THE VOLCKER REPORT

When President Bush laid out plans for a Department of Homeland Security in June, the most compelling argument for the greatest federal restructuring in more than a half-century was how the Sept. 11 terrorist attacks had exposed the muddling that had crept into those functions of government with the most need for efficiency. The numbers alone – 170,000 workers, 22 agencies and bureaus, eight Cabinet departments, 80 congressional oversight panels – made the case for the elimination of bloat and redundancy.

The legislation to create this new department then spent the entire summer and most of the fall mired in Congress. The reason? One of the first details the president provided about his plan called for a drastic overhaul of the civil service. More than 2,000 pages of laws (starting with the Pendleton Act of 1883) to establish and promote the principle of merit-based hiring and advancement in federal employment were to be replaced with a new system described by just 13 words: “flexible, contemporary, and grounded in the public employment principles of merit and fitness.” Agency heads, many political appointees, would have power they’d not had in more than a century to hire, fire, discipline or reward. It took a stunning rebuke in the mid-term election for Democrats to overcome their concerns about the return of patronage and its potential for abuse.

Now comes a new federal restructuring proposal, not just specific to one issue, but government-wide. The National Commission on Public Service, led by former Federal Reserve Chairman Paul A. Volcker, has issued a plan for a sweeping reorganization, based upon the Homeland Security model. The panel of 13 prominent former public officials conclude that sprawling bureaucracy, rigid personnel systems and uncompetitive pay undercut prospects for good government staffed with talented people.

The 48-page report contains many good arguments for reform. There are seven different agencies that run 40 different job-training programs, nine agencies that operate 27 teenage pregnancy programs, eight agencies that operate 50 different programs to help the homeless. Personnel systems for pay and advancement were developed 50 years ago when most federal jobs were clerical; today jobs are far more technical and specialized. Administrations have so grown to distrust career civil servants that they have imposed an ever greater top-heavy layer of political appointees with little expertise: JFK had 286 top positions to fill; Bill Clinton in his last term had 914. Pay in some specialized areas (from technology to the law) lags so far behind the private sector that qualified applicants (from systems operators to judges) increasingly are hard to find.

No one objects to government that works better, with concentrated effort producing real results. Plenty, however, object to trying to make government work better by discarding the protections for some 1.6 million workers. The largest unions representing federal workers already have dismissed that part of the plan as entirely unacceptable; union-friendly members of Congress no doubt will do the same. This time, however, there is no overwhelming matter of homeland security to crush the objections. This is not the first study of government restructuring (Mr. Volcker himself did it 10 years ago); if it cannot be done without bringing back the spoils system, this time will be as unproductive as all the others.

There are a few models of “flexible and contemporary” personnel systems being tested in pockets of the federal government – Defense research and development, Commerce financial regulation, certain parts of the FAA, IRS and CIA. More testing is needed, however, before this is expanded government-wide.

The report contains many good recommendations. The president should have to power to “fast track” mission-oriented agency reorganization as now can be done with trade deals; congressional committees should be reorganized appropriately. The number of political appointees should be shrunk. Pay should be competitive with private sector. That’s plenty for starters; for now, leave the civil service alone.