As Lane Kirkland, former president of the AFL-CIO, famously declared: “Any jackass can draw up a balanced budget on paper.” Indeed, as the recently announced “Super Committee” begins to look for ways to save $1.5 trillion over the coming decade, it might want to go beyond what theoretically looks good on paper and consider looking at what one Cabinet department actually did to bring its budget under control. Under eight years of leadership by Secretary Elaine L. Chao, the Department of Labor actually cut discretionary spending. And it wasn’t simply a cut in anticipated spending that still leaves actual spending higher than before. The absolute level of spending fell. Discretionary budget authority fell from $12 billion in fiscal year 2001 to $11.8 billion in 2008.
That $200 million reduction represents the largest decline in discretionary budget authority of the 15 Cabinet departments from fiscal 2001 to 2008. In fact, DOL was the only Cabinet department to lose discretionary budget authority during that period. The Department of Transportation, the next most “frugal” department, got by on a 12.9 percent increase in discretionary budget authority. Across all Cabinet departments, discretionary budget authority skyrocketed 83.5 percent.
How was Chao able to achieve what 14 other departments could not? DOL maintained a slightly better than flat-line discretionary budget over eight years by, among other things:
• cutting costs associated with “departmental management” by 22 percent;
• reducing its work force by 7 percent;
• reducing the number of vehicles it leased by 11 percent;
• slashing the number of toll-free phone numbers by 77 percent;
• cutting the items on its “Regulatory Agenda” by 46 percent; and
• closing 112 offices and releasing 100,000 square feet of redundant office space.
During this time, DOL effectively administered the 180 laws under its responsibility, collected over $1.4 billion in back wages for more than 2 million workers, and obtained more than 900 convictions of corrupt union officials while receiving eight consecutive clean audits. DOL proved that controlling spending — not just reducing the rate of growth — is possible.
Unfortunately, two of the first bills President Obama signed — the “stimulus” bill and the omnibus spending bill — increased DOL’s fiscal 2009 discretionary budget authority by $6 billion. After eight years of frugality, DOL’s discretionary budget authority ballooned 50 percent in a single year!
Though DOL’s discretionary budget authority has fallen somewhat since fiscal 2009, it remains substantially above its fiscal 2008 level. The Obama administration’s latest budget proposes to reduce DOL’s discretionary budget authority even further (although never back to the fiscal 2008 level) in the years that come, but budget cuts that far in the future rarely materialize as planned on paper.
Because the Obama administration is unlikely to lead DOL back to its 2008 spending level, it falls to Congress — and that includes the “Super Committee” — to lead the way. Reducing DOL’s fiscal 2012 discretionary budget authority to its fiscal 2008 level and freezing it at that level for five years would, relative to the administration’s latest budget, save taxpayers more than $4 billion. Applying the same restriction across the federal government (excluding the Department of Defense) would save $58 billion next year alone.
If the “Super Committee” pays close attention to the example set by Chao, it will come away with at least three lessons: First, discretionary spending can be reduced in real terms. Second, cuts need not interfere with Cabinet departments’ responsibilities if the cuts are carefully targeted. Third, Kirkland was right; although “any jackass” can make budget cuts on paper, real cuts require hard work and a strict focus on achieving an agency’s core mission.
Patrick Pizzella was assistant secretary for administration and management at the U.S. Department of Labor from 2001 to 2009. James Carter was deputy undersecretary for international affairs at the U.S. Department of Labor from 2006 to 2007 and, more recently, served on the staff of the Senate Budget Committee.
