## Notes from 09 June 2025 [[2025-06-08|← Previous note]] ┃ [[2025-06-10|Next note →]] ### The hidden history of how America built—and broke—its government _Why understanding the past forty years of bureaucratic reform is essential to fixing present crisis_ There’s a [brilliant piece](https://americanaffairsjournal.org/2025/05/accounting-for-state-capacity/) making the rounds in policy circles that you need to read. In _American Affairs_, [Kevin Hawickhorst](https://open.substack.com/users/14179238-kevin-hawickhorst?utm_source=mentions) has written the most insightful analysis of government effectiveness in months — a deep dive into how America’s accounting and budgeting systems evolved from the New Deal through today. It’s ostensibly about spreadsheets and budget categories, but it’s really about something much bigger: how America built the most capable government in the world and then systematically dismantled it. Hawickhorst's core insight is elegant and devastating: the reforms that made government work were simple, fast, and useful to the people who actually had to make decisions. The New Deal's accounting system gave Congress and the White House real-time spending data they could actually use. Later "improvements" (cost accounting in the 1950s, program budgeting in the 1960s) were sophisticated disasters that empowered consultants and budget analysts while leaving decision-makers in the dark. But here's what makes Hawickhorst's story even more fascinating - and more puzzling. While he's telling the tale of how America managed the money, [[Executive Personnel Systems in the U.S.|there's a parallel story about who managed the money]]. And when you put these two narratives side by side, you get a picture of American government that's both more complex and more confounding than either story alone. ## The great paradox of the New Deal Consider this puzzle: The 1930s saw the creation of both the most transparent government accounting system in American history and the largest expansion of political hiring since the spoils system. FDR's [New Deal agencies were largely exempt from civil service rules](https://administrativestate.gmu.edu/wp-content/uploads/2020/02/Postell-From-Merit-to-Expertise-and-Back.pdf) (on the grounds that they were meant to be temporary). The president had unprecedented discretion over who ran his programs - and Congress got unprecedented visibility into how they spent their budgets. Was this a coincidence? I suspect not, though the exact relationship remains unclear. The hyper-transparent accounting system may have been the necessary counterweight to FDR's political staffing flexibility. Congress was willing to grant the president enormous personnel discretion precisely because they were getting such good financial data in return. It was a grand bargain: you can hire who you want, but we'll know exactly what you're doing with our money. This balance worked. The New Deal built the modern American state with remarkable speed and effectiveness. But it was fragile, dependent on mutual trust and shared purpose that wouldn't survive the coming decades. ## When business logic met government reality The 1950s brought the first great wave of "businesslike" government reform. The Hoover Commissions - packed with corporate executives - pushed for sophisticated cost accounting that would reveal government's "true" expenses. At exactly the same time, [they championed creating a Senior Civil Service](https://www.jstor.org/stable/972976): a professional, mobile corps of elite career managers with "rank-in-person" like military officers. The logic was impeccable: new accounting data would be useless without sophisticated managers to interpret it. You couldn't run government like a business with accountants alone - you needed a new class of executive who could bridge the gap between political leadership and technical expertise. But here's where the story gets weird. The accounting reforms succeeded - sort of. They created elaborate cost-tracking systems that, as Hawickhorst documents, mostly empowered budget offices and displaced program experts. Meanwhile, the personnel reforms failed spectacularly. The Senior Civil Service was blocked by Congress, fearful of creating a "closed" administrative elite - a notion that [some consider at odds with American administrative values](https://www.jstor.org/stable/975019?origin=JSTOR-pdf) and traditions. So America got the bureaucratic overhead of business-style accounting without the executive leadership to make it work. The country expanded the apparatus of control while weakening the capacity to actually manage. ## The technocratic dream and its unintended consequences The 1960s doubled down on this contradiction. Robert McNamara's "whiz kids" brought Planning-Programming-Budgeting (PPB) to the entire federal government - a technocratic dream of optimizing policy through cost-benefit analysis. Simultaneously, presidents were desperately trying to gain more control over the executive branch through increasingly sophisticated personnel systems. Kennedy launched the Career Executive Roster, a centralized database of high-potential executives, while simultaneously establishing a new selection office to recruit talent from universities and foundations, [headed by Harvard professor Dan Fenn](https://www.jfklibrary.org/asset-viewer/archives/jfkwhsfdhf). Although he lacked a formal mandate, Fenn devised a proactive strategy to identify promising candidates - [over half of Kennedy’s appointees](https://pages.ucsd.edu/~skernell/resources/EvolutionoftheWhitehouseStaff.pdf) were first contacted through active search by someone in the White House. Johnson went further: he gave John Macy - [known as LBJ’s Chief Talent Scout](https://time.com/archive/6833712/nation-the-talent-scout/) - the unprecedented dual role of Civil Service Commissioner and White House Personnel Director, centralizing more hiring authority than any previous administration. Then came Johnson's Executive Assignment System in 1966—the most elaborate attempt yet to engineer a **hybrid managerial executive, one who was neither a pure political appointee nor a career bureaucrat**. It created three distinct types: Career Executive Assignments (competitive career positions), Limited Executive Assignments (temporary specialists), and Noncareer Executive Assignments (replacing the old _[Schedule C political appointments](https://www.jstor.org/stable/j.ctt7rnqz)_ for senior roles). This wasn't just personnel management; it was an attempt to engineer a new kind of government executive who could bridge political and technical demands. Nixon's 1971 proposal for a _[Federal Executive Service](https://www.presidency.ucsb.edu/documents/annual-budget-message-the-congress-fiscal-year-1972)_ was even more radical—it would have covered all senior positions and allowed a significant percentage to be noncareer appointments, giving presidents unprecedented flexibility in deploying talent. When Congress rejected this as a power grab, Nixon pivoted to creating OMB, [explicitly designed to give the president more political direction](https://pfiffner.gmu.edu/files/pdfs/Book_Chapters/OMB%20JPP%201991.pdf) over the bureaucracy. But here's the paradox: PPB was supposed to be objective and scientific, while these personnel reforms were about presidential control and political responsiveness. How do you reconcile "scientific" management with "responsive" leadership? It's a puzzle that goes to the heart of democratic governance, and one that American reformers never quite solved - because they kept trying to resolve what should have been managed as a permanent tension. You don't solve this puzzle: you balance it. The best government systems hold both scientific rigor and political responsiveness in dynamic tension. But America's reformers attacked each side separately: building elaborate analytical systems without ensuring leaders could use them, fighting over personnel control without considering how it would affect information flow. The result was predictable: PPB failed because it created another layer of analysts between decision-makers and experts. The personnel reforms failed because Congress saw them as power grabs. America got neither scientific rigor nor political responsiveness - just more bureaucracy and less capability. ## The permanent settlement that wasn't The [Civil Service Reform Act of 1978](https://en.wikipedia.org/wiki/Civil_Service_Reform_Act_of_1978) was supposed to resolve these tensions. The _[[U.S. Senior Executive Service]]_ (SES) finally institutionalized the "third way" that reformers had sought for forty years: senior managers who were neither traditional bureaucrats nor political appointees, but something in between. This wasn't just bureaucratic reshuffling - it was the culmination of nearly four decades of institutional experimentation. The [SES consolidated over 60 distinct systems for managing federal executives into a single framework](https://www.opm.gov/policy-data-oversight/senior-executive-service/overview-history/#url=History). It institutionalized "_rank-in-person_" (like military officers) rather than "_rank-in-position_", enabling mobility across agencies. It established _Executive Core Qualifications_ emphasizing general management skills. Most crucially, it tried to balance "technical competence" with "political responsiveness" through a statutory 90/10 split between career and political appointments - a literal embodiment of the tension that had driven reform efforts since the 1940s. It was a masterpiece of institutional design - on paper. But forty years later, the [SES is widely seen as a disappointment](https://s3.us-west-2.amazonaws.com/napa-2021/studies/building-a-21st-century-senior-executive-service/Building-a-21st-Century-SES-3.17.2017.pdf#page=34.99). Senior executives don't move between agencies. Pay compression makes the positions unattractive. The balance between management and expertise remains elusive. Meanwhile, as Hawickhorst documents, budget and accounting systems continued their evolution toward complexity and uselessness. Each new reform - performance budgeting, evidence-based policy, data-driven decision making - has added new layers of analysis that often obscure rather than illuminate. ## The two-front war we're still fighting Reading Hawickhorst's account alongside this personnel history reveals something crucial: reforming government is a two-front war. You have to fix both the systems of control (budgeting, accounting, oversight) and the systems of leadership (hiring, development, deployment) simultaneously. America keeps fighting these battles separately and wondering why it loses. It creates new accountability systems without ensuring there are leaders capable of using them effectively. It reforms personnel systems without considering how they interact with information systems. It optimizes for either technical competence or political responsiveness without recognizing that modern governance requires both. The result is what we see today: a government that generates enormous amounts of data but struggles to turn information into action, staffed by people who are either highly specialized technical experts with limited managerial authority or generalist managers with limited technical knowledge. It's a pattern that other democracies would do well to study - both to understand what went wrong and to avoid repeating these mistakes. ## What success actually looks like Hawickhorst's most important insight is that successful reforms "give actual decision-makers useful information." But who are the actual decision-makers? In the 1930s, it was clear: elected officials and their direct appointees. The accounting system served them, and it worked. Today, decision-making is distributed across a complex web of career executives, political appointees, contractors, and oversight bodies. Everyone needs information, but they need different kinds of information for different purposes. **A budget system that tries to serve everyone serves no one.** The same logic applies to personnel. The SES was designed to serve multiple masters: agencies that need deep technical expertise, the White House that needs political alignment, Congress that wants oversight and accountability, OPM that needs systemic coherence, OMB that needs managerial efficiency, and a public that simultaneously demands both competence and fears "politicization." Meanwhile, countless laws impose different types of accountability on SES executives while few give them the [[Executive Decisiveness|executive decisiveness]] to take risks and implement solutions. **A personnel system that tries to optimize for everything optimizes for nothing—and creates executives who can satisfy process requirements but struggle to actually execute.** ## The path forward So what would success look like? Hawickhorst offers a crucial clue: build coalitions around reforms that help real decision-makers do their jobs better. But governments everywhere need to be honest about who the decision-makers actually are and what they actually need. This might mean accepting that different parts of government need different systems. Some functions require deep technical expertise and stability - think disease surveillance or nuclear safety. Others require political responsiveness and rapid adaptation - think economic policy or international relations. One-size-fits-all solutions have failed for eighty years in America. Maybe it's time to try something else. It also means recognizing that information systems and personnel systems are two sides of the same coin. You can't fix budgeting without fixing management, and you can't fix management without fixing budgeting. The story Hawickhorst tells about accounting reform is incomplete without the parallel story of leadership reform - and vice versa. But how exactly to integrate these reforms remains an open question that deserves serious attention from reformers worldwide. Most importantly, it means learning from this history instead of repeating it. For eighty years, America has cycled through the same basic reforms with the same basic failures. Politicians have promised to make government more businesslike, more scientific, more responsive, more accountable. They've created new systems, new processes, new job categories, new oversight mechanisms. What hasn't been created are the conditions for sustained excellence: clear missions, capable leadership, useful information, and the trust of the people government serves. Hawickhorst's piece is a brilliant start toward understanding why. The question is whether America - and other democracies watching this long experiment - are finally ready to learn from it. _Read Hawickhorst's "[Accounting for State Capacity](https://americanaffairsjournal.org/2025/05/accounting-for-state-capacity/)" in American Affairs. Then ask yourself: if America has been reforming government for eighty years, why does it still feel broken? The answer might change how you think about what government can - and should - do. And for those of us watching from elsewhere, it offers lessons about the complexity of building state capacity that we ignore at our own peril._