OMB head: Federal workers could face more sacrifices

As the government looks to make more budget cuts, federal workers could be in for an unpleasant surprise.

"We're not going to be in a place where we can say that there's nothing else that will happen regarding federal workers, as the plan we put forward last week demonstrated," said Jacob Lew, director of the Office of Management and Budget. "I think federal workers understand that in times of fiscal constraint, there are tough decisions all around."

Lew made his remarks Sept. 27 at the Partnership for Public Service’s offices in downtown Washington, where he was discussing a new report that highlights lessons learned from the government downsizing efforts of the 1990s. The Partnership for Public Service and Booz Allen Hamilton's report, “Making Smart Cuts,” outlines the best and worst strategies for budget reductions and workforce reshaping and offers guidance for today’s federal leaders.

It's "really, really easy to take costs out of a budget but really hard to do it in a way that doesn't diminish mission impact," said Max Stier, the partnership’s president and CEO, in his opening remarks.

"You have to have a vision about what's important, what you're trying to achieve, and you have to have leadership engaged in that in order for that cost-reduction exercise not to simply result in a stripping of capacity," he said.

In discussing the 1990s’ most-employed strategies to cut budgets, Stier highlighted personnel reductions as a sometimes inevitable approach but one that has serious implications.

The 1990s efforts to reduce personnel resulted in long-term damage to agencies, Stier said. Agencies were unable to produce in the ways they needed to, leading to issues that later had to be remedied, he added.

As an example of a hiring freeze gone wrong, Stier cited NASA, which froze hiring in 1987 and several times after that. In 1989, 18 percent of the agency’s employees were under the age of 30. By 2004, that number had fallen to 4 percent, Stier said.

He said efforts to recruit talented employees cannot be disregarded.

"We can't shut up shop on recruiting talent in government, we can't shut up shop in developing the talent that we already have, or else we're not going to get where we need to go," he said.

Lew took the opportunity to address the public's declining trust in government in the middle of what he called "extraordinarily real" budget cuts. Given political gridlock, a sluggish economy and an aging infrastructure, confidence in the government is "probably at an all-time low right now," he said.

"There is a deep-seated tradition in our country to have skepticism in government," Lew said. "It's a strain of American thought that runs really back to our founding. But over the past several decades, there has been a relentless effort to make the case that government is actually part of the problem and not part of the solution. And I think that has had an impact on public opinion."

Managing the federal workforce is "obviously more complicated than private-sector workforce management," Lew said. Officials need to address the fact that the federal workforce is aging and must have a strategy for replacing retirees, he added.

"Getting the balance right between the pace of reductions and making sure that the federal workplace is an attractive place for young talent to come to start a career is as important as 'where do we get the savings?'" Lew said.