Candidate Barack Obama promised that if elected president he would
go through our federal budgetpage by page, line by lineeliminating
those programs we dont need, and insisting that those we do need
operate in a sensible cost-effective way.
Since the 2009 inauguration, there has been some progress in this
important direction. The Obama Administration proposed $20 billion
in program terminations, reductions, or consolidations in its first
two budgets, and Congress has enacted about 60 percent of those
savings. This years budget includes an additional $33 billion of
Of course, we need to do more. The United States is on an
unsustainable fiscal course in the long-term that will require a
redoubling of budget discipline. But we cant sacrifice investments
that are creating jobs and helping the economy recover and grow.
Bottom line: Its never been more important to spend every public
Yet there is no systematic and effective review process that looks
at all programs across federal agencies to establish whats working.
Which of the 110 programs in the 14 agencies that promote science,
technology, or engineering education are the most effective, and
which ones should be reformed or eliminated? Of the more than 100
programs across 13 agencies on youth mentoring, which ones
demonstrate the most cost-effective use of taxpayer dollars?
While legislation such as the Government Performance and Results
Act has ensured there is considerably more information available on
programs, little of this information is of value in ascertaining
the relative effectiveness of programs. The consequence of this
information deficit is that when the budgets axe falls, politically
popular programs often survive even if they are relatively
ineffectiveand those that are effective but lack powerful sponsors
And its not just traditional spending programs that need better
performance reviews. There is $1 trillion in annual federal
spending that goes almost entirely unreviewed for effectiveness
from year to year. Money that the federal government spends through
the tax code through special breaks, credits, and loopholes. The
largest ones are familiar, such as the deduction for home mortgage
interest. But many are relatively unknown, buried in the tax code,
and directed at certain industries.
But most tax expenditures are permanent fixtures of the tax code
that do not need to be renewed so they are exempt from the
congressional appropriations process and the scrutiny that comes
with annual budgeting. As a result, many tax expenditures have
grown out of all proportion to their original purpose. Out of view
and insulated from the budget process, ineffective tax expenditures
tend to continue while the budget axe falls on discretionary
spending programs, effective and ineffective alike.
To address these problems, the Center for American Progress has
developed a performance review process it calls Reviewing What
Works that would enable the government to undertake a systematic
review of spending programs and tax expenditures.
The Reviewing What Works Approach
Working with some 200 experts from government and beyond, the
Center for American Progress developed a set of tools that allow
for a systematic analysis of which government funded programs are
most effective and which ones merit reform. This process can be
extended to cover tax expenditures as well.
The Reviewing What Works toolkit includes a set of evaluation forms
and a formal process for using them. The approach examines families
of programs across a policy area, such as homelessness or youth
mentoring, rather than focusing on individual programs.
This sort of overview enables comparisons of effectiveness of
programs. It also addresses a key weakness in Washington: the
inability of the administration or Congress to draw conclusions
about the relative effectiveness of different programs, whether
direct spending programs or tax expenditures.
Heres a summary of the process the Center for American Progress
Step 1| Identify Policy Areas and Form Interagency Panels
The Office of Management and Budget (OMB) and other federal
agencies should identify policy areas where programs and tax
expenditures can be evaluated for effectiveness. For instance, a
recent General Accountability Office report on duplication sets out
a number of areas that would be strong candidates for this kind of
approach, including domestic food assistance, homelessness, and job
For each policy area, interagency panels should be formed to lead
the program review process. Panelists should include program
managers from relevant agencies, performance and budget officers,
and officials from the U.S. Treasury Department and OMB.
Step 2| Define Goals and List Programs
The interagency panels develop a set of goals for a particular
policy area. The goals define key outcomes that programs and tax
measures across the policy area are trying to achieve. Where
possible, these should be coordinated with agency High Priority
Performance Goals, which define key outcomes the administration is
The goals for each policy area would be captured on the Policy
Strategy tool. Interagency panels also would create an inventory of
programs and tax expenditures that contribute to these goals. This
list of spending and tax programs defines the scope of the exercise
to evaluate effectiveness of programs.
Federal energy programs illustrate the importance of including tax
expenditures in government-wide review. For example, Americas
Hidden Power Bill: Examining Federal Energy Tax Expenditures
contends that the federal government makes most of its investments
in energy through tax expenditures, and the various incentives and
subsidies often work at cross-purposes.
For example, the federal government encourages clean and renewable
energy sources through programs such as the Advanced Research
Project Agency for Energy (ARPA-E) and through tax credits for
clean energy investments. At the same time, the federal government
provides some $4 billion in special tax breaks for fossil fuel
production. A cross-government review process provides an
opportunity to define clear goals and review the relative
effectiveness of each program or tax expenditure.
Step 3| Evaluate Programs
Each program or tax expenditure that appears on the inventory is
now subject to the evaluation process. Program managers, as well as
designees from Treasury in the case of tax expenditures, should
complete the Program Evaluation Tool (see Figure 1), which captures
the answers to 25 questions under five categories:
- Impact. What impact is the program or tax measure having on the
goals across government in the particular policy area? Often, this
will be a difficult question to answer, but it is absolutely
- Duplication and collaboration. Whats the relationship between
the program or tax expenditure and other similar programs? Is the
program duplicative or complementary with related efforts?
- Benchmarking. How effective is the program or tax expenditure
under review, as measured against benchmarks?
- Operational excellence. Is the program well run? Have there
been delays or cost overruns?
- Learning from experience. To what extent does the program or
tax measure regularly assess progress toward goals, learn from
experience, and make necessary changes.
Step 4| Judge Programs and Tax Expenditures for
Once the program effectiveness form for each program or tax measure
has been completed, the process returns to the interagency panel to
complete the Program Effectiveness Tool (see Figure 2). This form
captures the panels views on the efficacy of the program or tax
measure for each of the five categories. The panel might ask the
program managers to appear before the panel and answer questions in
order to reach their own judgments.
A Way Forward
The Reviewing What Works approach will enable agencies to assess
the relative effectiveness of programs across a policy area through
a collaborative interagency process. Without such an assessment,
decisions are likely to be based on incomplete information or
merely relative political clout. The use of interagency panels
provides an opportunity to inject evidence of whether a program
works into the decision-making process about the future of programs
and tax expenditures.
Once each program has been assessed, the interagency panel can
advise the budgeting process. They might consider which programs
merit expansion, or whether aligning programs more closely in the
same policy area could yield more effectiveness.
And of course, they could consider how to make difficult budget
decisions. For instance, if budgets were 10 percent tighter, would
they recommend an across-theboard cut, or target particular
programs while preserving or even expanding high-performing ones?
In the end, political considerations will remain relevant for
decisions. Neither the administration nor Congress will find it
easy to cut funds from a politically popular but ineffective
program. But our belief is that if there was better evidence
available on programs effectiveness, it would better inform the
The process for the Reviewing What Works approach is a basic
template for evaluating the performance of government programs,
including both direct spending programs and the even larger
universe of tax expenditures finally integrating $1 trillion in tax
breaks into the performance review processes. Doing so will help
policymakers make wise public investments at a time of budget
For the first time, policymakers would be able to assess the
relative effectiveness of related initiatives, such as the 110
programs on science, technology, engineering, and math education,
or overlapping spending and tax expenditures for higher education.
That should not only free up public dollars, it makes a great deal