April 2018 – Minutes

CLJP Minutes April 10, 2018
Monticello Room, Westminster Canterbury

Present: Taylor Beard, Jean Hammond, Dave Warren, Peter Weatherly, Bob McAdams, Chip Sanders,  Warren Grupe, Carroll Houle, Ed Murray, Diane Murray, John Peale, Louise Sinclair (Honorary Member), Matthew Carter, and our guest speaker, Mark Weatherly.

The meeting began with Chip Sanders leading us in a very thoughtful and timely prayer.

The Minutes of March 13 prepared by Horan, were approved.

Treasurer’s Report: Taylor Beard reported that the balance as of March 13, 2018 was $2,396.85. After Ed & Diane Murray, along with John Peale paid their dues of $60 each, the resulting balance as of April 10, 2018 is $2,506.85.

Bob McAdams said our joint sponsorship of the program, ‘Economic Inequality: What’s in Your Wallet,’  with Virginia Festival of the Book and Charlottesville Center for Peace and Justice, was well attended and received.

Program: Mark Weatherly – former Deputy Associate Director on Housing, Treasury, and Commerce at the Office of Management and Budget (OMB) for over 30 years, spanning 5 presidential administrations. He currently works for Deloitte, a major consulting firm for the federal government.

Mark Weatherly gave an insightful and enlightening presentation on the current state of the federal government. It was a perfect follow-up to his talk last year on the role and influence of federal policies on income inequality.  It was strangely comforting to hear that the gridlock in DC may be helping curb many of President Trump’s proposals to fulfill his radical campaign promises.

Mark focused on the effectiveness of the checks and balances provided by Congress upon the President, as well as the impact of the new administration on personnel – specifically, the slow-to-no filling of political appointee positions, while many career employees are either being reassigned to lesser positions or leaving altogether.

In short, Congress is ignoring the President’s spending proposals, and the lack of a robust political team in place in the agencies results in far less actual change from the status quo of federal government than has been reported.

Congress vs. the President – who controls what?

It is important to understand what the President can do administratively vs. which of his proposals require Congress to agree and enact the necessary legislation.

For instance, the President has the power to revise regulations – which are the instructions to the Executive Branch and the private sector on how to implement enacted legislation and policy within current law.  The President instructed his agencies to reduce the existing “regulatory burden” by eliminating two existing regulations for every one new regulation they want publish.  (This can be easily gamed, however, by cutting two outdated, unused regulations.)  The EPA in particular makes a significant impact through regulations, and is working on reducing the ‘burden’ on industry of clean air and water regulations.

Executive Branch Personnel – Situation with career and political appointees limits change

The President also can administratively control Federal Personnel: military and non-military were initially under a hiring freeze when the new Administration came in.  This resulted in a lot of vacancies accruing.  Most agencies are now hiring, but are slow to get new political appointees, consequently mostly career personnel are running the show.  But these career staff are unwilling to stick their necks out too far for fear of alienating their future political boss; consequently, most are maintaining status quo procedures and policies.

The Senior Executive Service (SES) is a corps of approximately 7,000 career officials (not political appointees) who administer public programs at the top levels of federal government. These positions are primarily managerial and supervisory. These are the people who oversee how agencies are run, and implement the policies approved by Congress and the President. Under the current administration, though, many of these people are being moved by their political bosses over concerns (largely unfounded) that they are too aligned to the previous administration.  Mark cited an example of the Department of Education’s budget director, who was moved to a lower level position because the Secretary’s office blamed the career budget office for not having enough money to do what they wanted to (when in fact Congress controls the money).  Consequently, and not surprisingly, morale is extremely low. Many career people are leaving the federal government for the private sector, further crippling the effectiveness of the agencies.

Regarding the Administration’s political appointees, this is the slowest filling of positions in modern history.  Perhaps one-quarter of the roughly 4,000 key political positions in agencies requires Senate confirmation.  But the Senate has rejected roughly 1/3 of appointees nominated by the President due to concerns they are unqualified, conflicted or unsuitable.  And no nominees have been submitted for an extraordinarily large number of positions.

Moreover, the turnover rate among the political appointees is extraordinarily rapid.  And those who leave are generally being replaced by less talented and qualified replacements.  So we’re seeing the “B and C teams” now when we usually don’t see them until the last year of an administration.  And again, lower quality means less “progress” or change in policies.

Question:  Is ‘federal gridlock’ good or bad?

President Trump now doesn’t have or know what tools are available to him to effect change under current law, plus the cadre of expertise is not there.   In contrast, Obama’s team knew and used their authority effectively – for example by creating Advanced Manufacturing consortia with government, academia, and industry in half a dozen centers across the country.  They spent over $1 billion, and there was not one sentence in legislation directing it – the President just did it.

Congress Controls the Purse (“The President proposes; the Congress disposes”)

Congress is acting as a good moderator between what the President proposes vs what is actually being enacted.  And once Congress enacts funding, the President must spend it (illegal to “impound” funds) – so the President cannot unilaterally terminate a program.

Federal Spending – Entitlements vs. Discretionary Programs

It is important to understand the distinction between the two types of federal spending, as the controls on them are very different:

‘Direct spending’, also known as ‘mandatory’ or ‘entitlement’ spending, refers to multi-year spending not dependent on an annual Congressional action. Most mandatory spending consists of entitlement programs such as Social Security benefits, Medicare, and Medicaid, as well as interest on the public debt.  Generally speaking, mandatory/entitlement spending happens unless and until Congress says to stop or change it.

In contrast, ‘Discretionary spending’ does NOT happen until Congress says ‘go’ – as it must do through annual legislation called ‘appropriation bills’.  It is this discretionary spending that funds nearly all federal salaries including the military, research and a large number of grant programs.  It is also this spending that, if it is not enacted annually, causes a ‘government shutdown’.

Annual discretionary funding is overall around $1 trillion, half of which is Defense, and the  other half is called “domestic discretionary” funding.  While Trump proposed $462 Billion in domestic discretionary spending, Congress enacted $579 Billion, much higher than even under Obama since 2010.

The President proposed huge cuts in discretionary spending programs, including elimination of Public Broadcasting, economic and community development grants to states and localities, slashed NIH and other research funding, job training programs, and proposed major reductions in federal personnel salaries.

But Congress almost completely ignored the President’s proposal in the Fiscal Year 2018 appropriation funding enacted in March (FY 2018 began last October, but the government stayed open through a series of flat-lined, temporary “Continuing Resolutions” funding!).

  • Block Grants for Community service increased over last year– President wanted to end
  • Subsidized housing – Congress increased it $6 Billion over Trump request
  • Economic Development – CDBG grants- not eliminated/funded at $3.3B; used for sidewalks, centers, used for anything as long as helping the poor
  • Rural economic development – not eliminated/funded at over $1B from Trump request, especially including rural internet funds in USDA
  • NIH – Congress gave $3 Billion more than what President wanted
  • Environment/EPA got $8B, or more than $2.5B more than President requested
  • Energy efficiency/conservation research – got almost $2B more than Trump request

Question:  Federal spending/deficits huge – does it matter anymore?

Austerity was in effect since 2011 when the House went Republican and they complained about “runaway federal spending”, but now Congress is spending more than ever!

Combination of lower tax revenue due to recent ‘Tax Reform Act’, and higher spending on Defense and domestic discretionary, leading to first trillion dollar deficits in a couple years!  There could be severe consequences 15-20 years down the road when Social Security spending peaks, and if interest rates rise making ‘interest on the public debt’ explode.  CBO estimates interest on public debt will exceed Defense spending within 5 years.

All in all, good food for thought.

The meeting adjourned at  2:10 pm.

Respectfully submitted,

Pete Weatherly