Former Obama nominee proposes $100 billion in savings

President Obama's initial choice for a new administration post aimed at tightening the government’s belt said more than $100 billion could be saved annually from productivity gains.

Nancy Killefer, who withdrew from consideration as chief performance officer because of tax problems, said Friday that a 15 percent increase in government employee productivity would lead to a $135 billion in savings annually. A 5 percent productivity boost would save the government $45 billion. The numbers were first reported in a study by consulting firm McKinsey & Company, the consulting firm where Killefer serves as a senior partner.

"That's a lot to go after," Killefer said during a panel on government productivity at the left-leaning think tank Center for American Progress (CAP) in Washington.

Federal spending for fiscal 2010 is expected to reach $3.6 trillion.

"We still have to deal with rising healthcare costs, entitlement programs," she said. But productivity gains are "part of the answer in our minds," she added.

Obama named Killefer in January as his choice to fill a new White House position focused on boosting government performance and controlling spending. But she pulled out after she acknowledged that she hadn't paid employment taxes for household help.

Jeffrey Zients, another management consultant, was confirmed by the Senate to fill the position last month. He will also serve as a deputy director in the White House Office of Management and Budget.

Killefer praised Zients as a “terrific choice.” She said, however, that a new office seeking savings and boosting performance needs to become an institution to make a long-term difference.

“This is something that happens on a long-tail,” she said.

Killefer and other government productivity experts Friday criticized Congress for providing little incentives for federal departments to save money.

Killefer agreed with the suggestion by John Podesta, president of CAP and the former chief of staff to President Clinton, that Congress is an "impediment" to finding savings and consolidating wasteful programs.

One problem with Congress is that it requires federal agencies to return leftover money at the end of the fiscal year to the Treasury, giving federal workers little incentive to save, said Elaine Kamarck, who led a White House office looking for waste in the Clinton administration.

"Congressional appropriators are totally allergic to this idea," Kamarck said.

Kamarck suggested that lawmakers let federal departments keep any money they don't spend beyond the end of the fiscal year, so that they can use it for their other priorities.