How DOGE can cut waste: Pay government to cut itself

Source ideas from rank-and-file bureaucrats and cut them in on the savings.

Elon Musk and Vivek Ramaswamy’s “Department of Government Efficiency” (DOGE) is shaping up to be a high-stakes, high-profile effort at overhauling the federal government. Whether it proves to be serious and effective remains an open question—so far the signs are decidedly mixed. 

As folks toss around their ideas for turning DOGE into a force for a leaner, more effective federal government, I’ll offer one of my own: Pay government to trim itself by cutting bureaucrats in on savings. 

Here’s how it would work: When Congress passes a rescission package that revokes prior appropriations for a particular office or program, federal employees within those offices get a cut of the savings, up to some cap. If HUD’s Office of Community Planning and Development, for instance, finds it can accomplish the mission given to it by Congress with $1 million less than what it was appropriated, its employees can share (ten percent?) those savings, divided up into equal-sized bounties. 

Today, when the clock is running out on Congressionally-appropriated funds, bureaucrats face a “use it or lose it” incentive. Funds that an office or agency doesn’t spend (or commit to spend) in the prescribed window essentially evaporate. This chart from the Congressional Research Service demonstrates how this works:

If an office can accomplish its mission with merely 90 percent of what Congress gives it, appropriators will come back with a budget the following year that is ten percent smaller. So offices have a completely rational incentive to spend everything Congress gives them, even if those last few dollars are effectively set on fire.

For an incoming, reform-minded administration intent on cutting waste, the hundreds of offices and agencies responding to this incentive can be hard to track. Their responses are even harder to combat and corral into regular rescission packages sent to Congress.

Bounties would counter the incentive to get every last dollar out the door by giving rank-and-file federal employees a direct, personal stake in saving their agencies and offices money.

Broadly-shared bounties—as opposed to larger rewards for program or agency directors—would have a few additional benefits:

First, sharing the benefits of cutting waste aligns everyone’s incentives. Directors overseeing an office who have either a sincere motivation to trim costs or a large (un-shared) personal reward for doing so can easily be resisted by hard-to-discipline subordinates. Offices making unpopular cuts may still face resistance, but the marginal rebel can be “bought off” by the promise of a cushy bonus.

Second, shared bounties take advantage of the deep knowledge and experience widely distributed throughout the federal workforce. GS-9-level analysts and program managers in every agency are likely aware of small but common instances of waste that higher-ups know nothing about. Indeed, as

Kevin Hawickhorst

writes, Al Gore’s Reinventing Government initiative owed much of its success to relying on and coordinating with the civil service, rather than business world outsiders, to source reform ideas.

Finally, creating a bottom-up incentive to identify savings should make it easier to build and coordinate rescission packages in the first place. This is an Executive Branch muscle that has largely atrophied. Congress has not adopted a rescission package proposed by the President since the Clinton administration. Uncooperative offices can simply run out the clock or slow-walk directives from a politically-appointed boss to identify potential savings. In a world where bureaucrats get paid to save the government money, they would be more likely to source ideas from their subordinates and pass them up the chain.

Such an incentive scheme would yield an initial flurry of cuts. But just as importantly, keeping it in place long-term would gradually change the cultural norms within federal agencies from the bottom-up. Thrift would be rewarded across government, while identifying ways to give money back to taxpayers would become just another common, boring, day-to-day activity of the federal bureaucracy.