John J. DiIulio Jr., a professor of political science at the University of Pennsylvania and a member of the National Academy of Public Administration, served as the first director of the White House Office of Faith-Based and Community Initiatives under President George W. Bush. He is the author of “Bring Back the Bureaucrats,” from which this essay is adapted.
We all know that the federal government has gotten a lot bigger in the past half century. In 2013, Washington spent five times what it spent in 1960, adjusted for inflation. Annual federal spending doubled between 1960 and 1975 — and had doubled again by 2000. And dozens of bureaucracies created after 1960, from the Environmental Protection Agency (1970) to the Department of Homeland Security (2002), dot the federal landscape.
And yet, the number of federal civilian workers (excluding postal workers) has barely budged. When George W. Bush became president, the executive branch employed about 1.8 million civilians, about the same as when John F. Kennedy won the White House. There were more federal bureaucrats (about 2.2 million) when Ronald Reagan won reelection in 1984 than when Barack Obama won reelection in 2012 (about 2 million).
How is this possible, when Washington is doing so much more?
This is the dirty secret behind all those debates over the size of government. Yes, government is big and is dangerously debt-financed, but it is also administered by outsiders — and that is what guarantees that our big government produces bad government, too.
Post-1960 Federal America has become a grotesque Leviathan by proxy, in which an expanding mass of state and local government workers, for-profit contractors, and nonprofit grant recipients administers a vast portion of federal money and responsibilities. Beginning in the 1960s, the War on Poverty, the Vietnam War, and growing public demands for Washington to do more on issues from street crime and health care to environmental protection and veterans affairs led to government’s expansion.
Members of Congress and blue-ribbon panels calling for cuts in the federal workforce are missing the real problem. We don’t need fewer federal workers; we need more of them — a lot more. More direct public administration would result in better, smarter, more accountable government.
Right now, that administration is too diffuse. Look first at the states, where the federal government spends more than $600 billion per year on more than 200 grant programs for state and local governments, a 10-fold increase, in constant dollars, since 1960. And while the post-1960 federal civilian workforce has remained steady, the state and local government workforce has roughly tripled to more than 18 million. Many state workers function as de facto federal bureaucrats. For instance, the largest single item in most state budgets is the federal-state Medicaid program, and Washington covers about half of that program’s administrative costs. And more than 90 percent of EPA programs are administered by state and local agencies that together employ many times the EPA’s workforce of less than 20,000.
The federal government also spends more than $500 billion a year on contracts with for-profit firms. The Pentagon alone obligates more than $300 billion each year to private contractors, much of it through more than 100,000 single-bid contracts. The contractors do everything from design and deliver major weapons systems to supply on-the-ground security forces. The Defense Department has roughly 800,000 civilian workers — plus the equivalent of about 700,000 full-time contract employees. In 2010, it was revealed that the Department of Homeland Security had more contract employees (about 200,000) than federal bureaucrats (about 188,000). And the Energy Department spends about 90 percent of its annual budget on private contractors, who handle everything from radioactive-waste disposal to energy production.
Even less well understood than the military-industrial complex is the entitlement-nonprofit complex. The nonprofit sector has grown to encompass about 1.6 million organizations registered with the Internal Revenue Service, plus thousands more tax-exempt groups that are not required to register. The registered nonprofits have about $2 trillion in annual revenue. Roughly a third of that money comes from government grants, along with fees from the government for services and goods.
These three players — state and local governments, contractors, nonprofits — are often involved simultaneously in large federal programs. For instance, the American Recovery and Reinvestment Act of 2009 was a roughly $800 billion “stimulus bill” that dedicated about $250 billion to 80,000 federal grants, contracts or loans to state and local governments, for-profit businesses, and nonprofit groups.
America’s Leviathan by proxy consumes as large a share of the nation’s gross domestic product (more than a third) as many supposedly more statist European governments do. Yet, the U.S. government cannot predictably, reliably and cost-effectively do what our laws dictate that it must — whether cleaning up toxic-waste sites, collecting income taxes, supplying eligible low-income children with meals in the summer, or getting major weapons systems delivered on time and within budget.
Leviathan by proxy has had its well-publicized implosions. Just over the past decade, we’ve witnessed the Federal Emergency Management Agency’s failed response in 2005 to Hurricane Katrina , which hit when FEMA had only about 2,100 permanent, full-time employees and had recently lost many senior managers. And the 2013 launch of the Obamacare health insurance exchanges, which involved scores of contractors and was overseen by a federal center with fewer than 5,000 employees. And the recent scandal at Veterans Affairs hospitals, whose “contract officer’s representatives” are too few to properly monitor what the small armies of contractors at VA medical centers do.
Beyond such well-publicized meltdowns, the Leviathan by proxy routinely courts administrative debacles on chores as distinct as handling plutonium or regulating the use of pesticides. Worse, with little regard for performance or results, Washington’s proxies lobby for federal policies, programs and regulations that they are paid to administer. The proxies rarely lose, which is a big reason government never stops growing.
Big government masquerading as state or local government, private enterprise, or civil society is still big government. And privatization that involves “acquisition workforce” bureaucrats contracting out work to entrenched interests is not really privatizing. The growth of this form of big government is harder to constrain, and its performance ills are harder to diagnose and fix, than they would be in a big government more directly administered by an adequate number of well-trained federal bureaucrats.
Today’s federal civil service is not bloated — it is overloaded. We have too few federal bureaucrats monitoring too many grants and contracts, and handling too many dollars. Many federal agencies are in crying need of more workers. By 2025, for instance, the number of Social Security beneficiaries will exceed 85 million , and the Social Security Administration will disburse nearly $1.8 trillion a year. But the SSA projects that it could lose a third of its workforce by 2020, when some 7,000 headquarters workers and 24,000 field employees become eligible for retirement. Unfortunately, in recent years, because of a congressionally mandated hiring freeze, the SSA has been unable to fill positions left open by employee retirements.
Donald F. Kettl, the great public administration scholar at the University of Maryland, has been warning about these distortions of America’s government for a quarter-century. He argues that progressively fewer federal bureaucrats have been progressively more responsible not for managing government programs, but for managing proxies who manage programs on the government’s behalf.
So how can we both shrink and improve our Leviathan by proxy? It may be that the only practical way is to slowly cut funding for the nonessential proxies and rely more on full-time federal civil servants to directly administer federal policies, programs and regulations. Paradoxical though it may sound, more federal bureaucrats means less big government, and more direct public administration means better government.
A 2011 report by the National Academy of Public Administration and the Kettering Foundation concluded that programs operated by civil servants receive “significantly higher” scores for management and effectiveness than those run by “grant- and contract-based third parties.” Efforts like the one underway at the Department of Transportation to reduce the number of information-technology contractors, for example, are promising. Over time, hiring more federal workers while pruning proxies will not only reduce the size of government, but will produce a federal government less beset by grant-seeking and contract-mongering special interests, one that is more faithfully executed by the executive branch, and one that is less bungled by Congress and its dozens of dysfunctional administrative oversight committees and subcommittees.
Of course, there are many steps on this path. We need to reinvent federal grants-in-aid to states, drain the federal for-profit contracting swamps and wring more public value from grants to nonprofits. But we also need to hire more federal bureaucrats and do a far better job of training, equipping and — not least — respecting them.
How many more federal bureaucrats are needed? Here’s a rough measure: In 1965, the ratio of full-time federal civil servants (1.9 million) to the total U.S. population (193 million) was about 1 to 100. In 2013, with a civilian workforce of 2.1 million and a U.S. population of 316 million, that ratio was about 1 to 150. The Census Bureau estimates that the nation’s population by 2035 will be about 370 million.
If the federal workforce grew back to its 1965 ratio, then by 2035 it would need to have 3.7 million employees. If, instead, the federal workforce merely maintained its 2013 ratio, then by 2035 it would have about 2.5 million workers. The midpoint would land the federal personnel roster at about 3 million by 2035, with roughly 1 federal bureaucrat for every 125 citizens.
Crude as it is, that calculation is probably in the ballpark of what’s needed: 1 million more full-time federal civilian workers by 2035. Looking at present and potential personnel needs agency by agency, it is hard to imagine doing with fewer federal bureaucrats by then, not unless we intend to have each worker managing still more tasks, more money, more proxies.
The way to restore limited government is to roll back leveraged government. Of course, even if we hire and train 1 million more federal bureaucrats over the next two decades, Big Brother will still be outsourcing more than it did a half century ago. The Leviathan by proxy is here to stay. But it can be tamed, trimmed and improved. It is past time for we the people to understand it — and to accept our collective responsibility for it.