Trimming federal fat -- what Reagan's doing

If you think the dollar figures on a gas pump spin around fast, consider this: The US government spends money at the rate of $23,000 a second. That works out to outlays of about $734 billion for 1982. With a budget that large, you don't have to look hard for examples of misspent and wasted money:

* Russell Fierge of Mexico, Mo., was supposed to use the $100,000 Small Business Administration guaranteed loan to fund his Dixie Tree Service. But Mr. Fierge never went near any oaks or maples. Until he was caught last year, he spent the cash on himself - using it principally to speculate in commodities.

* The Commerce Department pumped thousands of dollars into Giant Step Inc., a Los Angeles-based organization expected to teach minority students entrepreneurial skills through the manufacture and sale of T-shirts. No one every received any training. Sixty shirts were purchased, but they were given to Giant Step's directors, as gifts.

* Since 1970, the Navy has spent $150 million to upgrade its payroll system. It still has a 50 percent error rate, according to a recently released White House statement.

* In today's computerized age, the Treasury Department still receives 3,000 pounds a month of adding machine tapes and paper vouchers from other branches of government - all of which must be manually entered into Treasury's data processing system.

These examples are small, but particularly egregious parts of a much larger picture of governmental waste. In 1981, about $24 billion - 4 percent of the budget - was waste, estimates the Congressional Budget Office. For decades, every administration, rattling their shears, has promised to snip this fat from government spending.

Last February, the Reagan administration joined in this historic assault on waste by launching the President's Private Sector Survey on Cost Control (PPSSCC) in the Federal Government.

Headed by Grace & Co. chairman J. Peter Grace, the PPSSCC is a team of approximately 1,500 business executives, grouped into 35 task forces, who have ventured behind the lines of the federal government in seach of waste and fraud.

This cooperative effort between business and government is expected to begin writing its final report next month.

''We're going to look at the government, and see where we can find overlap, duplications, unnecessary functions, red tape,'' says Adm. James Nance, executive director of the survey. ''This is really a motherhood thing. How could anybody be opposed to making (government) more efficient?''

Complementing the private sector survey will be a newly formed Cabinet Council on Management and Administration. The new Cabinet subgroup will implement money-saving suggestions from inspectors general and other existing executive branch programs, including the survey. It will also oversee the work of ''Reform '88'' - a task force of top government executives charged with overhauling government's Model-T management systems.

''What's happened before is that people have come up with great cost-cutting ideas, but haven't had a plan to implement them,'' said presidential counselor Edwin Meese when announcing the Cabinet council Sept. 22.

But the administration's attack on waste in government has itself drawn some fire.

The survey has been dogged from the outset by charges that some executive members were not disinterested observers of their assigned agencies, though Admiral Nance claims the PPSSCC has had ''a very careful watch over conflict of interest.''

The PPSSCC Agriculture Department team includes employees of Armour & Co., Quaker Oats, and General Foods, for example.

In addition, Rep. William D. Ford (D) of Michigan has chaired hearings investigating how far the PPSSCC is delving into sensitive policy issues. The PPSSCC, in return, has refused to give work papers or a complete list of members to Congress and the General Accounting Office. J. Peter Grace, pleading the press of business, has begged off appearing before Congress. Mr. Grace also declined to be interviewed for this article.

''We think they have exceeded their announced intent. It is clear they are dealing in policy matters,'' says a congressional committee staffer.

The staffer points to a PPSSCC work document which implies that federal employees should be forced to abandon their Civil Service Retirement program and enter the social security system.

''We don't get into policy unless we just sort of get led in,'' says Nance. ''We don't say you shouldn't have food stamps. But you might be led into a position, as you investigate, that finds some particular policy is costing you horrendous money, and it should be looked at.''

The PPSSCC has also been embarrassed by an internal memo calling for ''horrifying and ridiculous'' examples of waste to illustrate its coming report.

''That disturbs me a good deal,'' says one task force member who asked not to be identified. ''Let's just say some of the task forces do not feel that sort of thing is appropriate.''

Ronald Reagan is far from the first President to call in private management experts. A pair of two-year Hoover Commissions, one ending in 1949, the other in 1955, suggested a number of reforms - including creation of a department of Health, Education, and Welfare. In 1971, a president's advisory council recommended, among other things, formation of the Office of Management and Budget.

As director Nance admits, this subject has been ''studied, re-studied, and triple-studied.'' Will the PPSSCC come up with anything new?

''I was extremely skeptical at first,'' says task force member Wilson Johnson , president of the National Federal of Independent Business. But he says he's now convinced the survey will submit many fresh ideas.

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