"Government Is Run Horribly"

By Ed Magnuson

A panel uncovers waste and names names, sort of

The warning: annual federal deficits will run as high as $2 trillion by the end of the century if current trends continue. The alternative: annual savings in federal spending can amount to $1.9 trillion by the year 2000 if the Administration and Congress implement each of some 2,500 highly specific businesslike reforms in the way the Government operates. The budget, moreover, can be balanced without raising taxes or curtailing the military buildup if governmental waste and inefficiencies are cut out.

Those grand findings should ring melodically in Ronald Reagan's politically attuned ears, for they totally conform to his views about runaway federal spending. Unfortunately for his Administration, they also contain jarring criticisms about how he is managing the Government. The conclusions are the work of a task force of 162 corporate executives* and their staffs, which toiled for 18 months turning out 2,300 pages on Government inefficiency. The group finished last week with the claim that it had pinpointed ways in which $424.4 billion can be saved in just the next three years.

"The Government is run horribly," declared the task-force chairman, J. Peter Grace, 70, the flamboyant head of the New York-based W.R. Grace & Co. He noted that the Pentagon had been paying $91 for screws that cost 3-c- "in any hardware store." He charged that the Federal Government has failed to collect some $100 billion each year in taxes that are owed it. "If you're still paying taxes," he said to his audience, "hi, sucker."

The task force presented what it called "random examples of bureaucratic absurdity" and noted how much could be saved over three years if the practices were stopped. Among them: the failure of the Government to negotiate discounts on freight charges with high-volume shippers ($530 million); spending by the Veterans Administration of $61,250 a bed to construct its nursing homes rather than the $16,000 common for private homes ($474 million); maintaining 12,469 post offices that serve fewer than 100 people each ($272 million); failure to keep money seized from criminals in interest-bearing accounts ($50 million).

The Grace group's big-ticket items will be politically difficult to change. Some $30 billion could be saved over three years, it contends, by raising the average civil service retirement age from 55 to the private sector's prevalent 64 and scaling back cost of living increases. Noting that military personnel can retire after 30 years of service at about 75% of base pay, the survey said $26.1 billion in spending would be cut by making benefits for future military retirees more comparable to civilian pensions.

The commission also investigated the perennial problem of getting Congress to go along with the closing of unneeded military installations and the abandonment of various expensive public works projects. The response by top bureaucrats to questions about Congress was not enthusiastic. Officials in the Defense Department, the Veterans Administration and the Environmental Protection Agency refused to name congressional culprits. Officials in at least two agencies would not meet the investigators face to face. Instead, questions were sent to them in unmarked envelopes and the answers went back the same way, written on paper bearing no letterheads. As one assistant secretary explained: "Long after your report is forgotten, we'll have to deal with these committees in Congress, and it would be suicide for us to cooperate with you."

Grace's team persisted and by last month had produced a 263-page report listing some 150 examples of legislative opposition to needed reforms and naming the big spenders in Congress. When the group closed up shop last week, however, the specific boondoggles had been deleted and the report no longer named names. Grace contended that so many instances of congressional meddling with sound business practices had been found that it was impossible to list them all and unfair to cite only a few examples.

The unexpurgated first draft of the report, however, promptly leaked. It praised some members of Congress for placing the national interest above their home-district concerns (Democratic Representatives Les Aspin of Wisconsin and Patricia Schroeder of Colorado and Republican Congressman Silvio Conte of Massachusetts). It also noted candidly that some of the best-known legislators had dipped into pork-barrel politics. Among them: Democratic Presidential Candidate Ernest Hollings and Republican Senator Strom Thurmond, both of South Carolina (for fighting to keep Fort Jackson, near Columbia, open); Republican Senator Robert Dole of Kansas (for preventing the closing of a Housing and Urban Development Department office in Topeka); Senate Minority Leader Robert Byrd of West Virginia (for protecting a money-losing Amtrak route through his state); Democratic Presidential Contender John Glenn and his Ohio colleague Howard Metzenbaum (for stopping the transfer out of Cleveland of 19 attorneys from the Justice Department's antitrust division).

Reagan is considering appointing a new bipartisan panel to forge a consensus on the tough tax and spending measures needed to reduce the nearly $200 billion deficit. He will undoubtedly find the Grace report of great help as he tries to score rhetorical points in his continual campaign against congressional spendthrifts, even those in his own party. But the findings also pose a political challenge. If such huge savings are possible, Democrats can ask, why has Reagan failed so dismally at cutting waste?

--By EdMagnuson. Reported by Neil MacNeil/Washington

* Among the most prominent panel members were Bennett Archambault, chairman of Stewart-Warner Corp.; Edward N. Ney, chairman of Young & Rubicam Inc.; and Wilson S. Johnson, president of the National Federation of Independent Business.

With reporting by Neil MacNeil.Washington