August 23, 2002
Treasury Department Staff Losses

All eight of these guys are first-class analysts and economists: smart, non-partisan, willing to tell their political bosses when they are off-base, willing to stay as late as they have to to get the work done, and deeply committed to public service. Their departure is a real loss for the country--for the current and for future administrations.

There are still a lot of first-class career staff working at the Treasury, but there are definitely fewer than there were two years ago.


washingtonpost.com: Treasury Departures Hurt Staff Morale: ...The Treasury's economic policy division lost four veterans in recent weeks: Springer, John Hambor, Ed Murphy and John Kitchen, "the economic policy backbone at Treasury," said Gary Gensler, a Treasury official during the Clinton administration. The agency's international division has lost four senior staff members: Kristin Forbes, deputy assistant secretary for quantitative analysis; Steven Radelet, who covered East Asia, Africa and the Middle East; Sonal Shah, a former director of African policy; and Brad Setser, who was acting director of International Monetary Fund policy...

washingtonpost.com

Treasury Departures Hurt Staff Morale
Some See Department Losing Power, Prestige

By Jonathan Weisman
Washington Post Staff Writer
Friday, August 23, 2002; Page E01

The Treasury Department has suffered a series of recent staff departures that has dampened morale and left the rest of the agency's workforce stretched and less effective, current and former Treasury employees say.

Treasury officials commissioned the Gallup organization to survey employees this month about morale and management issues, a poll the department calls routine. One recently departed career researcher said the survey has become "a vessel for bile."

"There is low morale," said Colleen Kelley, president of the National Treasury Employees Union, which this May won the right to represent employees at the department's core offices. "Employees feel like they have no ability to impact anything about their working life. Nobody's asking, and when they do speak up, nobody's listening."

Treasury officials and some outside observers say the number of staff departures is negligible, and not unusual for an agency shifting from the control of one political party to another. Staff problems have cropped up in scattered divisions but are being dealt with expeditiously, they say. Some of the complaints are coming from former employees who showed no interest in pursuing or implementing a new administration's policies, they say.

"You are not serving the president if you don't come in and make some changes," one department official said.

And to be sure, recent departures at the Treasury point up problems afflicting all of the federal government: an aging workforce, lingering problems traced to the transition from one administration to another, and personality clashes between new political appointees and civil servants, many of them hired during the Clinton administration.

But some current employees and some of those who have recently departed point to decidely nonpartisan problems that have helped career civil servants decide to leave. Many complain that Treasury Secretary Paul H. O'Neill and his key deputies do not listen to the career staff and have placed more emphasis on hiring from the outside than promoting from within.

More fundamentally, Treasury leaders have given employees the impression that there is not much need for economic policy, some employees say. In the absence of clear policy initiatives, a Treasury Department that gained influence at the expense of other agencies during the Clinton administration has seen power slip away. A senior State Department official even boasted that his agency had won the debate with Treasury over whether to support a massive International Monetary Fund bailout for Brazil, a measure the Treasury initially opposed.

"There is no [economic] policy," said economist Michael Springer, a 22-year veteran of the department who left this month for the General Accounting Office. "If there are no pipes, why do you need a plumber?"

Criticism in the media and on Wall Street of O'Neill's stewardship has only underscored a perception that the department is losing stature.

"At Treasury, people are feeling particularly beleaguered because the economy is ailing and their leader has not gotten particularly good notice," said Paul C. Light, director of the Center for Public Service at the Brookings Institution. "Let's face it. O'Neill has not faired well in the 'American Idol' sweepstakes we have here in Washington."

Treasury spokeswoman Michele Davis contested any assertion that the department has serious morale issues. She described the Gallup questionnaire as a "standard workplace survey" of the type used routinely in corporate America to sound out employees. Its use at the Treasury is an example of O'Neill's effort to bring good business practices into the government. The results have not been tabulated, she said. Repeated requests to interview O'Neill were refused.

One recently departed civil servant said the new administration hasn't so much given up on economic policy as refocused it on new, less visible interests, such as terrorism risk insurance and airline loan guarantees. More dramatic interventions in social policy or state and local government problems that were Treasury staples during the Clinton years are simply not the style of a Republican administration.

A survey of 1,051 federal employees by the Brookings Institution earlier this year found broad and significant declines in morale among non-Defense Department workers after Sept. 11. Federal employees not involved in the war on terrorism reported feeling less sure of their missions, more taxed and less equipped.

Other personnel issues are not of the Treasury's making. The Treasury's counsel office lost four senior staff members when the department's chief law enforcement lawyer, Stephen McHale, left to become a top aide at the newly created Transportation Security Agency and took three senior aides with him.

But some employees insist that what is happening at the Treasury is anything but routine. Light, who led the Brookings study of overall government morale, also picked out the Treasury Department as an agency in trouble. Before Sept. 11, the agency was part of what Light calls the inner cabinet, the most powerful federal agencies.

But, he said, the Treasury -- along with the Justice and State departments -- are being marginalized.

"There is a general sense that Treasury is moving to a lower spot on the pecking order," Light said. And that is affecting morale.

The Treasury's economic policy division lost four veterans in recent weeks: Springer, John Hambor, Ed Murphy and John Kitchen, "the economic policy backbone at Treasury," said Gary Gensler, a Treasury official during the Clinton administration.

The agency's international division has lost four senior staff members: Kristin Forbes, deputy assistant secretary for quantitative analysis; Steven Radelet, who covered East Asia, Africa and the Middle East; Sonal Shah, a former director of African policy; and Brad Setser, who was acting director of International Monetary Fund policy.

Employees say the Treasury was having difficulty filling spots before the departures. Now, matters have only become worse. Forbes, a Massachusetts Institute of Technology economist and Republican political appointee, had been pressed into service on Latin America policy. After she returned to MIT, her Latin America portfolio was dropped on Deputy Assistant Secretary Nancy Lee, who is also watching Russia and Eastern Europe.

Radelet's nations are handled by David Loevinger, who now covers Africa, East Asia, South Asia and the Middle East and is filling in as a deputy assistant secretary for the second time, Treasury sources said.

On top of all that, O'Neill's initiative to take Treasury staff out of offices and put them into cubicles still rankles. Springer said he had to give up a fourth-floor office with French doors opening on a view of the White House.

Employees admit the issue might seem trivial. But they point to it to illustrate what they see as O'Neill's refusal to listen to employee concerns if they conflict with his experience. The secretary believed cubicles facilitated teamwork at Alcoa Corp., where he was chief executive, so they should do the same at Treasury.

"It's not just being in a cubicle but the sense that no one is listening to what the staff needs or wants," says one employee, who spoke on condition of anonymity.

This spring, restive senior staff members sent John Taylor, undersecretary of the Treasury for international affairs, a detailed memo on morale issues and how they could be addressed. Some sources insist the memo was largely ignored, but others say it may actually have had an impact. One central complaint was that Taylor was reserving senior slots for holders of doctorates in economics from outside the agency, precluding advancement for career staffers.

But in recent months, the strain around that issue appears to have lessened, one employee said, perhaps because Taylor took the concerns to heart, and perhaps because the Treasury has failed to recruit the academic-minded economists Taylor wanted.

The problems appear to have reached down to the clerical, administrative and information technology staff as well. The Treasury employees union began pushing for representation when it became clear that complaints about working conditions were not isolated, Kelley said. A year-long battle with Treasury managers ended in April, when the Federal Labor Relations Authority ruled that the union could represent 300 support staffers in the Treasury's central offices if those employees agreed. A vote in May affirmed union representation, 119 to 10.

Some Treasury sources say much of the problem lies with the strikingly different approaches to economic policy of the Clinton and Bush administrations. Under the leadership of Robert E. Rubin and Lawrence H. Summers, the Treasury Department took power from the State Department by making economic policy central to diplomacy. The Council of Economic Advisers was largely sidelined. Even the Department of Health and Human Services felt the Treasury encroaching on its turf.

Treasury officials were shaping interventionist policies not only on international and domestic economics, but on social policy issues such as health insurance coverage, tobacco litigation and gun control.

In that sense, civil servants who worked at Treasury during the Clinton administration may have become accustomed to a work environment that was exceptional. "To some extent, the staff got spoiled," one former Treasury official said.

"It's much more complicated than simple morale issues," Springer said. "During the Clinton administration, Treasury was riding high. We had superb secretaries bringing in absolutely excellent staff, in contrast to the current administration, where the White House has no policy and certainly doesn't want any help from us."

One Treasury official says President Bush has actively sought O'Neill's input on matters including environmental preservation, health care and education. His seat on the National Security Council gives the Treasury a presence in discussions of all foreign policy matters. And the Treasury has been given a lead role in the president's "Millennium Challenge Account," an effort to increase development aid by 50 percent over three years.

But others say the more free-market-oriented Bush administration has been reluctant to intervene unilaterally in economic crises abroad and has kept the Treasury out of many issues at home. The State Department and NSC have taken back power to make foreign policy decisions, and the White House Council of Economic Advisers -- a largely ineffectual outpost in the Clinton years -- has been resurgent in recent months, Gensler says.

Even on issues that the Treasury has asserted itself on, such as the airline industry's crisis, California's electricity shortages and steel tariffs, it has done so lightly. On steel, O'Neill argued against tariffs and lost. And on international economic issues, staff members have expressed confusion about the administration's policy goals. Rhetorically, Treasury officials have expressed doubts about intervention in economic turmoil, but they have backed big IMF bailouts in Brazil, Argentina, Uruguay and Turkey.

That contrasts sharply with the Clinton years. Some Treasury employees concede that some Treasury policies during the last administration were unsuccessful or misguided, but if Rubin or Summers wanted something done, it got done, for better or worse.

Now, said one source, the Treasury's representative at the policy-making table speaks softly, if at all.

Posted by DeLong at August 23, 2002 07:49 AM | Trackback

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"Employees feel like they have no ability to impact anything about their working life. Nobody's asking, and when they do speak up, nobody's listening."

We have to cultivate a new respect for civil service employees at all levels.

Posted by: on August 23, 2002 12:38 PM

setting up the homeland security department the administration wishes to remove hard won civil service protections for employees - the matter has been too little noticed

Posted by: on August 24, 2002 09:30 AM
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