Policy Documents

No. 67 Thoughts from the Business World on Downsizing Government

Donald Rumsfeld –
August 1, 1995

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1. Five Steps to a Smaller, More Effective Federal Government

  • Define the "Core" Business. Although they are vital, Total Quality Management, procurement reform, and streamlining middle management are not a substitute for addressing the most central issue: what is the core business of the federal government? All other activities should be eliminated, downsized, reorganized, moved to state and local governments, or privatized.
  • Cut Sharply and Rapidly. Whatever Congress does to downsize the federal government, the odds are overwhelming that it should have done more, rather than less, and that it should have done it sooner, rather than later. There are so many pressures to keep the status quo that the most frequent mistake is to make too few changes or to cut too little. Don't try to cut the dog's tail off one inch at a time, hoping it won't hurt as much.
  • Eliminate Bureaucracies. In less than seven months, Scott Paper Co. cut 71 percent of its headquarters staff, 50 percent of management, and 20 percent of the hourly employees. Using Scott Paper's experience as a guide, we can estimate that some 140,000 managers could be cut from the federal government payroll immediately, saving taxpayers billions of dollars.
  • Redesign the Organizational Chart. Probably one-half to two-thirds of the federal government's non-central departments are no longer needed in their current form. For example, the 93-year-old Department of Commerce lacks a clear sense of mission and duplicates the work of dozens of other departments and agencies--a clear sign that taxpayers could do without it. The same likely could be said for other departments, such as Energy, Housing and Urban Development, Education, Transportation, Veterans Affairs, and the Appalachian Regional Commission.
  • Don't Micromanage. Smaller government will remain an unachievable goal if Congress continues to try to tell the Executive branch when to turn right, turn left, speed up, or slow down. Too many hands on the steering wheel will put the truck in the ditch.

2. Three Proposals for Congress

  • Stop giving Members of Congress credit for pork. Congress should end the practice whereby Members of the House and Senate announce federal grants, contracts, and projects in their home states and districts. As long as we continue giving "credit" to Members who secure federal dollars for their home states or districts, an incentive will remain for involving Washington in many activities that belong in the private sector or with state or local governments.
  • Privatize where possible. Government programs are effectively insulated from the rigors of the marketplace, and therefore are denied the possibility of failure. Sometimes, nothing short of outright privatization can restore the discipline of a bottom line.
  • Sell under-utilized assets. I have trouble understanding why the federal government should be borrowing over $200 billion a year to cover its deficit when it is sitting on billions of dollars of assets that could and should be sold to the private sector to raise cash, and which would then be forced to operate on a more cost-effective basis.

3. Conclusion

The choices to be made by Congress affect real people with careers, mortgages to pay, and families to raise, to be sure. But Congress oversees an enterprise facing bankruptcy, and the consequences of not acting now, swiftly and firmly, will be devastating for a far greater number of people. The right decisions made now, however tough, can help to restore the long-term health of the government, our economy, and our country.


Based on Heartland Policy Study #67, "Theoughts from the Business World on Downsizing Government," by Donald Rumsfeld. Printed copies are available from The Heartland Institute for $10.00 each. can also download the full text, free of charge, in Adobe's PDF format; click here.

Copyright 1995 The Heartland Institute. Nothing in this Executive Summary should be construed as reflecting the views of The Heartland Institute, nor as an attempt to aid or hinder the passage of any legislation. Permission is hereby given to reprint or quote from this Executive Summary; please send tearsheets to The Heartland Institute, 19 South LaSalle Street, Suite 903, Chicago, Illinois 60603.

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