There is no question the size of government and workforce needs to be pared, but the outright attacks on and ongoing insinuation about the role of federal workers is troubling.
Many of you wrote in to thank me for my dispassionate take on President Trump and his assertion of executive power on his return to office. As always, I appreciate the comments and reactions. Many of you felt I put what was occurring in context with what other presidents have done on both sides of aisle. As well, you appreciated the balanced assessment of what was happening. In that blog, I concluded that, while some of what Trump was asserting is not unreasonable, the speed and scattershot nature of the endeavors were issues and that major fallout could occur on many fronts, including on services to Americans. You can see that full blog here: https://www.healthcarelabyrinth.com/trump-tests-limits-of-power-by-stretching-article-2-of-the-constitution/ . If you prefer podcasts, the podcast on the topic is here: https://www.healthcarelabyrinth.com/65-is-trump-stretching-article-2-of-the-constitution/ .
Now, many of you have asked me to go a little deeper and react to the Trump administration’s effort to downsize the workforce. I covered a little of this in the earlier blog.
A little background on me
To give you a feel for my experience here, I am repeating my background from the earlier blog.
I served in state government in Connecticut from 1995 to 2005. I was a Republican executive appointee and eventually became the Deputy Management Secretary/Deputy Budget Director of the state and then the Management Secretary/Budget Director. I served about 7.5 years in these two appointed posts. Connecticut is a small state, so a great deal of the authority and power is vested at the state level. And the Office of Policy and Management (OPM) (as my office was called) held great sway over policy, management, and budget in state government at the direction of the governor. In rough measure, it is like the federal Office of Management and Budget (OMB). While my boss was in office, we saw either a split legislature or one controlled by Democrats.
My tenure was not without some of the same controversies we see today over the last few weeks, especially during lean budget times when state budgets can go out of balance. We had executive-exercised spending cutbacks, layoffs, reorganization, and showdowns with the legislative branch. At one point, we as the executive branch ran the government by executive order because of the lack of a budget in place after vetoes of the spending and revenue plan. We unilaterally set expenditure levels at minimum levels. It was a gambit to force the legislature to make reductions to spending levels to keep outlays in line with anticipated revenues. At the time, the Democratic attorney general did not challenge the executive branch’s authority to what we did. This ultimately led to a compromise budget being passed.
What has Trump done on the workforce front so far?
To put it simply – a great deal. Here is a quick inventory of the workforce actions the Trump administration and the Department of Government Efficiency (DOGE) commission have taken. Without going into details, some of these have been enjoined by federal judges, while others have been allowed to proceed. Some judges have indicated that what the administration has done is in itself illegal. Others have said the executive branch has the authority to carry out certain proposed activities but the administration has not followed legal processes required to do so.
The Trump administration has done the following:
- Directed most agencies to freeze hiring.
- Instituted layoffs of many probationary employees.
- An executive order to make it easier to fire federal workers in jobs that are normally apolitical.
- Ordered most in the civilian workforce to report back to work by limiting or eliminating most work-from-home provisions.
- Put in place a job buyout, which allowed people to opt into termination as of September 30 without further work obligations until then.
- Put some workers on administrative leave given plans to shutter permanently certain agencies (e.g., the Agency for International Development), to massively downsize and reorganize others, and to end the Diversity, Equity, and Inclusion (DEI) programs.
- Directed all agencies to prepare workforce reduction plans to massively reduce the size of the agencies.
- Directed that agencies will be able to hire no more than one employee for every four employees that depart from federal service.
- The workforce reductions are aimed at both shedding employment in the federal government but also to reorganize agencies and stop services being provided that are not mandated in federal law. As well, DOGE wants to sell or end leases on up to 25% of all federal buildings.
- Generally speaking, the administration wants to reduce the civilian workforce by 25% to 33%. Reductions at agencies will likely range from 8% to 50%, not counting those agencies that will be shut down completely. The administration notes that the cutbacks are aimed primarily at administrative positions.
- Renegotiating collective bargaining agreements with federal workers’ unions to improve “government efficiency and employee accountability.”
- About 10,000 workers have already been cut from the Department of Health and Human Services (HHS) and its related healthcare agencies and plans are for another 10,000 reduction via early retirement incentives, voluntary separations, and layoffs.
- The lion share of the new 10,000 job reductions at the HHS and related agencies are slated to be as follows:
- 3,500 at the Food and Drug Administration (FDA).
- 2,400 at the Centers for Disease Control and Prevention (CDC).
- 1,200 at the National Institutes of Health (NIH).
- 300 at the Centers for Medicare and Medicaid Services (CMS).
Some statistics I will reflect on
Let’s lay out some of the facts as we explore the issue of workforce reductions:
- The national debt has hit about $36.7 trillion.
- The deficit for FFY 2024 was about $1.8 trillion.
- In FFY 2024, government spending was about $6.75 trillion or about 27%.
- While many would argue the annual budget should be balanced, a good target for a developed nation’s annual budget deficit is 2% to 3% of gross domestic product (GDP). Historically, the U.S. has been at about 3%. In FFY 2024, the U.S. nominal GDP was about $29.7 trillion. So, our deficit against GDP is about 6% — at least double the acceptable economic average.
- Interest on the federal debt in FFY 2024 was almost $900 billion and will hit $1 trillion per year in the coming years. That is over 10% of the budget and about what we spend on the military.
- Excluding active-duty military and Postal Service employees, the civilian federal workforce exceeds 2.4 million.
- The Federal Register lists over 400 agencies of the federal government of all sizes.
- In federal fiscal year 2022, the federal government spent nearly $300 billion on compensation for civilian employees, excluding pensions.
- If cuts to the civilian workforce (outside the postal service and direct military personnel) hit the target of 25% to 33%, that would mean the civilian workforce goes from about 2.4 million to between 1.6 and 1.8 million – a reduction of 600K to 800K employees.
- If the HHS and related agency reductions hit 20,000 (25%), this will bring the size of these agencies overall from 82,000 to 62,000.
- Only 6% of federal workers report to work in-person on a full-time basis.
So here are my hopefully balanced thoughts on the situation.
A case for workforce downsizing
Here I ouline my sympathies for what the Trump administration is undertaking:
By any reasonable measure, federal spending is out of control. The sheer magnitude of our debt and the annual deficits most assuredly will choke economic growth in the future. We can debate levels of taxation and revenue raising, but by most measures the U.S. is by no means too high or too low. On overall tax competitiveness, the U.S. ranks 18th by the Tax Foundation in its International Tax Competitiveness Index. The index looks at individual and corporate tax burdens, including corporate taxes, individual income taxes, consumption/sales taxes, property taxes, and even tariffs and other trade taxes. Interestingly, those with similar or lower tax burdens are social-program rich nations.
Budgetary cuts usually come to both programs and workforce. Indeed, reductions in the workforce are needed to ensure less impact to programs.
Critics of the workforce downsizing claim the savings numbers are very small. But a reduction of 25% to 33% would save $75 billion to $100 billion per year. If you argue 10% is a better target, the savings is $30 billion. If you could execute quickly on a 10% reduction, that would save $300 billion over the budget horizon. That is $300 billion fewer program cuts or added savings to bring down the cost of government.
What’s more, there is no excuse to have an inefficient bureaucracy. It seems clear from my dealings with healthcare agencies that there are too many units or divisions and reorganizing would mean greater efficiency, accountability, and transparency.
Good governance means challenging the status quo in government and looking for ways to deliver services more efficiently. Over the past several decades, both Democrats and Republicans have allowed government to grow far too much, endangering our economic growth as well as our ability to deliver critical programs over the long term.
We also badly need change at the federal level. We are far too reliant on people and thus we have not kept up with the technological times. Information systems are many and too disparate. They are also legacy systems. This has led to the need for personnel when many of these tasks could be done far more efficiently by technology.
A case for study and moderation
But as I noted in the last blog on executive authority, the workforce downsizing also suffers from too much speed and indiscriminate approaches. Here is my take on where the Trump administration is approaching this wrong:
The DOGE experts would argue speed is important and that it is OK to break things. Maybe in the private sector, but breaking things in the government sector can have much more profound negative impacts. Here is a case in point: The DOGE and Office of Personnel Management laid off thousands of probationary employees without thinking through impacts. That led to the need to call thousands back. Problem 1: they laid people off in critical agencies, including those that oversee nuclear safety, aviation safety, healthcare regulation and more. Problem 2: they cut off employees’ government email swiftly (even before the employees knew they were fired) and did not have ways to communicate with those they wanted back. Rookie mistakes for a supposedly experienced Trump 47 administration.
Elon Musk and his senior DOGE consultants say they have taken corrective action after the performance above. They say the current downsizing plans are being worked on nights and weekends with agency heads and senior civil service executives in each agency. They are methodically going through each position to identify duplicative positions and those that do not serve critical or mandated functions. I really question how much input the senior civil service has, whether it is because decisions have already been made or the civil servants even feel comfortable weighing in. The reality is that DOGE is still moving at lightning speed and Congress is barely involved, but for the temporary DOGE Committee in the House that seems to be more of a dog-and-pony show than a substantive look at the issues at hand.
Whatever the right percentage to downsize, the indiscriminate nature of the layoffs and buyouts will undoubtedly leave delivery of critical services unmanned and in question. The graphic below shows the rough number of employees by major agency. Veterans Affairs is very much a direct service healthcare agency. Homeland Security and the various military departments are top priorities for the administration to add dollars to overall. Of course there are some targeted positions in those agencies. But if DOGE is to cut 25% to 33%, that means massive downsizing at a much more limited number of agencies. DOGE needs to be attentive to the impact on critical services and oversight.
For example, let’s look at two critical areas that protect the public health. Newly appointed Dr. Marty Makary has a huge task in front of him to reform the Food and Drug Administration (FDA). But will he have enough people to regulate two critical industries if the target of 3,500 (18% not including probationary eliminations) new position eliminations is carried out? Will the Centers for Disease Control and Prevention (CDC) have enough employees if 2,400 (20% not including probationary eliminations) additional personnel are let go? The public health infrastructure both nationally and within many states is fragile.
More broadly, there is the debate over adequate oversight of certain sectors of the economy, including healthcare. The Trump administration is on a crusade to rescind regulations on vast swaths of the economy. And Trump wants to combine that effort with laying off people in these oversight areas. There is no question that some relief from regulatory burden makes sense, but will it go so far as to have too few employees to carry out essential duties of regulating critical aspects of the economy – Medicare, Medicaid, drugs and food, etc.
Trump, too, is combining reductions in critical grant programs with workforce downsizing. The U.S. leads the world in investments in research and development (R&D). This includes from business, higher education, the federal government, nonprofit organizations, and other organizations. The federal government support usually is either direct science grants or tax credits to businesses to make such investments.
The direct government grants are very important for basic research advancement, but they have been on a downward trajectory since 2010. Other countries, such as China, are catching up quickly on the R&D front. China’s investment growth has recently been double the U.S. growth.
The positive impact of R&D across the board is phenomenal. Since World War II, the U.S. investment in R&D has meant our economic productivity is demonstrably greater than other nations. Studies indicate that the U.S. funding to higher education and other organizations pays huge R&D dividends and has helped drive overall productivity. But these are precisely the grants the Trump administration seems to be questioning. The administration, too, wants to downsize the workforce that oversees these programs.
Smaller or no grants along with too few personnel to oversee them could spell doom both for R&D and productivity. Healthcare R&D would be badly hurt.
Most troubling is the characterization of federal workers by Trump, Elon Musk, JD Vance, and others. Trump himself has blamed career federal employees for “destroying this country.” He has dubbed them “crooked,” “dishonest” and “unnecessary.” In Trump’s and his advisers’ minds, every federal worker is a loafer. Their views, too, are motivated by revenge politics against the so-called deep state that supposedly worked against Trump 45 and then prevented his initial re-election.
I don’t doubt that some do not contribute and should be shed. I also don’t doubt that we have duplication and that some are doing too little for their paychecks. But the sinister characterizations are unfortunate. We want a professional, dedicated, and knowledgeable civil service. Trump’s views simply aim to alienate the high performers in government and those who might think about government service.
In my years working with people within the Centers for Medicare and Medicaid Services (CMS), I have found the most talented and dedicated individuals. I have indeed challenged and criticized some of their decision-making over the years. But on the whole, there is no question in my mind that CMS employees collectively have done tremendous things. They have launched and reformed a successful Medicare Advantage (MA) program, which now serves a majority of Medicare beneficiaries. They have pursued important reforms in the traditional Medicare program. They have sought to bring more accountability to Medicaid. They set up the Children’s Health Insurance Program in the late 1990s and early 2000s. While there were problems at the beginning, they have sheparded what is now the 10-year-old Affordable Care Act (ACA) Exchange program. Together, by my count, over 170 million people rely on these healthcare programs – more than half the nation. CMS has a huge responsibility.
Yes, things are not perfect at CMS, and important reforms must be made. But these civil servants are working within the constraints of federal law and rules and the often-ill-conceived dictates of presidents and Congresses. We are far better for the CMS associates’ work. Again, they are dedicated and have contributed greatly on the healthcare front.
Conclusion
There is no question we need to reorganize and streamline government. But as is so often the case, Trump’s approach and excess often turn good ideas into bad ones. The speed, lack of collaboration with Congress, limited interaction with careerists, and little to no understanding of the agencies and what they do point to the fact that this has become more of a politically motivated “get the deep state” exercise rather than an effort in good governance.
#trump #congress #doge #budgetreconciliation
— Marc S. Ryan
