Fire the Contractors
This article is from a cover package of essays entitled Ten New Ideas for the Democratic Party to Help the Working Class, and Itself. Find the full series here.
Donald Trump won the 2024 election on a promise to radically shake up the federal government. Voters were hungry for that message, as was obvious to anyone who looked at the polls, and even more from the election’s results. A Pew Research Center survey released in June 2024 found that 56 percent of Americans believed that government is “almost always wasteful and inefficient.” That belief is not new. From 1979 to 2015, Gallup asked Americans what percentage of every tax dollar they thought the federal government wastes. The answers ranged from 38 to 51 percent.
Of course, what constitutes “waste” depends on your point of view. Conservatives might think anti-poverty programs are wasteful but that defense expenditures are worth every penny; liberals might think the opposite. Navigating those disagreements is the job of Congress, which writes the laws and appropriates the funds. The president’s job is to “take Care that the Laws be faithfully executed,” with the laws and money that Congress provides. Or so the Constitution says.
In general, however, the voters aren’t wrong: The federal bureaucracy does waste too much of the money Congress gives it to deliver public services. It undoubtedly could deliver those services more efficiently and effectively. The Washington Monthly has been arguing for years that Democrats need to face this reality. Alas, the Joe Biden–Kamala Harris administration and Democratic leaders in Congress shut their ears—and now the party is shut out of power, without a tool kit for dealing with these issues.
The good news for them is that Trump’s plans for the federal government—which he has outsourced to Elon Musk and Vivek Ramaswamy and their ill-defined advisory group, the Department of Government Efficiency (DOGE)—are likely to upset voters, including his own.
That’s because Trump and his DOGE sidekicks both misunderstand the nature of the problem and risk undermining the government services that their base depends on. The primary source of government waste and inefficiency isn’t what they say it is: a bloated civil service insufficiently “loyal” to the president. Rather, as writers for this magazine—including yours truly (see most recently “Memo to AOC: Only You Can Save the Government,” July/August 2021)—have tried to explain, the problem is the opposite. Federal agencies have too few civil servants with the right expertise to manage the contractors who increasingly deliver the federal government’s services. The key to reducing waste and increasing efficiency is for the government to hire more high-quality government employees and shrink the number of contractors. And there’s even a huge opportunity here of bringing in the technology and people skills to remake government so it’s ready for the challenges of the future.
To grasp this counterintuitive point, it helps to look at the numbers. The federal government’s civilian employment now stands at 2.28 million people. That’s about the same as during the Lyndon B. Johnson administration. In the meantime, the U.S. population has increased by about 70 percent and federal spending has quintupled in inflation-adjusted dollars.
To handle this mounting workload, Washington has increasingly relied on contactors—not just to build hardware like fighter jets and levees, but to do much of the work that civil servants once did, from conducting security clearances to overseeing the work of other contractors. These “service contracts” are typically performed by giant firms like Booz Allen Hamilton and McKinsey, and then are often subcontracted to small companies most people have never heard of. Private contractors working for the federal government have grown to the point that they outnumber federal employees by more than three to one, according to a 2022 Brookings Institution estimate.
Sometimes these service contracts make sense and provide good value. It can be hard to get good expertise in the door fast. Too often, however, they are a taxpayer rip-off. A 2011 study by the Project on Government Oversight found that in 33 of 35 different government occupations, federal employees were less expensive than comparable contractors, even accounting for federal benefits. In the case of “claims assistance and examining” work, contractor rates were almost five times higher than the cost of having federal employees do the job. And according to a 2024 CBO analysis, workers in the highest-skilled positions—and these are the positions most likely to be contracted out—are paid one-fifth more in the private sector.
Privatizing federal work has made government not just more costly but also less effective. There are too few federal employees with the needed skills, charged with managing too many contractors. That’s led to endless cost overruns and policy snafus, which the press inevitably blames on Washington—and on incompetent federal bureaucrats. The fault lies in not having enough bureaucrats to begin with.
Fixing these problems will require a considerable increase in the number of civil servants, especially ones with the right training and experience to manage complex contracts. We need civil servants, in particular, with the skills to ensure that government is a smart buyer: that it can define what it needs, that it can choose who can best deliver it, and that it can be sure we get our money’s worth. An aggressive effort to fire expensive contractors and bring work in-house, combined with reasonable reforms of civil service personnel rules, would be the kind of dramatic overhaul that voters have been looking for. It’s just the reverse of what they’ve been told for decades: The key to more responsive government at a lower price is often having government employees do the work.
That is not, to say the least, what Trump and his DOGE advisers have in mind. Ramaswamy announced in the fall of 2024 that he’d like to fire all the feds whose Social Security numbers begin or end with an odd number. “Boom,” he said. “That’s a 75 percent reduction done.” His quip conveyed not only his contempt for federal employees but also his ignorance of how government works. No president has the power to fire mass numbers of civil servants. Congress sets personnel levels in the agencies.
In a Wall Street Journal op-ed after the election, Ramaswamy and Musk got more specific—if not more persuasive—in how they intend to achieve “mass head-count reductions across the federal bureaucracy” without asking Congress. Their plan begins with recent Supreme Court rulings that have checked the power of agencies to write expansive new regulations. These decisions, they say, also give the executive branch greater power to unilaterally rescind existing regulations. The president can then cut the federal workforce “at least proportionate to the number of federal regulations that are nullified.”
Assessing the merits of these legal arguments is best left to constitutional law scholars (see Peter Shane’s essay). As a student of public administration, however, I can say that if Trump and his team are relying on regulatory agencies for a substantial share of their civil service scalp quota, they are going to be mightily disappointed. That’s because the regulatory reductions they hope to achieve will require more feds, not fewer.
The statutorily defined procedures the Trump administration will have to follow to unwind regulations are as cumbersome and time consuming as the ones required to create them—and recent Supreme Court rulings don’t give the administration a pass on that. Agencies must justify their deregulatory proposals in writing, allow time for public comment, redraft their plans to take account of the comments, and respond to the almost inevitable legal challenges that groups and individuals will bring to court. That whole process can take years—and lots of government lawyers. The complexity of the process is a big reason why, in his first term, Trump failed to fulfill his pledge to cut the overall number of federal regulations (they actually went up a bit).
Even successful deregulatory actions typically require civil servants to enforce them. If, say, the Trump administration rescinds the Biden-era rule that colleges taking federal Title IX money can’t bar trans women from playing on women’s sports teams, federal staff will be needed to inform colleges that aren’t in compliance and handle the lawsuits that will inevitably arise.
Musk and Ramaswamy identify other means at the administration’s disposal to achieve major staff reductions and budget savings. One is aggressive use of “reductions in force,” or RIF, the rules the executive branch follows to carry out layoffs. Those rules, however, only apply under certain circumstances, such as when Congress fails to appropriate funds for existing programs. The idea that the president can RIF employees whenever he wants is farcical. A second route is to challenge the constitutionality of the 1974 Impoundment Control Act, which bars presidents from refusing to spend congressionally mandated funds. A third is to assert that the president is not obliged to spend funds Congress has appropriated but not reauthorized.
These assertions don’t pass the constitutional laugh test, either. But with this Court, who knows? So, for the sake of argument, let’s assume Trump and team get their way, and the administration is free to cut spending and staffing levels unilaterally to its heart’s content.
Most Americans won’t complain if the administration uses those powers to make a few, largely symbolic cuts—say, eliminating every DEI office in the government. But racking up even a fraction of the savings Musk and Ramaswamy have promised—half a trillion dollars a year—will require making cuts that Trump’s supporters won’t appreciate. In poll after poll, we’ve learned one thing for sure: Everyone wants to cut back on government. There’s no consensus, however, about which part of government to cut—and, in fact, most people want more of the government they themselves get.
The primary source of government waste and inefficiency isn’t a bloated civil service that’s insufficiently “loyal” to the president. It’s the opposite. Federal agencies have too few civil servants to manage the contractors who increasingly deliver the federal government’s services.
The employees at the dozen largest federal agencies together account for 75 percent of all federal jobs. Among them is the VA. Is the administration prepared to turn off health care for the veterans, from the constellation of military branches and agencies that Republican voters revere? Then there are the various agencies of the Department of Homeland Security, where, if anything, the Trump administration will want to increase employment—deporting millions of undocumented migrants will require a bigger, not smaller, workforce at Customs and Border Protection. And there’s the FAA, which is already struggling to keep planes flying on time because of the shortage of air traffic controllers. There’s the Bureau of Prisons; no one is going to want to turn convicted criminals loose because there aren’t enough prison guards. And then Social Security—try clogging up a payment system that provides half the income for two-thirds of the nation’s seniors.
That leaves 25 percent of all federal employees to manage the other 400 federal government agencies, from the Forest Service (should we just let fires burn the West Coast to the ground?) to the Coast Guard (the next boat in trouble might just have to sink to the bottom of the sea).
Radically reducing these vital government services would outrage the public. To avoid that result, but still fulfill their promise to cull the civil service, the Trump administration will surely be tempted to bring in even more contractors. As it is, the federal government spent $307 billion in salaries and benefits for government employees in fiscal year 2023. That’s a lot of money that Musk and Ramaswamy would love to slash. But, in the same year, it spent three times as much on private service contractors. If, at the end of four years, the contractor budget soars and total federal spending rises, will anyone care?
Maybe not, but here’s what voters do care about: disasters. Remember when the Obamacare website failed to work when it was unveiled? The problem was caused by federal managers who didn’t have the knowledge to oversee the contractors who built the website (and it was solved by adding experienced federal managers into the mix). Remember the George W. Bush administration’s incompetent response to Hurricane Katrina? That calamity was the result of the president putting inexperienced federal managers (“Brownie, you’re doing a heck of a job”) in charge of FEMA. And what about Trump’s own shambolic management of COVID-19, including, among other things, shutting down the Obama administration’s pandemic preparedness office and failing to resupply the strategic stockpile with ventilators and other medical equipment?
Each of these debacles did serious political damage to the administrations in charge. In fact, the point at which Bush’s negatives exceeded his positives and never recovered was in the immediate aftermath of Katrina. In Trump’s case, it may have cost him the 2020 election. Yet these fiascos will seem like fender benders compared to what could happen over the next four years if the Trump administration decimates the civil service and tries to fill the void with more contractors, who are left home alone without oversight to make sure they’re giving taxpayers what they’re paying for.
During the campaign, Trump promised that his government efficiency commission would “develop an action plan to totally eliminate fraud and improper payments within six months.” Musk and Ramaswamy echoed those claims in their Wall Street Journal op-ed. It’s true that there are big savings to be had. The Government Accountability Office estimates that improper payments have totaled $2.7 trillion since fiscal year 2003 and that the federal government is losing somewhere between $233 billion and $521 billion each year to fraud. In Medicare, for example, a fraud ring was submitting bills for unnecessary medical equipment, which led to before overbilling of more than $2 billion since 2022.
The reason we aren’t doing more to rein in fraud and overpayments, however, is not a lack of will but insufficient federal staff capacity and technological muscle. Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) account for roughly 23 percent of all federal spending, but the agency that oversees that spending, the Centers for Medicare and Medicaid Services (CMS), employs just 0.2 percent of all federal employees. Critics pounced on Trump’s appointment of Dr. Mehmet Oz for lacking experience in running a large bureaucracy. But CMS isn’t a large bureaucracy—it’s a small bureaucracy charged with overseeing a mammoth contractor system. Seniors visiting their doctors are often told, “We’ll see if Medicare will pay for this.” It’s a safe bet that it’s not CMS but a private contractor that ultimately makes the call about what public money will pay for.
Fixing the problem requires more feds with better IT to detect and correct the overpayments and find the fraudsters. If Trump cuts the CMS workforce, all these problems will surely get worse.
Of all the unilateral power grabs Trump has announced, none is more frightening—to liberals, at least—than “Schedule F.” This is the plan to strip job protections from 50,000 senior civil servants and essentially turn them into political appointees who can be dismissed at will, all the better to ensure their “loyalty” to his agenda. Schedule F is also, alas, the most constitutionally defensible of his plans—presidents really do have significant power to make civil servants at-will employees. Legality notwithstanding, Schedule F is a terrible idea for all kinds of reasons, including its potential unworkability. No administration in recent memory has filled all its 4,000 current political appointees, let alone the 50,000, because it’s hard to recruit individuals with the right expertise for jobs that don’t pay a lot and that they might lose in the next election. But for our purposes, two aspects of the plan are most relevant.
The first is that the senior civil servants most likely to become Schedule F employees are also the ones most likely to have supervisory roles over contracts. If the administration replaces capable people with loyalists who have less contractor oversight experience, all the problems of the current system—cost overruns, performance failures, fraud, overpayments—will get worse.
The second is that politicization of the civil service could lead to politicization of contracting. For all its faults, the government’s traditional contracting system generally follows accepted legal procedures in everything from choosing the best contractors to overseeing their work. But with loyalists in charge of the process, it wouldn’t be hard for the administration to steer contracts to firms it sees as friendly (because, say, their executives provide sizable campaign contributions to the GOP) and away from those it deems unfriendly (because its executives give to Democrats). This kind of political control over government contractors is common in illiberal counties like Hungary, Turkey, and Russia. And it tracks with how Trump governed in his first term—when, for instance, he used antitrust enforcement to reward his friends in industry and punish his enemies. But if the administration goes in that direction, it will be hard to hide from investigative reporters, inspectors general, and anyone else who bothers to look—especially if Elon Musk maneuvers to garner special deals for his own companies.
There’s a high likelihood, in other words, that four years from now, voters who supported Trump and his MAGA plans to shake up the government for the benefit of the American people will feel swindled. And they might just be ready to support those who have a different and better plan for government reform.
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