REGO no go.

The Clinton administration sacrificed "reinventing government" to block deficit reduction.

"PRESIDENT CLINTON IS STARTING A revolution in government," said Vice President Al Gore last September. "It will fundamentally change the way government works." The reinventing government revolution was such a big deal it even got a nickname: REGO.

REGO was serious stuff--you don't drive forklifts on the White House lawn for just any government study. Al Gore, America's favorite funnyman, even appeared on The Late Show with David Letterman to pitch the REGO program. According to the press releases, REGO was going to save $108 billion and cut 252,000 federal positions. "This is one report that will not gather dust in a warehouse," said the president.

But, as the REGO report itself so eloquently quotes Ralph Waldo Emerson, "What you do thunders so loudly I cannot hear what you say to the contrary." And the administration's actions demonstrate that Clinton isn't really all that gung-ho on making government smaller.

Consider Clinton's legislative strategy for pushing REGO through Congress: There isn't one. To get reinventing-government guru David Osborne to sign on to the federal reinvention effort, Clinton and Gore had to promise that the recommendations would be presented to Congress as a coherent package and that Clinton would go to bat for them on the Hill. Neither promise has been kept. "The administration has no legislative strategy for REGO," says one insider close to Osborne. "The recommendations have been picked apart by Congress."

This situation could have been avoided if Clinton and Gore had insisted from the beginning on obtaining commission authority from Congress to present the REGO recommendations as a single package, as was done with the successful base-closure commission. This would have forced members of Congress to vote up or down on the entire package. Why didn't they?

"For one of two reasons," says Scott Hodge, a budget expert at the Heritage Foundation in Washington. "It either shows political naivete or a lack of sincerity regarding reinventing government--REGO as merely a political slogan." A clue: It wasn't political naivete.

REGO WAS SACRIFICED EARLY ON TO A much higher administration priority: to avoid budget cuts and deficit reduction at all cost. The worry was that if a REGO package were presented to Congress, Republicans would demand that the savings be applied to deficit reduction, a demand that Democrats couldn't openly refuse. But if REGO passed and any savings were returned to taxpayers, Clinton would still have to work under existing spending limits. So long big-ticket programs to "invest" in public works, urban programs, and education. This is Clinton's worst nightmare. What fun is reinventing government if you can't spend the savings?

"We feared that if we put REGO together in one big package it could be used for deficit reduction," admits a Gore staffer. "We needed the savings to meet existing savings targets." With a host of new "investments" to fund, Clinton had no interest in actually cutting money out of the budget. Thus, REGO will be presented to Congress in dribs and drabs, where it will be drubbed by special interests.

The irony is supreme. At the first sign that it might mean having to reduce the budget deficit, a president who spent months talking about the perils of that very deficit sacrifices to the pickpockets in Congress his ballyhooed plan to reinvent the federal government.

NOT THAT REGO WAS ANY AX-wielding budget chopper to begin with. The report's recommendations were advertised as saving $108 billion over five years. That sounds pretty good, until you realize that it represents only 1.3 percent of all federal spending. And now that people have started combing through the fine print of the appendix, it turns out that the REGO report may have been just a tad optimistic.

When Reps. Tim Penny (D-Minn.) and John Kasich (R-Ohio) went to REGO to find cost-cutting items for their own budget proposal, they found the report thoroughly lacking in specifics. (See "Deficit Chickens," February.) And when the administration included a number of REGO proposals in a November bill, it estimated the six-year savings at $9.1 billion. The Congressional Budget Office put the savings at $350 million over the same period. Part of the difference arises from arcane budgetary procedures, but the CBO declined to estimate savings on some aspects of the bill because "the legislative language of the bill is not specific enough to generate any savings."

The appendix of the REGO report contains recommendations such as this: "The State Department should do a better job collecting debts, such as medical expenses and others, owed to the department." Estimated savings: $9.8 million. Many of the proposals called for "improving" or "streamlining" this or that function, with a savings figure beside it. Says one Senate staffer, "Most of the proposals lacked specifics. They were a lot more window dressing than substance."

INITIALLY, REGO WASN'T FOCUSED ON SAVings at all; the objective was to radically alter the culture of the federal government, to "revolutionize the way the federal govemment does business." After the REGO revolution, the federal government would run like Federal Express, maybe better. The reinvented federal government would be customer friendly, quality-obsessed, and entrepreneurial. To paraphrase Milton Friedman, the report wants to build a cat that barks.

REGO does make sense in places, especially when it stresses the need for competitive pressures: "We must force our government to put the customer first by injecting the dynamics of the marketplace. The best way to deal with monopoly is to expose it to competition."

The report also does an excellent job of identifying the root causes of federal inefficiency and urges steps to combat them: "The problem is not lazy or incompetent people; it is red tape and regulation so suffocating that they stifle every ounce of creativity." The report challenges government to focus on results rather than process and for government workers to serve the customer rather than the system. It recommends opening up some federal agencies--such as the Government Printing Office--to competition and spinning off air-traffic control into an independent corporation. All sensible recommendations.

But it also helpfully explains why its recommendations will never be adopted: "While the savings from killing a program may be large, they are spread over many taxpayers. In contrast, the benefits of keeping the program are concentrated in a few hands. So special interests often prevail over the general interest."

It would be a major achievement--though far short of a revolution--if most of the report's legislative proposals were adopted. Unfortunately, the Clinton administration has approached the implementation of reinvention with anything but revolutionary zeal.

The biggest flaw with the REGO report lies with what it doesn't say. The report states that it "focused primarily on how government should work, not on what it should do": efficiency as the goal of government. The cult of efficiency meshes well with Clinton's Roosevelt-like faith that government can solve all our problems.

When assessing any government activity, the first question that should be asked is: Is this activity necessary in the first place? By ignoring that question, the reinventing-government drive becomes a blueprint for better bureaucracy rather than a blueprint for revolutionary change in government.

Even such a liberal stalwart as Nobel-laureate economist Paul Samuelson recognizes that efficiency in government is a means, not an end. "The crucial steps in overhauling government involve political choices, not questions of managerial efficiency," writes Samuelson. If the surgeon general efficiently discourages smoking while the Department of Agriculture efficiently subsidizes tobacco growers, government still isn't working right.

AFTER THE INITIAL MEDIA BLITZ, REGO, once a top priority (how many top priorities can one administration have?), faded from prominence. It will likely be resurrected any time the question, "How will we pay for it?" is raised by pesky naysayers. But anyone still paying attention knows that a lean, streamlined federal government is not in this administration's plans. Between ClintonCare and Labor Secretary Robert Reich's slew of programs designed to throw a warm government security blanket around America's helpless workers, the truth has become apparent: The Clinton administration isn't nearly as interested in reinventing government as it is in expanding government.

Last September, flashbulbs popped as Clinton and Gore stood on the White House lawn in front of a forklift loaded with federal regulations. "The government is broken, and we intend to fix it," the president solemnly intoned.

To get more money for planned spending projects, people had to be convinced the money would be well spent. REGO is intended to make taxpayers feel good about the federal government, allowing Clinton to spend real dollars now in exchange for phantom savings later. Pretty clever. As the report puts it: "Is government inherently incompetent? Absolutely not!"

William D. Eggers, director of the Reason Foundation's Privatization Center, and Reason Foundation policy analyst John O'Leary are writing a book on streamlining state and local government.