The Office of Management and Budget (OMB) functions as the primary budget office for the Executive Branch of the federal government. The OMB oversees the budgetary activities of various federal agencies for the White House and offers advice to senior White House officials on policy, management, legislation, regulatory, procurement, e-gov, and budgetary functions. One of the largest tasks assigned to the office is preparing the President’s annual budget request submitted to Congress, a document that runs into the thousands of pages. Over the last 30 years, the agency has sometimes found itself in the thick of political debates over balancing the federal budget. Its most famous director, David Stockman, became a high-profile figure (unlike most OMB officials) during the 1980s when President Ronald Reagan declared war on big government and attempted (unsuccessfully) to shrink the size of federal agencies.
In 1921 the Bureau of the Budget was established as part of the U.S. Department of the Treasury, according to the Accounting Act. The Treasury Department continued overseeing the budget office until 1939, when the Executive Office of the President (EOP) was given authority over the bureau.
In 1970, during the Nixon administration, the Bureau of the Budget was reorganized and renamed the Office of Management and Budget (OMB). In the 1990s, it was further reorganized to combine management and budgetary staff responsibilities under the heading of the various Resource Management Offices.
Historically, the OMB and its predecessor have quietly gone about its work, leaving public debates over the state of the federal budget in the hands of the White House or Congress. The exception was David Stockman, President Ronald Reagan’s first director of OMB.
Stockman entered the White House a true believer in supply-side economics and was gung-ho about radically shrinking the size of government. His ambition to cut federal spending made him a poster child for Reaganomics and a much despised figure among liberals. Despite his zeal, Stockman failed to achieve significant budget cuts in federal spending, which, combined with Reagan’s tax cuts, caused massive budget deficits in the 1980s. A story in the Atlantic Monthly depicted Stockman as a brilliant young conservative idealist who gradually became disillusioned with the conservative movement’s grand theories about how the world worked. Stockman expressed his own disgust with the political process in his memoir, The Triumph of Politics: Why the Reagan Revolution Failed.
For some OMB directors, the position has proven to be a launching pad for bigger assignments in the federal government. Caspar Weinberger and George Shultz both served as head of the budget office for Nixon, with Weinberger going on to serve as Secretary of Defense and Shultz as Secretary of State, both under Reagan. In the Clinton administration, Leon Panetta went from OMB to White House Chief of Staff, as did Joshua Bolten in the administration of President George W. Bush.
Peter Orszag, on the other hand, departed the Obama administration after his OMB directorship to become a Distinguished Visiting Fellow at the Council on Foreign Relations and a contributing columnist for the New York Times Op-Ed page and Bloomberg View, subsequently joining Citigroup as Vice Chairman of Global Banking. As Obama’s first head of OMB, Orszag was involved with the health care reform plan and responsible for the creation of the Independent Payment Advisory Board.
The Office of Management and Budget (OMB) is a cabinet-level agency operating under the authority of the Executive Office of the President. The agency is responsible for administering the President’s annual budget request, issuing circulars on agency management practices, and reviewing agency regulations.
Six positions within the OMB are nominated by the President and confirmed by the Senate. These include the director, the deputy director, the deputy director for management, and the administrators of the Office of Information and Regulatory Affairs, the Office of Federal Procurement Policy and the Office of Federal Financial Management.
The agency is divided into five Resource Management Offices (RMOs), each led by an OMB associate director. Program examiners within these RMOs are assigned to monitor one or more federal agencies or may be assigned a specific area, along with its management and budgetary issues. Examiners analyze trends and consequences of budget policy, provide strategic and technical support for budget decision making and negotiations, and monitor congressional action on spending legislation.
Each year, staff members review federal agency budget requests and help to decide what resource requests will be sent to Congress as part of the President’s budget. Using the Program Assessment Tool, staff members can also review proposed regulations, agency testimony, analyze pending legislation, and oversee all aspects of the President’s Management Agenda. Additionally, they are often called upon to provide information to the agency’s sub-offices, including the Office of Federal Procurement Policy, and the Office of Federal Financial Management.
The Office of Federal Financial Management provides direction on how to successfully implement financial management policies and systems. The Office of Federal Procurement Policy coordinates efforts to improve federal procurement law, policies and practices, and the Office of Information and Regulatory Affairs (OIRA) oversees federal regulations and information requirements and develops policies to improve statistics and information management. The Office of Performance and Personnel Management (OPPM) guides agency strategic and annual planning, performance reviews and reporting, and federal personnel policy. The Office of E-Government and Information Technology oversees the use of Internet-based technologies to facilitate citizen interaction with the federal government; it is managed by the Chief Information Officer.
Other OMB offices include the Office of General Counsel, the Office of Legislative Affairs, the Budget Review Division (BRD) (pdf) and the Legislative Reference Division, which distributes proposed legislation and testimony to all relevant federal reviewers and writes an Enrolled Bill Memorandum to the President once a bill is presented on both sides of Congress. The Enrolled Bill Memorandum details the various elements of the bill, including opinions from relevant federal department and an overall opinion about whether the law should be signed or vetoed. The Legislative Reference Division also issues Statements of Administration Policy, which makes the White House’s official opinions known.
From the Web Site of the Office of Management and Budget
The FY 2013 Congressional Budget Submission for the Office of the President (pdf) provides the following outline of expected Office of Management and Budget (OMB) expenditures for that year:
Personnel Compensation & Benefits $75,779,000
Includes salaries, terminal leave, premium pay, reimbursable
details, assignments under the Intergovernmental Personnel
Act, and all employee benefits.
Rental Payments to GSA $7,235,000
Other Contractual Services $6,470,000
Includes advisory and assistance services, other purchases
of goods and services from government accounts, operations
and maintenance of facilities, research and development
contracts, medical care, operations and maintenance of equipment,
or subsistence and support of persons, and MAX Budget
System contractor costs.
Communication, Utilities & Misc. Charges $603,000
Includes data, voice, and wireless communications, as well
as utilities, postage, and miscellaneous rental charges.
Equipment $519,000
Includes IT hardware and software, customized software
programming, printers and network devices, office furniture,
photocopiers, fax machines, and telephones.
Supplies and Materials $416,000
Includes general and information technology (IT) supplies,
newspapers, magazine subscriptions, and government publications.
Travel & Transportation of Persons $348,000
Includes official travel, such as per diem, hotel and transportation,
auto rental, and local transportation.
Printing and Reproduction $167,000
Official Entertainment $3,000
Transportation of Things $2,000
Includes commercial express delivery as well as freight
and other shipping charges.
Total Estimated Budget $91,542,000
The OMB does not have any information regarding contracts on USASpending.govDocument6. However, the office does work with private contractors. In August 2007, REI Systems announced that it had received a contract from SRA Touchstone, which supports the development of a pilot Web site designed to support OMB’s Federal Funding Accountability and Transparency Act. The site makes acquisition, grant, and loan award data available to the general public, and REI Systems assists with technical support and integration services. In May 2011, REI Systems reported that it had developed for OMB the IT Dashboard, a tool to manage complex federal information technology projects, and that the OMB subsequently released the tool’s source code so that it could be adapted for use by outside companies and agencies.
WinMagic, a company supplying disk encryption services, announced in June 2007 that it had been selected to provide protection for sensitive, unclassified data on OMB laptops, other computing devices and removable storage media. The contract extended to the Department of Defense and General Services Administration and could result in contract values exceeding $79 million.
Capping Private Contractor Executive Compensation
The Obama administration launched an effort in 2011 to cap the amount reimbursed to government contractors for executive compensation.
Through the Office of Management and Budget, the administration proposed limiting the compensation at $200,000 a year for company leaders, the same amount paid to cabinet secretaries.
To demonstrate why the cap was needed, officials pointed out that following a formula set up under existing federal rules, the statutory limit on reimbursable contractor pay went up to $763,029.
Lawmakers in Congress also wanted proposed a plan for capping contractors’ pay. Senators Barbara Boxer (D-California) and Chuck Grassley (R-Iowa) sponsored legislation that would restrict the taxpayer reimbursement for government contractor salaries. And the Obama administration suggested limiting contractor payments to the highest level paid to senior-most federal officials, such as Cabinet secretaries ($200,000). The bill also would extend the cap to all government contractor employees, not just executives.
OMB Raises Salary Cap For Contractor Executives Because It Has To (by Charles S. Clark, Government Executive)
'Outdated' Contractor Pay Cap Raised 10 Percent (by Matthew Weigelt, Washington Technology)
Obama Jobs and Deficit Proposal Targets Contractor Executive Pay (by Charles S. Clark, Government Executive)
10-12-2011: Lawmakers Urge Super Committee To Address Contractor Salary Cap (by Andrew Lapin, Senedia)
Office of Management and Budget
The Office of Management and Budget got swept up in the Solyndra bankruptcy controversy when government emails revealed OMB officials accused the White House of pressuring them on the company’s loan guarantees.
The administration awarded solar-cell manufacturer Solyndra $535 million in loan guarantees in 2009 as part of its green-energy strategy and economic stimulus package. Two years later, the company collapsed, which prompted a federal investigation and plenty of political sniping.
A congressional probe turned up emails from the OMB that showed Vice President Joe Biden’s office pressured the OMB to speed up approval of Solyndra’s deal in order for Biden to make a factory groundbreaking event.
“We have ended up with a situation of having to do rushed approvals on a couple of occasions (and we are worried about Solyndra at the end of the week),” one OMB official wrote to Terrell P. McSweeny, Biden’s domestic policy adviser. “We would prefer to have sufficient time to do our due diligence reviews.”
Republicans pounced on Solyndra’s failure, labeling it an example of the wastefulness of the stimulus program. They also said it raised doubts about the administration’s funding of green technology, and may have been an example of crony capitalism.
Solyndra was founded in part with funding that originated from Tulsa, Oklahoma, billionaire George Kaiser, a major Obama fundraiser.
White House's Haste On Solar Firm Loan Creates Political Headaches (by Frank James, NPR)
GOP: Solyndra Deal was Rushed (by Jim Puzzanghera and Stuart Pfeifer, Los Angeles Times)
Solyndra Controversy A Transparent Attempt To Kill Green Energy (by David Dayen, Campaign for America’s Future)
Furor Over Loans to Failed Solar Firm (by Matthew Wald and Charlie Savage, New York Times)
U.S. Army Plan to Add More Generals Shot Down by OMB
In June 2008, the Associated Press reported that the OMB had quashed a service plan proposed by the U.S. Army to add five active-duty generals to oversee purchasing and monitor contractor performance. This came about after a panel criticized the Army for contracting failures that undermined war efforts in Iraq an Afghanistan and wasted millions in tax dollars. The Army already has 300 full-time generals, which the OMB has deemed more than enough to handle any new demands. The Army appealed OMB’s decision and, the following month, the OMB reversed its decision.
White House Rejects Army Plan to Hire Generals to Oversee Contracting (Associated Press)
White House Leaves Loophole for Foreign Contractors
In March 2008, the White House indicated that it would not remove a loophole inserted into an OMB budget rule that allows foreign contractors to remain silent if they witness fraud or abuse on U.S. government contracts. The Justice Department opposed the exemption and wrote to the OMB, asking for the exemption to be eliminated. Congressman Peter Welch subsequently authored a bill—the Close the Contractor Fraud Loophole Act (H.R. 5712)—that was signed into law in 2008, which closed that loophole. In January 2012, the OMB—under the Obama administration—directed federal agencies to increase oversight of contractors as a means of cutting down on fraud, waste, and abuse.
White House won't remove loophole allowing foreign contractors to ignore fraud (by John Byrne, Raw Story)
Congress Passes Legislation Which Will Require Contractors to Self-Report
Violations of Criminal and Civil Laws (Sutherland)
OMB memo on contractor oversight (pdf)
Government Outsourcing Raises Controversy
In December 2002, The Washington Post reported that President George W. Bush’s new E-Government initiative (which is part of the OMB) was raising controversy among librarians and public interest groups who were worried that the new law would make it harder and more costly for the public to find government documents and take advantage of existing federal services.
Also at issue was a new plan to encourage competition and bids from printing and electronic archiving companies for jobs. The Bush administration said a law requiring agencies of the executive branch to submit all their printing jobs to the GPO was unconstitutional. Previously, the Government Printing Office (GPO) enjoyed a near-monopoly on these services. It maintained that these changes would cost taxpayers an additional $100-200 million every year. Indeed, when it came time to print the federal budget, the GPO placed a bid that was lower than those of private contractors. The OMB said GPO’s winning bid of $387,000 was 23% below what it charged for printing the budget in the previous year. By accepting the GPO bid, the OMB bypassed a potential showdown with Congress, which ordered the administration to have the GPO print the budget. The Government Accountability Office (GAO) ruled in 2002 that federal agencies cannot use appropriated funds to purchase printing services without first going through the GPO in most cases.
E-Gov Law Sets Up Clash Over White House Outsourcing Plan (by Brian Krebs, Washington Post)
OMB e-Government Scorecard Lacks Essential Citizens’ Perspective, Says Report by ForeSee Results (Business Wire)
Peter R. Orszag (January 20, 2009 - July 30, 2010)
Jim Nussle (September 4, 2010 - January 19, 2009)
Robert J. Portman (May 26, 2006 - August 3, 2007)
Joshua B. Bolten (June 26, 2003 - April 14, 2006)
Mitchell E. Daniels, Jr. (January 23, 2001- June 6, 2003)
Jacob J. Lew (May 21, 1998 - January 19, 2001)
Franklin D. Raines (September 13, 1996 - May 21, 1998)
Alice M. Rivlin (October 17, 1994 - April 26, 1996)
Leon E. Panetta (January 21, 1993 - October 1994)
Richard G. Darman (January 25, 1989 - January 20, 1993)
Joseph R. Wright, Jr. (November 8, 1988 - January 20, 1989)
James C. Miller III (October 8, 1985 - October 15, 1988)
David A. Stockman (January 21, 1981 - August 1, 1985)
James T. McIntyre, Jr. (September 24, 1977 - January 20, 1981)
Thomas Bertram Lance (January 21, 1977 - September 23, 1977
James T. Lynn (February 10, 1975 - January 20, 1977)
Roy L. Ash (February 2, 1973 - February 3, 1975)
Casper W. Weinberger (June 12, 1972 - February 1, 1973)
George P. Shultz (July 1, 1970 - June 11, 1972)
Robert P. Mayo (January 22, 1969 - June 30, 1970)
Charles J. Zwick (January 29, 1968 - January 21, 1969)
Charles L. Schultze (June 1, 1965 - January 28, 1968)
Kermit Gordon (December 28, 1962 - June 1, 1965)
David E. Bell (January 22, 1961 - December 20, 1962)
Maurice H. Stans (March 18, 1958 - January 21, 1961)
Percival F. Brundage (April 2, 1956 - March 17, 1958)
Rowland R. Hughes (April 16, 1954 - April 1, 1956)
Joseph M. Dodge (January 22, 1953 - April 15, 1954)
Frederick J. Lawton (April 13, 1950 - January 21, 1953)
Frank Pace (February 1, 1949 - April 12, 1950)
James E. Webb (July 13, 1946 - January 27, 1949)
Harold D. Smith (April 15, 1939 - June 19, 1946)
Daniel W. Bell September 1, 1934 - April 14, 1939
Lewis W. Douglas (March 7, 1933 - August 31, 1934)
J. Clawson Roop August 15, 1929 - March 3, 1933
Herbert M. Lord (July 1, 1922 - May 31, 1929)
Charles E. Dawes (June 23, 1921 - June 30, 1922)
- Table of Contents
- Overview
- History
- What it Does
- Where Does the Money Go
- Controversies
- Suggested Reforms
- Comments
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