addition, the inter-agency
Wage Reponing Simplification Project
(WRSP) will be in place quickly-allowing
businesses to file information once to serve
many different purposes. The savings from
fully implementing this program over the
life of the system have been projected at
$1. 7 billion for government agencies and
$13.5 billion for private employers.
Individuals will be able to file federal and
state income taxes simultaneously through
an Electronic Data Interchange, with their
privacy protected and fraud prevented
through digital signature standards.
Electronic filing alone will save the IRS and
state agencies from having to mail out the
equivalent of75 boxcars offorms.
Working together, the Labor
Department and IRS will develop an
automated system all employers can use to
file electronically the pension plan forms
employers required by the Emplolee
Retirement Income Security Act. At
present, it costs the Internal Revenue
Service more than $10 million a year to
enter all these forms into its data base.
The Labor Department will develop
computer programs to determine quickly
the appr0r,riate wages on federal service
contracts. 5 Currently, all federal agencies
contracting for services-from cleaning
services to building management-must
apply to the department for a determination
of appropriate wages. The process is
supposed to ensure that federal contracts
don't undermine local prevailing wages. The
process takes an average of 57 days and,
with a growing number of service contracts,
more and more are subject to delays.
We will continue investing in the Social
Security Administration's massive project to
create a single nationwide disability
processing system. 66 This will require
considerable investments in new
telecommunications and computer systems
as well as in staff retraining. It will also
mean that the SSA will have to work
cooperatively with state-run disability
determination offices, set performance
standards, and take over those that don't
meet standards. Many of the system's worst
processing bottlenecks are in the state offices
that approve individual claims.
Money for Numbers
The National Technical Information Service
runs a large and complex-information collection
and marketing operation. It is the nation's largest
clearinghouse for scientific and technical
information. Yet it covers the COsts of its operations
without receiving a penny in federal
appropriations. Its customers pay - and their
numbers are growing ~ year.
NTIS's archives contain about 2 million
doruments (from research reportS to patents), more
than 2,000 data files on tape, diskette, or CDROM, and 3,000 software programs. This resource
is growing at the rate of about 70,000 items each
year. NTIS's press releases, on-line services, and
CD-ROMs serve 70,000 customers, three-quarters
of whom are from business and industry.
In 1991, NTIS collected $30.7 million in
revenues - 77 percent from its clearinghouse
activities, the rest from other government agencies
that reimburse NTIS for patent licensing services,
and from billing other agencies for producing and
distributing documents. NTIS is required by law to
be self-sufficient.
115
FROM RED TAPE TO RESULTS- CREATING A GOVERNMENT THAT WORKS BETTER
Some of these investments will require
Congressional appropriations. Bur some can
be financed through the innovation funds,
described above, and some will become
possible to pay for as soon as rigid budget
regulations are relaxed.
Action: Feeleral agencies will develop
and mArket titltll blUes to 1nuineu.67
Federal agencies must treat the data they
compile and process as potentially valuable
resources. Congress alerted the bureaucracy
to the value of information in 1991 by
passing the American Technology
Preeminence Act. The act required federal
agencies to transfer to the National
Technical Information ~ce copies of
federally funded research. At NTIS, the
information is organized and made available
to research scientists in academia and in
industry. NTIS has developed an aggressive
marketing sttategy and pricing policy that
have greatly increased irs revenues.
The Census Bureau has pioneered the
use of computer technology such as CDROM technology to make federal data
available. By 1992, the Bureau sold census
data to 380,000 customers on tape or disc
directly, and served another 1.1 million
customers indirectly.
'Unfortunately, some federal agencies lag
behind private data retailers in the services
they offer their customers. People buying
Census data must order it through paper
order forms or by telephone during business
hoUfS-{)ruy 9 hours a day, 5 days a week. If
private software companies offer 24-hour a
day technical support, so should the Census
Bureau.
Other agencies will begin to exploit the
potential of the information they collect.
The Commerce Depamnent, for example,
will develop a manufacturing technology
data bank that brings together information
residing in the National Institute of
Standards and Technology, the Defense
Department, federal research laboratories,
and other organizations. Commerce will
also use its climate data as the basis for
developing a National Environmental Data
116
& COSTS LESS
Index. Good data will be vital in solving the
problems associated with global climate
changes. The U.S. must be a leader in
developing these information resources.
Action: In partnership with StIlle muJ
loCAl governments andprivate companies,
we will create a NatiotuJ Spatial Data
Infrastructure. 68
Dozens of agencies collect spatial datafor example, geophysical, environmental,
land use, and transportation data. They
spend $1 to 3 billion a year on these efforts.
The administration will develop a National
Spatial Data InfrastrUcrure, (NSDI) to
integrate all of these data sources into a
single digital resource accessible to anyone
with a personal computer. This resource will
help land developers and conservationists,
transportation planners and those
concerned with mineral resources, and
farmers and city water depanments.
Because of the value of the data, it will be
possible to attract private sector funding for
its collection, processing, and distribution.
The Federal Geographic Data Committee,
which operates under the auspices of OMB,
plans to raise enough non-federal funding
to pay for at least 50 percent of the project's
cost. It will set the standards for data
collection and processing by all agencies to
ensure that NSDI can be devdoped as
economically as possible.
Action: The IntenuJ Revenru Service
will develop a system that lets peopk ptry
tIlxes by credit card. 69
The Customs Service letS people pay
duties on imported goods by credit card.
Americans should have the same convenient
way to pay taxes. It will save time and cut
the IRS's collection costs.7° There is one
hitch: Those who pay by credit card could
avoid paying back taxes simply by filing for
personal bankruptcy. This escape
mechanism can't be employed today
because back taxes are, under bankruptcy
law, a "non-dischargeable" debt-that is,
they are a debt that remains even after
CUTfING BACK TO BASICS
someone becomes insolvent. Therefore, the
use of credit cards for tax payments should
be delayed until Congress has amended the
bankruptcy statute to prevent taxes paid by
credit card from becoming a dischargeable
debt. Our goal is to increase customer
convenience, not to open up another
loophole through which people can dodge
paying delinquent taxes.
Reengineering to Use
Cost-Cutting Tools
Our reinvented government will be able
to CUt further costs by using new ways to
carry out traditional duties. To begin with
we will have to get a lot smarter about how
we design government programs. The
President's Management Council will playa
lead role in helping government learn from
its past failures and successes to design
better programs. In addition new
approaches to regulation-such as
negotiated rule making~ reduce
conflict and produce better results. Finally,
alternative techniques for resolving disputes
can avoid many of the costs of traditional
litigation.
Action: The President's Manllgement
Council will help agencies design and
redesign better programs. 70
As taxpayers and customers we have
been, time and time again, victims of the
thoughtless expansion of government.
When new programs were introduced or
old ones retargeted, little thought was given
to what economists blandly label "second
order effects"-the unintended and
unwanted consequences of actions. These
unintended consequences are the collateral
damage responsible for so much of the
waste documented in this repon. When we
placed limits on crop deficiency payments,
we didn't realize how easy it would be to
establish eligible shell-corporations. When
we added new procurement standards, we
didn't anticipate the difficulties caused by
centralized decision making. When we tried
to target training programs on dislocated
workers, we didn't anticipate the
bureaucratic hassles involved in establishing
eligibility.
But the fact that we did not anticipate
consequences does not mean that we could
not have done so. Many different programs
have been tried-by federal agencies, by
state and local agencies, and by
governments overseas. We have built up
what lawyers would call "case law": lots of
useful precedents about what works and
what doesn't. The trouble is that, unlike
case law, these precedents aren't easy to find.
Congressional staff or agency employees
designing new programs have no systematic
way to find out what has been tried before
and how well it has worked. The result?
Endless reinvention of third rate or failed
programs.
In 1981, for example, the chairman of
the House Banking Committee asked the
Congressional Budget Office if it knew of
any studies evaluating government loans as
an effective policy tool. CBO did not. Yet
the federal government had lent hundreds
of billions of dollars--and it continues to
do so today. The price we pay for this
ignorance is a mountain of delinquent debt
and a raft of discredited government
initiatives. Too many policies and programs
are built on equally feeble foundations.
In 1988, Congress recognized this
dilemma and provided for the
establishment of a National Commission on
Executive Organization, patterned after the
first Hoover Commission. Its charter would
have included a requirement to "establish
criteria for use by the President and
Congress in evaluating proposals for
government corporations and governmentsponsored enterprises and subsequently
overseeing their performance. "71 The new
commission could have been activated by
directive. It was not.
To begin our arrack on ignorance, the
President should direct the President's
Management Council to make program
design a formal discipline throughout the
federal government. The PMC will
commission the preparation and
117
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
publication of a program design handbook
and establish pilot efforts within agencies to
suengthen their ability to design programs.
These pilot programs will help senior
management design new programs, evaluate
current programs, and create models for
many different types of programs (research
contracts, loan programs, taX preferences,
and insurance programs to name just a few.)
Since many programs originate in
Congress, the Legislative branch should also
work to improve staff capacity. We urge the
Offices of the Legislative Counsel, the
Congressional Research Service, and the
General Accounting Office to fill this role.
As both the legislative and executive
branches elevate the discipline of program
design, we will get better programs and less
contentious relations between the two
branches of government.
But we need more than good programs.
We need better rules and more efficient
rulemaking. Federal· agencies administer
tens of thousands of laws, rules, and
regulations-and the number is growing
quickly. For better or worse, government's
rulemaking, even more than its
appropriations, shapes our lives.
Costs, for the most part, are offset by
benefits. Our system of laws and rules is the
foundation for our economic success. It
defines and protects personal and property
rights and provides the framework for the
orderly conduct of social and business
affairs.
But some aspects of rulemaking don't
work well. As rules extend into increasingly
complex areas of our environment,
workplace safety, health, and social rights,
their consequences-both deliberate and
unintended-also grow. As this happens,
we introduce more and more safeguards
into the rulemaking process. The result is
noc always what we want. Hearings,
reviews, revisions, more reviews, more
hearings, and even more reviews are
cumbersome, costly, and time consuming.
For example, because the Depanment of
Health and Human Services has been slow
to issue regulations on such vital areas as the
allocation of funds for the elderly and for
118
& COSTS LESS
children, states have had to introduce their
own regulations without the benefit of
federal guidance. Some of these state
regulations have later been ovenwned after
federal regulations were evenrually issued,
leaving states financially liable.
New rules and regulations can also
generate costly litigation-a bonanza for
lawyers. Agencies writing the rules to
implement environmental laws, according
to one expen, often find "too frequently
that their proceedings become a
battleground for interest groups and other
affected parties-in effect little more than
the first round of the expected litigation."72
There are better ways to make rules. A
small group of federal agencies has pioneered
a process called negotiated rulemaking. In
1990, Congress recognized and encouraged
the process with passage of the Negotiated
Rulemaking Act. We believe negotiated
rulemaking-colloquially referred to as "reg
neg"-is a process every rulemaking agency
should use more frequently. 73
Action: Agencies will 11Ulke greater use of
negotiAted rule making. 74
The "reg neg" process brings together
representatives of the agencies and affected
groups before draft regulations are issued
and before all sides have formally declared
war. The group meets with a mediator or
"facilitator." The negotiators reach
consensus on the regulation by evaluating
their own priorities and making trade-offs.
The negotiating process allows informal
give and take that can never happen in
coun or in a public hearing. If agreement is
reached, the agency can publish the
proposed rule, accompanied by a discussion
of the issues raised during negotiations.
Even if both sides are too far apan to reach
consensus, agency staff learn a lot during
the process that helps them improve the
regulations. When the panies do reach
consensus, regulations are issued faster and
costly litigation is avoided.
When EPA applied reg neg techniques
the issue of emission standards for wood
burning Stoves, it was able to put standard!
CUTIING BACK TO BASICS
into effect two years faster, and with much
better factual input, than it could have
without negotiations. Manufacturers of
stoves, in turn, were able to begin retooling
to meet standards without another two
years of uncertainty.
Action: Agencies will expand their use of
altenuztive dispute resolution
techniques. 75
Federal agencies also need better and
cheaper ways to resolve disputes. Enforcing
thousands of difficult and sometimes
controversial rules-however carefully they
are designed-leads to disagreements. State
and local governments, businesses, and
citizens challenge Washington's right to
regulate certain issues, or they challenge the
the enforcement of specific regulations.
Solving these disputes can be expensive.
It involves high-priced lawyers, it clogs the
courts, and it delays action. Each year,
24,000 litigation matters reach the 530 fulltime attorneys and 220 suppon staffers
employed by the Labor Department alone.
It often takes years to resolve these disputes,
postponing the implementation of
important programs and preventing a lot of
people from doing what they are paid to do.
In some cases, litigation is important: it
interprets the law, sets important
precedents, and serves as a deterrent to
future wrongdoing. But in many cases, no
one really wins-and the taxpayer loses. It is
often cheaper to resolve conflicts through
new techniques known collectively as
Alternative Dispute Resolution (ADR).
Alternative Dispute Resolution (ADR)
includes mediation (a neutral third parry
helps the disputants negotiate), early neutral
evaluation (a neutral, often expen, person
evaluates the merits of both sides),
factfinding (a neutral expen resolves
disputes that arise over matters of fact, not
interpretation), settlement judges (a
mediator settles disputes coming before
tribunals), mini-trials (a structured
settlement process), and arbitration (an
arbitrator issues a decision on the dispute).
Overcrowded courts are already
encouraging private litigants to use ADR
Private contracts often specify the use of
ADR to resolve disagreements among
signatories. In 1990, Congress passed the
Alternative Dispute Resolution Act,
authorizing every federal agency to develop
its own ADR policy. Some have, but some
have dragged their feet.
Those that have used ADR have saved
time and money and avoided generating ill
will. The Labor Department starred a pilot
program last year for OSHA and Wage and
Hour cases and found it much quicker and
cheaper. The Federal Deposit Insurance
Corporation saved more than $400,000
with a single, small pilot program. The
Farmers' Home Administration has used
ADR on foreclosure cases-not only saving
money but acrually avoiding foreclosure on
several families. This type of innovation
should spread faster and further across the
federal government.
11 ~
FROM RED TArE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER &
COSTS LESS
Conclusion
f we follow these steps, we will move
much closer to a government that costs
less and works better for all of us. It will
be leaner, more effective, fairer, and more
up-to-date. It will be a government worth
what we pay for it.
We do not deny that many groups will
oppose the actions we propose to take. We
all want to see cuts made, but we want
them elsewhere. Eliminating or cutting
programs hurts. But it hurts less, at least in
me long run, man the practice of
government as usual. Writing about
Britain's monarchy in the eighteenth
century, Samuel Pepys once observed that it
I
120
was difficult for the king to spend a million
pounds and get his money's worth.
Fawning couruers, belligerent Lords and
hundreds of other claimants each
demanded their share. The same is true
today. The money spigot in Washington is
much easier to turn on than to tum offand too little of the funds that gush from it
irrigate where water is scarce. That is why
we have not simply offered a list of cuts in
this repon. Instead, we have offered a new
process--a process of incentives that will
imbue government with a new
accountability to customers and a new
respect for the public's money.
CONCLUSION
Though I do not believe that a plant will spring up where no seed has been, I have great faith in a
seed Convince me that you have a seed there, and I am prepared to expect wonders.
Henry David Thoreau
nlike many past efforts to
change the government,
the National
Performance Review will
not end with the
publication of a report.
We have identified what we must do to
make government work better and cost less:
We must serve our customers, cut red tape,
empower employees to get results, and cut
back to basics. Now, we will take action.
The task is immense. The federal
government has 2.1 million civilian
employees, 800,000 postal workers, 1.8
million military personnel, and a $1.5
trillion budget-more than the entire gross
domestic product of Germany, the world's
third largest economy.
The National Performance Review has
identified the problems and defined
solutions. The President will issue
directives, cabinet secretaries will change
administrative practices, and Office of
Management and Budget will issue
guidance. We will work with Congress for
legislation where it's needed. Senseless
regulations will be repealed; mechanisms to
enhance customer service will be created;
change will begin.
But we do not pretend to have solved
every problem. We will transform the
federal government only if our actions--
This' pnformance review wiD not produce
another report just to gather dust in some
warehouse. 'We have enough ofthem already.
President Bill Clinton
Remarks announcing the National Performance Review,
March 3.1993
and the Reinvention Teams and Labs now
in place in every department-succeed in
planting a seed. That seed will sprout only if
we create a process of ongoing change that
branches outward from the work we have
already done.
How we proceed will be as important as
what we have done to date. We must avoid
the pull of implementation models that are
familiar and comfortable but poorly suited
to today's world. We must avoid creating
new bureaucracies to reform the old. We
must actively involve government leaders at
all levels. We must seek the guidance of
those who have successfully transformed
large organizations in both the private and
public sectors.
The nature of our strategies will no
doubt cause discomfort. They will be
unf.uniliar. They will not look like business
121
FROM RED TAI'E TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER Be COSTS LESS
as usual. They will challenge the current
federal culrure. And they will demand
risk-taking.
If we are to bring about true change,
however, some discomfort is inevitable. Our
strategies are not untested; they have been
used successfully by both public and private
organizations throughour the country.
To succeed where others have failed, the
President and Vice President have
committed to specific initiatives that will
create a culrure capable of sustaining
fundamental change. This shift in culrure
will not occur overnight. To bring it abour,
we will continue:
• a cascading process of education,
participation, and ownership at the
highest levels of the executive
branch;
What wlre trying to do is to create a largt
numb" ofchanges, simultaneously, in the
fedmd government. Because ifyou just change
one thing without changing some ofthe oth"
things that need to be changed, we won't get
anywhere.
we can bring the quality revolution, for
example, into the federal workforce as wen as it
couldpossibly be done, and ifwt didn'tfix
some ofthe oth" problems, it wouldn't amount
to much. ~ couldfix the pmonne/ system, but
ifwe didn't fix the budgetary syrtml and the
procurement systml, then we would stin be
mired in a lot ofthe diJfo:u/tits that wt
mcountn' today. we are trying to do a lot of
thingr at the same time.
Vu:e President AI Gore
Town Hall Meeting,
Dcparuncm of Veterans Affairs
August 4, 1993
--
1",,,,
• two-way communication with
federal employees and organizations;
• bi-partisan partnership with
Congress;
• processes to listen to and use
feedback from customers and
citizens; and
• government-wide mechanisms to
monitor, coordinate, and facilitate
plans for reinvention.
The administration has already taken a
number of steps to bring about the changes
we are recommending.
First, we have launched Reinvention
Teams and Reinvention Labs in every
department to continue seeking ways to
improve the government and put these
ideas in practice.
Second, we have begun to work-and
will continue to expand relationshipswith leaders and representatives of federal
employees from throughout the
government. Indeed, the National
Performance Review is the first
government-wide change initiative to be
run and staffed by federal employees. Our
actions will make employees' jobs better,
and their participation will make our
actions better.
Third, the President and Vice President
have begun to work with the cabinet to
develop performance agreements that will
institutionalize a commitment to and
establish accountability for change.
Fourth, we have developed a mechanism
to spread our basic principles throughout
the government. The President will meet
with the cabinet to develop strategies
reflecting these principles and ideas,
committing all involved to take
responsibility for changing the way we do
business. Cabinet members will then go
through the same process with their senior
managers, who will go through it with the
senior managers, and so on.
Fifth, the President is establishing a
management council to monitor change
CONCLUSION
and provide guidance and resources to
those working to bring it about. The
President's Management Council will be
charged with responsibility for changing the
culture and management of the federal
government.
Sixth, the Federal Quality Institute will
help agencies with access to information,
education, research, and consultation on
quality management. Like our other
initiatives, this models a basic tenet of the
behavior we recommend---encouraging
managers to define their own missions and
tasks, but providing the support they need
to do a good job.
Seventh, we will launch future reviews of
the federal government, targeted at specific
problems. The National Performance
Review was a learning experience; we
learned what we could do in six months,
and what we still need to do. We focused
heavily on the basic systems that drive
federal agencies: the budget, personnel,
procurement, financial management,
accountability, and management systems.
In subsequent reviews, we will narrow our
focus. For example, we plan a review of the
antiquated federal field office structure,
which dates from the 1930s and contains
some 30,000 field offices. (See Chapter 4.)
Other targets might include the
abandonment of obsolete programs; the
elimination of unproductive subsidies; the
redesign of failed programs; the redefinition
of relationships between the federal
government and state and local
governments; and the reinvigoration of
relationships between the executive and
legislative branches.
Finally, the National Performance
Review will continue to rely on its greatest
asset: the federal employees who made it
happen. They have all worked hard for
change, and many will continue to work on
reinvention in their own agencies. They
constitute a network that will reach out to
other employees, sharing their enthusiasm,
energy, and ideas.
During this process, a vision of change
will emerge beyond that which is contained
in this report. Leadership and management
Our task is not tofix the blamefor the past,
but to fix the course for the foture.
President John F. Kennedy
values will, over time, change-not in
response to a mandate, but because people
are working together to change their
government. If we have done our job well,
the next generation of changes will be built
on the foundation we have laid with this
report. We are merely initial planners; the
President, the Vice President, the cabinet,
federal managers and employees will be the
architects and builders.
Despite all the horror stories and years of
scorn heaped on federal employees, our
government is staffed by people committed
to their jobs, qualified to do them better,
and hungry for the opportunity to try. The
environment and culture of government
have discouraged many of these people; the
system has undermined itsel£ But we canand will--change that environment and
culture.
Over time, it will become increasingly
obvious that people are not the problem. As
old ways of thinking and acting are replaced
by a culture that promotes reinvention and
quality, a new face of government will
appear-the face of employees newly
empowered and newly motivated, and of
customers newly satisfied.
What Reinventing Government
Means for You
We have talked enough of what we will
do and how we will change. The more
important question is how life will change
for you, the American people.
If we succeed-if the administration can
implement our recommended actions and
Congress can pass our legislative packageyou will begin to see a different
government. Your mail will be delivered
123
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
more rapidly. When you call a Social
Security office, you'll get through. When
you call the Internal Revenue Service, you'll
get accurate answers-and if you don't, you
will no longer be penalized.
If you lose your job, a local career center
will help you find a new one. If you want
retraining, or you want to go back to
school, you'll find counselors who can help
you sort out your options, pick the best
program, and pay for it. If you run a
Make no littk plans; thty have no magic to
stir men's blood, andprobably themselves wiD
not be realized. Make big plans; aim high in
hope and work" remmzbering that a nobk
logical diagram, once recorded, wiD nevtr die,
but long afttr we are gone wiD be a living
thing, asserting itself with tvtr-growing
t'
tnszstency.
Daniel Burnham
1907
small business, you will have fewer forms to
fill out.
If you live in public housing, your
apanment complex might get deaner and
safer. Perhaps you'll even be able to move
your family to a safer, quieter, more stable
neighborhood.
Our workplaces will get safer because
they are inspected more often. Our water
will get deaner. Your local government will
work bener because it is no longer
hamstrung by silly federal regulations.
And perhaps the federal debt-that $4
trillion albatross around the necks of our
124
children and grandchildren-will slow its
rampage. Our federal agencies will begin co
figure out, bit by bit by bit, how to cut
spending, eliminate the obsolete, and
provide bener service for less money.
You will begin to feel, when you walk
into a post office or social security office or
employment service or veterans' hospital,
like a valued customer. We will begin to
spend more money on things you want and
need-health care, training, education,
environmental proteaion-and less on
bureaucracy. One day you will be able to
conclude that you are getting a dollar of
value for every dollar of taxes you pay.
This is our vision of a government that
works bener and costs less. We know it will
not come to be overnight, but we believe it
is a vision we can bring to life. We believe
this because we have already seen this vision
come to life--in local governments, in state
agencies, even in a few federal agencies. We
believe it is the right vision for government
as we approach the 21st century.
It will take more than a dedicated
President and Vice President to make this
vision a reality, however. It will take more
than dedicated employees. It will take
dedicated citizens, willing to work long and
hard to improve their government.
It will take citizens willing to push their
social security offices and unemployment
offices to treat them like customers-and to
demand that their voices be heard when
they don't get satisfaction. It will take
citizens willing to demand information
about the performance of their federal
organizations. And it will take citizens
willing to act on the basis of that
information.
As our President has said so often, the
future is ours-if we have the courage to
create It.
ENDNOTES
PREFACE
1. Bill Clinton and AI Gore, Putting P~opLe First,
(New York, Times Books, 1992) pp. 23-24.
INTRoDucnoN
1. Data taken from the following sources: "The
average American ... ," Senator William Roth, vol.
138 no. 51, Congo Rec. (April 7, 1992), p. SI; "Five
out of every six Americans ... ," CBS News Poll,
unpublished, May 27-30, 1992, released June 1,
1992; "Only 20 percent ... ," an ABC NewsWashington Post poll, taken April 23-26, 1993,
asked: "How much of the time do you trust the
government in Washington to do what is right: Just
about always, most of the time, or only some of the
time?" Four percent said "just about always," 16
percent said "most of the time," 74 percent said
"only some of the time," and 6 percent volunteered
"none of the time;" 1963 figure, Universiry of
Michigan poll, cited in "From Camelot to Clinton:
A Statistical Ponrait of the United States,"
Washington Post (August 23, 1993), p. A15.
2. U.S. General Accounting Office (GAO), HighRisk Sm~s: Difmu Invmtory Managmzmt,
GAO/HR-93-12 (December 1992).
3. U.S. Office of Management and Budget (OMB),
Budga ofth~
Gov~mmt FY 93 (Washington,
D.C, 1992) and Budg~toftht U.S. Gov~mmt FY
94 (Washington, D.C, 1993); and interview with
Department of Housing and Urban Development
Budget Officer Herbert Purcell, August 26, 1993.
u.s.
4. U.S. Congress, Senate, Committee on
Appropriations, Subcommittee on Education, Labor
and Health and Human Services, testimony of
Clarence C Crawford, U.S. GAO, "Multiple
Employment Programs: National Employment
Training Strategy Needed," June 18, 1993.
5. Democratic Leadership Council, Th~ Road to
&alignmmt: Th~ Dmzocrats ant! th~ p"ot ~otm
(Washington, D.C: Democratic Leadership
Council, July 1993), p. III-12. Pollster Stanley
Greenberg asked people if they agreed that
"government always manages to mess things up."
Sevenry-two percent of Perot voters agreed, 64
percent of Clinton voters agreed, and 66 percent of
Bush voters agreed.
6. Dilulio, John J., Jr., Gerald Garvey, and Donald
F. Ketti, Improving Gov~mmt Pnformance: An
Own"s Manual (Washington, D.C: Brookings
Institution, 1993), p. 79.
7. Yankelovich, Daniel, Ammcan Valu~s and Public
Policy (Washington, D.C: Democratic Leadership
Council, 1992), p. 7.
8. National Performance Review Accompanying
Report, Transforming Organizational Structum
(Washington, D.C: U.S. Government Printing
Office [GPO], September 1993).
9. Finegan, Jay, "Four-Star Management," Inc.
Oanuary 1987), pp. 42-51; Osborne, David, and
Ted Gaebler, R~invmting Gov~mmt: How tht
Enmprm~rial Spirit is Transforming tht Public
Smor (Reading, MA: Addison-Wesley Publishing
Company, Inc., 1992), pp. 255-259; and Creech,
General W. 1., "Leadership and Management The Present and the Future," address presented at
the Armed Services Leadership and Management
Symposium (October 11-14, 1983) (available from
the Office of the Assistant Secretary of Defense for
Installations, Pentagon. Washington. D.C.).
10. National Performance Review Accompanying
Report, Improving Custom" StrVice (Washington,
D.C: U.S. GPO, September 1993).
11. U.S. Department of Agriculture, Forest Service.
Regional Office. Profile ofa Rtinvmud Gov~mmt
Organization (Milwaukee, WI. May 24.1993); "The
U.S. Forest Service: Decentralizing Authoriry."
Gov~mmt Ex~cutivt (March 1993). pp. 23-4; and
interviews with Forest Service officials.
12. The President's Fiscal 1994 budget (page 40)
estimates 2.1 million Federal non-postal workers and
1.8 million military for 1994. Manpower, Inc.
employs 560.000. General Motors employs 362.000.
125
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
CHAPTER l-ClTITING RED TAPE
1. U.S. Departmenr of Agriculture. Starting OV(1'
(Washington. D.C.. undated). p. I.
2. Estimate by Office of Managemenr and Budget.
3. National Performance R~iew Accompanying
Report. Mission-Drivm. Rtsults-Orimud Budgtting
(Washington, D.C.: U.S. GPO, September 1993).
4. Letter to Vice President Gore from Bob Peterson.
Jackson, NJ (undated).
5. Department of Energy town meeting of the
National Performance R~iew. July 13,1993.
6. Peter. Dr. Lawrence J., Ptt(T'S Quotations: Id~asfor
Our Timt (New York: QuillfWilliam Morrow,
1977), p. 124.
7. Osborne, David. and Ted Gaebler. Rtinvmting
Govn-nmmt: How tht EntrqJrmturia/ Spirit is
Transforming tht Public Smor (Reading, MA:
23. Office of Personnel Management. Central
Personnel Data File, unpublished analysis, March
1993. Calculations by Robert Knisely. National
Performance R~iew.
24. National Performance R~iew Accompanying
Report, Rtinvmting Human Rtsouru Manag"""'t
(Washington, D.C.: U.S. GPO, September 1993).
25. Ibid.
26. National Academy of Public Administration,
Modn-nizing htkral Classification: An Opportunity
for Exulknct (Washington, D.C.: July 1991).
27. Rtinvmting Human Rtsourct Managtmmt.
28. Ibid.
29. Ibid.
30. National Performance R~iew Accompanying
Report. Rtinvmting hdtral Procurnnmt
(Washington. D.C.: U.S. GPO, September 1993).
Addison-Wesley Publishing Company, Inc., 1992),
p. 118.
31. Ibid.
8. Mission-Drivm. Rtsu/ts-Orimud Budgtting.
Foret Quality and htkral Procurnnmt: An Assrssmrnt
9. Kondracke. Morton. "How to Aid AID." vol.
202, Nw Rtpublic (February 26. 1990), pp. 20-23.
10. This estimate is derived from federal
employment statistics as of September 30. 1991.
provided in Office of Personnel Management
publication MW 56-22.
32. U.S. Merit Systems Protection Board, Work
(Washington, D.C.: U.S. GPO, July 1992), p. 21.
33. National. Performance Review Accompanying
Report, Rtinvmting htkral Procurnnmt, "PROC08:
Reform Information Technology Procurements"
(Washington, D.C.: U.S. GPO, September 1993).
34. Ibid.
11. $35 billion = 700.000 central staff x $50.000 in
salary and benefits per person year.
35. Ibid.
12. The last year that the civilian, nonpostal
workforce was under rwo million was 1966.
37. Ibid.
13. Haas. Lawrence J .• Running on Empty: Bush.
39. National Performance R~iew Accompanying
Report, Strtamlining Managnnmt Control
(Washington, D.C.: U.S. GPO, September 1993).
Congms. and tht Politics ofa Bankrupt Govn-nmmt
(Homewood. IL: Business One Irwin 1990). p. xxiii.
14. Mission-Drivm Rtsults-Orimud Budgtting.
15. Ibid.
16. Ibid.
17. Unpublished case study by Pamela Variey, John
F. Kennedy School of Government. Harvard
Universiry. Cambridge. MA, July 1993.
18. Mission-Drivm. Rtsults-Orimud Budgtting.
19. Broder. David S. and Stephen Barr, "HilI's
Micromanagemenr of Cabinet Blurs Separation of
Powers," Washington Post Ouly 25, 1993), p. AI.
20. Mission-Drivm. Rtsults-Orimud Budgtting,
"BGT04: Eliminate Employment Ceilings and
Floors by Managing Within Budget."
21. M ission-Drivm. Rtsults-Orimtrd Budgtting.
n. U.S. Congress, House. Democratic Caucus.
T ask Force on Government Waste, Thr Chalkngt of
Sound Managnnmt (Washington. D.C.. June 1992).
126
& COSTS LESS
36. Ibid.
38. Ibid.
40. National Performance Review Accompanying
Report, Improving Rtguiatory Sysmns (Washington,
D.C.: U.S. GPO, September 1993).
41. Strtamlining Managtmmt Controls.
42. Department of Veterans Affairs, Management
Efficiency Pilot Program, Innovativt Ttst is Muting
All Exptctations (Washington, D.C.: U.S. GPO,
March 1990).
43. Improving Rtguiatory Systnns.
44. Strtam/ining Managtmmt Control
45. Strtamlining Managtmmt Control and National
Performance Review Accompanying Report.
Improving FinanciaL Managtmmt (Washington,
D.C.: U.S. GPO, September 1993).
46. Strtamlining Managtmmt ControL and Improvin1
Financial Managtmmt.
ENDNOTES
47. Interview with Stephen Cleghorn. Director.
Jobs for Homeless People. Washington. D.C..
August 1993.
Franklin Frazier, Tax Administration: U.S. and
For,ign Straugi,s for Pr,/,aring NoncolUg, Youth for
Employmmt, GAOIT-HRD-90-31 Uune 14, 1990).
48. National Performance Review Accompanying
Report. Strmgthming th, Pannmhip in
Inurgovnnmmtal Sfflliu D,Iiv")' (Washington.
D.C.: U.S. GPO. September 1993).
13. National Performance Accompanying Reports,
H,alth and Human Sffllim; and Strmgthming th,
Pannmhip in Inurgov,rnmmtal Sffllie, D,Iiv")'
(Washington, D.C.: U.S. GPO, September 1993).
49. Ibid.
14. National Commission on Children, Btyond
Rhuoric. A NroJ Ammcan Agmda for Childrm and
Famili,s(Washington D.C., 1991), p. 314.
50. Ibid.
51. Ibid.
52. Ibid.
53. National Performance Review Accompanying
Report. Housing and Urban Dro,lopmmt.
(Washington. D.C.: U.S. GPO. September 1993)
54. Peters. Tom. Thriving on Chaos: Handbook for a
Managmzmt R,volution, (New York: Harper & Row.
1989).
CHAPTERS 2-PUITING
CUSTOMERS FIRST
1. National Performance Review Accompanying .
Report. R,mgin((ring Through information
T,ehnolog;y (Washington, D.C.: Government
Printing Office [GPO], September 1993).
2. National Performance Review Accompanying
Report, improving Custom" Sfflliu (Washington,
D.c.: U.S. GPO, September 1993).
3. General Accounting Office (GAO), Tax and
Administration 1989 Tm Call Survty. GAO/GGD90-36 Uanuary 4, 1990) and Tax and Administration
IRS Budgu R'qum ofFY94, GAO/T-GGD-93-23
(April 28. 1993).
4. Improving Custom" S,rviu.
5. Department of Health and Human Services,
&port ofth, Insp,ctor Gm"ai. on the Social Security
Administration's services, 1993.
6. Improving Custom" Sfflliu.
7. Ibid.
8. National Performance Review Accompanying
Report, Str,amlining Managmzmt Control
(Washington, D.C.: U.S. GPO, September 1993).
9. National Performance Review Accompanying
Report, D'partmmt of Transportation (Washington,
D.C.: U.S. GPO, September 1993).
10. National Performance Review Accompanying
Report, D'partmmt ofLabor (Washington, D.C.:
U.S. GPO, September 1993).
11. Ibid
12. U.S. General Accounting Office, testimony of
15. H,alth and Human S,rvim.
16. Sylvester, Kathleen, "New Strategies to Save
Children in Trouble," Govnning (May 1990), pp.
32-37.
17. National Performance Review Accompanying
Report, Offiu ofSeimu and Tuhnolog;y Policy and
th, National Seimu Foundation (Washington, D.C.:
U.S. GPO, September 1993).
18. Executive Office of the President, Office of
Management and Budget, A Vision of Chang' for
Ammea (Washington D.C.: U.S. GPO, February
1993), p. 52.
19. National Performance Review Accompanying
Report, D,/,artmmt ofComm"u (Washington,
D.C.: U.S. GPO, September 1993).
20. Nothdurft, William, It's Tim'th( U.s. Got
Smous About Exporting (St. Paul, MN: The
Northwest Area Foundation), pp. 28-31.
21. National Performance Review Accompanying
Report, R'invmting Environmmtal Managmzmt
(Washington, D.C.: U.S. GPO, September 1993).
22. Ibid.
23. D,/,artmmt ofComm"u.
24. Transforming Organizational Structum.
25. National Performance Review Accompanying
Report, R'invmting Support Sffllim (Washington,
D.C.: U.S. GPO, September 1993).
26. Ibid.
27. National Performance Review Accompanying
Report, Improving Financial Managmzmt
(Washington, D.C.: U.S. GPO, September 1993).
28. D'/Jartmmt ofComm"a.
29. National Performance Review Accompanying
Report, D'/Jartmmt ofD,f(nJ' (Washington, D.C.:
U.S. GPO, September 1993).
30. D'/Jartmmt ofLabor.
31. Improving Financial Managmzmt.
32. Cummins, Keren Ware. National Technical
Information Service, R'invmting Govnnmmt's Role:
Th, Turnaround ofth, National Tuhnical
Information Sfflliu (Washington, D.C.: U.S. GPO,
January 27,1993).
127
FROM RED TAPE TO RESl'LlS • CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
33. D(partmmt of Transportation.
34. Competitiveness Policy Council, A
Compuitivmm Straug)' for Ammca (March 1993).
p. 274. The Competitiveness Policy Council is an
independent advisory committee established by
Congress in 1988.
35. Rrinvmting Support S(MJ;w.
36. National Performance Review Accompanying
Report. Housing and Urban Dro(lopmmt
(Washington. D.C: U.S. GPO. September 1993).
1989).
11. National Performance Review. R(invmting
Govtrnmmt Summit Proceedings (Washington.
D.C.: U.S. GPO. June 25. 1993). p. 87.
12. OPM. Central Personnel Data File. unpublished
analysis. March 1993. Calculations by Robert
Knisely. National Performance Review.
13. Transforming Organizational Structum.
37. DqJartmmt ofLabor.
14. Ibid.
38. National Performance Review Accompanying
Report. Environmmtal Prouerion Agmry
(Washington. D.C: U.S. GPO. September 1993).
15. Ibid.
39. Osborne. David. and Ted Gaebler. Rrinvmting
Govtrnmmt: How th( EntrqJrmNlrial Spirit is
Transforming thr Public Smor (Reading. MA:
Addison-Wesley Publishing Company. Inc.• 1992).
pp.304-5.
40. Housing and Urban Drorlopmmt.
CHAPTER
3- EMpOWERING EMpLOYEES
TO GET REsULTS
1. Budgrt ofthr
u.s. Govtrnmmt FY 1994
16. National Performance Review, Town Hall
Meeting Department of Transportation.
unpublished transcript (Washington. D.C.. May 11.
1993).
17. National Performance Review Accompanying
Report. Drpartmmt ofV(tn-ans Affairs (Washington.
D.C.: U.S. GPO. September 1993).
18. National Performance Review Accompanying
Report. Housing and Urban Dro(lopmmr
(Washington. D.C.: U.S. GPO. September 1993).
19. GAO. Program Pnformancr Mrasum.
20. 1992 Commission on the Future of the South.
Hrading Homr: N(W Dir(ctions Toward South""
Progrm (Research Triangle Park. NC: Southern
(Washington. D.C.. 1993). p. 40.
Growth Policies Board. September 1993).
2. National Academy of Public Administration
(NAPA). Rroitalizing hdn-al Managmzmt: Managm
and Thtir Ovn-burdmrd Sysmns (Washington. D.C.:
NAPA 1983).
21. National Performance Review Accompanying
Report. Mission Drivm, R(suits-Orimt(d Budgrting
(Washington. D.C.: U.S. GPO. September 1993).
3. UDepartment of Transportation Town Hall
Meeting with Vice President AI Gore," unpublished
transcript. May 11. 1993, pp. 11-12.
4. Office of Personnel Management (OPM). Office
of Systems Innovation and Simplification. Survry of
hdrral Employm. publication 05-92-06.
(Washington. D.C: OPM. May 1992).
S. Telephone interview with the Social Security
Administration. Atlanta office. on April 1. 1993.
6. Obmascik. Mark. "Light-Bulb Change a 43Person Task." Dmlln- Post (November 1. 1992). p.
AI.
7. U.S. General Accounting Office (GAO). Program
Pnformana M(asum: hdn-al Colkerion and US( of
Pnformancr Data. GAO/GGD-92-65 (Washington
D.C.: U.S. Government Printing Office [GPO],
May 1992).
8. National Performance Review Accompanying
Report. Transforming Organizational Structum
(Washington. D.C: U.S. GPO. September 1993).
9. Office of Personnel Management (OPM). Central
Personnel Data File. unpublished analysis. March
1993.
128
10. Peters. Tom. Thriving on Chaos: Handbook for II
Managmzmt Rroolution (New York: Harper & Row.
22. Ibid.
23. National Performance Review Accompanying
Report. Crrating Quality Lratimhip and Managmmt
(Washington. D.C.: U.S. GPO. September 1993).
24. Osborne. David. and Ted Gaebler. Rrinvmting
Govtrnmmt: How thr Entuprmrurial Spirit is
Transforming thr Public Smor (Reading. MA:
Addison-Wesley Publishing Company. Inc .• 1992).
p. 144.
25. Ibid .. p. 145.
26. Crraring Quality Ltadmhip and Managmmt.
27. National Commission on the Public Service
(Volcker Commission). Lradmhip for Ammca:
R(buiiding thr Public S(TViu (Washington D.C..
1989).
28. Ibid.
29. National Performance Review. Department of
Justice Town Hall Meeting. unpublished transcript.
Washington. D.C.. July 14.1993.
30. National Performance Review. Exrcutivr Offi((~
rh( Pmidmt (Washington. D.C.: U.S. GPO.
September 1993).
ENDNOTES
31. National Performance Review, R~invmting
Govn-nmmt Summit.
30, 1993), p. 30; and A Study ofthr Work and
Family Nuds, p. 96.
32. National Performance Review Accompanying
Report, R~invmting Human R~sourc~ Manag~mt
(Washington, D.C.: U.S. GPO, September 1993).
51. Improving Financial Manag~mt.
33. National Performance Review Accompanying
Report, R~mginming Through Information
T~chnology (Washington, D.C.: U.S. GPO,
September 1993).
34. Kendrick, James E., "IT Management Focus
Must Extend Beyond Tip of the Iceberg," htkral
Compuur Wuk (September 21, 1992), p. 17.
35.
R~invmting Human R~source Manag~~nt.
36. OPM, 1969-1991 Trmds ofth~ htkral Civilian
Workforce in Accounting and Budg~t Occupations,
Special Report. Figures represent 1991 employment
in occupation series 501, 503, 505, 510-11, 525,
530,540,544-45,560-61,593,599, and half the
total number in 343.
37. National Performance Review Accompanying
Report, Improving Financial Manag~mt
(Washington, D.C.: Government Printing Office,
September 1993).
52. Interview with Lani Horowitz, Administration
for Children and Families, Department of Health
and Human Services, August 20, 1993.
53. Interview with Tom Komarek, Assistant
Secretary for Administration and Management,
Department of Labor, August 20,1993.
54. Reinvmting Human
R~source Manag~mt.
55. U.S. Merit Systems Protection Board, A
Qurstion ofEquity: Womm and thr Glass Criling in
htkral Govrrnmmt (Washington D.C., October
1992), p. 37.
56. GAO, Quality Manag~mt in Govrrnmmt,
GAO/GGD-93-9-BR (Washington D.C.: GAO,
October, 1992).
57. GAO, htkral Labor Rriations:A Program in Nr~d
ofRiform, GGD-91-101(Washington, D.C: GAO,
July 1991), p. 2.
5B.
R~invmting Human R~sourc~ Manag~mt.
59. Ibid.
60. GAO, htkral Labor R~iations, p. 76.
3B. To date, Congress has appropriated $130 billion
to cover the savings and loan bailout. General
Accounting Office estimates project the cost will
reach $500 billion over the next few decades,
including interest costs.
61. GAO, Govrrnmmt Manag~mt Issu~s,
GAO/TR-93-3 (Washington, D.C: GAO,
December 1992).
39. Improving Financial Manag~mt.
63. Reinvmting Govrrnmmt Summit.
40. Ibid.
64.
41. Ibid.
65. Ibid.
42. Barr, Stephen, "See IRS's Books. Color Them
Red," Washington Post (August IB, 1993), p. A19.
66. Ibid and Rrinvmting Human Rnourc~ Manag~t.
43. Improving Financial Manag~mt.
44. Not all federal agencies will have audited
financial statements completed by 1997, but the
1997 consolidated financial statements will footnote
any discrepancies. See Improving Financial
62.
Cr~ating
Cr~ating
Quality uadmhip and Manag~mt.
Quality L~admhip and Manag~mt.
67. Interview with Robert DeGrasse, Special
Assistant to Hazel O'leary, Secretary of Energy,
August 22, 1993.
68.
R~invmting
Govrrnmmt Summit.
Manag~mmt.
45. Telephone interview with Rick Weidman,
Administrator, New York State Veterans Program
(New York Department of Labor), August 20.1993.
46. Rungin~~ring Through Information T~chnology.
47. Galen, Michele, Ann Therese Palmer, Alice
Cuneo, and Mark Maremont, "Work & Family,"
Busin~ss W~~k. Oune 2B, 1993), p. 82.
4B. R~invmting Human R~source Manag~mt.
49. OPM. A Study ofthr Work and Family Nuds of
thr Frtural Workforce (Washington, D.C., April
1992), pp. 5,6,20,26.
50. OPM, Rrport to Congrm on thr htkral Employ~rs
L~avr Sharing Act of 1988 (Washington, D.C., Apnl
CHAPTER 4-CU1TING BACK
To BASICS
1. Letter and personal communications with Bruce
Bair. Schoenchen, KS, May 24, 1993.
2. La Franiere, Sharon, "Hair That Defies Cutting;
Subsidy Program Seems a Lock in Budget,"
Washington Post, April 6, 1993, p. AI.
3. Gladwell, Malcolm, "Epicurean Niche Barely
Survives a Boiling Dispute," Washington Post. August
20.1993, p. A2l.
4. National Performance Review Accompanying
Report, Mission-Drivm. R~suLts-Orimud Budg~ting
(Washington, D.C: U.S. Government Printing
Office [GPO], September 1993).
129
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
COSTS LESS
5. National Performance Review Accompanying
Report, Transforming OrganiZlltional Structum
(Washington, D.C.: U.S. GPO, September 1993).
25. National Performance Review Accompanying
Report. D(pamnmt ofEducation (Washington.
D.C.: U.S. GPO. September 1993).
6. National Performance Review Accompanying
Report, DqJamnmt ofAgricuitur( (Washington.
D.C.: U.S. GPO, September 1993).
26. National Performance Review Accompanying
Report, Htalth and Human Strvicts (Washington.
D.C.: U.S. GPO. September 1993).
7. U.S. General Accounting Office (GAO). U.s.
DqJamnmt ofAgricuLturt: Farm Agmcits' Fitld
Structurr Nuds Major Ovtrhau~ RCED-91-09
(Washington. D.C.:January 1991). p. 10.
27. Ibid.
8. National Performance Review Accompanying
Report. Housing and Urban D(V(lopmmt
(Washington. D.C.: U.S. GPO, September 1993).
9. Ibid.
10. National Performance Review Accompanying
Report. DqJamnmtofEntrgy (Washington. D.C.:
September 1993).
II. National Performance Review Accompanying
Report. DqJamnmtofDifmu·(Washington. D.C.:
U.S. GPO. September 1993).
12. National Performance Review Accompanying
Report. SmalL Busintss Administration (Washington.
D.C.: U.S. GPO. September 1993).
13. National Performance Review Accompanying
Report. U.S. Agmry for Inttrnational D(Vtlopmmt.
(Washington. D.C.: U.S. GPO. September 1993).
28. Dtpartmmt o/Statt.
29. National Performance Review Accompanying
Report. Dtpamnmt o/Commtrc( (Washington.
D.C.: U.S. GPO. September 1993).
30. H(alth and Human StrVim.
31. Ibid.
32. National Performance Review Accompanying
Report. Dtpamnmt ofJustict (Washington. D.C.:
U.S. GPO. September 1993).
33. Dtpamnmt ofAgricultur(.
34. U.S. Department of Agriculture, Office of the
Inspector General, International Affairs. Commodity
Programs. and Science and Education Division.
Rtport on Agricultural Stabilization and ConstrVatioTl
StrVia (Washington D.C.: Department of
Agriculture. May 1993). p. 11.
35. DqJamnmt of Transponation.
14. National Performance Review Accompanying
Report. DqJamnmt ofStau (Washington. D.C.:
U.S. GPO. September 1993).
36. U.S. General Accounting Office. Highway
Demonstration Projects: Improved Selection and
Funding Controls Are Needed (Washington. DC:
GAO. 1991). pp. 1-6.
15. Ibid.
37. Dtpamnmt ofTransponation.
16. Ibid.
38. National Performance Review Accompanying
Report. Dtpamnmt oftht Intmor (Washington.
D.C.:
GPO. September 1993).
17. National Performance Review Accompanying
Report. DqJamnmt ofEntrgy (Washington. D.C.:
u.s. GPO. September 1993).
18. National Performance Review Accompanying
Report. Dtpamnmt of Transponation (Washington.
D.C.: U.S. GPO. September 1993).
19. DqJamnmt ofDiftns(.
20. National Performance Rmew. Accompanying
Report. Rrinvmting F((ural Procurmzmt (Washington.
D.C.: U.S. GPO, September 1993).
u.s.
39. Ibid.
40. Htalth and Human StrVim.
41. National Performance Review Accompanying
Report. Dtpamnmt ofVtttrans Affairs (Washington,
D.C.: U.S. GPO. September 1993).
42. Dtpamnmt ofDiftns(.
43. DqJamnmt ofEntrgy.
21. National Performance Review Accompanying
Report.lnuliigmc( Community (Washington. D.C.:
U.S. GPO. September 1993).
44. Office of Management and Budget (OMB), Fact
Shm on Rtform ofFtdn-al POWtr Marktting
Administration Dtbt Rtpaymmt Practiw
(Washington D.C.. 1990). p. 3.
22. National Performance Review Accompanying
Report. DqJamnmt ofLabor (Washington. D.C.:
U.S. GPO. September 1993).
45.0MB. Status Rtport on Crtdit Managtmmt and
Dtbt Colkction, Report [0 Congress (Washington
D.C.. 1993), p. 1.
23. GAO. Dislocaud Workm: Comparison of
Assistana Programs, Briefing Report to
Congressional Requesters. GAO/HRD-92-153BR
(Washington D.C., September 1992). p. 2.
46. National Performance Review Accompanying
Report, Improving Financial Managtmmt
(Washington. D.C.: U.S. GPO. September 1993).
24. DqJamnmt ofAgricultur( and Dryamnmt of
Labor.
130
&
47. Dtpamnmt ofJustic~.
48. Dtpamnmt ofth( Inurior.
ENDNOTES
49. Housing and Urban DroeLopmrnt.
50. Department ofLabor.
63. Ibid.
51. Ibid.
64. Department ofLabor.
52. Health and Human Services.
65. Ibid.
53. GAO, SSA sProcessing of Continuing Disability
66. Health and Human Services.
Rroirols, testimony of Jane L. Ross before the House
67. Department ofthe Interior.
Select Committee on Aging, GAO/T-HRD-93-3
(March 9, 1993), p. 3.
September 1993).
68. Department ofthe Treasury.
54. Health and Human Services.
69. Ibid.
55. Ibid.
56. GAO, Fednal Brnefit Paymrnts: Agrncies Need
70. National Performance Review Accompanying
Report, Rethinking Program Design (Washington,
D.C.: Government Printing Office, September
1993).
Death Information from Social Security to Avoid
Erroneous Payments, GAO/HRD-9-3 (Washington
D.C., February 1991).
57. National Performance Review Accompanying
Reports: Department ofthe Treasury and the
Resolution Trust Corporation; Departmrnt ofthe
Inurior; Improving Financial Management; and,
Department ofDefrnse (Washington, D.C.: U.S.
GPO, September 1993).
58. Improving Financial Managemrnt.
59. Ibid.
60. Department ofStau.
61. Department ofthe Treasury.
62. National Performance Review Accompanying
Report, Reengineering Through Information
Technology (Washington, D.C.: U.S. GPO,
71. Moe, Ronald c., "Reorganizing the Executive
Branch," in The Twrntieth Century: Landmark
Commissions, 92-293 GOV (Washington. D.C.:
Library of Congress, Congressional Research Service.
March 19. 1992). p. 50.
n. Pricier, David M .• "Working Together for
Berter Regulations." vol. 5, no. 2, Natural Resources
and the Environment (Fall 1990).
73. Department ofLabor and Health and Human
Services. and National Performance Review
Accompanying Report. Improving Regulatory Systems
(Washington. D.C.: U.S. GPO. September 1993).
74. Department ofLabor and Improving Regulatory
Systems.
75. Improving Regulatory Systems.
131
APPENDIX A
NATION&PE~O~CE~EW
MAJOR RECOMMENDATIONS
ByAGENCY
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
Recommendation
Fiscal Impact, 1994-99·
(MIllions of Dollars)
Change In
Change In
Spending
Revenues
AGENCY FOR INTERNATIONAL DEVELOPMENT
AlDOl Redefine and Focw AID's MissioD and Priorities
cbe
cbe
With the end of the Cold War, AID must rethink how it will operate.
NPR recommends steps to plan for this new mission .an.d propo~ n~
authorizing legislation to define its post-Cold War ITUSSi0n and pnontlcs.
AlD02
Reduce Funding. Spending and Reporting Miao~~t
Eliminate AID's outdated or unduly burdensome reporting reqwrements and
reduce legislative earmarks (0 provide greater operating flexibility.
cbe
cbe
AlOO3
Overhaul the AID Penonod System
Recommendations include changes in AID's personnel system to integrate
its multiple systems and review benefits.
na
na
AlD04
Man~ AID Employees and Consultants as a Unified Work ~orce
Lift some currenr personnel restrictions and give managers authonty to manage
staff resources more efficiently and effectively.
cbe
cbe
AlOOS
Establish an AID lonovation Capital Fund
Create a capital investment fund to improve information and financial
management systems and customer service.
na
na
AlD06
Reengineer M~ment of AID Projects and Programs
AID should use pilot programs and new approaches to emphasize flexibility,
innovation, customer service and program results.
cbe
cbe
AlOO7
Consolidate or Oose AID Overseas Missions
AID should regionalize missions and staff services overseas and dose
nonessential missions. It should establish "graduation" criteria for
countries receiving U.S. assistance.
cbe
cbe
USDAOI End the Wool and Mohair Subsidy
The subsidy is no longer needed since wool is no longer a strategic commodity.
-$923.0
$0.0
USDA02 Eliminate Federal Support for Honey
Eliminate the honey subsidy because the program does not serve the
intended purpose of ensuring the availability of honeybees for crop pollination.
-1 5.0
0.0
-1,673.6
0.0
USDA04 Implement a Consolidated Farm Management Plan
The farm management plan proposed by Secretary Espy provides an
opportunity to simplify regulations for farm management and is a good way to
consolidate competing requirements into a single plan for each farm.
cbe
cbe
USDAOS Administer the Employment and Training Requirements for
Food Stamp Recipients More Ef&ctivdy and Efficiendy
Redirect funds from an ineffective training program for food stamp recipients
and allow them to participate in programs with proven results.
-1,041.1"
0.0
-500.0"
0.0
DEPARTMENT OF AGRICULTURE
USDA03 Reorga.n.iu the Department of Agriculture to Better Accomplish Its Mission,
Streamline Its Fidd Structure and Improve Service to 113 Customers
USDA should streamline its field operations to eliminate unnecessary offices,
reduce COSts and bener serve farmers.
USDA06 Encourage Better Food Package Management Practices and Facilitate Multi-State
Contracts for Infant Food and Formula Cost Containment in the WlC Program
The recommendation encourages increased competition among infant formula
vendors and manufacturers of other items in the UDSDA's Special Supplemental Food
Program for Women, Infants and Children (WIC). Savings accrue to program.
---------------------------- ----
~
--~---
• FIScal estimates were made for 1994 only where action could impact spending in that year. Most estimates cover 1995-99.
Estimates sho"''!) are for cumulative budget authoriry changes. Negative numbers indicate reduced spending .
•• The NPR recommends mar rnese savings be redirected to alternative uses. Savings totals exclude these amounts .
••• Savings will be invested in the program to serve additional customers.
cbe = cannor be estimated (due to data limitations or uncertainties about implementation time lines).
n.a= not aoolicable--recommendation improves efficiency or redirects resources but does not directly reduce budget authority.
134
--
APPENDIX
Recommendation
USDA07 Deliver Food Stamp Benefits Via Electronic Benefits Transfer to Improve Service
to Cwtomers While Remaining Cost Effective
Use electronic technology to distribute food stamp benefits, thereby
improving service and reducing the need for current paper stamps.
A
Fiscal Impact, 1994-99
(Millions of Dollars)
Change In
Change In
Spending
Receipts
cbe
cbe
DOCOI Reinvent Federal Economic and Regional Development Efforts
Improve coordination of federal economic development efforts with the goals
of eliminating duplication and better directing federal resources to improve
business conditions.
na
na
DOC02 Provide Better Coordination to Refocus and Leverage Federal Expon Promotion
This recommendation is designed to improve federal services to U.S. businesses
competing in the world export markets.
na
na
DOC03 Reform the Federal Expon Control System for Commercial Goods
To help ensure leading U.S. industries are competitive in the global marketplace,
changes should be made in the export control
system.
.
.
na
na
DOC04 Strengthen the T ourum Policy Council
Revitalize the Tourism Policy Council and give it greater authority to coordinate
federal tourism promotion efforts.
na
na
DOCOS . Create Public I Private Competition for the NOAA Fleet
A pilot program is recommended to open the National Oceanic and Atmospheric
Administration fleet to public and private competition to bolster the aging fleet.
cbe
cbe
DOC06 Improve Marine Fisheries Management
To help protect fishing resources and provide new income to the government, NOAA
should collaborate with Congress and fishing industry representatives to establish
appropriate user fees to help offset management costs for national fishery zones.
0.0
375.0
DOC07 Provide IDA Public Works Loan Guarantees for In&astructure Assistance
This recommendation would provide the Economic Development
Administration with authority to use part of its funding as a reserve for loan
guarantees for various public economic development projects.
na
na
DOCOS Establish a Manufacturing T ecbnology Data Bank
To help U.S. manufacturing firms increase their technical capabilities, Commerce
should create a new database to provide technical information and contaCts.
na
na
DOC09 Expand the Electronic Availability of Census Data
To increase access to and use of census data, the Census Bureau should
create a computerized census information center.
na
na
DOCIO Amend the Omnibus Trade and Competitiveness Act to Increase the Data
Quality of the National Trade Data Bank
This recommendation outlines improvements needed in the quality and quantity
of data in this business-oriented data bank.
na
na
DOCII Eliminate Legislative Barriers to the Exchange of Business Data Among
Federal Statistical Agencies
Eliminate legislative barriers to the exchange of business data among federal
agencies (the Census Bureau, Bureau of Labor Statistics, and Bureau of
Economic Analysis) to reduce the reporting burden on American business.
na
na
-300.0
0.0
cbe
cbe
DEPARTMENT OF COMMERCE
DOCl2 Establish a Single Civilian Operational Environmental Polar Satdlite Program
To reduce duplication and save taXpayers a billion dollars over the next decade,
various current and proposed polar satellite programs should be consolidated
under NOAA.
DOC 13 Use Sampling to Minimize Cost of the Decennial Census
Use sampling rather than more costly methods of counting nonrespondents to
next deciennial census. (Savings will occur but are beyond the time frame of this analysis.)
cbe = cannot be estimated (due to data limitations or uncenainties about implementation time lines).
na= not applicable-recommendation improves efficiency or redirects resources but does not directly reduce budget authority.
135
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
& COSTS LESS
Fiscal Impact, 1994-99
(MIllions of Oollars)
Recommendation
Change In
Change In
Spending
Receipts
cbe
cbe
na
na
cbe
cbe:
cbe
cbe:
DOC I 4 Build a Business and Economic Information Node for the Information HiPwar
To assist in the distribution of government information [0 private citizens,
Commerce should build a business and economic information node to the
winformation highway."
DOC I 5 Increase Aa:as to Capital for Minority Businesses
.
Commerce and SBA should provide the Presidenr with recommendaoons to
improve SBA and Minority Business Developmenr Administration programs.
DEPARTMENT OF DEFENSE
The Bottom-Up Review
This is a general swnmary of the Bonom-U p Review of DO D's force struCtUre
and requirements and its pan in the National Performan~ Review effo,:.
A total of $79 billion in savings through 1997 are already Incorporated Int~ the
President's 1994 budget. These savings arc not included in the NPR analysts.
Acquisition Reform
The DOD acquisition system is large and extraordinarily complex. It needs
ro enable DOD to take advantage of the technological advances and efficient
procuremenr practices of the commercial marketplace.
DODOl Rewrite Policy DirectMs to Include Better Guidance and Fewer Procedures
DOD should clarify policy directives and procedures to reduce administrative
burden and unnecessary regulatory controls.
00002 Establish a Unified Budget for the Department of DeCm..e
Give commanders greater flexibility to set priorities. solve funding problems,
and resolve unplanned requirements at the lowest appropriate operating level.
00003 Purchase Best Value Common Supplies and Services
Allow managers and commanders ro purchase the best value common supplies
cbe
and services from public, private, or nonprofit sources.
DOD04 Outsource Non-core Department of Defaue FuncboDS
cbe
cbe
-500.0
60.0
-110.3
0.0
na
na
cbe
cbe
350.0
0.0
cbe
cbe
By conrracting out non-core functions (from rowing services to certain information
technology functions), DOD will be bener able to focus on its core responsibilities.
00005 Create Incentives for the Department of Defense to Generate Revenues
This recommendation proposes giving managers and commanders me ability to
generate income at the insrallation level by allowing me Corps of Engineers ro
recover its costs for processing certain commerical applications and by establishing
goals for solid waste reduction and recycling.
DOD06 Establish and Promote a Productivity-Enhancing Capital Investment Fund
DOD should be authorized to expand its capital invesonent fund manage its
operations in a more business-like manner.
00007 Create a Healthy and Safe Environment for Department of Dcfm.se Activities
To create a safe environment. DOD must take action in me areas of clean-up of
hazardous wastes. use of environmental technology, and pollution prevention.
00008 Establish a Defensc Quality Workplace
This is an internal department recommendation to encourage the use of quality
management concepts at all levels of DOD.
DOD09 Muimiu the Efficiency of DOD Health Care OpcratioDS
Use emerging technology to upgrade care at DOD health care facilities.
00010 Give Department ofDefensc Installation Commanders More Authority and
RespoD5ibility Over Installation Management
By giving DOD installation commanders more authority over installation
management. DOD will be bener able to manage its resources, provide services
to Its employees and move: toward more cntrepreneurial management.
cbe: = cannot be estimated (due to data limitations or uncertainties about implcmentation time: lines).
na= not applicable-recommendation improves efficiency or redirects resources but does not directly reduce budgct authority.
136
APPENDIX A
Recommendation
00011 Reduce National Guard and Reserve Costs
Fiscal Impact, 1994-99
(Millions of Dollars)
Change In
Change In
Spending
Receipts
-900.0
0.0
-68.0
0.0
-$3,000.0·
$0.0
-515.0·
0.0
na
na
na
na
cbe
cbe
na
na
-175.0
0.0
1.8
0.0
na
na
This recommendation makes two changes in the current costs for reservists:
(1) to limit compensation of federal employees on reserve duty to the greater of
civilian or reserve compensation or to allow the reservist to take annual leave; and
(2) to limit the basic allowance for quaners only to reservists who acrually bring
their dependents on short-term duty assignments when quaners are not provided
to dependents.
00012 Streamline and Reorganize the U.S. Army Corps of Engineers
NPR recommends implementing a 1992 reorganization proposal that would
reduce the number of division offices from 11 to six and would allow the Corps
OMB and other agencies to make maximum use of Corps'
engineering and technical capabilities.
to work with
DEPARTMENT OF EDUCATION
EDOI
Redesign Chapter 1 of Elementary and Secondary Education Act
Recommendations focus education funds on the neediest srudents and simplify
requirements on schools receiving federal education aid. Existing funds are redirected.
ED02
Reduce the Number of Programs the Department of Education Administers
Eliminate or consolidate more than 40 existing education grant programs and
free up funds for use in other educational programs.
ED03
Consolidate the Eisenhower Math and Science Education Program with Chapter 2
NPR proposes combining this teacher training program, which is largely consumed
with short-term training, with other ED programs to create a new program with a
more coherent national focus on teacher training and professional d~elopment.
ED04
Consolidate National Security Education Act Programs
The NSEA trust fund, administered by the Department of Defense, should be
consolidated with the Center for International Education in ED to strengthen
foreign language srudy and eliminate duplication of effort.
ED05
Streamline and Improve the Department of Education'. Grants Process
Statutory restrictions on the department's rulemaking process should be removed,
flexibility added to certain procedures, and unnecessary requirements eliminated
to shorten the grant award process.
ED06
Provide Incentives for the Department of Education'. Debt Collection Service
This recommendation would allow ED to use a portion of ~enues collected
from defaulted student loans to pay for collections costs, thereby providing
an incentive for increased collections.
ED07
Simplify and Strengthen Institutional Eligibility and Certification for
Participation in Federal Student Aid
NPR recommends d~eloping ways of measuring default indicators, creating profiles
of high-risk institutions, and removing elgibility of institutions to participate in
federal financial aid programs once the schools have become ineligible to receive
federal student loan funds.
ED08
Create a Single Point of Contact for Program and Grant Infonnation
ED should create an electronic system that can be used by srudents, parents,
researchers and administrators to learn about department programs, funding
opportunities, best practices and other information.
ED09
Improve Employee Development Opportunities in Department of Education
ED should create a full spectrum of activities which can contribute to career
development, including conducting a departmentwide assessment of training and
development needs .
• The NPR recommends that these savings be redirected to alternative uses. Savings totals exclude these amounts.
cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).
na= not applicable--recommendation improves efficiency or redirects resources but does not directly reduce budget authoriry.
137
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
Fiscal Impact, 1994-99
Recommendation
(Millions of Dollars)
Change In
Change In
Spending
Receipts
EDIO
Eliminate the Grantback Statutory Provi5ion of the
General Education Provi5ioDS Act
NPR recommends repealing this provision which permits the depanment to return
to a grantee a percentage of funds recovered from the grantee as a result of an audit.
0.0·
0.0
ED 11
Build a Professional, Miasion-Driven Structure for Research
na
NPR recommends establishing a research advisory board. consolidating and
.
targeting research and development efforts. and establishing an office to translate research findmgs
into education reform assistance.
na
Devdop a Strarcgy for TecbnicaJ AssisWlce and Information Di.uemination
ED should develop a strategy for its $290 million technical assistance efforts
designed to promote the National Goals 2000 themes.
na
ED12
na
DEPARTMENT OF ENERGY
cbe
cbe
cbe
cbe
DOE03 Make Fidd Facility Contracts Outcome-Oriented
This recommendation would modify the current DOE contract process at
field facilities to make the contractS more outcome-oriemed to improve efficiency
and contractor performance.
-570.0
0.0
DOE04 Increase Electrical Power Revenues and Study Rates
NPR proposes increasing federal income by allowing the Power Marketing
Administrations to recover a larger ponion of their operating costs through
rate increases or by changing the financing of Bonneville Power Administration.
0.0
3,601.0
DOEOS Strengthen the Federal Energy Management Program
NPR recommends a number of improvements to this program, designed to
better management of federal energy use.
na
na
'-2.150.0
0.0
DOE07 Save Costs Through Private Power Cogeneration
This would allow the private sector to cogenerate power at DOE labs as a means
of saving money. DOD has similar authoriry at this time.
-112.0
0.0
DOEOS Suppon the Sale of the Alaska Power Adm.in.i.stration
The federal government should divest its interests in the Alaska Power Administration.
-20.5
-52.5
na
na
-22.5
0.0
DOEOI
Improve Environmeatal ContraCt Management
NPR proposes improvements in DOE environmental clean-up contractS to
achieve efficiency.
DOE02 Incorporate Land Use Planning in Oeanup
NPR recommends that DOE incorporate land use planning into the nuclear
facilities clean-up process.
DOE06 Redirect Energy Laboratories to Post-Cold War Priorities
This recommendation provides guidance for use of the DOE energy labs.
focusing on defining new missions, consolidating or eliminating unneeded
faciJines. and making their services of greater benefit in the post-Cold War era.
ENVIRONMENTAL PROTECTION AGENCY
EPAO 1
Improve Environmeatal Protection Through Increased Flc:ribility for Loca1
Govemmeat
EPA should amend the regulations it determines are most troublesome for local
governments pursuant to the Regularory Flexibiliry Act of 1980. The goal is to
provide alternative. flexible approaches to meeting environmental mandates.
EPA02
Streamline EPA's Permit Program
S[reamlining efforts include establishing a permit clearinghouse to serve as a single
potn[ of contact and piloting a cross-program permit tracking system.
--------------------------------.-----~--~
·This recommendation saves an estimated $18.5 million in expenditures but makes no change in budget authority.
dx = cannO[ be estimated (due ro data lImitations or uncertainties about implementation time lines).
n.1= no[ apphcable--recommendation improves efficiency or redirects resources but does nor directly reduce budget authoriry.
138
APPENDIX
Recommendation
A
Fiscal Impact, 1994-99
(MIllions of Dollars)
Change In
Change In
Spending
Receipts
EPA03
Shift EPA's Emphasis Toward Pollution Prevention and Away from Pollution Control cbe
EPA needs to emphasize pollution prevention by implementing an effective
pollution prevention strategy thar includes amending regulations and motivating
the private sector to invest in cleaner, less polluting technologies and practices.
cbe
EPA04
Promote the Use of Economic and Market-Based Approaches to Reduce Water
cbe
Pollution
EPA should work with Congress to propose language amending the Clean Water
Act to explicitly encourage market-based approaches to reduce water pollution.
EPA should also identify wasrewarer discharge fees that could be included in the Clean Water
Act reauthorization.
cbe
EPA05
Inaease Private Sector Partnerships to Accelerate Development ofInnovative
T ecbnologies
NPR recommends thar EPA develop an action plan wirh specific milestones for
improving the regulatory and statutory climate for innovative technologies.
na
na
EPA06
Stop the Expon of Banned Pesticides
EPA should work with Congress to develop legislation to Stop the exportarion of
banned pesticides from the U.S. by June 1994.
na
na
EPA07
Establish Measurable Goals, Performance Standards and Strategic Planning
witbinEPA
EPA should draft measurable environmental goals for the range of environmental
problems the U.S. faces. The agency should also draft internal goals to provide
direction for assessing and redirecting existing EPA strategies.
na
na
EPA08
Reform EPA's Contract Management Process
NPR recommends reforms in EPA's contract management process by implementing
performance standards and by maximizing competition in the contracting process.
cbe
cbe
EPA09
Establish a Blueprint for Environmental Justice Through EPA's Operations
EPA should develop a blueprint of actions thar will incorporare environmental
justice consideration into all aspects of EPA operarions.
na
na
EPAl 0
Promote Quality Science for Quality Decisions
Improvements include establishing guidelines for professional development of EPA's
scientific and rechnical staff and expanding the use of peer-review and quality
assurance procedures.
na
na
EPAII
Reorganize EPA's Office of Enforcement
EPA should iniriare a reorganizarion of its headquarter's enforcement organization
by October 1. 1993.
-10.5
0.0
EXECUTIVE OFFICE OF THE PRESIDENT
NOTE:
White House Office and Office of the Vice President
The White House Office and the Office of the Vice President are regularly
"reinvented" with each change of administration. This analysis focuses on the
other portions of the Executive Office of the President.
EOPOI
Delegate Routine Paperwork Review to the Agencies and Redeploy OMB'
Resources More Effectively
These recommendations outline improvements to srreamline the government's
paperwork review process and reduce unnecessary burdens on agencies.
cbe
cbe
EOP02
Modify the OMB Circular System
OMB should reinvigorate the process for the review, updating, and consolidation
of management circulars. It should also develop uniform processes for developing
circulars and for obtaining input during their development.
na
na
EOP03
Strengthen the Office of U.S. Trade Representative's Coordination with State
and Local Governments
The Trade Representative's Office should examine the trade policy needs of stare
and local governments and work with them on relevant issues.
0.5
0.0
cbe
=
cannot be estimated (due to data limitations or uncertainties about implementation time lines).
na= nor applicable-recommendarion improves efficiency or redirects resources bur does nor directly reduce budger aurhority.
139
FROM RED TArE TO RESCLTS • CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
Fiscal Impact, 1994-99
(MIllions of Dollars)
Change In
Change In
Recommendation
Spending
Receipts
EOP04
Improve Federal Advisory Committee Management
Discontinuing the "anti pass the hat" language annually inserted into
appropriations aCtS would allow appropriate pooling of executive resources for
~rtain multi-agency projecrs.
-1.4
0.0
EOPOS
R.eiment OMB'. Management Mission
NPR recommends a series of actions by OMB to redirect resources to provide
better management information for Presidential decision making.
0.1
0.0
EOP06
Improve OMB's Rdatiooship with Other Agencies
This recommendation outlines methods by which OMS can work more effectively
with agencies and with states.
Strengthen the Office of the U.S. Trade Representative's Trade Policy
Coordination Process
These recommendations outline ways to improve the interagency trade policy
coordination process.
na
na
na
na
EOP07
u.s.
EOPOS
Strengthen the Office of the
Trade Representative's Negotiation Process
The Office of the USTR should implement various techniques for upgrading the
negotiating skills of its employees and ~c: analysis of the negotiation process itself.
cbe:
cbe:
EOP09
Establish a Customer Service Bureau in the EOP
Using available resources, EOP management should establish a small, one-stop
custOmer service bureau within the EOP.
na
na
EOPIO
Conduct Qualitative Self-Reviews of Critical Ad.mio.i.strati Processes
The Assistant to the President for Management and Administration should establish
a formal program of ongoing, internal quality reviews of administrative processes in
the EOP to save money and improve servi~.
cbe
cbe
EOPtI
Improve the Presidential Tranaition Process
Past difficulties with the Presidential transition should be corrected by amendment
of the Presidential Transition Act and related actions.
cbe
cbe:
EOP12
Improve Administrative Processes
This recommendation outlines a series of steps to improve internal administrative
processes within the EOP, including mail processing. paperwork flow. and supply
management.
na
na
FEMAOI Shift Emphasis to Preparing for and Responding to the Comequences of
All Disasters
FEMA's early focus was on preparedness for nuclear war. The current world situation
and recent natural disasters highlight the need for FEMA to continue to shift its
resources to respond to all hazards.
na
na
FEMA02 Develop a More Anticipatory and Customer-Driven Response to Catastrophic
Disasten
These recommendations should make FEMA respond faster and more effectively
to catastrophic disastc:rs.
na
na
FEMA03 Create Results-Oriented Incentives to Reduce the Costs of a Disaster
Th~ Midwest floods, Hurricanes H~o and Andrew and the Lorna Prieta Earthquake
all illustrate the enormous costs of disaster to society. These recommendations will
move: toward reducing that cost.
cbe
cbe
FEMA04 Develop A Skilled Management T cam Among Political Appointees and Career
Staff
lndership has been the weak link in FEMA's mission as the federal government's
emergency management coordinator. These: recommendations strive to improve
FEMA leadership to successfully implement its new, all-hazards mission.
na
na
FEDERAL EMERGENCY MANAGEMENT AGENCY
cbe = cannor be: estimated (due to data limitations or uncertainties about implementation time lines).
na= not applicable--recommendation improves efficiency or redireCtS resources but does not directly reduce budget authority.
140
APPENDIX A
Fiscal Impact, 1994-99
(Millions of Dollars)
Change In
Change In
Spending
Receipts
Recommendation
DEPARTMENT OF HEALTH AND HUMAN SERVICES
NOTE:
Treatment of Health Care and Welfare Reform Issues by the NPR
Two primary concerns of the Department of Health and Human Services are the
delivery of health and welfare services to individuals. Since the Administration has
special. ongoing efforts dealing with these areas. they are not covered by the
National Performance Review.
HHSOI
Promote Effective, Integrated Service Delivery for Customers by Increasing
Collaborative Efforts
cbe
cbe
cbe
cbe
cbe
cbe
na
na
cbe
cbe
-4.010.0'
0.0
na
na
cbe
cbe
-335.0'
0.0
-1.439.8
0.0
na
na
na
na
cbe
cbe
These recommendations outline a number of steps needed to bener integrate and
deliver social services to communities and families.
HHS02 Reengineer the HHS Process for Issuing Regulations
HHS should improve the timeliness and quality of regulations issued and should
involve stakeholders in the development of regulations.
HHS03 Devdop a National, Uniform Inspection System to Ensure a Safe Food Supply
Responsibility for food safety should be consolidated into a single agency. and policies
and inspection systems should be implemented on an objecrive. scientific basis.
HHS04 Reconfigure Support for Health Professions Education
Existing programs should be consolidated and/or eliminated.
HHS05 Restructure the Management of Railroad Industry Benmt Programs
Railroad Retirement Board functions should be integrated into existing programs
administered by federal. state. and private secror service providers.
HHS06 Improve Social Security Administration Disability Qaims Processing to
Better Serve People with Disabilities and Safeguard Trust Fund Assets
SSA should apply resources and management tools needed to reduce backlogs and
to avoid paying benefits to individuals who are no longer disabled.
HHS07 Protect Social Security, Disability and Medicare Trwt Fund Assets by Removing
Barriers to Funding Productive Oversight Activities
HHS should aggressively pursue options to assure that adequate investments are
made to avoid unnecessary payments from trust funds.
HHSOB Coordinate CoUection and Dissemination of Social Security Administration
Death Information to Protect Federal Program Assets
SSA's clearinghouse for death information and "best practices" can be used by dozens
of federal and state agencies
to
reduce federal program outlays.
HHS09 Take More Aggressive Actions to CoUect Outstanding Debts Owed to the Social
Security Trwt Fund
SSA should be given the authority to use a full range of debt collection tools available
under the Debt Collection Act of 1982 to collect debts owed by individuals who are
no longer on benefit rolls.
HHSIO Institute and CoUect User Fees on FDA's Inspection and Approval Processes
Food. drug and medical device manufacrurers. processors and suppliers should be
required to pay for FDA services.
HHSII
Redesign SSA Service Delivery and Make Better Use of Technology to Provide
Improved Access and Services to Customers
SSA's organizational strucrure needs to be updated to reflect changing customer
needs and to rake full advantage of emerging technologies.
HHSl2 Strengthen Departmentwide Management
The department should conduct a review of its organizational strucrure and
management systems to determine an appropriate balance between cenualized and
decentralized functions.
HHS 13 Review the Fidd and Regional Office Structure of the HHS and Devdop a Plan
for Shifting Resources to Match Workload Demands
The review should emphasize customer service. results and increased accountability.
'Savings will be realized in the Social Se~u~ity .Trust Funds ~d ~ nor ~ect discretionary. spen.ding levels.
cbe = cannot be estimated (due to data lImitations or uncertainties about Implementation time lInes).
na = not applicable-recommendation improves efficiency or redirects resources but does nor directly reduce budget authority.
141
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
Flseallmpact, 1994-99
(Millions of Dollars)
Change In
Change In
Recommendation
HHS14 Amend the Health Care Financing Administration's Contracting Authority
to Allow for Competitive Contracting
. . ,
Spending
Receipts
-985.0
0.0
cbe
cbe
na
na
na
na
na
na
na
na
-167.0
0.0
-210.0
0.0
-225.0
0.0
cbe
cbe
cbe
cbe
HCFA should be authorized [Q fully and openly compete Medicare claIms processing
contracts to reduce costs and eliminate inefficiencies and confliCts of interest.
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
HUDO I Reinvent Public Housing
. '
HUD should create pilot programs [Q devolve greater authon.ty o~er hOUSing ~nds
to sound local agencies. lr should create demonstratlons of.mlXed-lncome public
housing with ponable subsidies. HUD should also streamlme pubhc housmg rules
and take other steps [Q improve public housing management.
HUD02 Improve Multi-Family Asset Management and Disposition
HUD should use public-private pannerships to manage and sell HUD-held loans
and real estate for non-subsidized housing projeCts. Congress should reduce restrictions
on HUD sale of muiti-f.'\TI1ily propenies. including use of portable subsidies for
tenants when the Secretary determines that to be best for tenant needs.
HUD03 Improve Single-Family Asset Management and Disposition
HUD should use a combination of early assistance to borrowers having financial
difficulties. contract loan servicing. contract mongage assistance programs and
public-private pannerships to streamline and improve management of HUDassigned single-family mongages.
HUD04 Create an Assisted-HOUSing/Rent Subsidy Demonstration Project
HUD should be authorized to aperiment in negotiated restrucruring of privately
owned assisted-housing projects [Q improve management. promote mixed-income
housing and save taXpayer funds.
HUD05 Establish a New Housing Production Program
HUD should stimulate housing production through FHA risk-sharing arrangements
with housing finance agencies. stimulate a secondary market for multi-family
propenies. improve access [Q FHA insurance for first-time home buyers. provide
special FHA programs to revitalize neighborhoods and improve FHA management.
HUD06 Saumline HUD Field Operations
HUD should Streamline its Washington. regional and field office structure and
consolidate and reduce its size over time.
HUD07 Refinance Section 235 Mortgages
HUD should use incentive contracts to speed savings from refinancing expensive
old mongages subsidized by HUD.
HUD08 Reduce Section 8 Contract Rent Payments
HUD should modify its process to reduce unjustified increases in annual payments
to Section 8 projects.
HUD09 Consolidate Section 8 Certificates and Vouchen
This recommendation would consolidate two overlapping projects to eliminate
duplication.
HUDIO Reduce Operating Subsidies for Vacancies
ThiS recommendation would encourage public housing agencies to make better
use of their assets by reducing subsidies paid for unjustifiably vacant units.
INTELLIGENCE COMMUNITY
INTELOI Enhance Intelligence Community Integration
The end of the Cold War and the constrained fiscal environment in the U.S. create
an Imperative for the 13 components of the Intelligence Community to act more
effectively and more efficiently as a ream.
"The Intelligence Communiry budget is. d~i~ed. Savings from these recommendations cannot be shown in this repon.
Cbe = cannor be estimated (due to data hmllauons or uncenaInues about implementation time lines).
na = noc apphcable--recommendauon Improves efficiency or redirects resources but does not directly reduce budget authority.
142
APPENDIX
A
Fiscal Impact, 1994-99
(Millions of Dollars)
Recommendation
Change in
Change In
Spending
Receipts
INfEL02 Enhance Community Responsiveness to Customers
A 40-year emphasis on the Soviet Union allowed the Intelligence Community
to develop a repertoire which was not dependent on a close relationship with its
customers. That is no longer the case today, and NPR makes recommendations
for improvements in this area.
INTEL03 Reassess Information CoUection to Meet New Analytical Challenges
The analytical issues the Intelligence Community faces are far more diverse and
complex today, requiring new focus and new techniques to meet the intelligence
needs of policymakers.
INTEL04 Integrate Intelligence Community Information Management Systems
The Intelligence Community lacks the connectivity and interoperability in its
information systems to do its job efficiently and effectively.
INTEL05 Develop Integrated Personnel and Training Systems
This recommendation focuses on organizational development and training issues
within the Intelligence Community.
INTEL06 Merge the President's Intelligence Oversight Board with the President's Foreign
Intelligence Advisory Board
The roles of these two oversight bodies are sufficiently similar that small savings
and some efficiencies can be achieved by combining them.
INTEL07 Improve Support to Ground Troops During Combat Operations
Numerous studies of intelligence support during the Gulf War focused on agency
or service-specific support issues. This issue outlines a reinvention lab effort which
proposes an integrated approach to studying support to ground forces during
combat operations.
DEPARTMENT OF THE INTERIOR
00101
Establish a Hard Rock Mine Reclamation Fund to Restore the Environment
cbe
cbe
-28.0
0.0
36.0
0.0
332.0
993.0
132.4
549.7
To address health and safety threats and environmental damage caused by toxic
metal and chemical leaching from abandoned mines, the federal government should
establish a hard-rock mine reclamation fund.
DOlO2
Redefine Federal Oversight of Coal Mine Regulation
To overcome organizational problems that inhibit an effective state-federal
relationship, federal oversight of coal mine regulations should be redefined.
00103
Establish a National Spatial Data Infrastructure
By supporting a cross-agency coordinating effort, the federal government can develop
a coherent vision for the national spatial data infrastructure (NSDI). (Spatial, or
geographic, data refers to information that can be placed on a map.) This will allow
greatly improved information analysis in a wide range of areas, including the analysis
of envIronmental information and the monitoring of endangered animals and sensitive
land areas.
DO 1M
Promote Entrepreneurial Management of the National Park Service"
The Park Service should be allowed to raise additional revenues from appropriate
sources and to use a portion of the money for investment in park infrastructure.
ThIS proposal would increase selected park entty fees and would increase fees on
park concessionaires.
DOI05
Obtain a Fair Return for Federal Resources
The federal government should institute reforms to guarantee a fair return for
federal resources such as livestock grazing and hard-rock mining. Some of the
programs regulating the commercial sale and use of natural resources on federal
lands operate at a loss to the taxpayers and fail to provide incentives for good
stewardship practices. The administration should also develop a new fee schedule
for communications sites on DOl and Department of Agriculture lands.
"The Intelligence Community budget is classified. Savings from these recommendations cannot be shown in this report.
""NPR recommends redirecting half of increased park income to investment in park infrastructure.
cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).
na = not applic~ble-recommendation improves efficiency or redirects resources but does not directly reduce budget authority.
143
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
Flacallmpact, 1994-99
(Millions of Dollars)
Recommendation
Change In
Change In
Spending
Receipts
na
na
DOI06
Rationalize Federal Land Ownenhip
DOI07
Improve the Land Acquisition Policies of the DOl.
.
The Secretaries of Interior and Agriculrure and the Director of OMB should modify
the process for determining land acquisition priorities and.~r~~res. The new
system should reflect major objectives of federal land acqulslOon. mclu~ng outdoo~
recreation resources. resource protection. and resource and culrural heritage protectIOn.
na
na
DOI08
Improve Mineral Management Service Royalty CoUections
0.0
28.0
na
na
-17.5
0.0
cbe
cbe
- I 84.1
0.0
-12.0
35.0
18.7
0.0
-$187.0
$0.0
na
na
001 needs to reinvent the way it manages and acquires federal lands. Due to
historical patterns of settlement and development of this co~try, adjoining federal
lands often fall under the jurisdiction of several federal agenCIes. To the degree
possible. this should be corrected based on the principle of ecosystem management.
Better management of DOl's royalty collection program would increase revenues
and improve efficiency.
00109
00110
F.ttablish a System of Penonnd &c:hanga in DOl
A change in management philosophy is needed to address bureaucratic barriers at
DOL This recommendation outlines various approaches to this problem.
Consolidate Administrative and Programmatic Functions in DOl
To manage its bureaus effectively, 001 needs to reduce duplicative services. By
consolidating administrative and programmatic functions. 001 can improve
customer service. promote efficiency. and reduce costs.
00111
00112
Streamline Management Support Systems in DOl
To create a quality management culrure. the depamnent should strc:amline its
managemenr suppott systems, including telecommunications. procurement.
financial management, and paperwork control.
Create a Nt:W Mission for the Bureau of Redamation
The Bureau of Reclamation needs to redefine its mission toward new environmental
priorities and clarify its role in water management.. The original mission to develop
water resources and provide for economic development of the West-is almost complete.
00113
Improve the Federal Helium Program
The federal government needs to reexamine its role in the federal hdium program.
The program can be run more efficiently, reducing outlays by federal helium
customers and increasing revenue. To obtain maximum benefit from helium
operations, the government should cancel the helium debt, reduce costs, increase
efficiencies in helium operations. and increase sales of crude helium as market
conditions permit.
00114
Enhance Environmental Management by Remediating Hazardous Material Sites
The time is right to inregrate skills across bureau boundaries in the remediation of
DOl's hazardous materials sites. The high COSt of remediation requires 001 to make
maximum use of existing resources.
DEPARTMENT OF JUSTICE
OOjOl
Improve the Coordination and Structure ofFc:deral Law Enforament Agencies·
NPR recommends the designation of the Attorney General as the Director of Law
Enforcement to coordinate federal law enforcement efforts. It also recommends
changes in the alignment of federal law enforcement responsibilities.
00j02
Improve Border Management*
Federal border management should be significantly improved. NPR recommends
a series of actions to be taken by Customs and INS to make these improvements.
00j03
Redirect and Better Coo~te Resources Dedicated to Interdiction ofOrugs*
This recommendation outlines changes that can be made (0 better coordinate federal
programs directed at the air interdiction of drugs.
"Issue corresponds to an identical issue in the Depanment of Treasury report; fiscal impact is for Justice only.
cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).
na = noc applicable-recommendation Improves efficiency or redirects resources but does nor directly reduce budget authority.
144
APPENDIX
Recommendation
A
Fiscal Impact, 1994-99
(Millions of Dollars)
Change In
Change In
Spending
Receipts
00104
Improve Deparunent oflustice Debt Collection Efforts
This recommendation would make improvements in the Justice debt collection
effort, including giving the department the ability [0 retain a small percentage of
debts collected and allowing Justice to credit its working capital fund with a
percentage of debt collections to be used for the creation of a centralized debt
tracking and information system.
cbe
cbe
00105
Improve the Bureau of Prisons Education, lob Training, and Financial
Responsibilities Programs
NPR makes a series of recommendations for improving prison education, training,
and inmate financial responsibility policies.
0.0
13.5
00106
Improve the Management of Federal Assets Targeted for Disposition·
Improvements are needed in the methods by which the federal government disposes
of various assets.
cbe
cbe
00107
Reduce the Duplication of Drug Intelligence Systems and Improve Computer
Securlty*
NPR recommends several changes to eliminate duplication in the federal drug
intelligence system.
cbe
cbe
00108
ReinvCDt the Immigration and Naturalization Service's Organization and Management -48.0
NPR recommends a number of changes in INS organization and management
processes to provide an improved management strucrure and a strategic vision for
the agency.
0.0
00109
Make the Deparunent of lustice Operate More Effectively as the U.S. Government,
Law Finn
Justice should undertake several improvements in the way it manages its litigation
functions to improve service to its customers and better manage its case load.
na
na
00110
Improve White Collar Fraud Civil Enforcement
Civil fraud recovery should be established as a priority and the department should
take steps to improve its white collar fraud enforcement.
14.0
111.0
00111
Reduce the Duplication of Law Enforcement Training Facilities
Overlap and duplication in the provision of federal law enforcement training facilities
should be examined. Multi-agency training needs should be accommodated through
existing facilities in lieu of the construction of new facilities by individual agencies.
cbe
cbe
00112
Streamline Background Investigations for Federal Employees
The current method of completing background examinations on federal employees
is time-consuming and inefficient. This recommendation outlines improvements to
streamline the process without sacrificing thoroughness.
-60.0
0.0
00113
Adjust Civil Monetary Penalties to the Inflation Index
Civil monetary penalties have not been adjusted [0 keep up with inflation. Under
this recommendation, a "catch-up" adjustment would be made and the need for
additional inflation adjustments would be automatically reassessed every four years.
0.0
193.0
00114
Improve Federal Courthouse Security
This recommendation is intended to address concerns of the U.S. Marshals Service
concerning security at federal courthouses.
24.0
0.0
00115
Improve the Professionalism of the U.S. Marshals Service
U.S. Marshals should be selected based on merit by the Director of the U.S.
Marshal Service and reduce some positions.
-36.0
0.0
00116
Develop Lower Cost Solutions to Federal Prison Space Problems
This recommendation describes approaches to solving aisting prison space problems.
cbe
cbe
-$125.7
$0.0
DEPARTMENT OF LABOR
DOLO 1 Enhance Reemployment Programs for Occupationally Disabled Federal
Employees
These recommendations would help occupationally disabled federal employees return
to productive careers by expanding DOL's return-to-work program. This saves money
by reducing long-term benefit costS to the government.
cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).
na
= nor applicable-recommendation improves efficiency or redirects resources but does nor directly reduce budget authority.
145
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
Fiscal Impact, 1994-99
(Millions of Dollars)
Change In
Change In
Spending
Receipts
Recommendation
DOL02
Devdop a Single Comprehensive Worker A.dj~ent S-:rat~
Improve services to the unemployed-and those at nsk of dIslocatIOn-and ~ake
berter use of resources available for assistance by developing a new worker adJustmem
strategy.
001.03 Expand Negotiated Rulemaking and Improve Up-£r:ont Teamwork on Regulations
na
na
cbe
DOL should provide administrative guidance more qUickly and cheaply through
negotiated rulemaking and a streamlined team approach to the rules development
process.
001.04 Expand the Use of Alternative Dispute Resolution by the Def:l~ent of Labor
cbe
The increased use of alternative dispute resolution could reduce hugauon and produce
significant long-term savings.
DOL05 Automate the Processing of ERISA Annual Financial Reports (Forms 5500) to Cut Costs-49.7
and Delays in Obtaining Employee Benefit Plan Data
Automating the filing and processing of annual financial reports required of pension
and benefit plan administrators (ERISA Forms 5500) would reduce COSts and delays.
-0.6
0.0
na
na
DOL08 Create One-Stop Centen for Career Management
Establishing one-stop centers for career management would create a customer-driven
work force system, empowering Americans to make informed career choices and
providing the means to achieve those goals.
cbe
cbe
DOLO? Create a Boundary-Spanning Work Force Devdopment Council
Because the greatest barriers to creating an integrated work force development system
are the categorical nature of federal funds and strucrural fragmentation of various
federal programs, this issue proposes to coordinate work force development efforts
bv convening a multi-agency Work Force Development Council and implementing
"bouom-up grant consolidation" for states and localities.
na
na
DOLtO Refocus the Responsibility for Ensuring Workplace Safety and Health
This recommendation proposes to shift responsibility for workplace safety and health
to employers by issuing regulations requiring self-inspections and implementing a
sliding scale of incentives and penalties to ensure safety standards arc met.
cbe
DOL06 Amend the ERISA Requirement for Summary Plan Descriptions
The filing of summary plan descriptions by employee benefit plan administrators
with DOL is intended to make the plans more readily available for participants and
beneficiaries. Since requests for copies are received on only about one percent, the
cost to maintain the system and the administrative burden on employers far ourweighs
the public benefit.
DOL07
Redirect the Mine Safety and Health Administration's Role in Mine Equipment
Regulation
Shifting the Mine Safety and Health Administration's regulatory role from one of
in-house testing to one of on-site quality assurance would provide increased economic
benefits to the mining industry and would allow DOL to redirect resources.
DOLlt
Open the Civilian Conservation Centen to Private and Public Competition
A long-term reduction in costs is possible through apanded competition for
contracts to operate Job Corps Civilian Conservation Centers.
DOLl2
Partially Fund Mine Safety and Health Enforcement Through Service Fees
Charge for services to put the mining industry on a comparable footing with other
in~usrries which bear the cost of their regulation. This proposes to partially fund
entorcement of mine safety regulations through service fees.
cbe
cbe
-44.4
0.0
DOLl3 Integrate Enforcement Activities within the Department of labor
Inrroduce grearer coordination and flexibility in the DOL enforcement agencies ro
prolect a conslstenr message to cusromers and integrate approaches to common issues.
cbe
cbe
DOL14 Apply Information Technology to Expedite Wage Determinations for Federal
Contracts
Developing an electronic data interchange/data mapping system which is integrated
Into the Service Contract Act process should eliminate delays both in the delivery of
wage determlnanons and In procurement when caused by determination delays.
0.1
0.0
cbe = cannot be estimated (due
to
data limitations or uncertainties about implementation time lines).
nJ = not applicable-recommendation improves efficiency or redirects resources but docs not directly reduce budget authority.
146
0.0
.A,pPENDIXA
Recommendation
Fiscal Impact, 1994-99
(Millions of Dollars)
Change In
Change In
Spending
Receipts
DOllS Provide Research and Development Authority for the DOL's Mine Safety and
Health Program
Granting the Mine Safety and Health Administration authority (0 procure services
and goods directly would improve the mine safety program by expediting the
acquisition process for new and improved technology.
na
na
DOll 6
na
na
DOLl7 Revise and Update the Consumer Price Index
The consumer price index has important consequences for both public and private
decisions. This important measure should be updated (0 reflect recent inflation
trends.
56.0
0.0
DOllS Improve the Delivery of Legal Services by the Office of the Solicitor in the
DepaM%DentofLabor
The delivery of legal services by the Office of the Solici tor can be improved by using
cooperative agreements, coordinated budgeting and bener use of resources.
na
na
DOll 9 Transfer the Veterans' Employment and Training Service to the Employment
and Training Administration
The DOL can improve service delivery (0 veterans and save money by consolidating
administration of this funCtion.
-66.0
0.0
DOl.20 Reduce Federal Employees' Compensation Act Fraud
Congress needs to amend several sections of the United States Code (0 enable DOL
(0 eliminate benefits (0 persons who have been conviCted of defrauding the
program.
-22.6
0.0
na
na
NASAOI Improve NASA Contracting Practices
This recommendation outlines several steps NASA can take (0 improve its
contracting procedures. including greater use of performance standards. contraCting
out for data instead of hardware whenever appropriate. and using cooperative
research agreements (0 more quickly exploit high performance computing
techniques.
cbe
cbe
NASA02 Increase NASA Technology Transfer Efforts and Eliminate Barriers to Technology
Development
NASA should expand its technology transfer efforts and promote the development
of new technologies.
na
na
NASA03 Increase NASA Coordination of Programs with the U.S. Civil Aviation Industry
NASA should develop a closer relationship with the U.S. civil aviation industry (0
ensure industry input is received early and throughout the technology development
process.
na
na
-1. 982.0
0.0
na
na
DOl.21
Increase Assistance to States in Collecting Delinquent Unemployment Insurance
Trust Fund Contributions
This recommendation ouclines ways of improving state collections of delinquent
unemployment insurance contributions.
Change the Focw of the Unemployment Insurance Benefits Quality Control Program
to Improve Performance
Re-examining the present mix of systems to shift the focus of this program from
error measurement to a constructive use of the results would allow DOL to improve
benefit payment quality and more effeCtively achieve the program's goals.
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
NASA04 Strengthen and Restructure NASA Management
NASA program management should be aggressively overhauled. This
recommendation outlines a number of steps the agency should take. both in overall
management and in the management of the space station program.
NASA05 Oarify the Objectives of the Mission to Planet Earth Program
This recommendation suggests a number of steps needed to improve the
management and performance of the Mission to Planet Eanh program.
------------------------cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).
na
------- ----
= not applicable-recommendation improves efficiency or redirects resources but does not directly reduce budget authority.
147
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
Recommendation
& COSTS LESS
Fiscal Impact, 1994-99
(MIllions of Dollars)
Change In
Change In
Spending
Recelpta
NAnONAL SCIENCE FOUNDAnON/OFFICE OF SCIENCE AND TECHNOLOGY POLICY
NSFO 1
Strengthen Coordination of Science Policy
. .
NPR recommends modifying the current structure of the Federal Coordmatl~g
Council for Science, Engineering. and Technology (FCCSET) to strengthen Its role
in science policy.
na
na
NSF02
Use a Federal Demonstration Project to lnaease Ilesc:arch Productivity
NPR recommends using a demonstration project strucrured between several
universities and five federal agencies as a modd for a program to reduce
administrative overhead on research grants.
na
na
NSF03
Continue Automation of NSF Raearcb Support Functions
NSF should push fotward with efforts to implement advanced information
technology in the proposal submission, review. award. and information
dissemination areas.
na
na
cbe
cbe
SMALL BUSINESS ADMINISTRAnON
SBAO 1 Allow JudiciaJ Review of the Regulatory FleEibillty Act
Allow access to the courts when federal agencies devdop rules that fa.iI to properly
examine alternatives that wiJllessen the burden on small businesses.
SBA02
Improve Assistance to Minority Small Businesses
This proposal recommends a complete review of all federal minority business
assistance programs and the establishment of a Small Disadvantaged Business SerAside program for civilian agencies to provide increased opportunities for minority
small business.
na
na
SBA03
Reinvent the U.S. Small Business Administration's Credit Programs
Identify ways to improve SBA's credit programs to make SBA more responsive to
those industries with the potential for creating a higher number of jobs. those
involved in international trade, and those providing critical technologies. It will also
enable the agency to operate more efficiently.
na
na
SBA04
&amine Federal Guidelines for Small Business Lending Requirements
The federal government should examine the guidelines bank regulators set for small
business lending by financial institutions to ensure that capital is available without
undue barriers while maintaining the integrity of the financial institutions.
na
na
SBA05
Manage the Miaoloan Program to lncreue Loans for Small Business
Allowing SBA to guarantee loans made by banks to nonprofit intermediaries, who
could, in turn, make small loans to low-income individuals, women, minorities and
other small businesses unable to obtain credit through traditional lending sources
would increase private sector panicipation and lessen administrative burdens linked
to direct government lending.
na
na
SBA06
Establlib User Fees for Small Business Development Center Services
Authorize Small Business Development Centers to charge a nominal fee for their
services to reduce federal outlays and require the direct beneficiaries of the assistance
co pay a share of the cost.
0.0
102.0
SBA07
Distribute SBA Staff Based on Workload and Administrative Efficiency
Reallocating staff based on administrative efficiency and objective workload
measures to allow the SBA to better serve its customers by shifting resources from
its central and regional offices into its district offices.
na
na
SBA08
Improve Federal Data on Small Businesses
The quality of information made av~lable to. shape federal legislative and regulatory
actIOns affectmg small and large busmesses will be incrc:asc:d if federal household
and employer surveys include a ·siu of firm" question.
na
na
cbe = cannot be estimated (due co data limitations or uncenainties about implementation time lines).
na = not applicable--recommendation improves efficiency or redirects resources bur does not directly reduce budget authority.
148
APPENDIX
Recommendation
A
Fiscal Impact, 1994-99
(Millions of Dollars)
Change In
Change In
Spending
Receipts
DEPARTMENT OF STATEIU.S. INFORMATION AGENCY
DOSOI
Expand the Authority of Chiefs of Mission Overseas
This recommendation proposes a pilot program (0 expand the management
authority of Chiefs of Mission overseas in the allocation of fiscal and staffing
resources.
cbe
cbe
DOS02
Integrate the Foreign Affairs Resource Management Process
NPR recommends specific reforms of the interagency foreign policy resource
management process (0 improve coordination. The recommendation also covers
specific improvements within the Deparunent of State.
na
na
DOS03
Improve State Department Efforts to Promote U.S. Business Overseas
International trade is an important responsibility of U.S. missions overseas in the
post-Cold War world. This recommendation outlines several improvements that
can be made in State Deparunent efforts in this area.
cbe
cbe
DOS04
Provide Leadership in the Department's Information Management
The Department of State should make significant changes in the way it manages
information technology policy. Several improvements are recommended.
cbe
cbe
DOS05
Reduce Mission Operating Costs
.
.
Several recommendations are made for reducing U.S. costs (0 operate missions
overseas, including eliminating cenain facilities, reducing security costs and
considering altogether new forms of overseas representation.
-57.8
0.0
DOS06
Consolidate U.S. Nonmilitary International Broadcasting
This recommendation supports the Administration's decision to consolidate U.S.
international broadcasting under USIA and outlines ways of extending the benefits
of this change.
na
na
DOS07
Relocate the Mexico City Regional Administrative Management Center
NPR recommends moving this administrative support office to the U.S. to save
money and recommends examining the need for similar offices now in Paris and
Bangkok.
-0.1
0.0
-9.8
0.0
-36.2
0.0
DOTOI Measure Transportation Safety
NPR recommends the development of common, government-wide measures of
transportation safety.
na
na
DOT02 Streamline the Enforcement Process
NPR recommends pilot programs in the U.S. Coast Guard, the Federal Aviation
Administration, and the Federal Highway Administration, designed to offer greater
flexibility in enforcement methods.
cbe
cbe
DOT03 Use a Consensus-Building Approach to &pedite Transportation and Environmental
Decisionmaking
DOT should conduct two demonstration projects to apply a problem-solving
approach (0 transportation planning, development and decision making as a means
of reducing costs and improving the efficiency of agency decisionmaking.
na
na
DOT04 Establish a Corporation to Provide Air Traffic Control Services
NPR recommends development of a detailed action plan and sta(Utory language for
changes in air traffic concrol management (0 make it more business-like.
0.0
0.0
DOS08 Improve the Collection of Receivables
The State Department should do a better job collecting debts, such as medical
expenses and others, owed (0 the deparunent.
DOS09
Change UN Administrative and Assessment Procedures
This recommendation outlines several changes in the U.S.'s fiscal relationship with
the United Nations. including recommending an oversight office for the
organization and tax law changes (0 reduce COSts (0 the federal government.
DEPARTMENT OF TRANSPORTATION
cbe
= cannot be estimated (due (0 data limitations or uncenainties about implementation time lines).
na = not applicable--recommendation improves efficiency or redirects resources but does not directly reduce budget authority.
149
FROM RED TAPE TO RESl'LTS • CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
Flscallmpacl, 1994-99
(Millions of Dollars)
Change In
Change In
Spending
Receipts
Recommendation
DOT05 Permit States to Use Federal Aid as a Capital Reserve
This recommendation would allow federal transportation grant recipients to use
gran! funds capital reserve to back debt financing to construct eligible
transportation projeCts.
na
na
.,
.
DOT06 Encourage Innovations in Automotive Safety
NPR recommends allowing the National Highway Traffic Safery AdmmJStraoon to
grant more exemptions from highway safery standards to develop new safery
na
na
DOT07 Examine User Fees for International Over-Flights
DOT should conduct a cost allocation study to determine whether foreign air
carriers passing over U.S. air space are paying their fair share and whether direct
user fees should be imposed.
0.0
9.0
DOT08 lnaease FAA Fees for Inspection of Foreign Repair Facilities
To ensure full cost recovery, increase the fees charged for certification and
surveillance of foreign aircraft repair stations.
0.0
8.0
DOT09 Contract for Level I Air Traffic Control T owen
NPR recommends converting 99 level I (low-use) air control towers to contract
operation and reviewing the remaining level I towers for possible
decommissioning.
-3.1
0.0
DOTIO Establish an Aeronautical Telecommunications NetWOrk to Develop a Public-Private
Consortium
FAA should pursue the creation of a public-private consortium under a cooperative
agreement with industry to develop an Aeronautical Telecommunications Nerwork.
na
na
DOTII Improve Intermodal Transportation Policy Coordination and Management
DOT should institute a strategic planning process to promulgate national,
integrated transportation policies.
na
na
DOTl2 Develop an Integrated National Transportation Research and Development Plan
DOT should examine the nation's transportation-related research and development
portfolio and develop an integrated national transportation plan that considers
specific transportation research needs as well as intermodal transportation plans.
na
na
DOTl3 Create and Evaluate Telecommuting Programs
DOT should implement a telecommuting plan within the agency and should
evaluate transportation-related behavior and other topics requiring research in this
area.
na
na
DOTI4 Improve DOT Information Technology Management
The department should develop an information management strategy which will
enable the sharing of data among its component agencies and reduce costs.
-224.5
0.0
DOTI S Provide Reemployment Rights for Merchant Mariners
Guarantee reemployment rights to U.S. seafarers at their private sector jobs if called
to serve during a war or national emergency.
na
na
DOTl6 Establish an Independent Commission to Review U.s. Maritime Industry
NPR recommends a detailed examination of the future of the maritime industry in
the U.S. and the benefits derived by the taxpayers from maritime industry subsidies
and related issues.
na
na
DOTl7 Eliminate Funding for Highway Demonstration Projects
Rescind funding for existing highway demonstration projeCts. These demonstration
projects should compete at the Statt' level for the limited highway resources available
and nor be singled out for special treatment at the federal level.
-7,853.0
0.0
DOTl8 Reduce Spending for the U.S. Merchant Marine Academy
As an economy measure, federal funding for the U.S. Merchant Marine Academy
should be cut bv half. The Academy should be given the ability to charge tuition to
cover a portion of its operations.
-45.16
0.0
DOTI9 Rescind Unobligated Earmarks for the FfA New Starts and Bus Program
Rescind unobligated balances for fiscal year 1992 and prior earmarked funding
under thIS ITA program that remain unobligated after three years.
-131.5
0.0
~tems.
(be = cannot be estimated (due
to
data limitations or uncertainties about implementation time lines).
na = not applIcable-recommendation improves efficiency or redireCts resources but does not directly reduce budget authority.
150
APPENDIX
A
Fiscal Impact, 1994-99
(Millions of Dollars)
Change in
Change In
Spending
Receipts
DOT20 Reduce the Annual Essential Air Service Subsidies
This recommendation would set new. more restrictive criteria for small airportS to
qualify for essential air service subsidies.
-65.0
0.0
DOT21 T enninate Grant Funding for Federal Aviation Administration Higher Education
Programs
To reduce costs. eliminate federal grant funding of rwo FM post-secondary
education programs.
-45.4
0.0
DOT22 Assign Office of Motor Carriers (OMC) Field Staff to Improve Program Effectiveness
and Reduce Costs
OMC should develop a resource allocation model so that regional managers will be
able to optimize geographic assignment of staff. schedule carrier reviews in an
efficient manner. and eliminate unnecessary travel requirements.
cbe
cbe
DOT23 Automate Administrative Requirements for Federal Aid Highway Projects
NPR recommends improvements in the flow of information on Federal Aid
Highway projects that will reduce paperwork and reduce staff time in completing
certain forms and other current requirements.
na
na
$-92.9
$0.0
cbe
cbe
-186.6
0.0
Recommendation
DEPARTMENT OF TREASURYIRESOLUTION TRUST CORPORATION
TREO 1
Improve the Coordination and Strucnue of Federal Law Enforcement Agencies·
NPR recommends the designation of the Attorney General as the Director of Law
Enforcement to coordinate federal law enforcement effortS. It also recommends
changes in the alignment of federal law enforcement responsibilities.
TRE02
Improve Border Management·
Federal border management should be significantly improved. NPR recommends a
series of actions to be taken by Customs and INS to make these improvements.
TRE03
Redirect and Better Coordinate Resources Dedicated to the Interdiction of Drugs·
This recommendation outlines changes that can be made to bener coordinate
federal programs directed at the air interdiction of drugs.
TRE04
Foster Federal-State Cooperative Initiatives by the IRS
Cooperative relationships berween the IRS and state tax administrations. including
joint filing of data. should improve taxpayer service as well as collection activiry
while reducing cOSts.
cbe
cbe
TRE05
Simplify Employer Wage Reporting
The administrative burden caused by our current employer wage-reponing
requirements could be reduced while maintaining or improving the effectiveness of
government operations by developing and implementing a simplified wage
reporting system.
cbe
cbe
TRE06
Establish Federal Firearms License User Fees to Cover Costs
The current fee for a retail dealer's firearms license (authorized in 1968) does not
cover the cost of license processing and is low enough to encourage applications
from individuals wishing to occasionally purchase firearms at reduced cost.
Increased fees would recover the cost of operating the firearms program.
0.0
132.5
TRE07
Improve the Management of Federal Assets Targeted for Disposition*
Improvements are needed in the methods by which the federal government disposes
of various assets.
cbe
cbe
Reduce the Duplication of Drug Intelligence Systems and Improve Computer
na
na
cbe
cbe
TRE08
Sccurity*
NPR recommends several changes to eliminate duplication in the federal drug
intelligence system.
TRE09
ModenUzc the IRS
The IRS Tax System Modernization (TSM) initiative. currently in its initial stages.
would ease taxpayer burdens due to manual return processing and inaccessible
information. and enable IRS to provide a level of service comparable to private
sector financial institutions.
"Issue corresponds to an identical issue in the Department of Justice report; fiscal impact is for Treasurv only.
cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).
na = not applicable-recommendation improves efficiency or redirects resources but does not directly reduce budget authority.
151
FROM RfO TAPr TO RESl'lTS • CREATING A GOVER:'-<MENT THAT WORKS BETTER & COSTS LESS
Fiscal Impact, 1994-99
(MIllions of Dollars)
Change In
Change In
Spending
Receipts
Recommendation
TREIO
u.s. Customs Servi~
0.0
450.0
Ensure the Efficient Merger of Resolutioo Trust Corporatioo into the FDIC
The merger of the RTC and the FDIC should ensure the transfer of RTC expertise:
nor currently hdd by the FDIC in order to provide the most efficient
administration of thc:sc: a5SCt-<iisposition functions.
na
na
Rcdu~ the Duplication of Law Enforcement Training Facilitics·
cbe
cbe
cbe
cbe
0.0
126.0
cbe
cbe
cbe
cbe
cbe
cbe
. -41.1
0.0
Modern..iu the
NPR recommends a number of changes in Customs' organization and management
processes to provide an improved management structure and strategic vision.
TREII
TREl2
.'
Overlap and duplication in the provision of federal law enforcement uammg
facilities should be c::xamined. Multi-agency training nc:c:ds should be
accommodated through aisting facilities in lieu of the construction of new facilities
by individual agencies.
TREl3
Streamline Background Investigations for Federal Employees·
The current method of completing background c::xaminarions of federal employees
is time-consuming and inefficient. This recommendation outlines improvements to
streamline the process without sacrificing thoroughness.
TREl4
Adjust Civil Monetary Penalties to the ln8ation Ioda"'
Civil monetary penalties have nor been adjusted to keep up with inflation. Under
this recommendation. a "catch-up" adjusunent would be made and the need for
additional inflation adjustments would be aummaticalJy rc:assc:ssc:d by the
government every four years.
TREIS
Increase IRS CoUecrions Through Better Complian~ EHoI15
NPR supports the current efforts of the IRS under Compliance 2000 to improve
voluntary compliance and other efforts to collect taxes already owed to the federal
government.
TREl6
Impron Agency Compliance with Employment Tax Reporting Requiremcots
Many federal agencies do not fully comply with federal tax reporting requirements.
Responsibilities for compliance should be more fully communicated and enforced.
TREI7
Authorize Federal To: Payment by Credit Card
Legislation should be enacted to allow certain taxpayers to make tax payments with
a credit card.
TREl8
Modcrnizc the Financial Management SystCD15
NPR recommends several changes to improve financial management with Treasury,
induding consolidation of some operations. the improved usc: of technology. and
other actions.
TREl9
Repeal Section 5010 of the lntcmal Rc:vcnue Code to FJimio8'e To: Credits
for WUle and Ravon
0.0
500.0
0.0
45.0
na
na
na
na
The wine and flavors tax credit should be repealed.
TRElO
Amcod or Rcpcal Section 5121 of the Intcmal Rc:vcnue Code Requiring Special
Occupational Taxes on Retail Alcohol Dcalcn
This recommendation would increase: federal income from alcohol dealers.
DEPARTMENT OF VETERANS AFFAIRS
DVAOI
Devdop the Master Veteran Record and Modcrnizc the Dcpartmcot'slnformation
Infrastructure
Creation of a master veteran record for all VA programs and the improvements in
the depanment's information technology will improve services to veterans and their
families.
DVA02
Modcrnizc Benefits Claims Processing
Modernization of the VA benefits claims processing system will improve the quality
of scrvlCe and save taXpayer dollars over time.
"Issue corresponds
[Q
an identical issue in the Department of Justice rc:pon; fiscal impact is for Treasury only.
cbe = cannot be estimated (due to data limitations or uncertainties about implementation time lines).
na = not apphcable-recommendatlon unproves effioency or redirc:cts resources but does not directly reduce budget authority.
.
..
1 -.,
)
APPENDIX
Recommendation
A
Fiscal Impact, 1994-99
(Millions of Dollars)
Change In
Change In
Spending
Receipts
DVA03
Eliminate Legislative Budget Constraints to Promote Management Effectiveness
VA is covered by a number of special legislative requirements. including
employment "floors" for certain programs. Reducing or eliminating some of these
controls can reduce costs and improve service without sacrificing accountability.
cbe
cbe
DVA04
Stra.ml.i.ne Benefits Claims Processing
VA should examine the usefulness of a New York Regional Office approach to
benefits claims processing that promises to streamline the process. It should also
examine regional staffing.
1.8
0.0
DVA05
Consolidate Department of Defense and Department of Veterans Affairs
Compensation and Retired Pay Programs
DOD and VA should create a task force to jointly examine their disability
compensation adjudication and disbursement processes.
cbe
cbe
DVA06
Enhance VA Cost Recovery Capabilities
Revise VA policy to use a portion of cost recovery funds to defray debt collection
costs and expand recoveries to save money.
0.0
486.5
DVA07
Establish a Working Capital Fund
This recommendation would allow creation of a working capital fund using existing
resources in the department to be used for certain selected needs.
na
na
DVA08
Decentralize Decisionmaking Authority to Promote Management Effectiveness
NPR recommends that VA headquarters and field management work together to
improve agency decision making. including the delegation of some decisionmaking
to field activity directors.
na
na
DVA09
Establish a Comprehensive Resource Allocation Program
VA should design and develop a comprehensive. departmenrwide. performance and
needs-based resource allocation program to replace current approaches.
na
na
DVAIO
Serve Veterans and Their Families as Cwtomers
This recommendation outlines several approaches for VA to improve its focus on
veterans and their families as customers.
na
na
DVAll
Phase-Out and Close Supply Depots
VA should convert its existing centralized depot storage and distribution program to
a commercial just-in-time delivery system and close unneeded supply depots.
-168.0
0.0 .
DVA12
Improve Bwiness Practices through Electronic Commerce
VA should expand its use of electronic media to reduce paperwork and save money.
It should seek to make greater use of electronic funds transfer of compensation and
pension benefits.
-124.1
0.0
DVA13
Eliminate "Sunset" Dates in the Omnibw Budget Reconciliation Act of 1990
To achieve cOSt savings. extend certain cost savings measures that are due to expire
in 1998.
-704.8
490.0
DVA14
Raise the Fees for Veterans Affairs' Guaranteed Home Loans
As a cost savings measure. loan fees on veterans loans should be raised above the
-811.4
0.0
DVA15
Restructure the Veterans Affain' Health Care System
VA should reexamine its role and delivery structure after the issuance of the report
of the President's National Health Care Reform Task Force and take actions to
restructure the VA health care system.
0.0
0.0
DVA16
Recover Administrative Costs of Veterans' Insurance Program from Premiums
and Dividends
VA should be permitted to recover certain insurance program costs from insurance
trust fund surpluses.
Grand Total
0.0
0.0
$29,448.6
•
$8,256.0
levels set in the Omnibus Budget Reconciliation Act of 1994.
= cannot be estimated (due to data limitations or uncertainties about implementation time lines).
na = not applicable-recommendation improves efficiency or redirects resources but does nor directly reduce budget authority.
cbe
153
APPENDIXB
NATIONAL PERFORMANCE REvIEW
SUMMARY OF SAVINGS
lnttoduction
The NPR recommendations yield $108.0 billion in
savings for the 5 year period, FY 1995-1999.
$36.4 billion result from the specific changes in
individual agencies that were detailed in Appendix A
The remaining $71 billion result from
governmentwide changes explained here.
This appendix provides the estimates of the
governmentwide changes, and the assumptions
underlying those estimates. Savings by major issue area
are shown in Table B-1.
1. StmJmJining The Bureauaacy Through
Reengineering.
These estimates assume:
a. Agency reengineering will allow a 12% reduction
of civilian personnel over 5 years.
b. Administrative and central control staffs and
supervisors will be the primary areas for
downsizing.
c. Attrition, enhanced severance, reassignment,
relocation, outplacement and reua.ining will be
the primary tools to accomplish the reduction.
d. Agencies will use other tools as necessary to
accomplish the 12% reduction.
e. The 12% reduction includes and increases the
Administration's previously established 4%
personnel reduction goal for fiscaJ 1995.
f. Indirect costS associated with personnel, such as
office space and expenses, travel and supplies, are
not included in the dollar estimates.
2. Rein~ting Federal ~ment
These estimates assume:
a. The General Service Administration's estimate
that total annual procurement COSts equal $200
billion (GSA Federal Procurement Report).
b. Savings can be generated by a variety of reforms
in procurement systems, including simplified
acquisition thresholds, labor law reforms, IT
procurement reforms, shifting from government
specifications to commercial items, expanded use
of purchase cards, and dectronic commerce.
c. Savings up (0 12% of procurement spending
may be achieved through these reforms (study
by Defense Systems Management College). The
NPR used 5% as a mid-range estimate.
d. To avoid double-counting, savings associated
156
with reductions in procurement personnel are
excluded from this "reinventing procurement"
savings estimate.
3. R.eeingeeriDg Through Infonnation
Technology
These estimates assume:
a. A $25 billion baseline in information technology
(IT) spending, based on obligations reponed
through OMB circular A-II by executive branch
agencies for acquisition, operation, and use oflT
systems.
b. 30% savings in IT systems may be achieved
through information infrastruc:rurc
consolidation and standardization - this savings
estimate is extrapolated from the "Defense
Information Infrastructure Initiative"
(December 1992, Resource Summary). Since
Defense IT spending constitutes roughly onehalf of total IT spending it is assumed that equal
savings can be obtained from the IT budgets of
civilian agencies.
c. Savings from electronic benefits transfer and
from consolidation and modernization of the
federal information infrastructure; offsetting
costs result from consolidation and
modernization of the law enforcement and safery
mobile networks and a program to provide
citizens with better access to government
information.
d. Savings for electronic benefits transfer nationally
may be extrapolated from pilot programs in the
states of New Mexico and Minnesota.
e. Savings recommended for the Department of
Transportation IT consolidation and
modernization are subtracted to avoid doublecounting.
4. lntragovemmental Administra.tM: Costs.
Simplifying and reducing the federal government'S
reporting requirements will generate savings at the
federal, state, and local levels. The estimate assumes
that over 75% of the state and local governments will
accept a fee-for-service option in place of existing cost
reimbursement procedures from FY1995-1999 in
rerum for greater administrative flexibility. Eliminating
cost reimbursement procedures slows cost growth by
3% per year at the federal level.
APPENDIX
B
Table B-1. Estimates of Savings from
NPR systems Teams Recommendations
(dollars in billions)
Fisal
Fisal
Fisal
Fisal
Year
Year
Year
Year
Year
1995
1996
1997
1998
1999
Total
5.0
5.8
7.4
9.5
12.7
40.4
2. Reinventing Federal
Procurement
0.0
5.6
5.6
5.6
5.7
22.5
3. Reengineering Through
Information Tcchnology
0.1
0.5
1.2
1.6
2.0
5.4
4. Reducing Intergovernmental
Administrative Costs
0.5
0.7
0.7
0.7
0.7
3.3
5. Changes to Individual
Agencies (see Appendix A)
7.0*
6.2
7.0
7.3
8.9
36.4
18.8
21.9
24.7
30.0
108.0
Fisal
1. Streamljning the
Bureauaacy through
Reengineering
Total NPR Savings
12.6
*Includes $0.5 billion in FY1994
The assumptions used to tkvelop these savings mimaus follow.
157
APPENDIXC
NATIONAL PERFORMANCE REvIEW
MAJOR RECOMMENDATIONS
AFFECTING
GOVERNMENTAL SYSTEMS
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
& COSTS LESS
Recommendations
CREAnNG QUALITY LEADERSHIP AND MANAGEMENT
QUAl.oJ
PROVIDE IMPROVED LEADERSHIP AND MANAGEMENT OF THE EXECUTIVE BRANCH
The Presidenr should define a vision for the management of the government in the 21st century. To act on this vision, he
should direct depamnent and agency heads [0 designate chief operating officers and he should establish a President's
Management Council, comprised of the chief operating officers, to oversee the implementation of NPR's recommendations.
QUAL02
IMPROVE GOVERNMENT PERFORMANCE THROUGH STRATEGIC AND QUALITY MANAGEMENT
Encourage all departmenc and agency heads to lead and manage in accordan~ wit? the criteri.a in the Presjd~ntial Award for
Quality. To begin this culrure change, all executive branch employees-startmg WIth the President and Cabmet-should
attend appropriate educational sessions on strategic and quality management.
QUAL03
STRENGTHEN THE CORPS OF SENIOR LFADERS
Devc:lop guidance to be used to determine the qualifications needed for selected senior political appointee positions, and
provide adequate orientations for individuals upon their appointment.
IMPROVE LEGISLATIVE-EXECUTIVE BRANCH RELATIONSHIP
Improve communications between the executive branch, members of Congress, and congressional staff on key issues during
and after program and policy devc:lopmenc and implementation. Devc:lop an agreed-uPQn approach for dealing with
management failures, crises, and chronic program difficulties.
QUAL04
STREAMLINING MANAGEMENT CONTROL
SMCOI
IMPLEMENT A SYSTEMS DESIGN APPROACH TO MANAGEMENT CONTROL
Redesign the existing coUection of management control mechanisms for the executive branch, using a systems design
approach, in order (0 create a well managed and cost-effective system.
SMC02
STREAMLINE THE INTERNAL CONTROLS PROGRAM TO MAKE IT AN EFFICIENT AND EFFECTIVE
MANAGEMENT TOOL
Rescind the current set ofInremai Control Guiddines and replace them with a broader handbook on management controls.
SMC03
CHANGE THE FOCUS OF THE INSPECTORS GENERAL
Change the focus of Inspectors General from compliance auditing to evaluating management control systems.
In addition, recast the IGs method of operation to be more collaborative and less adversarial.
SMC04
INCREASE THE EFFECTIVENESS OF OFFICES OF GENERAL COUNSEL
Define clearly the clients of agency General Counsel offices as agency line managers. Train staff attorneys to understand the
cultural changes they will need to undertake to operate in an environment where program results are important. Develop
performance measures and "feedback loops" to ensure close cooperation with line managers.
SMC05
IMPROVE THE EFFECTIVENESS OF THE GENERAL ACCOUNTING OFFICE THROUGH INCREASED
CUSTOMER FEEDBACK
Improve GAO's documentation of best practices and the use offeedback loops on its performance.
SMC06
REDUCE THE BURDEN OF CONGRESSIONALLY MANDATED REPORTS
Eliminate at least 50 percent of all congressionally mandated reports. Review new reporting requirements for management
impact. and include a sunset provision.
SMC07
REDUCE INTERNAL REGULATIONS BY MORE THAN 50 PERCENT
Direct department secretaries and agency heads to reduce by at least 50 percent the number of internal regulations, and the
number of pages of regulations, within 3 years.
SMC08
EXPAND THE USE OF WAIVERS TO ENCOURAGE INNOVATION
Establish a process for obtaining waivers from federal regulations and identifying those regulations for which this process
should apply.
TRANSFORMING ORGANIZATIONAL STRUCTURES
ORGOI
REDUCE THE COSTS AND NUMBERS OF POSITIONS ASSOCIATED WITH MANAGEMENT CONTROL
STRUcnJRES BY HALF
Cut management control positions over .the next 5 years. Reinvest some of the savings in benchmarking, training, and
IOvesunents 10 new technology. In addition to separation incentives (see HRM 14). provide outplacement services to affected
staff.
ORG02
L'SE MVLTI-YEAR PEFORMANCE AGREEMENTS BETWEEN THE PRESIDENT AND AGENCY HEADS TO
GUIDE DO'WNSIZING STRATEGIES
Performance agreements with agency heads (see BGT01) should be used to identify progress toward agreed upon downsizing
goals-not central managemenr.agency conrrols such as across-the-board cuts or ceilings on employment. In exchange,
agencIes wJil be supported WIth IOcreasc:d management flex.ibilities.
ORG03
ESTABLISH A LIST OF SPECIFIC FIELD OFFICES TO BE CLOSED
Within 18 months. the President's Management Council should submit a list to Congress of civilian field
offices that should be closed.
160
APPENDIX
C
Recommendations
ORG04
THE PRESIDENT SHOULD REQUEST AUTHORITY TO REORGANIZE AGENCIES
Congress should restore to the President the authority to restructure the executive branch.
ORG05
SPONSOR THREE OR MORE CROSS-DEPARTMENTAL INITIATIVES ADDRESSING
COMMON ISSUES OR CUSTOMERS
The President's Management Council should identify and sponsor three or more cross-departmental initiatives
in areas such as illegal immigration, debt collection, and the problems of the homeless.
ORG06
IDENTIFY AND CHANGE LEGISLATIVE BARRlERS TO CROSS-ORGANIZATIONAL COOPERATION
As cross-organizational collaborations become an integral part of government operations, barriers to ready collaboration and
funding should be removed.
IMPROVING CUSTOMER SERVICES
ICSOI
CREATE CUSTOMER-DRIVEN PROGRAMS IN ALL DEPARTMENTS AND AGENCIES THAT PROVIDE
SERVICES DIRECTLY TO THE PUBLIC
Establish an overall policy for quality of federal services delivered to the public and initiate customer service programs in all
agencies that provide services directly to the public.
ICS02
CUSTOMER SERVICE PERFORMANCE STANDARDS-INTERNAL REVENUE SERVICE
As part of its participation in the NPR, the Internal Revenue Service is publishing customer service performance standards. To
speed the delivery of taxpayer refunds, the Secretary of the Treasury should delegate disbursing authority to IRS in 1993 and
future tax seasons.
ICS03
CUSTOMER SERVICE PERFORMANCE STANDARDS-SOCIAL SECURITY ADMINISTRATION
As part of its participation in the NPR, the Social Security Administration is publishing customer service performance
standards. SSA will also obtain customer opinions on all the goals and objectives of their strategic plan, using that input to
revise the goals and objectives as needed, set priorities, and establish interim objectives.
ICS04
CUSTOMER SERVICE PERFORMANCE STANDARDS-POSTAL SERVICE
As part of its participation in the NPR, the U.S. Postal Service will expand its plans to display customer service standards in
Post Office retail lobbies.
ICS05
STREAMLINE WAYS TO COLLECT CUSTOMER SATISFACTION AND OTHER INFORMATION
FROM THE PUBLIC
For voluntary information collection requests directed at customers, OMB will delegate authority to approve such requests if
departments certifiy that they will fully comply with Paperwork Reduction Act requirements. OMB will also clarify rules on
the use of focus groups and streamline renewals of previously approved survey requests.
MISSION-DRIVEN, RESULT5-0RIENTED BUDGETING
DEVELOP PERFORMANCE AGREEMENTS WITH SENIOR POLITICAL LEADERSHIP THAT REFLECT
BGTOI
ORGANIZATIONAL AND POLICY GOALS
The President should develop performance agreements with agency heads, starting with the top rwo dozen. Agency heads
should also use performance agreements within their agency to forge an effective team commirted to achieving organizational
goals and objectives.
EFFECTIVELY IMPLEMENT THE GOVERNMENT PERFORMANCE AND RESULTS ACT OF 1993
BGT02
Accelerate planning and measurement efforts to improve performance in every federal program and agency. Designate as pilots
under the act several multi-agency efforts that have related programs and functions. Develop common measures and data
collection efforts for cross-cutting issues. Clarify the goals and objectives of federal programs. Incorporate performance
objectives and results as key elements in budget and management reviews.
EMPOWER MANAGERS TO PERFORM
BGT03
Restructure appropriations accounts to reduce overitemization and to align them with programs. Ensure that direct operating
costs can be identified. Reduce overly detailed restrictions and earmarks in appropriations and report language. Simplify the
apportionment process. Reduce the excessive administrative subdivision of funds in financial operating plans.
ELIMINATE EMPLOYMENT CEILINGS AND FLOORS BY MANAGING WITHIN BUDGET
BGT04
Budget and manage on the basis of operating COStS rather than full-time equivalents or employment ceilings. Request Congress
to remove FTE floors.
PROVIDE LINE MANAGERS WITH GREATER FLEXlBILITYTO ACHIEVE RESULTS
BGT05
Identify those appropriations that should be converted to multi- or no-year starus. Permit agencies to roll over
50 percent of their unobligated year-end balances in annual operating costs to the next year. Expedite reprogramming of funds
within agencies.
161
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER
lie COSTS LESS
Recommendi1tions
BGT06
STREAMLINE BUDGET DEVELOPMENT
.
Begl n the President' s budget formulation process with a mission-driven Executive Budget Resolunon process
that will replace hierarchial budget d~elopment •. d~lcgate mo~e decisio~ making to age~cy heads. ~d ~rom~)(e a colla.borative
approach (0 crosscuning issues. In the pr~. el!mm~te mult~ple reqwrements for detailed budget )uscificanon materials.
Negotiate a reduction in the detailed budget )uscificanon provided to Congress.
BGTO?
INSTIl1JfE BIENNw.. BUDGETS AND APPROPRIATIONS
.
Submit a legislative proposal to move fro~ an :u'nual to a. bi.ennial budget submission by the Presl~ent
Establish biennial budget resolution and blenrual appropriation processes. Evaluate program effectiveness
and refine performance measures in the off-year.
SEEK ENACTMENT OF EXPEDITED RESCISSION PROCEDURES
Pursue negotiations with the leadership of the House and Senate to gain enactment of expedited rescission authority.
BGT08
IMPROVING FINANCIAL MANAGEMENT
ACCELERATE THE ISSUANCE OF FEDERAL ACCOUNTING STANDARDS
FMOI
Issue a comprehensive set of federal financial accounting standards wi~in 18 mO.nths. If all standards are not issued under the
present advisory board structure. create an independent federal finanaal accounnng standards board.
CLARIFY AND STRENGTHEN THE FINANCIAL MANAGEMENT ROLES OF
FM02
OMB AND TREASURY
D~elop a Memorandum of Understanding (0 clarify the roles of OMB and Treasury in financial management. Create a
governmentwide budget and financial information steering group to d~dop and provide guidance in implementing an
integrated budget and financial information strategic plan. Shift r~i~ of Financial Management Service budget (0 the OMB
Deputy Director for Management.
FULLY INTEGRATE BUDGET. FINANCIAL AND PROGRAM INFORMATION
FM03
Ensure that agency financial systems are in compliance with a revised OMB Circular A-127 • "Financial Management
Systems." by September 1996. Provide interagency funding for the joint d~e1opment of financial systems.
FM04
INCREASE THE USE OF TECHNOLOGY TO STREAMLINE FINANCIAL SERVICES
Use electronic funds transfer (0 pay and reimburse expenses for all federal employees, to handle all interagency payments, to
make payments (0 state and local governments, and (0 pay for purchases from the private sector. Similarly. all payments to
individuals should be done electronically.
FM05
USE THE CHIEF FINANCIAL OFFICERS (CFO) ACT TO IMPROVE FINANCIAL SERVICES
Identify the set of financial management functions which should repon to agency CFOs, and ensure that all financial
management personnel are fullY-<Iualified when hired. Ensure that information being collected, disseminated, and reponed on
is useful. objective, timely, and accurate for the benefit of program managers.
.
FM06
"FRANCHISE" INTERNAL SERVICES
The President' s Management Council should encourage agencies to purchase common administrative services, such as payroll.
computer suppon, or procurement, competitively from other federal agencies that may be more responsive or offer bener
pnces.
FM07
CREATE INNOVATION FUNDS
Allow agencies (0 create innovation capital funds from retained savings (0 invest in innovations that can improve service and
provide a rerum on investment.
FM08
REDUCE FINANCw.. REGULATIONS AND REQUIREMENTS
Eliminate timesheets and timecards and use. technology to enter payroll data only on an exception basis. Allow use of
commercial checking accounts Instead of thlrd-pany accounts. Create a threshold below which it is not cost effective to resolve
audit findings.
FM09
SIMPLIFY THE FINANCw.. REPORTING PROCESS
Grant OMB the flexibiliry (O.consolidate and simplify over a dozen related Starutory reports to Congress and the President.
ReqUire agency heads (0 pro~de two reports annually, a planning repon and an accountability repon. Ensure that any future
finanCial management reponmg reqwrements can be addressed in either the planning or accountability repons.
FMIO
PROVIDE AN ANNUAL FINANCIAL REPORT TO THE PUBLIC
Provide a simplified version of a consolida.ted repon on the finances of the federal government for distribution (0 the taXpayers
b\· June 1995. D~elop a method of Identifying and budgeting for the expected costs of contingent liabilities of the Federal
Government.
Fi\111
STRENGTHEN DEBT COUECTION PROGRAMS
Propose legislation to allow debt collection activities (0 be funded by the r~enues generated from collections and (0 allow the
agencies to keep a cert3..1n percentage of any mcreased collection amounts. Propose legislation to lift restrictions on the use of
pm'ate collectlon. and expand agency litigation authority for debt collection through the designation of special assistant U.S.
Anorneys.
162
APPENDIX
C
Recommendations
FM12
MANAGE FIXED ASSET INVESTMENTS FOR THE LONG TERM
~tabli~h ~ long-term fIXed asset planning and analysis process. and incorporate it into the federal budget process. Ensure there
IS no bias 10 the budget agamst long-term invesrments.
FM13
CHARGE AGENCIES FOR THE FULL COST OF EMPLOYEE BENEFITS
Require all agencies to pay the full accruing cost of Civil Service Retirement and Pensions. OMB and the Office of Personnel
Management should also research the possibility of charging agencies for civilian retiree health benefits.
REINVENTING HUMAN RESOURCE MANAGEMENT
HRMOI
CREATE A FLEXIBLE AND RESPONSIVE HIRING SYSTEM
Authorize agencies to establish their own recruitment and examining programs. Abolish centralized registers and standard
application forms. Allow federal departments and agencies ro determine that recruitment shonages exist and directly hire
candidates without ranking. Reduce the types of competitive service appoinrments to 3. Abolish the time-in-grade
requirement.
HRM02
REFORM THE GENERAL SCHEDULE CLASSIFICATION AND BASIC PAY SYSTEM
Remove all grade-level classification criteria from the law. Provide agencies with flexibility ro 1=stablish broadbanding systems
built upon the General Schedule framework.
HRM03
AUTHORIZE AGENCIES TO DEVELOP PROGRAMS FOR IMPROVEMENT OF INDIVIDUAL AND
ORGANIZATIONAL PERFORMANCE
Authorize agencies to design their own performance management programs which define and measure success based on each
agency's unique needs.
.'
HRM04
AUTHORIZE AGENCIES TO DEVELOP INCENTIVE AWARD AND BONUS SYSTEMS TO IMPROVE
INDMDUAL AND ORGANIZATIONAL PERFORMANCE
Authorize agencies to develop their own incentive award and bonus systems. Encourage agencies ro establish productivity
gainsharing programs to suppon their reinvention and change efforts.
HRM05
STRENGTHEN SYSTEMS TO SUPPORT MANAGEMENT IN DEALING WITH POOR PERFORMERS
Develop a culrure of performance which provides supervisors with the skills. knowledge. and suppon they need to deal with
poor performers. and holds supervisors accountable for effectively managing their human resources. Reduce by half the time
needed to terminate federal employees for cause.
CLEARLY DEFINE THE OBJECTIVE OF TRAINING AS THE IMPROVEMENT OF INDMDUAL AND
HRM06
ORGANIZATIONAL PERFORMANCE; MAKE TRAINING MORE MARKET-DRIVEN
Reduce restrictions on training to allow managers to focus on organizational mission and ro take advantage of the available
training marketplace.
HRM07
ENHANCE PROGRAMS TO PROVIDE FAMILY-FRIENDLY WORKPLACES
Implement family-friendly workplace practices (flex-time. flexiplace. job sharing. telecommuting) while ensuring
accountability for customer service. Provide telecommunications and administrative suppon necessary for employees
participating in flexiplace and telecommuting work arrangements. Expand the authority to establish and fund dependent care
programs. Allow employees to use sick leave to care for dependents. Allow employees who leave and then re-enter federal
service ro be given credit for prior sick leave balances.
IMPROVE PROCESSES AND PROCEDURES ESTABLISHED TO PROVIDE WORKPLACE DUE PROCESS FOR
HRM08
EMPLOYEES
Eliminate jurisdictional overlaps. All agencies should establish alternative dispute resolution methods and options for the
informal disposition of employment disputes.
IMPROVE ACCOUNTABILITY FOR EQUAL OPPORTUNITY GOALS AND ACCOMPLISHMENTS
HRM09
Charge all federal agency heads with the responsibility for ensuring equal opponunity and increasing representation of
qualified women. minorities, and persons with disabilities into all levels and job categories, including middle and senior
management positions.
IMPROVE INTERAGENCY COLLABORATION AND CROSS TRAINING FOR HUMAN RESOURCE
HRMIO
PROFESSIONALS
Establish an Interagency Equal Employment Opponunity and Affirmative Employment Steering Group under the joint chair
of the Equal Employment Opponunity Commission and the Office of Personnel Management. Require appropriate cross
training for human resource management professionals.
STRENGTHEN THE SENIOR EXECUTIVE SERVICE SO THAT IT BECOMES A KEY ELEMENT IN THE
HRMll
GOVERNMENlWIDE CULTURE CHANGE EFFORT
Create and reinforce a corporate perspective within the Senior Executive Service that supports governmentwide culture
change. Promote a corporate succession planning model to use ro select and develop senior staff. Enhance voluntary mobility
within and between agencies for rop senior executive positions in government.
163
FROM RED TAI'E TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS
Recommendations
HRM12
HRM13
HRMI4
ELIMINATE EXCESSIVE RED TAPE AND AlITOMATE FUNCf10NS AND INFORMATION
Phase out the entire 10.000 page Federal Personnel Manual (FPM) and all agency impleme?ring ~rectives by December
1994. Replace the FPM and agency directives with automated personnel processes. electroniC deoslon support systems and
• manU2ls" tailored to user needs.
FORM lABOR-MANAGEMENT PARTNERSHIPS FOR SUCCESS
Identify labor-management partnerships as a goal of the executive branch and establish the National Partnership Council.
PROVIDE INCENTIVES TO ENCOURAGE VOLUNTARY SEPARATIONS
Provide departments and age:ncies with the: a~thority [0 ~ffe:r sepantio? .p~y. Decent~~ the authority to approve early
retireme:nt. Authorize de:partments and age:ncles to fund Job search activities and retrammg of employees scheduled to be
displaced. Limit annual leave accumulation by senior executives to 240 hours.
REINVENTING FEDERAL PROCUREMENT
PROCOIREFRAME ACQUISmON POLICY
Conve:rt the 1.600 pages of the: Fede:ral Acquisition Regulation from a set of rigid rules to a set of guiding principles.
PROC02
BUILD AN INNOVATIVE PROCUREMENT WORKFORCE
Establish an interagency program to improve: the: gove:mme:ntwide: procurement workforce. Provide: civilian age:ncies with
authority for improving the: acquisition workforce: similar [0 that of the: De:fe:nse Departme:nt·s.
PROC03
ENCOURAGE MORE PROCUREMENT INNOVATION
Provide new legislative: authority to test innovative: procure:ment me:thods. Establish a mechanism to disse:minate: information
gove:rnme:nrwide on innovative: procure:me:nt ideas.
ESTABLISH NEW SIMPLIFIED ACQUISITION THRESHOLD AND PROCEDURES
Enact legislation to simplify small purchases by raising the: threshold for the: use of simplified acquisition proce:dures from
$25.000 [0 $100.000 and raise: the: various thresholds for the: application of over a.dozen other statutory require:me:nts that
similarly complicate the: process. To ensure: small business participation, establish a single c:Ie:ctronic bulle:tin board capability
to provide: access to information on contracting opportunities.
REFORM lABOR LAWS AND TRANSFORM THE lABOR DEPARTMENT INTO AN EFFICIENT PARTNER
FOR MEETING PUBLIC POLICY GOALS
Enact legislation to simplify acquisition labor laws such as the: Davis-Bacon Act, the: Copeland Act, and the Se:rvice: Contract
Act. Improve accc:ss to wage: schedules through an on-line: c:Iecrronic system.
AMEND PROTEST RULES
Change the: standard of review at the: Ge:ne:ral Services Board of ContractS Appeals to conform [0 that used in the: relevant
courts. Allow penalties for frivolous protests. Allow contract negotiation to continue up to the point of contract award, even
though a protest has been filed with the: Gene:ral Services Board of Contract Appeals.
PROC04
PROC05
PROC06
PROC07
PROC08
PROC09
PROCIO
LOWER COSTS AND REDUCE BUREAUCRACY IN SMALL PURCHASES THROUGH THE USE OF
PURCHASE CARDS
Provide: managers wi.th the ability to authorize e:mployees to purchase: small dollar value: ite:ms dire:ctly using a gove:rnme:nt
purchase card. Reqwre: mte:rnaI gove:rnme:nt supply sources to accept this card.
ENSURE CUSTOMER FOCUS IN PROCUREMENT
Rc:visc: Procurement Manageme:nt Reviews to incorporate: NPR principles such as "focusing on results"
for the line managers.
PROCl!
IMPROVE PROCUREMENT ETHICS LAWS
Create: consiste:ncy across the: gove:rnment in the: application of procure:ment e:thics laws.
PROCI2
AllOW FOR EXPANDED CHOICE AND COOPERATION IN THE USE OF SUPPLY SCHEDULES
Allow state and local gove:rnments, grantees. and cenain nonprofit age:ncies to use fe:de:ra1 supply sources. Similarly, allow
fc:dc:ral age:ncles to ente:r mto cooperative: agreeme:nts to share: state: and local gove:rnme:nt supply sources.
FOSTER RELIANCE ON THE COMMERCIAL MARKETPLACE
Change laws to make it easier to buy comme:rcial items. For example:, revise the: definition of comme:rcial ite:m. Revise:
gove:rnmentwide: and age:ncy rc:gulations and procedures which pre:c1ude: the use: of comme:rcial spe:cifications.
EXPAND ELECTRONIC COMMERCE FOR FEDERAL ACQUISITION
Establish a governmen~;de program to use c:Ic:crronic commerce: for federal procure:me:nts.
PROCl3
PROC 14
164
ENHANCE PROGRAMS FOR SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS CONCERNS
Rc:peaI staNt0ty limitations on subcontracting and sUbstiNte: regulatory limitations to provide: greate:r flexibility. Authorize
civilian agencies to establish small disadvantaged business set-asides.
REFORM INFORMATION TECHNOLOGY PROCUREMENTS
Increase the delegation of authority to agencies to purchase: information technology. For purchases less than $500,000 for
productS. and $2.5 million for services ove:r the: life of a contract, eliminate: inde:pth re:quire:me:nts for analyses of alternatives.
Pilot-test alternative: ways of buying comme:rcially available: information technology items.
APPENDIX
C
Recommendations
PROCIS
ENCOURAGE BEST VALUE PROCUREMENT
To recognize other factors besides price, define "best value" and provide regulatory guidance to implement a program for
buying on a "best value" basis. Issue guide on the use of "best practices" source selection procedures.
PROC16
PROMOTE EXCELLENCE IN VENDOR PERFORMANCE
Establish an interagency Excellence in Vendor Performance Forum that would develop policies and techniques to measure
contractor performance for use in contract decisions. Establish an award for contractor and government acquisition excellence.
PROC17
AUTHORIZE A TWO-PHASE COMPETITIVE SOURCE SELECTION PROCESS
Authorize the use of a two-phase selection process for certain types of contracts so that an offeror does not incur a substantial
expense in preparing a contract proposal.
PROC18
AUTHORIZE MULTIYFAR CONTRACTS
Authorize multiyear contracts and allow contracts for severable services to cross fiscal years.
PROC19
CONFORM CERTAIN STATUTORY REQUIREMENTS FOR CIVILIAN AGENCIES TO THOSE OF
DEFENSE AGENCIES
Repeal requirements for commercial pricing certificates and authorize contract awards without discussions, where appropriate.
Maintain the $500,000 threshold for cost and pricing data requirements for the Defense Department and establish the same
threshold for civilian agencies.
.
PROC20
STREAMLINE BUYING FOR THE ENVIRONMENT
Develop "best practice" guides on buying for the environment. Encourage multiple award schedule contractors to identify
environmentally preferable products. Provide energy efficiency information in government catalogs and automated systems.
REINVENTING SUPPORT SERVICES
SUPOI
AUTHORIZE THE EXECUTIVE BRANCH TO ESTABLISH A PRINTING POLICY THAT WILL ELIMINATE
THE CURRENT PRINTING MONOPOLY
Give the executive branch authoriry to make its own printing policy that will eliminate the mandatory printing source.
Develop a new executive branch printing policy for the 21st century.
SUP02
ASSURE PUBLIC ACCESS TO FEDERAL INFORMATION
Give the executive branch agencies responsibiliry for distributing printed federal information to depository libraries. Require
agencies to inventory the federal information they hold, and make it accessible to the public.
SUP03
IMPROVE DISTRIBUTION SYSTEMS TO REDUCE COSTLY INVENTORIES
Permit customer choice in sources of supply. Compare depot distribution costs with commercial distribution systems. Take
away the Federal Prison Industries' status as a mandatory source of federal supplies and require it to compete commercially for
federal agencies' business. Increase the use of electronic commerce for ordering from depot systems.
SUP04
STREAMLINE AND IMPROVE CONTRACTING STRATEGIES FOR THE MULTIPLE AWARD
SCHEDULE PROGRAM
Eliminate the use of mandatory supply schedules. Make the supply schedule system easier to use by reducing the
administrative burden for acquisitions under $10,000. In addition, eliminate the announcement requirements and raise the
maximum order limitations for the purchase of information technology items listed in supply schedules.
SUPOS
EXPAND AGENCY AUTHORITY AND ELIMINATE CONGRESSIONAL CONTROL OVER FEDERAL VEHICLE
FLEET MANAGEMENT
Update vehicle replacement Standards. Increase emergency repair limits to $150. Eliminate the monopoly on disposing of
agency-owned vehicles.
GIVE AGENCIES AUTHORITY AND INCENTIVE FOR PERSONAL PROPERTY MANAGEMENT AND
DISPOSAL
Provide incentives to agencies to dispose of excess personal property. Automate the process and eliminate the monopoly on
personal property disposal.
SIMPLIFY TRAVEL AND INCREASE COMPETITION
Increase choices for federal travelers and automate the travel process. Pilot-test a tender system for airfares.
SUP06
SUP07
SUP08
GIVE CUSTOMERS CHOICES AND CREATE REAL PROPERTY ENTERPRISES THAT PROMOTE SOUND
REAL PROPERTY ASSET MANAGEMENT
Give agencies greater authoriry to choose their sources of real property services. Create competitive enterprises within the
government to provide real property services on a fee basis, and encourage federal managers to seek the best available source.
Create an ownership enterprise for the sound management of federal real property assets. Establish a governmentwide policy
for real properry asset management. Manage the Federal Buildings Fund in a manner comparable to the commercial sector.
SUP09
SIMPLIFY PROCEDURES FOR ACQUlRING SMALL BLOCKS OF SPACE TO HOUSE
FEDERAL AGENCIES
Simplify the procedures for acquiring small amounts of leased space under 10,000 square feet.
165
FROM RED TAPE TO RESULTS. CREATING A GOVERNMENT THAT WORKS BETTER &. COSTS LESS
Recommendations
SUPIO
SUPII
ESTABLISH NEW CONTRAcrING PROCEDURES FOR THE CONTINUED OCCUPANCY
OF LEASED OFFICE SPACE
Simplify the procedures for ren~ng leases.
REDUCE POSTAGE COSTS THROUGH IMPROVED MAIL MANAGEMENT
Encounge postage savings through the implementation of mail management initiatives.
Allow line managers to manage their own postal budgets.
REENGINEER THROUGH THE USE OF INFORMATION TECHNOLOGY
ITOI
PROVIDE CLEAR, STRONG LEADERSHIP TO INTEGRATE INFORMATION TECHNOLOGY INTO THE
BUSINESS OF GOVERNMENT
Create a Government Information Technology Services working group to develop a strategic vision for me use of govemment
information technology and to implement NPR's information technology recommendations.
IT02
IMPLEMENT NATIONWIDE, INTEGRATED ELECfRONIC BENEFIT TRANSFER
Design an integrated implementation plan for the use of electronic benefit transfer for programs such as Food Stamps and for
direct payments to individuals without bank accounts.
IT03
DEVELOP INTEGRATED ELECTRONIC ACCESS TO GOVERNMENT
INFORMATION AND SERVICE
Use information technology initiatives to improve customer service by creating a one-stop "SOO" calling service, integrated
one-stop service "kiosks," and a govemmenrwide electronic bulletin board system.
IT04
ESTABLISH A NATIONAL LAW ENFORCEMENT/PUBLIC SAFETY NETWORK
Establish a national law enforcement/public safery data network for use by federal, state, and local law enforcement officials.
ITOS
PROVIDE INTERGOVERNMENTAL TAX FlUNG, REPORTING, AND PAYMENTS PROCESSING
Integrate government financial filings, reporting, and payments processing, and determine ways to eliminate the need for
filing routine taX rerurns.
IT06
ESTABLISH AN INTERNATIONAL TRADE DATA SYSTEM
Develop and implement a U.S. Government International Trade Data System in the Treasury Department.
1T07
CREATE A NATIONAL ENVIRONMENTAL DATA INDEX
Organize the implementation of a national environmental data index in the Commerce Department.
ITOS
PLAN, DEMONSTRATE, AND PROVIDE GOVERNMENTWIDE ELECfRONIC MAIL
Improve electronic mail and messaging among federal agencies.
IT09
ESTABLISH AN INFORMATION INFRASTRUCTURE
Develop a Government Information InfrastructUre to use government information resources effectively and support electronic
govemment applications. Consolidate and modernize government data processing centers.
IT 10
DEVELOP SYSTEMS AND MECHANISMS TO ENSURE PRIVACY AND SECURITY
Establish a Privacy Protection Board. Establish uniform privacy protection practices and generally
acceptable implementation methods for these practices. Develop a digital signature standard for sensitive, unclassified data by
January 1994.
IT!!
IMPROVE METHODS OF INFORMATION TECHNOLOGY ACQUISITION
(see PROC 09, PROCIO, PROC1 S, SUP04, and FM06)
ITI2
PROVIDE INCENTIVES FOR INNOVATION
Retain a portion of agency information technology savings to reinvest in information technology. Promote performance-based
contracting for information technology. Establish a governmentwide venture capital fund for innovative information
technology projects
IT 13
PROVIDE TRAINING AND TECHNICAL ASSISTANCE IN INFORMATION TECHNOLOGY TO FEDERAl
EMPLOYEES
Establish a p~ogram t? train non-technical seni?r executives and political appointees in information technology. Require
managers of mformauo~ ~esources to meet ce~ficatJon standards. Promote collegial assistance in using information
technology. Include tralDlng costs as part of all IOformation technology purchases.
RETHINKING PROGRAM DESIGN
DESOl
ACfIVATE PROGRAM DESIGN AS A FORM>\L DISCIPUNE
The President's Management Council should commission the development of a handbook to help federal managers
understand the strengths and weaknesses of vanous forms of program design.
DES02
ESTABLISH PILOT PROGRAM DESIGN CAPABILITIES IN ONE OR TWO AGENCIES
Test the usefulness of the program design handbook and the value of program design as a useful discipline.
166
APPENDIX
C
Recommendations
DES03
ENCOURAGE THE STRENGTHENING OF PROGRAM DESIGN IN THE LEGISLATIVE BRANCH
The President's Management Council should work with congressional support agencies to help them
strengthen their program design capacities.
DES04
COMMISSION PROGRAM DESIGN COURSES
Develop training courses for managers and policymakers on various program design approaches.
STRENGTHENING THE PARTNERSHIP IN INTERGOVERNMENTAL SERVICE DELIVERY
FSLOI
IMPROVE THE DELIVERY OF FEDERAL DOMESTIC GRANT PROGRAMS
Create flexibility and encourage innovation by designing a bottom-up solution to the problem of grant proliferation and its
accompanying red tape. Also. support the pending proposal for Federal-State Flexibility Grants that has been developed by the
National Governors Association and the National Conference of State Legislatures. Establish a Cabinet-level Enterprise Board
to oversee NEW initiatives in community improvement.
FSL02
REDUCE RED TAPE THROUGH REGULATORY AND MANDATE RELIEF
Issue an Executive Order addressing the problems of unfunded federal mandates and regulatory relief and authorize Cabinet
Secretaries and agency heads to obtain selective relief from regulations or mandates in programs they oversee.
FSL03
SIMPLIFY REIMBURSEMENT PROCEDURES FOR ADMINISTRATIVE COSTS OF
FEDERAL GRANT DISBURSEMENT
Modify OMB Circular A-87. "Cost Principles for State and Local Governments." to provide a fixed fee-for-service option in
lieu of costly reimbursement procedures covering acrua1 administrative costs of grant disbursement.
FSL04
ELIMINATE NEEDLESS PAPERWORK BY SIMPLIFYING THE COMPLIANCE
CERTIFICATION PROCESS
Simplify OMB's requirements to prepare multiple grant compliance cenifications by allowing state and local governments to
submit a single certification to a single point of contact in the federal government.
FSL05
SIMPLIFY ADMINISTRATION BY MODIFYING THE COMMON GRANT RULES
ON SMALL PURCHASES
Modify OMB Circular A-102. "Grants and Cooperative Agreements to State and Local Governments". to increase the dollar
threshold for small purchases by local governments from $25.000 to $100.000 (see also PROC04).
FSL06
STRENGTHEN THE INTERGOVERNMENTAL PARTNERSHIP
Reinvent the Advisory Commission on Intergovernmental Affairs (ACIR) and charge it with the responsibility for continuous
improvement in federal. state and local partnership and intergovernmental service delivery. Direct the AICR to identify
opportunities to improve intergovernmental service delivery and develop a set of benchmarks.
REINVENTING ENVIRONMENTAL MANAGEMENT
ENVOI
IMPROVE FEDERAL DECISIONMAKING THROUGH ENVIRONMENTAL COST ACCOUNTING
Develop demonstration projeCts to test the applicability of environmental cost accounting. Based on project results. develop
guidelines to implement environmental cost accounting throughout the Federal Government. Issue an Executive Order to
encourage the use of environmental cost accounting by federal agencies.
ENV02
DEVELOP CROSS-AGENCY ECOSYSTEM PLANNING AND MANAGEMENT
Issue an Executive Order to encourage sustainable economic development and ensure sustainable ecosystems through a crossagency ecosystem management process. Begin phased-in implementation of the policy with selected ecosystem management
demonstration projeCts. Conduct management and budget reviews of the ecosystem management projects as a part of the fiscal
year 1995 budget process.
ENV03
INCREASE ENERGY AND WATER EFFICIENCY
Issue an Executive Order to address energy efficiency and water conservation issues at federal facilities. Propose legislation
to allow the Defense Depamnent to retain savings from water efficiency projects. Develop appropriate mechanisms to allow
facilities to retain rebates received from utility companies.
ENV04
INCREASE ENVIRONMENTALLY AND ECONOMICALLY BENEFICIAL LANDSCAPING
Issue an Executive Order to require the use of environmentally beneficial landscaping techniques. including increased use of
native species and reduced use of water and chemicals. at federal facilities and federally-funded projects. where appropriate.
IMPROVING REGULATORY SYSTEMS
REGOI
CREATE AN INTERAGENCY REGULATORY COORDINATING GROUP
Create an interagency Regulatory Coordinating Group to share information and coordinate approaches to regulatory issues.
REG02
ENCOURAGE MORE INNOVATIVE APPROACHES TO REGULATION
Use innovative regulatory approaches and develop a Deskbook on Regulatory Design.
REG03
ENCOURAGE CONSENSUS-BASED RULEMAKING
Encourage agencies to use negotiated rulemaking more frequently in developing new rules.
167
FROM RED TAPE TO RESULTS- CREATING A GOVERNMENT THAT WORKS BETTER
&. COSTS LESS
Recommendations
REG04
ENHANCE PUBUC AWARENESS AND PARTICIPATION
Use: information technology and ocher techniques to increase opportunities for early, frequent and interactive public
participation during the: rulemaking process and to increase program evaluation effortS.
REG05
STREAMUNE AGENCY RULEMAKlNG PROCEDURES
Sueamline internal agency rulemaking procedures, use "direct final" rulemaking for nonconuoversial
rules and expedite ueaonent of rulemaking petitions.
ENCOURAGE ALTERNATIVE DISPUTE RESOLUTION WHEN ENFORCING REGUlATIONS
Increase the use of alternative means of dispute: resolution.
RANK RISKS AND ENGAGE IN "ANTICIPATORY" REGULATORY PLANNING
Rank the: seriousness of environmental, health or safety risks and dcvdop anticipatory approaches
to regulatory problems.
IMPROVE REGULATORY SCIENCE
Create science advisory boards for chose regulatory agencies chat depend heavily on scientific information and judgments.
REG06
REG07
REGOS
REG09
IMPROVE AGENCY AND CONGRESSIONAL RELATIONSHIPS
Encourage agencies to establish technical drafting services for congressional committees and subcommittees.
REGIO
PROVIDE BElTER TRAINING AND INCENTIVES FOR REGUlATORS
Establish a basic uaining program for Presidential appointees assigned to regulatory agencies and expand
existing training programs to cover ~r staff not currendy being trained.
GENERAL SERVICES ADMINISTRAnON
SEPARATE POUCYMAKING FROM SERVICE DELIVERY AND MAKE THE GENERAl.. SERVICES
GSAOI
ADMINISTRATION (GSA) A FUllY COMPETITIVE, REVENUE-BASED ORGANIZATION
Fund GSA service delivery from customer revenues, transfer activities not rdated to GSA's cenual mission to othe:r agencies,
and allow agencies to choose: whether to purchase GSA services.
OFFICE OF PERSONNEL MANAGEMENT
OPMO}
STRENGTHEN THE OFFICE OF PERSONNEL MANAGEMENTS (OPM) LFADERSHIP ROLE IN
TRANSFORMING FEDERAL HUMAN RESOURCE MANAGEMENT SYSTEMS
Clearly define: OPM's policy. service and leadership role in addressing human resource problems and
delegate operational work to the: agencies.
OPM02
REDEFINE AND RESTRUCTURE OPM'S FUNCTIONAL RESPONSIBIUTIES TO FOSTER
A CUSTOMER ORIENTATION
Restructure and rightsiu OPM to enhance and rdlea its commionent to addressing its customers' needs.
OPM03
CHANGE THE CULTURE OF OPM TO EMPOWER ITS STAFF AND INCREASE
ITS CUSTOMER ORIENTATION
Use inreragcncy groups to involve: OPM's external stakeholders in changing federal human resource systems. Improve OPM's
policy-making process through experimental use of negotiated rulemaking ("reg-neg") and broaden the customer focus of
OPM and agency personnd specialists.
168
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FROM RED TAPE TO RESULTS
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Executive Summary
The Report of the
NATIONAL PERFORMANCE REVIEW
Vice President AI Gore
September 7, 1993
"Our goal is to make the entire federal government
both less expensive and more efficient, and to change the culture
ofour national bureaucracy away from complacency
and entitlement toward initiative and empowerment.
we intend to redesign, to reinvent, to reinvigorate
the entire national government. "
- President Bill Clinton
Remarks Announcing the
National Performance Review
March 3. 1993
The National Perfonnance Review
T
he National Performance Review began on March 3, 1993 when President Clinton announced
a six-month review of the federal government and asked Vice President Gore to lead the effort.
Unlike past efforts that relied on outsiders, the Vice President gathered experienced federal
workers and organized them into teams to examine federal agencies and issues that cut across agencies,
such as personnel, procurement or budget policies. The goal: identifY problems and offer solutions and
ideas for savings. In addition. the President asked each cabinet secretary to organize a 'Reinvention Team'
to work from within each agency and to create 'Reinvention Laborarories' where experiments in new
ways of doing business could begin immediately.
The Vice President and the National Performance Review teams sought input from people all across
America. Vice President Gore spoke with workers at every major agency and at federal centers around the
country. He visited programs that work and companies that have implemented new practices,
dramatically changing their operations and decreasing costs while increasing profits in the process. The
Vice President and the National Performance Review teams learned from state and local leaders who have
put many of these ideas into practice and they listened to the very best experts in the country business. government. and the academic community -
from
at special conferences in Philadelphia and
Nashville. And, they listened to the American people whose letters and phone calls were invaluable.
The National Performance Review focused on how government should work. not on what it should
do. The National Performance Review teams examined every cabinet department and 10 agencies. A
'bottom-up' review at the Department of Defense and the work of the Health Care and Welfare Reform
Task Forces at the Department of Health and Human Services both covered areas that the National
Performance Review did nor.
This report represents the beginning of what will be, and what must be. an ongoing commitment to
change. It includes actions that should be taken now. by Executive Order of the President or by the
cabinet secretaries and agency heads; recommendations for Congressional action; and a vision for the
future. for long-term changes we must begin now. It reflects a government-wide determination to
'reinvent' government -
to
create a government that works better and cOSts less. If implemented. these
recommendations will revolutionize the way the federal government does business. Thev will reduce
waste. eliminate obsolete functions. improve services to taxpayers and create a smaller but more
productive government.
CUTfING RED TAPE
Chapter 1
CUTTING
RED TAPE
About ten lears ago. two foresters returned from a hard dal in the field to make plans for the coming week.
Searchingfor a detaii ofagency policy. they found themselves overwhelmed
try voluminous editions ofpolicy manuals. reports. and binders fiiled with thousands ofdirectives.
One forester recalled the very first Forest Service manual- smail enough to fit into every ranger's shirt pocket.
let containing everythingforesters needed to know to tk their jobs.
"Wiry is it that when we have a problem. " the other forester asked, "the solution is alwap to add somethinga report. a system. a policy - but never take something awal?"
The first replied: "What if.. we could just start over. "
C
onsider the plight of managers in the
million-acre Ochoco National Forest,
in Oregon. Until recently they had 70
separate budgets - one for fence
maintenance in the north sector, another for brush
burning in the south, and so on - divided into
556 management codes and 1769 accounting
lines. To transfer money between accounts they
needed approval from headquarters. The task of
tracking spending in each pot consumed 45-60
days of their time each year. It also sent a message:
They were not trusted with even the simplest
responsibilities.
STEP
The federal government does at least one thing
well: It generates red tape. But nor one inch of
that red tape appears by accident. In fact, the
government creates it all with the best of
intentions. It is time now to put aside our
reverence for those good intentions and examine
what they have created-a system that makes it
hard for our civil servants to do what we pay for,
and frustrates taxpayers who rightfully expect their
money's worth.
1: STREAMLINING TIIE BUDGET PROCESS
W
e must streamline the budget process
to remove the many restrictions that
consume managers' time and literally
force them to waste money. We focus on process
when we should focus on content, spending
needless hours and money in the process.
Action: The President should begin the budget
process with an executive budget resolution,
setting broad poNry priorities and allocating
funds by function for each agenry.
Federal managers should focus primarily on the
content of the budget, not on the process. The
President should issue a directive in January 1994
to mandate the use of an executive budget
resolution in developing his fiscal year 1996
budget.
Action: Institute biennial budgets and
approprUztions.
We recommend that Congress establtsh
biennial budget resolutions and appropriations
and multi-vear authorizations. The first biennium
should begin October 1, 1996 to cover fiscal years
1997 and 1998.
ClTITING RED TAPE
STEP
3: STREAMLINING PROCUREMENT
E
very year the government spends $200
billion buying goods and services. That's
$800 per American. With a price tag like
that, taxpayers have a right to expect prudent
spending.
But precisely because government tries to be
prudent, our procurement system has become too
complex, absurdly slow, and frequently ineffective.
Our elaborate safeguards often cost more money
than they save. Federal procurement must be
massively reshaped by decentralizing authority to
line managers and simplifYing regulations and
processes.
Instead of forcing managers to buy items on
GSA "supply schedules" - lists of items and
approved prices - they will be free to buy the
same or comparable product for less if they can
find it.
Action: Simplify the procurement process by
rewritingfederal regulAtions - shiftingfrom
rigid rules to guiding principks.
Action: AikJw agencies to make purchases
under $100,000 through simplified purchase
procedures.
The Administration will rewrite the Federal
Acquisition Regulation, the government's
principal set of procurement regulations, the
2,900 pages of agency supplements that
accompany it, and Executive Order 12352, which
governs federal procurement.
Action: 1he GSA wiD tkkgate significantly
more authority to federal agencies to purchase
infonnation technology, including hardware,
software and services.
The federal government takes, on average, more
than four years to buy major information
technology systems; the private sector takes 13
months. GSA will raise authorization levels for
STEP
T
agencies to purchase equipment and services on
their own from $2.5 million to $50 million, $20
million, or $5 million depending on the agency.
Action: GSA wiD simplify the procurement
process by allowing agencies to buy where they
want, and by testing a foUy "ekctronic
marketplace. "
Current law allows use of simplified
procurement practices only on purchases of
$25,000 or less.
Action: Rely more on the commercial
marketplAce.
The government can save money by buying
more commercial products instead of requiring
products to be designed to government-unique
specifications.
Action: Bringfetkral procurement lAws up to
dAte.
4: REORIENTING THE INSPECTORS GENERAL
he Inspectors General are independent of
the agencies in which they operate. They
report to Congress twice a year and perform
an audit and investigations function that is valid
and important. We seek to broaden their role.
However, federal employees complain that the
Ie's basic approach inhibits innovation. Heavyhanded enforcement has a negative effect in some
agencies and creates adversarial relationships with
some managers who try to do things better.
Action: Broaden the focus of the Inspectors
General from strict compliance auditing to
evaluating maTUlgement control systems.
Today, Inspectors General look for "waste,
fraud. and abuse." In the future they should also
help improve systems to prevent wa'ste. fraud and
abuse, and ensure efficient, effective service.
CUlTING RED TAPE
($2.66 billion); six defense conversion programs
($460 million); and one mowr carrier safety
program ($76 million).
.
Action: Congress should aUow sUItes and
localities to consolidate separate grant programs
from the bottom up.
Localiries would have me authoriry co mix
funding from differem programs withour
Washington's approval when combining grants
smaller than $10 million each.
Action: Give aU cabinet secretaries and agency
heads authority to grant sUItes and localities
selective waivers from federal regulAtions or
mandates.
We will ask Congress to give cabinet officers
authoriry to grant waivers under limited
circumstances - waivers would be time limited
and require performance measures.
We and the Secretary of the Deparrmem of
Housing and Urban Development recommend
that Congress give HUD me authoriry to create
demonstration projects in which local housing
aurhorities would continue to receive operating
subsidies as long as they meet a series of
performance targets. These projects would be free
from orher HUD controL
Conclusion
The changes described above are ambitious.
They will take enormous effort and enormous
wilL It will be many vears before all of them take
root. But if they s~c~eed, the American people
will have a government capable of arracking their
problems with far more energy and far less waste
than they can today imagine.
Action: Give control ofpublic housing to local
public housing authorities with histories of
excellent maruzgement and substantiaUy
tkregulate the rest.
7
CUITING RED TAPE
Crossing Agency Boundaries
Action: The Presidmt should issue a directive
Washington's organizational chan doesn't
always make sense. The traditional solution shuffling the organizational chan - that takes too
long and by the time it's complete, the problem
has changed. The best solution is to melt the rigid
boundaries between organizations, organizing
work according to customers' needs and
anticipated outcomes, not bureaucratic turf That
means giving federal workers greater decisionmaking authority, allowing them to operate
effectively in cross-cutting ventures; stripping
federal laws of prohibitions against such
cooperation; and ordering agencies to reconsider
their own regulations and tradition-bound
thinking.
to give the Trade Promotion CoordinAting
Committee (TPCC) greater authority to control
federal export promotion efforts.
The TPCe, chaired by the Commerce
Secretary and including representatives from 19
departments, agencies, and executive offices, gains
broader authority to create performance measures
and set allocation criteria for the nation's export
promotIon programs.
Action: Create a system ofcompetitive. onestop. career-development centers open to aU
Americans.
Action: The President should create a process
to establish ecosytem 11UlnAgement policies
across the government.
A host of federal agencies have jurisdiction over
individual pieces of our national ecosystem and no
coordinated approach governs their activity.
Action: The President shoukl create a Federal
These centers would offer skills assessment,
information on jobs, and access to education and
training. They would be linked to all federal, state,
and local workforce development programs and to
many pnvate ones.
CoordinAting Council for Economic
Development (FCCED).
This council would coordinate regional
development, mitigate community dislocation and
provide state and localities a central source of
information.
Action: The President shoukl issue a directive
and propose legislation to reconstitute the
Federal CoordinAting Council for Science.
Engineering and Technology as the NationAl
Science and Technology Council, giving it a
broader and more effective rok in setting science
and technology poliry.
Action:EliminAte statutory restrictions on
cross-agenry activities that are in the public
interest.
Congress should repeal a series of restrictions
that stand in the way of cross-agency
collaboration, and refrain from putting future
restrictions in appropriations bills.
The FCCSET is a White House-managed team
that helps set policy for technology development
and includes representatives of more than a dozen
departments. The new council would direct
science and technology policy more forcefully.
Action: The President shoukl issue a directive
that requires collAborative e.fforts across the
government to empower communities and
strengthen families.
9
CtJITlNG RED TAPE
STEP
3: CRFATING MARKEr DYNAMIcs
ot all p~~lic activities should be subject to
competltlon. In some cases, even service
delivery operations are better off as
monopolies. In the private sector we call these
"utilities" and regulate them to protect the
consumer. At other times, government subjects
public organizations to market dynamics. The
federal government should use this option more
often.
N
Action: Restructure the nations air traffic
control system into a corporation.
The government-owned corporation would be
supported by user fees and governed by a board of
directors that represents the system's cusromers.
This will optimize the highest rate of rerum for
taxpayers, while competing with the private sector
and better serving tenants' needs.
Action: The Department ofHousing and
Urban Development will turn over
ma1Ulgement ofits "market rate" rentAl
properties and mortgage loans to the private
sector.
If the department entered into limited
partnerships with real estate firms, it could retain
most profits from any sales and let a private
business entity perform the sales in the most
economically beneficial way.
Action: The General Services Administration
wiD create a Real Property Asset Management
Enterprise, separating GSA s responsibility for
setting polity on federaUy oumed real esUlte
from that ofproviding and 11Ulnaging office
space.
STEP
4: USING MARKET MECHANISMS
TO SOLVE PROBLEMS
overnment cannot create a program for
every problem facing the nation. It can't
just raise taxes and spend more money. We
need governance, which means setting appropriate
priorities, then using the federal government's
immense power to steer the direction of market
forces in the private sector.
G
Worker Safety and Health
Action: The SecreUlry ofLabor will isnu new
regulations for worksite safety and health,
relying on private inspection companies or non11Ulnagement employees.
With this new approach, OSHA could ensure
that all workplaces are regularly inspected without
hiring thousands of new employees.
Environmental Protection
Action: Encourage market-based approaches to
reduce pollution.
Public Housing
Action: Authorize the Department of Housing
and Urban Development to create
demonstration projects that free 11Ulnagers from
regulations and give tenants new market
powers, such as freedom ofchoice to move out of
old public housing buildings.
EMPOWERING EMPLOYEES TO GET REsULTS
Chapter 3
EMPOWERING EMPLOYEES TO
GET REsULTS
"Take two managers and give to each the same number o/laborers and let those laborers be equal in all respects.
Let both managers rise equally early, go equally late to rest, be equally active, sober; and industrious, and yet,
in the course o/the year, one o/them, without pushing the hands that are under him more than the other;
shall have perjomzed infinitely more work. "
George Washington
"When nature has work to be done, she creates a genius to do it. "
Ralph Waldo Emerson
espite our solid core of capable
employees, we lack efficient
management systems.
Cutting red tape, measuring results,
empowering customers and creating competition
incentives will create an environment that rewards
success. Now we must create a culture of public
entrepreneurship - of people willing to innovate.
D
Changing the culture of the federal workplace is
a lor harder than changing its rules and
regulations. We must discover what the private
seaor has already embraced: that more isn't always
bener, but bener is bener. We must pursue a new
goal: quality. And we must organize around it.
How do we do it? We suggest six steps.
STEP
1: DECENTRALIZING DECISIONMAKING POWER
W
e must give decision-making power to
those who do the work, pruning layer
upon layer of managerial overgrowth.
Currently, the federal government averages one
manager or supervisor for every seven employees.
We will double that. The federal government will
average one manager for every 15 employees.
Action: Over the next five years, the executive
branch will decentralize decisionmaking anJ
increase the average span ofa 11Ulnager's
control
13
EMPOWERING EMPLOYEES TO GET REsULTS
responsibilities. and raise the standards for
filumcwl officers.
Action: Within 18 months, the Federal
Accounting Standards Advisory Board wiD issue
a comprehensive set ofcredible accounting
standards for the federal government.
Action: The administration wiD issue an
Annual Accountability Report to the Citizens.
Infonnation Technology:
When workers have current and flexible
technology [0 do their jobs, they improve
performance. We need [0 get more computers off
the shelf and into the hands of federal employees.
Action: The administration wiD develop a
strategic plan for using infomultion technology
throughout the federal government.
Under a directive [0 be issued by 1995, the
Treasury and the OMB will develop a simplified
version of the government's financial condition, [0
be published as the Annual Accountability Repon
to the Citizens.
STEP
4: ENHANCE THE QUALITY OF WORKLIFE
W
Action: The executive branch wiD abolish aU
employee time sheets and time cards for the
standArd work week.
Action: The federal government wiD updAte
and expandfomily-friendly workplace options.
Action: The President should issue a directive
committing the administration to greater equal
opportunity and diversity in the federal
workforce.
e must make federal offices better
places (Q work by treating workers as
mature and honest individuals and by
being sensitive to their lives outside the office.
The President will issue an executive order
requiring that all agencies adopt
compressedlflexible time, pan-time, and job
sharing work schedules. Agencies will also be asked
to make other changes, such as allowing federal
employees (Q use accrued sick leave (Q care for sick
or elderly dependents or for adoptions.
STEP
5:
FORM A lABOR-MANAGEMENT PARTNERSHIP
e can only transform government if we
transform the adversarial relationship
that dominates federal unionmanagement interaction into a partnership for
reinvemion and change.
W
Action: The Presidnzt should isSUR a directive
that establishes Iabor-11Ulnagement partnership
as an executive branch goal and establishes a
National Partnership Council to help
implement it.
By Oc[Ober 1, 1993, the Presidem will appoint
the National Partner~hip Council which will
include appropriate federal cabinet secretaries,
deputy secretaries. and agency direc[Ors; the
presidents of AFGE, NTEU. and NFFE; and a
representative of the Public Employee Depanment
of the AFL-CIO. Within six months, the Council
will recommend legislation to the President.
Action: The National Partnership Council will
propose the statutory changes needed to 11Ulke
Iabor-11Ulnagement partnership a reality.
1c.;
CUTIlNG BACK TO BASICS
Chapter 4
CUTTING BACK TO BASICS
"Jlui Like the pmon in the old movie who writes in Lipstick on bathroom mirrors.
'Stop me beforr I kill again ..However; in my case. the legend should be.
'Stop me beforr I steal some more. ...
Letter from Bruce Bair of Schoenchen, KS
to Vice President Gore
May 24.1993
B
ruce Bair admitted to "stealing" from the
federal government - at a rate of about
$1 1 a hour. His job was checking the
weather in Russell, Kansas every hour and
reporting to the Federal Aviation Administration.
Bair saw just two landings in more than a year
during his night shift. Days were only slightly
busier. Before the advent of automated weather
gathering devices, human weather watchers at
small stations were vital for aircraft safety. Today
they could be replaced with machines. Bair
believed that too but although Russell has had a
machine for some time, the FAA has not yet
eliminated the human staff. Bair finally quit his
job. Now, he says, "J'm no longer stealing from the
government. "
Is government still doing things it no longer
needs to do? Are we paying for obsolete
programs? Are we paying for programs that weren't
needed in the first place? Are we spending public
money to benefit special interest groups? Are we
doing all we can to stop fraud? Are we doing all
we can to deny benefits to people who aren't
eligible for them?
When we start acting on the answers to those
questions we will begin to have a more effeaive
government.
We also face a second task: we must fight for a
fairer government. one that collects on the loans it
makes and the taxes it's owed.
Finally. we must make government work better
by taking a hard look at its internal processes. We
must consolidate programs to eliminate
duplication. We must adopt more efficient ways to
design regulations and resolve disputes. And we
must take advantage of the revolution in
computers and telecommunications to cut service
delivery costs.
STEP 1: EliMINATE WHAT WE DON'T NEED
Eliminate the obsolete:
Action: Within 18 months, the President's
Action: Give the PresiJnzt greater power to cut
Ma1Ulgement Council wiD submit to Congress a
"port on closing and consolUiatingfederal
civilian facilities.
items from spending biOs.
For the President to cut wasteful spending, he
needs the power of what is called. in Washington.
"enhanced recision." That is. the President should
have greater authority to reject individual
spending items.
Action: The Department ofAgriculture wiD
close or consolUJate 1,200 field offices.
17
CUlTING BACK TO BASICS
Action: Cut Essential Air Service subsidies.
Eliminate Special Interest Privileges:
This program guaranteed small communities
air services for a decade when it was passed in
1978 after airline deregulation. Congress extended
the program in 1988 for another ten years even
though the program is no longer needed.
Action: Eliminate federal support payments
for wool and mohair.
Action: Eliminate federal price supports for
honey.
Action: Rescind aU unobligated contract authority
and appropriationsfor existing highway
demonstration projects.
STEP
2: ColLECIlNG MORE
overnment must find berter, more
efficient and more effective ways to pay
for its activities. In this section we argue
for the need to introduce or increase market-based
user fees and for collecting what is due the
government: back taxes, delinquent loans,
accidental or fraudulent overpayment of benefits.
G
Action: The Royalty Management Program
wiD increase the royalty payments it collects by
developing new computer programs to analyze
and cross-verify ddta.
Action: Allow HUD to offer incentives to
federally subsidized homeowners who refinance
their mortgages at lower rates.
Raising User Fees:
Action: Allow aD agencies greater freedom in
Eliminating Fraud:
setting fees for services and in how the revenues
from these fees may be used
Collecting Debt:
While many think government steals from
people, the reverse is also true: people steal from
government. And, unlike private companies,
some government agencies aren't very good at
finding and prosecuting thieves. We will change
that.
If the federal government were to put a higher
priority on pursuing delinquent debt the
government could collen as much as an additional
$10 billion over the next five years. A strategy to
make this happen would include the following
elements:
Action: Make it afelony to knowingly lie on
an application for benefits under the Federal
Employees' Compensation Act, and amend
federal law so individuals convicted offraud
are ineligibk for continued benefits.
Action: Give agencies the flexibility to use
Under existing law, even if you are found to
have made false statements to receive benefits, the
government cannot terminate those benefits.
Action: Raise the price offederal hydropower.
some ofthe money they collect from delinquent
debts to pay for further debt collection efforts,
and to keep a portion ofthe increased
collections.
Action: Eliminate restrictions that prevent
federal agencies from using private collection
agencies to collect debt.
Action: Improve processes for removing people
who are no longer disabkd from disability roUs.
Action: Create a clearinghouse for death
info17TUltion and reporting.
Action: Authorize the Department ofjustice to
retain up to one percent ofamounts collected
through civil debt collections to cover costs.
19
CUlTING RED TAPE
CONCLUSION
U
nlike many past efforts to change the
government, the National
Performance Review will not end with
this report. We have identified what
we need to do. Now, we will do it. We will change
the environment in government from one that
resists change to one that fosters it; from one that
stifles innovation to one that encourages it; from
one that creates horror stories to one that creates
successes. We will cur red tape, serve our
customers, empower our employees, and cut back
to basics.
Bur it will take more than just a dedicated
President, Vice President, cabinet and federal
workforce to make the vision contained in this
report a reality. It will take dedicated citizens,
willing to work to improve their government. It
will take a willingness to demand the best service
possible. It will take a commitment to hold
government accountable for its operations. It will
require Americans to act as citizens, as customers,
and as voters in support of what they deserve: a
government that works better and COSts less.
With this report, we begin a journey. How far
we go and where we end up will be determined by
the public, the Congress, and the President. As
our President has said so often, the future is ours,
if we have the courage to create it.
21
Statement
of the
Honorable Frank N. Newman
Under Secretary of the Treasury
before the
Senate Committee on Banking, Housing, and Urban Affairs
September 9, 1993
Mr. Chairman and members of the Committee, I appreciate this opportunity to
present the Administration's views on S. 3S4, the Small Business Loan Securitization and
Secondary Market Enhancement Act. Promoting the growth and vitality of small
businesses, as this legislation seeks to do, is a major objective of the Administration.
I would like to commend Senator D'Amato for his leadership in introducing S.
3S4. He has played a key role in focusing attention on the advantages of developing a
secondary market for small business loans, and has worked constructively to remove
impedients to developing this market. I would also like to acknowledge the contributions
of other members of the Committee, including Chairman Riegle, who has introduced the
LB-350
2
Small Business Capital Enhancement Act of 1993 (5. 478), and Senator Dodd, who has
introduced the Small Business Incentive Act of 1993 (5. 479).
As major job-creators, small- and medium-sized businesses warrant special
attention. We know recessions and recoveries can be especially difficult for them,
including slow recoveries such as we are having at present. Many small- and mediumsized businesses do not have the financial strength and staying power of some large
multi-market and multi-product organizations. As a result they do not have access to as
many sources of financing. Many small businesses lack a sufficient credit history to get
credit from any but those few lenders they have dealt with since they began operations.
Lenders often fear that small businesses pose a greater risk of loan default to the
extent that they have thin capital, less experienced management, and revenue sources
limited to one activity. Lenders compensate for such risks in part through higher interest
rates. But they also may tend to sharply tighten other credit terms during a recession,
constricting the flow of credit. Less lending activity reduces the information lenders
receive about particular borrowers, impairing lenders' ability to make skilled risk
assessments. Lenders may then remain reluctant to lend to small- and medium-sized
businesses even after their creditworthiness has improved, thus perpetuating problems of
credit availability, particularly in light of regulatory policies that have prevailed during
the past few years.
3
Given the diversity of small- and medium-sized businesses and their special needs
in difficult economic times, one cannot easily address these needs with broad and general
policies and programs. Nor is it clear that programs designed for general purposes will
be as effective in a slow economic recovery. For these reasons, the Administration has
implemented programs to deal with the specialized needs of small- and medium-sized
businesses. These supplement the general tax and economic growth proposals that
should benefit all businesses and the whole economy.
Small Business Administration Program
One simple, effectIve, and relatively quick method of providing credit
to
a special
class of small businesses is through the Small Business Administration's (SBA) Section
7(a) Program, which guarantees bank loans to small businesses whose credit proposals
have been rejected by at least two lenders. Without the guarantees, these borrowers
might not obtain any credit and certainly not on as favorable conditions as this program
provides. Funding the 7(a) Program is part of the Administration's economic stimulus
efforts directed at a specific group of small businesses. In July, the President signed a
supplmental funding bill that provided an additional $175 million for the 7(a) program.
This additional funding increased the Section 7(a) budget authority to $372.9 million.
With this level of funding, the SBA will be able to guarantee $7.8 billion in loans for
fiscal year 1993. For fiscal year 1994, the Senate has approved $154.8 million in funding
which will support approximately $7.0 billion in lending.
4
Other Efforts to Promote Small Business Growth
I would like to address in more depth other Administration efforts to promote
small business growth. For example, the President's National Economic Council has
established an Interagency Working Group on New and Growing Businesses. The
Working Group has been examining lending, investment, technology, export promotion,
and other issues, with particular emphasis on the nexus between these issues and job
creation, innovation, and economic growth. Working with this group, the Treasury has
been analyzing proposals to promote small business growth, from the simple and wellunderstood to the more theoretical.
Proposals under review vary in their goals, from facilitating mutual-fund
investment in small businesses and the development of a secondary market for
~ecuritized
small business loans,
to
creating a government sponsored enterprise for small
business loans. Each proposal recognizes the benefits provided by the secondary markets
we already have for such credits as residential mortgages, education loans, automobile
loans, and credit card accounts receivable, and seeks to obtain similar benefits through a
secondary market for small business loans.
5
S. 384
One of the most appealing legislative approaches to expanding small- and
medium-sized business credit availability involves facilitating the development of the
private secondary market for small business loans. We have been working closely with
Congress on securitization issues and, in particular, with Senator D'Arnato and Chairman
Riegle to reach a common understanding on S. 384.
I now want to turn to some of the reasons we favor developing this market. I will
organize this discussion around the questions the Committee asked us to address
regarding S. 384.
1. (a) Will S. 384 facilitate the securitization of small business loans?
S. 384 seeks to remove legal, tax, accounting, and other impediments to
securitizing small- and medium-sized business loans. The statutory changes made by the
legislation would create a further incentive to develop a secondary market for these
loans. While we have some concerns about the bill's accounting and capital provisions,
which I will discuss later, the other proposed changes seem consistent with the goals of
the legislation.
6
works best when it involves a high volume of standardized loans, such as for those for
-.inl!le-familv. housing. automobiles, and credit card purchases. These all derive from
~
financing specific types of credit needs. Small business loans differ because they
represent the credit needs of contractors, manufacturers, and many other types of
en t repreneurs.
S. 384 will
provid~
tax and other advantages
to
financing a pool of loans the
underwriting standards of which can be standardized sufficiently to fit into a portfolio.
Such standardization is important in giving investors an understanding of the collateral
and income producing nature of the investment. The more confidence investors have in
the credit quality, payment terms, and other features of a securitized loan pool, the
greater their interest in investing in it. The size of the market for securitized small- and
medium-sized business loans, as well as the attractiveness of the returns it will offer,
depend on how active primarily institutional investors are in participating in the market.
1. (b) Does access to the capital markets through securitization have the potential
to increase lending to small businesses?
We believe it has the potential, alth
@FedFRASER