By Tory Newmyer, writer
FORTUNE -- What's becoming clearer now probably should have been obvious from the beginning: The IRS scandal sprung from bureaucratic incompetence -- and not some grand conspiracy to stifle the Obama administration's opponents that goes all the way to the top.
That won't deter the President's lead inquisitor, House Oversight and Government Reform Chairman Darrell Issa (R-Calif.), from pursuing gossamer-thin suggestions that IRS officials were marching on White House orders. And that's too bad. Because as this investigation circles the drain, it will almost surely focus on decreasingly relevant trivia while ignoring a big, actual problem laid bare by the scandal. It will let President Obama off the hook for a broken promise so far ignored. And good, or at least better, government will suffer for it.
The problem quite simply is that the civil service is broken. I hear a version of the same line from Democratic staffers who leave comparatively lean Capitol Hill operations for executive branch gigs outside the White House: "I'm thinking about becoming a Republican," they say, mostly joking. But they're serious that the bureaucratic rot they encounter is bad enough to make them think small-government types have a point. It's not just anecdotal: The federal government's 2012 survey of 687,000 of its own employees found only 22% believe pay raises are linked to job performance; 34% think promotions are merit-based; and 29% see managers taking steps to deal with underperforming workers who can't or won't improve. And those numbers are all trending downward.
One manifestation of the anti-meritocracy is its job-security. A USA Today analysis in 2011 found in many agencies, workers are more likely to die on the job than get fired. Fairly or unfairly, that fact has been personified by Lois Lerner, the IRS official in charge of tax-exempt organizations now on paid administrative leave following her refusal to testify before Congress. Firing her, we've learned, could invite the administrative migraine of wading through months or even years of appeals. With that kind of career immunity it's no wonder IRS employees spent close to $50 million on 220 conferences over the last few years -- the latest revelation stoking outrage over the agency.
Obama diagnosed the government bloat in his 2011 State of the Union address, calling for a sweeping federal reorganization. He rolled out a reform proposal a year later and sent then-Controller Danny Werfel, now serving as the IRS's interim leader, to testify on its behalf. Werfel told a Senate committee that "changing the way Washington works is a priority for the president." But the plan went nowhere as election-year politics swamped policymaking, and it hasn't gotten a mention since.
Now would be a good time to revive and revise it. "The current system fails in every task it was designed to do," says Paul Light, a professor at New York University's Robert F. Wagner School of Public Service. "It's slower hiring new employees, permissive in promoting them with time on the job, and negligent disciplining poor performers."
Pointing to the last meaningful overhaul of civil-service rules -- led by former President Herbert Hoover during the Truman administration -- Light says Obama should enlist Al Gore to lead a commission that will tackle how to rewrite federal personnel policies. It may sound like a pipe-dream, but Light says, "I just don't know anybody who's got the guts or the commitment to do it" besides Gore, who made streamlining government the central project of his vice presidency. And there is a template for how to do it successfully, Light says -- the Government Accountability Office has shed staff while dramatically improving its output, the result of a decades-long effort by the outfit to rewire itself.
The problem is that while scale of the mess calls for coordinated bipartisan action, the political incentives are all aligned against it. President Obama has better things to do with the remainder of his second term than tackling such a thankless project, especially as the economic rebound diminishes the urgency of deficit cutting. Congressional Democrats are loath to confront the public-sector unions invested in protecting the status quo. And Congressional Republicans are more interested in embarrassing the White House and demonstrating government's core dysfunction than in doing the hard work of fixing it.
Today is Dodd-Frank's birthday.
Not that you forgot, but now it's time to celebrate with a late lunch of regulatory reform spaghetti, courtesy of the banking team at Deloitte:
Just 206 items in the 2,000-page-plus legislation are awaiting next steps, the Deloitte chart shows. The thing where the Securities and Exchange Commission has been charged with implementing this massive piece of legislation in a hurry at a time when its budget is being MOREColin Barr - Jul 21, 2011 3:35 PM ET
Bill Gross is putting his investors' money where his sizable mouth is.
Gross, who manages the world's biggest bond fund and has spent recent months jawboning about the dangers of U.S. debt, has placed a $7 billion bet against Treasury bonds, according to the latest statistics released by his Pimco Total Return fund.
Gross made a splash last month by selling all the big bond fund's Treasury holdings and calling the federal MOREColin Barr - Apr 10, 2011 7:51 PM ET
The former economic adviser to President Obama talks about the risks of a shutdown and what he sees in Paul Ryan's budget plan.
By Tory Newmyer, writer
FORTUNE -- The first shutdown of the federal government in 15 years now looks more likely than not. Less clear is what that event would mean for the economy. For some perspective, Fortune talked to Larry Summers, who was Deputy Secretary of the Treasury during MOREApr 8, 2011 2:51 PM ET
Bond manager Bill Gross says he is "confident" the United States will effectively default on its debt unless Congress takes an ax to retirement and healthcare spending.
Gross runs Pimco, the $1.2 trillion investment manager that has spent recent months selling Treasury bonds, citing their low yields and poor prospects. He explains in his monthly investment outlook posted Wednesday evening that U.S. government bonds "have little value" in a world of MOREColin Barr - Mar 31, 2011 5:40 AM ET
Don't think for a second that the Portuguese are going to hog all the belt-tightening fun for themselves.
No, austerity is coming to the United States too, investment banker and Washington insider Roger Altman said Thursday.
Altman, who founded the Evercore (EVR) investment bank and was deputy Treasury secretary under Bill Clinton, said on Bloomberg TV that the latest installment in Europe's debt crisis shouldn't distract anyone from the need to make tough choices MOREColin Barr - Mar 24, 2011 3:39 PM ET
The Republican senator talks about how he'd fix government waste, what to do about government employees, and how Americans know how stupid Congress is.
Last week, Oklahoma Senator Tom Coburn called members of Congress everything from "stupid" to "jackasses," following the release of a comprehensive study by the Government Accountability Office that found dozens of overlapping and duplicative programs from education to defense that cost taxpayers billions of dollars each year. The 330-plus MORENin-Hai Tseng, Writer - Mar 7, 2011 8:53 AM ET
Forget about what's being cut and what's being funded. The key to understanding Obama's budget is to look at a few simple numbers that tell the whole story.
It's hardly surprising that America's taxpayers are thoroughly confused by President Obama's new budget, since pundits and politicians are calling it everything from a model of fiscal prudence to a shameless manifesto for Big Government.
So here's my version of the Budget for Dummies, MOREShawn Tully, senior editor-at-large - Feb 17, 2011 10:27 AM ET
Ready to start cashing in on your generous support of Fannie Mae and Freddie Mac?
The Obama administration is. Its budget, released Monday, forecasts that the mortgage companies – which have consumed a net $131 billion in taxpayer funds since their 2008 takeover – will start generating cash for the government the year after next.
All told, the administration expects the companies to make $89 billion in net payments to the government MOREColin Barr - Feb 14, 2011 12:28 PM ET
President Obama has two choices to avoid a major fiscal debt crisis for the U.S.: Fix it or ignore it. Unfortunately, he has so far chosen the latter.
Now it's official. The budget President Obama released today does virtually nothing to address the growth of entitlement spending that's by far the biggest factor driving our gargantuan deficits and debt. As for the administration's claims that it's making big cuts in areas MOREShawn Tully, senior editor-at-large - Feb 14, 2011 10:39 AM ET
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