How the Biden administration tried to align budgets with policies
"What I like to do in all of my jobs is to use the tools of government management, budget, procurement, all of the tools that OMB has," said Nani Coloretti.
Every administration tries to align federal agency budgets with its policy goals. That’s not easy in a government with two million employees and countless departments, agencies, bureaus and offices. My next guest has been working this very challenge for the last four years. Until Monday, at least, she’s the deputy director for budget at the Office of Management and Budget. Nani Coloretti joined the Federal Drive with Tom Temin.
Interview transcript:
Tom Temin And I just want to get a sense of what it’s like when you walk in with an administration and you do face this gigantic blob of the government. You can’t do everything. What is the process by which OMB decides these 50 things or hundred things are what we really need to focus on to drive what we want to do from a policy and even philosophical perspective?
Nani Coloretti So the way OMB operates, which I think you’re familiar with, is that we take our guidance from the president. And so walking into this job, what I did was I really looked at some of the many executive orders the president had already put forward, and spoke with the director, Shalanda Young, to find out what would be the best way to accomplish what was a very large, very ambitious policy agenda and legislative agenda. And from that, what I like to do in all of my jobs is to use the tools of government management, budget, procurement, all of the tools that OMB has, and also present policy, to kind of create the conditions for those things to happen. So that’s how I kind of array the work that I do.
Tom Temin Because on a given policy front, say climate has been important to this administration. And I guess maybe to the incoming one in a different way, but still, there are any one of a number of places that grants that program launchings and so forth could affect emissions output of the economy and climate and so forth. And you kind of have to pick your places, though, right?
Nani Coloretti Yeah, absolutely. Some of just to kind of ground this a little bit is you sort of need some good ideas, some authority in some capacity. OMB sits, by the way, with its finger on all of those things and can do all of those things. The thing that we were working on when I got here was the implementation of the bipartisan infrastructure law and also the Inflation Reduction Act as it passed. And that actually put landmark amounts of funding into infrastructure, and to also move ourselves towards more clean energy and address some of our climate goals across a whole array of agencies. So we were involved in basically making sure that agencies capacity could keep up with the number of things that need to be implemented through those agencies.
Tom Temin And do agencies ever raise their hand and say, we’ve got a program and we know what you’re trying to do here, maybe this is the place to direct some of that money.
Nani Coloretti All the time. And that actually happens even in the creation of the programs themselves. And this also happened that you saw at the beginning of this administration with the American Rescue Plan. We worked much of that through existing programs. So that is a smart way actually to do anything hard, which is to look at what you have already and build on what works.
Tom Temin And is there a process of maybe identifying the people already in the workforce? Because they can have tremendous leverage for or again what you’re trying to do without direct supervision necessarily because they’re often the hinterlands deep in an agency somewhere.
Nani Coloretti Yeah. I’ll say that the budget process itself allows us to really go step by step through agency capacity and to decide whether the right people are in the right places and to basically turn in to Congress our best framework or our best roadmap, as it were, to even implement laws that they’ve already passed where they may need more, more capacity. Capacity isn’t just federal workers, by the way. We also rely on the community and contracts and grants, which makes sense to do, especially when you’re building capacity and doing something new. Or if you have a surge and you need to get something done. And so the budget process allows for us to really routinely and step wise, go through the entire federal government and find out whether the capacity can match the needs of the day.
Tom Temin We’re speaking with Nani Coloretti, deputy director of the Office of Management and Budget. There is also the annual appropriations preparation process, and it’s really an 18 month type of effort. How much cycle time of OMB does that use up? Because so much of it is routine, block grants, federal employee salaries and benefits that really don’t have much control over that rolls on year after year. How much effort is required to do the annual budget in addition to all of these really sharp policies that there was extra money for?
Nani Coloretti That’s a great question. One thing I’ll say, Tom, is that appropriations happen both through the annual budget, as you just mentioned, and also through supplemental appropriations. And then there’s also work that we do sort of year round the way we do the budget, because when Congress doesn’t pass the budget on time, we also have, as you know, continuing resolution work. And then sometimes we even work on roll up bills that we call omnibus bills. So the straight up creating the federal budget, which is where the president gets to say to Congress, here’s our ideal budget that we want for the new fiscal year. That process probably takes from boom to flash seven months. Much of that work, by the way, is happening at agencies. And so they do their work to create what they would like. And then the reason why I was mentioning it as a good tool is because here at OMB, once we get those in, usually in the fall for the following fiscal year, it’s a really good way to kind of tie together the kinds of policies you want to do into a message to Congress that says, here’s how we want to fulfill these policies. And so it is a good way to do that every year on the regular. But the way in which appropriations happens, the way that process works, means that we’re working on a lot of different things at different times throughout the year to actually fund the operations of government, and that does take quite a lot of time.
Tom Temin And OMB itself increases its capacity by tasking people that can help you with the evaluations of what the agencies are sending in. They know where the bs might be.
Nani Coloretti Or where the good things might be, sure. Most of OMB, as you know, is career staff. And fun fact, I started my federal service 30 years ago at OMB as a career civil servant GS-9, was a presidential management intern. They called it back then president management fellow, doing just this work. I actually worked on entitlements. It was a little bit different, but there are people here who actually review all of the agency submissions and are able to actually be in dialog and conversation with agencies about what they’re trying to do and to really take a look under the hood, as it were, to see what’s possible. And everyone always wants the most money they can get. But it is actually important to have an agency evaluate that and see what works and what doesn’t.
Tom Temin And does a president ever weigh in directly, even if rarely on a particular issue with the OMB?
Nani Coloretti So the president directs the policy agenda, and OMB works with all parts of the White House to figure out what again, what is needed to kind of implement that. So the director, Shalanda Young and myself, we would go to the president and actually for the last things or the things that we know are very top priority, kind of make sure that he understands what’s in the budget before submitting it to Congress. So definitely the president is weighing in. Also, you have a dynamic where sometimes an agency head might go directly to the president instead of doing it through the budget process. And this president and all presidents I’ve ever worked with are actually very good at saying, hey, the place to have this dialogue and conversation that you’re trying to have with me is with OMB.
Tom Temin And what about relations with the Hill? Because that’s a big component in what actually happens. And sometimes those relations are strained, let’s say, or they can be fraught. And what was your experience in dealing with the Hill, especially with people from the opposite party?
Nani Coloretti Sure. So I’ll say OMB was lucky to have Shalanda Young in the time that I’ve served in this role, because she spent 15 years on the Hill and worked with both parties to appropriate funding. That was her job. She was the chief appropriator, staff, appropriator on the Hill. And so the White House would allow us to kind of work with agencies, but also the Hill would go to Shalanda, both parties, both to hear what was possible and to actually register their views on the budget and appropriations. And that happens constantly year round. But we were very lucky to have that. You know Tom, you’ve been in this town a long time, like it is about relationships and there’s no better person with these kinds of relationships than Shalanda.
Tom Temin My guest today is Nani Coloretti, deputy director of the Office of Management and Budget. Earlier, we were talking about some of the broad activities and what it’s like to get all of that done. Let’s talk about some of the specifics right now. Cybersecurity, executive order changed a lot of conversations throughout the government because of the changing nature of that particular challenge. And so you mentioned earlier agencies need capacity in people and other resources to take on these things, unless they have an unfunded mandate or something like that. Tell us about cybersecurity and also artificial intelligence, where again, another priority of the administration. How did you help ensure agencies had what they needed?
Nani Coloretti These are two really great examples of why OMB is such a wonderful agency to work at. What we did with both Cybersecurity AI and a host of other issues was we used the process of the budget to understand what agencies said they needed to implement these executive orders, and we took a whole of government approach. And what I mean by that is we didn’t just ask the budget teams at OMB to do that work. We actually partnered with the Office of the National Cybersecurity Director and the office of the CIO over in the M team at OMB to get ahead of our guidance to agencies and actually put forward some unified guidance that would help agencies implement all of the parts and pieces of these executive orders that cross-cut parts of agencies that may not have even been talking to each other.
Nani Coloretti Although, I’ll say my experience at three different agencies in the federal government, the way to run an agency is to make sure that you are talking with each other because you may be getting guidance from different parts of OMB or from a place like the Office of the National Cybersecurity Director. But what we did in this administration was we actually unified that guidance and put it forward as part of our budget formulation process. And then we had a little team, a cross-cutting team of people that were in the CIO shop in one of the resource management offices at OMB, and also interfacing with the Office of the National Cybersecurity Director as we evaluated what agencies said they needed. And then we tried to ensure consistency with what we thought the goals were, and what we thought the capacity needed to be at agencies. And so that we did with rigor and we created a really great process for that, that I hope continues in the future. Both for that and for things like AI, which are really just cross-cutting issues that need sort of a unified approach for government. And the fact that OMB sits at the fulcrum of all of these things, it can really be a good tool for presidents to implement the policies that they want.
Tom Temin And again, with the cybersecurity example, some of the guidance and also the material in the executive order was pretty technical. I remember in particular the idea of elevating the need for software bills of material. That’s a very arcane thing, not something you find in broad policy statements and so forth. How does OMB get in the technical expertise that may not be native there to make sure that something on a very, an EO on a specific subject like that has enough specificity to be realistic?
Nani Coloretti Yeah. So the way that these executive orders get put together, you actually draw from all of the technical parts and pieces of government to write the executive order. And If you’re running a good process in the White House, you can do that. You can draw upon the right folks, get the right brains to the table to help you design something that is implementable, but also technical enough that agencies know what to do to implement. Part of the challenge here is that the federal government is such a large enterprise that you need to be able to to get a little technical, to implement things if you want them to be consistent. The other great thing about OMB, as what we bring to the table is we have the Office of Federal Procurement Policy here. It’s not a very big office Tom, but there is incredible, incredible depth of knowledge on how to purchase things in government. And so to have that kind of expertise here inside one agency is what I think makes OMB so special and can really bring the right levels at the right time of detail to make something really hard happen.
Tom Temin I pity the next administrator that won’t have Leslie Fields around to ask you questions.
Nani Coloretti I do too. She is a national treasure. But I’ll just say one thing, and I learned this again in like my career in the Obama administration was here for eight years, and I kind of knew this already. Which is there’s a lot of talent in the federal government. And so the trick is to just deploy it where you need to do basically ask people who we’re here to serve. I will miss Leslie Field, I know the federal government will, but she has trained, there are other people coming up the line that know how to do this stuff. And it’s a very, very strong team that she left behind.
Tom Temin We’re speaking with Nani Coloretti, deputy director of the Office of Management and Budget. And sometimes contingencies happen that were not in anybody’s policy planning, and you had to deal with things as diverse as the collapse of that Baltimore bridge crashed into by that ship, which became somehow a national issue because of the ports. And the fact that half the trucking on the East Coast goes over that bridge. The infant formula shortage, things like that, that the Maui fires and now the California fires that emerge the black swans. What’s the process? What kicks into gear there?
Nani Coloretti So the best way to address these kind of crises, and this president has been really good at this, is to basically focus your attention on it and make sure that you have an interagency group and an inner White House group figuring out what the goals are to address the crisis and then march with rigor towards those goals. So for infant formula, OMB helped in a couple of ways. We had the US digital service team work with the National Economic Council and the Department of Commerce and many, many, many others, U.S. Department of Agriculture, HHS, to really figure out how to get our arms for the issue. Because what had happened, just to remind, and this was during we were having all of these COVID supply shortages. One of the main producers of specialty infant formula shut down. And because that lab and that manufacturer shut down, we had an acute and severe infant formula shortage, not just formula, which is in and of itself a very big problem, but specialty formula that newborns that are more fragile, the only thing they can eat. So we put together economists and people who understand supply chains and health folk and agricultural and really try to use data to tell us where the retail shortages were, and then came up with some policy ideas to address the formula shortage that included flying formula in from Europe, certifying it as safe and putting it into the communities that needed that formula. And that was just an incredible, incredibly hard sort of an every day marching towards our goals, kind of a set of meetings that I was really proud to be a part of, and also proud that OMB was able to identify usable sources of funding and resources to kind of address this shortage right away and continuously communicate with Congress and with other stakeholders about what we were trying to do to address it. And that’s really how you solve hard problems when you have something happen that is really unexpected but really needs a more of a whole of government approach to help address it.
Tom Temin And for people working at your level at OMB, or maybe the high level or the more senior career people, is it Monday through Friday, 9-5? Is it Monday through Friday, 7-6? Is it Monday through Friday, 7-6 and half a day Saturday? What’s life like in that kind of crucible?
Nani Coloretti I’ll just say when you’re in the ranks of the Senate confirmed, you are actually expected to be available 24/7. Now, it’s a humane administration, obviously. No one was calling me at two in the morning. I can’t say that hasn’t happened in other jobs. But you build your own capacity as well. I am grateful and sort of grateful these last few years to work with like the best career civil servants in the federal government and the Office of Management Budget. They have the capacity to handle things and to only lift things up to me when a problem needs to be solved. And that is I am available to all of them 24 seven at any time. But you really don’t have a start time and an end time to the day when you work in these kinds of jobs.
Tom Temin And is the technological support base for the work you do pretty much up to snuff?
Nani Coloretti I would have to say yes. And I’ll say 30 years ago we didn’t have cell phones. In fact, we had one cell phone at OMB and it was the size of a shoe box. And you had to sign it out if you were going to use the one cell phone and bring it to your meeting on the Hill or whatever. So we’ve come a long way and technology has really allowed us, everyone, not just the federal government, but everyone to do work when they need to.
Tom Temin And by the way presidents are said to leave letters in the Oval Office, Resolute Desk or whatever they call it, for their successor. Does that happen at your level? Will you leave a letter for the next deputy director?
Nani Coloretti I am planning on it, I think would be a nice way to welcome the new administration in. And I just think it’s such an honor and a privilege to serve in these seats. So I will be leaving a little missive on some fancy cards.
Tom Temin All right. Nice. And you’ll tell them where to get a good cup of coffee around that part of D.C.
Nani Coloretti Absolutely. Absolutely.
Tom Temin And do you have plans for post this administration work?
Nani Coloretti I’m a career public servant and I want to try to find a way to keep serving the public as I can.
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Tom Temin
Tom Temin is host of the Federal Drive and has been providing insight on federal technology and management issues for more than 30 years.
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