Wade Horn served from 2001 to 2007 as Assistant Secretary of Health and Human Services for Children and Families. In that role, he ran the Administration for Children and Families (ACF), which administers Temporary Assistance for Needy Families (TANF, or welfare), Head Start, Low Income Home Energy Assistance Program (LIHEAP), and the Social Services Block Grant (SSBG). He is currently a consultant with Deloitte Consulting LLP. We talked last Friday; a lightly edited transcript follows.
Dylan Matthews: So let's say you're back at the Administration for Children and Families, it's March 1, and the sequester takes effect. What do you do?
Wade Horn: We did things like this several times for a government shutdown. It's not exactly the same thing, but we did have to have plans. Let me walk you through it — and I’m including that within the across-the-board cuts there’s some flexibility.
The first thing I would do, I wouldn’t do anything without consulting with the OMB and the secretary [of health and human services]. I am assuming that all the heads at HHS are coordinating. But the first thing I would look at are items that are truly discretionary, where the funds have not yet been allocated. There’s a certain amount of that. Every year ACF will issue an request for papers for research grants or demonstration programs, things to test new ideas, generate new knowledge, and a lot of those discretionary announcements are done at ACF in spring or summer, and I’d take a look at them and ask how much are pledged. Anything that’s truly discretionary I’d cut. I’d take a look at my dollars and discretionary projects and I’d start to reduce spending there on discretionary activities.
Traveling, going to conferences, try to reduce that as much as I could. Then I would start to take a look at within programs, activities that are supposed to occur throughout their year that are not essential to the operation of the program. I’ll give some examples — and I don’t mean they’re not useful. But for example, within a particular program budget, there are funds for people who work in those programs to go to training programs.
I would hold off on releasing those funds, so that what is left is central to the direct operations of that program. If you’ve got money for child-care funds, I might sacrifice — if I had to, it’s not a good sacrifice to make — I might sacrifice the training fund for child-care providers as opposed to subsidies for people to put their kids in child-care facilities. I'd ask, "What programs are high priorities within the administration and which are important but not the highest priorities within the administration?" I might take a look at some of those that aren't high-priority programs. Hopefully after all that, you’re close to the number you need.
Dylan Matthews: But let's say the worst happens, you do all that, the numbers still aren't right, and you really do have to cut services. What then?
Wade Horn: Again, the program line is what it is. I'd want not to have to sacrifice the delivery of services to citizens, I'd push those off. I'd think, "We may or may not get to a deal to avoid the sequester on March 1. It’s not impossible that after March 1 everyone sees all these reductions, and all these people have a greater incentive to agree to a compromise that restores the sequestration amount. So what can I push down the road a little bit, so that if that does happen I can just put that money back into the program budgets?"
So training budgets, your travel to go to conferences within specific programs. After three months a final deal is worked out so then you can use those funds and go to the training you need to do. It’s impossible to reduce per-recipient spending in such a way that that’s a wholesale asset of the program. So is it possible to reduce the spending by some percentage that’s difficult and challenging, so that it’s not that the program or an element of the program would go away? Instead of saying, "Let’s reduce it by X number of slots," ask, "Is it possible after you’ve done everything else to reduce the amount people spend?" It may not be possible. You want to take a really careful look at that. What you'd really need to do is reduce participation.
That’s a problem with the sequester. You’d fund everything that you’d want to fund, but money’s not everywhere. The problem with the sequester, in my view, is that it allows you to not make those difficult choices at the appropriations level. It's better to make a considered decision about which programs get reduced or eliminated than to take some arbitrary percentage and apply it across all the programs.
Dylan Matthews: Is there anything you could do with personnel?
Wade Horn: The thing you do is that you shut down all hiring. There’s always churn. People retire or go to other jobs and you’re replacing those people. The first thing I would do is say, okay, we’re going to shut down hiring. That’s a blunt instrument, and people in mission-critical positions you'd still want to replace. But we’re just going to put hiring on hold. Any discretion you have with travel, training, things like that, you'd use. Then you certainly, because there are people who get overtime, you'd say no more overtime. Then again, people aren’t taking overtime because they have nothing to do. They do it because there’s work to do. So it hurts.
Once I’ve done both those things, if you really have to do a furlough, generally what a furlough does is first in, last out. You can do voluntary retirements, early outs, if there’s anyone who’s eligible for retirement or close to retirement might take this as an opportunity to do an early out or an early retirement. So you talk about that with your staff. But the very last thing you want to do is reduce the force.
Dylan Matthews: If you were in this position, would you prefer it if, as some people want, you were just told, "You have to do a 5 percent budget cut. Concentrate it however you'd like." Or would that add too much pressure?
Wade Horn: It’d put a lot more strain on the assistant secretaries. In situations like this, my feeling is to provide the managers with some discretion but not complete discretion, because they’re closer to the budget than just about anybody, and if there are things that you can do, then it’s not just an across the board cut. There may be some activities that are less critical than others.