at every stage of the policy process, but also puts a premium on protecting OMB’s reputation as a trusted source of facts and analysis, a reputation that enables OMB to often be the arbiter of fact.
This dual capability is a powerful combination. In the 1980s, as domestic policy advisor to House Speaker Thomas P. O’Neill Jr., I staffed many budget negotiations with OMB directors. I was struck that, in addition to deep familiarity with a broad range of issues, Dave Stockman always had thick binders filled with tabs on every item we would discuss, and as we hit one impasse after another, he would open the book and suggest alternatives to keep the conversation moving until we were able to reach an acceptable compromise. No one else in the room had a similar book with what seemed like infinite options. That book was not just a reference tool; it was a source of real power to shape outcomes.
I did not imagine then that I would be the bearer of those binders not once but as OMB director for two presidents, and that I would rely on many of the same career professionals to drive complex negotiations touching so many aspects of federal policy. Like Stockman, I gained broad familiarity with the many details of federal activities, but my ability to operate effectively was enhanced exponentially by the encyclopedic preparation contained in those notebooks and the many briefings associated with them. Whether health care, defense levels, income transfer, or any other programs, OMB has the ability, with a small footprint in each area, to draw on the agencies and their own expertise to cover the entire terrain of the federal government.
To be effective, OMB directors need the trust of the president. But to add real value for the president, they need to see across the landscape of all federal activities and make trade-offs to achieve the best possible outcomes to advance administration priorities. With expertise and strategic perspective across different policy areas, OMB has the tools to coordinate within the executive branch and work effectively with Congress. And not just at the level of OMB director, but down to program examiners who frequently have a major voice not just on funding decisions but also on questions of program design, implementation, and evaluation.
This is a long way of saying that OMB career staff are key to maintaining OMB’s integrity as an analytic agency, and to balancing the dual functions of OMB’s mission: policy analysis and policymaking.
The line between career staff and political appointees can be clearly articulated: career staff do the analysis and present options, often with recommendations, and political appointees make final policy decisions. But this line can be harder to discern as one delves into the intricate detail of technical decisions, which often do not rise to political appointees.
As many in this room know well, OMB career staff often hold strong views on the right path forward. But the measure of their impact is not simply whether their preferred position is followed but whether their analytic work informs the final decision. Career staff understand that every administration will have its own policy inclinations; the challenge is to make sure that whatever the political leanings of “policy officials,” as political appointees are fondly called by the career staff, decisions are informed by the facts and the best analysis possible.
For policy officials, the challenge is to develop relationships of trust and respect with a career staff who only a day before may have worked for a political team with very different policy views. That comes more easily to some than others, but ultimately evolves out of necessity, and to be effective, the sooner that happens the better.
OMB directors give straightforward guidance on funding levels during annual budget reviews that walk agency by agency, and often line by line, through the details of the president’s annual budget. My practice at the end was to do a final pass, asking, “What should I know now that we did not cover, so I will not be surprised later?”
But each day, examiners, branch chiefs, and deputy associate directors—all career staff—take actions on a myriad of issues, ranging from apportioning appropriated funds to approving how many staff positions can be filled at agencies, and providing a green or red light to proposed rules. No OMB director can pass judgment on each item. Program associate directors, the senior political appointees who sit between the career staff and the OMB director, oversee this process, and even they do not review each of the thousands of matters that come through OMB for approval.
In my experience, OMB staff work very hard to carry out policy guidance. Branch chiefs and deputy associate directors train every new analyst to understand how important it is for policy officials to provide policy direction, even if general guidance sometimes needs to be interpreted. Of course, budget examiners sometimes make choices that policy officials disagree with and occasionally actions are reversed, but these are unusual exceptions, and even more rarely are they willful.
Every OMB director has his or her own style. I know that, for better or worse, I had the reputation of wanting a great deal of detail, though I tried very hard not to micro-manage. For me, working directly with the full team was the best preparation for meetings and negotiations, where I would have the distinct advantage of more and better information. And nothing reflects serious consideration of staff work better than questions that show you absorbed a memo or a presentation and are probing to understand it fully. This Socratic process might lead to a simple decision to approve a staff recommendation, but also may reveal ambiguity or a need for further analysis. Even when a director manages at a higher level of detail, as some do, and more through senior and middle level staff, policymakers still need to receive the best possible information and analysis, and to provide at least outlines of guidance.
During my first tour, OMB had roughly 500 people, and there are fewer today. Whether 450 or 500, OMB punches above its weight, and as its numbers shrink, the responsibilities are only growing. When Congress looks to delegate assignments requiring analytic rigor and sound execution, it frequently turns to OMB, but rarely with additional resources, further stretching the institution and its career staff.
It is important to also recognize what OMB is not. Unlike many countries where revenue and spending both are in the Finance Ministry, since the Bureau of the Budget was moved from Treasury to the White House in 1939, we have divided these responsibilities. From the perspective of leading both institutions and knowing the workloads, the decision to separate the functions in our system is wise, but it creates a need for coordination.
Fiscal projections and fiscal policy require spending and revenue to come together in a single budget. And the scope of negotiations with Congress often entails trade-offs between tax and spending policy. Unlike Congress, where coordination can be challenging because of jurisdictional lines between independent committee chairs, all executive branch departments report to the same president, and typically negotiating teams are overseen by the White House chief of staff and include senior assistants to the president like the head of the National Economic Council. Some White House chiefs of staff, like Leon Panetta and myself, who were former OMB directors will engage in great detail. Others will play more of an oversight role. But in negotiations, OMB leadership typically keeps track of all the moving pieces and helps the president and chief of staff make the hardest trade-offs across policy areas.
In major budget negotiations in the 1980s, 1990s, and since, OMB, Treasury, and the White House were joined at the hip. This led to historic agreements like the Andrews Air Force Base negotiations in 1990 that produced the Budget Enforcement Act and the Balanced Budget Agreement in 1997. And sometimes success was to avoid disaster, like in 2012 when we were hours or days away from default.
I am particularly proud that many negotiations improved our fiscal position while protecting or expanding critical programs ranging from health care coverage to the Earned Income Tax Credit and ensuring sufficient room in annual appropriations for urgent priorities like education, research, and infrastructure. And even when negotiations fail to produce major positive outcomes, like 2012, which produced the Budget Control Act but not a grand bargain, OMB was still able to drive policy discussions to produce a menu of deficit reduction options capable of winning bipartisan support. Those options became building blocks in later years to avoid damaging cuts through sequestration—the actual product of the 2012 agreement to avoid default.
Administrations and congressional negotiators rarely get everything they want in a budget negotiation. The Reagan budget deals had more health care savings than congressional Democrats wanted,