Leading in tough times, with Obama’s stimulus boss Edward DeSeve

By David Donaldson

Tuesday October 16, 2018

Edward DeSeve was at the forefront of the US response to the GFC. He discusses the importance of using the tried pathways “wherever you can” and how the Trump administration is serving up policies that “aren’t quite half baked, they’re a quarter baked”.

As special advisor to President Barack Obama, Edward DeSeve spent two years overseeing implementation of the United States’ stimulus package response to the global financial crisis, the $787 billion American Recovery and Reinvestment Act.

So what did it feel like to be one of the key people working to save the world’s economy?

“It was all about three things: how do we get the money out as quickly as possible, how do we avoid waste and abuse, and how do we spend it wisely?”

“You had to focus, you couldn’t think about the world economy or what might happen if we were not successful,” DeSeve told The Mandarin ahead of his appearance at Wednesday’s IPAA national conference.

“It was all about three things: how do we get the money out as quickly as possible, how do we avoid waste and abuse, and how do we spend it wisely?”

The spending program went well despite a hostile political environment, says DeSeve. He wouldn’t do anything differently, even in light of the political ructions in the US since then, driven in part by anger around the fallout of the crisis.

“It’s kind of hubris to say that but we got the money out, we got it out under contract, we created 3 or 4 million jobs, and that followed through to the economy we have now. It worked very well.”

And, he adds, “luck favours the prepared”.

Before his appointment, DeSeve served at a senior level in the Office of Management and Budget in the Clinton administration, and had worked in a range of public finance-related positions at the city of Philadelphia, the state of Pennsylvania, Merrill Lynch, and the consulting industry.

“I had more than 30 years in government service, and the people I worked with were old hands, people who had done this before. We weren’t asking them to do anything beyond their capacity,” he says.

Leading in tough times

Reflecting on this experience, DeSeve offers some advice to other public servants leading through uncertain and polarised times.

“Step one is clarity of intent: what are we trying to do? Let’s be very clear what we’re trying to do. In the Recovery and Reinvestment Act we had a series of legislative mandates that were very clear,” he explains.

“Use the tried pathways wherever you can.”

“Two: build an effective network. Reach out to other people, develop a common purpose to move forward and achieve the things you said you would.

“Three: guard against evildoers. We had a number of people who were trying to defraud our program. We had something called the RAT board — it’s a terrible acronym — the recovery, accountability and transparency board. It was independent entity with 11 inspectors general who were continually checking we didn’t have fraud.”

The American stimulus program also focused on existing programs, which helped avoid the kinds of problems Australia faced with creating huge and untested new programs like the schools stimulus program and pink batts.

“We had a federal aid to states program for highways, so we simply added more money to that. The states had their plans, so they moved years two and three into year one. They built more roads and bought more buses that didn’t pollute and so on,” he says.

“Use the tried pathways wherever you can.”

Public servants under Trump

“We have civil servants acting in positions they do not feel comfortable with, implementing policies they don’t agree with.”

As part of his war on the so-called ‘deep state’, President Donald Trump has left many public service positions unfilled.

“Trump has not deigned to fill many positions that are important — that I believe are important anyway,” says DeSeve.

“He says ‘we don’t need those people blah blah blah’. I disagree — we can always shrink the number of political appointees or civil servants, but should do it not by aversion but by intention. I don’t believe he’s done that — I know he hasn’t. They just haven’t been filled.”

The result is that the US government’s administrative capacity is being undermined.

“We have civil servants acting in positions they do not feel comfortable with, implementing policies they don’t agree with,” he explains.

Policies are not being developed with the kind of consultation “you would expect”.

So there are people thrust into positions they’re not fully qualified for, “being given policies that aren’t quite half-baked, they’re a quarter-baked”.

“That’s a difficult position to put a civil servant into, in our tradition.”

Truth to power

An important part of the job is to “speak truth to power”, DeSeve argues.

“We had to spend a lot of time going to the president and vice president saying, ‘it won’t work exactly this way’ … this is the best way to do it,” he says.

“You have to be willing to take your knowledge and experience and put it in front of someone, and if they say ‘that’s bullshit, we’re going to do it this other way’, you have two choices: you can either do it, or you can resign.”

He did occasionally get pushback under the Obama administration, though he adds: “The support I had was unbelievable, the access I had was unbelievable.”

But DeSeve thinks there’s probably not a lot of truth being spoken to power in the White House these days.

“I don’t think they have that opportunity. I don’t think with the president, vice president or cabinet they can bring a professional opinion, because the courses are fundamentally pre-determined.

“It’s more: ‘why is it like that? Because I said so’. There’s a lack of empathy for other views.”

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