The Frederick O'Reilly Hayes Prize

WASHINGTON, DC
The Bureau of the Budget

In 1960, just after John Kennedy was elected President, I decided that I wanted to be part of the New Frontier. So I traveled from Cambridge to Washington to apply for a job at the Bureau of the Budget. When the BoB personnel officer asked me why I wanted to work there, I told her that I was trained as a planner and that I thought that the Budget Bureau was the central planning agency of the Federal Government. "Oh, no," she said, "We're not a planning agency at all. We're more like accountants."

But she was kind enough to send me for a courtesy 15-minute interview with a real budget person. I descended into the cavernous cellars of the Executive Office Building. There, in a dingy chamber decorated mostly with negative prestige symbols like typewriters and adding machines, I came upon a redheaded chain-smoker. It turned out that he, too, thought that budgeting had something to do with planning.

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Thence followed the most fascinating two hours of conversation I had ever experienced. I emerged enthralled with his insights into what government could be. Unfortunately for me, the Bureau of the Budget did not share my enthrallment. No job offer was forthcoming. So I returned to my modest planning consulting practice in Cambridge, still wistful for the wonders of Washington and wishing I could talk more with that guy I had met down in the EOB basement.

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The Urban Renewal Administration

Two years later, my consulting practice had expanded and was going quite well. Our firm had grown, I had five partners and a lot of contracts and my wife and I had just bought a house in Cambridge. Then, I got a call from Washington, not from Budget but from the Urban Renewal Administration, an agency in what is now the Department of Housing and Urban Development. The offer came from Fred Hayes. He had left Budget and moved to URA to run their planning programs. I overcame the protests of my consulting partners and my wife, abandoned the house we had just bought, and took the job.

My Washington experience was just what I had been looking for, and was just what I had been missing in consulting. Fred gave me my own program, making planning grants to big cities. He helped me learn the complex ways of the Federal Government and how to write passable policy documents. He challenged me to make cutting-edge grants. For example, we financed San Francisco to build a computer model of housing investment patterns that demonstrated, if I remember correctly, that there was a high correlation between where gay people lived and housing rehab.

Best of all, though, Fred always had time for mind-expanding conversation, sometimes during Martini-irrigated lunches, sometimes as we hung around the office at the end of the working day. For our wives and children, I'm afraid, it was a foreshadowing of long hours to come in subsequent years.

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The Community Action Program

I learned a lot just watching Fred Hayes operate at URA. One of the things that impressed me most was his extraordinary ability to reach out into the tangles of the Federal bureaucracy to locate like-minded people who wanted to change the way things worked. Fred was innovative bureaucracy personified.

In 1964, the most innovative activity in Washington was Lyndon Johnson's War on Poverty. Fred Hayes fit naturally into the loose, multi-faceted approach to fighting poverty taken by Sargent Shriver's Task Force that was framing what became the Economic Opportunity Act. Even before the act passed, Fred was encouraging me to use my urban renewal planning program to finance social planning in Detroit and other cities. We began to build a nationwide net of people and organizations that wanted to participate in the first deliberate effort to address the problems of low income and deprivation.

Once the Economic Opportunity Act was passed by Congress and signed by the President, Sargent Shriver appointed Fred Hayes as deputy director of OEO's Community Action Program. I went along with him as Assistant Director for Program Management.

CAP was the unruly, flexible, community-based central component of the poverty program, capable of financing anything from Headstart classes to neighborhood centers to sit-ins in Mayor's offices. I suspect that Sarge thought he was appointing a good conservative Irishman who would protect his flanks from the "bomb-throwing" firebrands who gravitated naturally to community action. Little did he know. Over the next two years, Fred's ability to reach out to Black and Hispanic groups and to the less-recognized groups such as Native Americans and migrant workers was of signal importance in helping build what eventually became a national network of more than a thousand local Community Action programs.

I could tell tales all night about Fred Hayes and innovative bureaucracy at Community Action. For example: early on, we were having a problem with Fred's old colleagues at the Bureau of the Budget. They were outraged by Shriver's demands for many super-grade positions for his staff. Unless Sarge agreed to cut back to what BoB thought was reasonable, they wouldn't approve application forms for our CAP applicants. They could do this through their power to control distribution of any Federal form to ten or more entities. Without BoB approval, we were stopped cold.

As time passed and neither Shriver nor Budget caved in, our situation became desperate. If we waited any longer, our applicants wouldn't be ready to expend funds when the President - once assured of re-election - finally allowed us to make grants. Fred's solution was simple: "Print the application forms and distribute them across the country", he told me. "In the space where the BoB approval number is supposed to go, just put 'Draft for Discussion Purposes Only'." We made our first $300 million worth of CAP grants on draft forms. The Budget Bureau went ballistic.

It was at Community Action that Fred got his first chance to hire staff on a mass basis. Soon, it became clear that this was one of his major talents. He staffed our Washington office and the regional CAP offices around the country with young people of extraordinary ability and dedication.

"I'm going to give you the best employee you'll ever have," Fred told me one day. "I had to pay the State Department a terrible price to get them to let his wife, who had been a French Fulbright, back into this country. But I think he'll be worth it." That Fulbright scholar from France was named Alliette. My new employee was Peter Goldmark.

Another day, Fred asked me to interview a woman whose professional experience seemed to consist of having been the unpaid finance director of a group of choral singers. "But she was first in her class at Wellesley," Fred told me. "I think she'll work out." Joan Leiman did work out, first at Community Action and then in the New York City Budget Bureau and after that in a lot of other places.

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NEW YORK CITY
The Bureau of the Budget

In 1966, newly elected Mayor John Lindsay offered Fred Hayes the job of budget director. Fred did what he said any educated person would do, faced with such an offer. He looked at Sayre and Kaufman's book, "Governing New York City." What they wrote, he told me, was that the budget director is the most powerful official in New York. Fred felt that sounded pretty good. What he may not have thought enough about at that time was that this was negative power, the ability to say "no" to just about anybody about just about anything. Later, as Fred worked hard to get City officials to take new and positive approaches to service delivery and investment, he could be heard to mutter that using his budgetary power was like "pushing on strings."

Fred asked me to come to New York to be his deputy. "Fred," I told him, "I really don't know anything about budgeting. I'm a city planner."

"Well, you once prepared a capital budget, didn't you?" I admitted that I had, but it was for a small Massachusetts town with only 7,000 residents."

"No problem," Fred said. "All you have to do is add three zeroes on the ends of all the numbers."

The five years that Fred Hayes was budget director of New York City were an unforgettable time for those of us privileged to share them. We saw a master craftsman of public policy at work, creatively building on the knowledge he had gained in his earlier career and showing to a superlative degree two talents I had watched him developing in Washington.

One of those talents was picking people. Many of you in this room tonight are testimony to that ability. Fred personally selected each of the capable young people he placed into a new Program Planning Division of the Bureau of the Budget. He delighted in hiring what at times seemed like legions of bright young summer interns, many of whom have gone on to have distinguished careers of their own. In John Lindsay's second term, Fred even began to staff the top positions in many other City agencies as well. It was a virtuoso performance.

Fred's other talent is harder to define. I saw it first as he "networked" around Washington and the country in the development of the War on Poverty. I saw it in New York City as he challenged us in the Budget Bureau and in the new planning staffs of other City agencies to approach municipal problems analytically. I saw it in one of his favorite creations, The New York City Rand Institute, as they applied economic analysis to the police, fire and other City departments. His talent for innovative bureaucracy served this city well.

I remember many tales that I could tell about Fred's years at the Bureau of the Budget. Let me restrain myself to a few.

There were the times at Gracie Mansion "super-cabinet" meetings, when he would awaken from what appeared to be a sound sleep, to skewer with a few pithy phrases, an unwary commissioner who was trying to blame his agency's shortcomings on delays caused by a budget examiner.

There was the time Fred debated Federal non-cash matching grants for underground garages at Lincoln Center with John D. Rockefeller in front of the Mayor at Gracie Mansion. Little did Mr. Rockefeller know that Hayes, in his days as a Federal budget examiner, had written the regs on that topic for the Government.

Early on, Fred pinpointed New York City's basic budget problem. This was what has become better known in recent years as "structural imbalance," the unfortunate reality that the city's recurring expenditures seem always to grow faster than its recurring revenues. Neither Fred, nor any of his many successors as budget director, has been able to solve this conundrum. At best, the problem gets put off from year to year with one-time revenues and an array of ingenious devices. As those of you who still follow City fiscal matters know, the structural balance problem is back in full force today. Fred would nod, I think, and say, "Well, you know, so what else is new?"

After Government

All in all, the years Fred Hayes ran the New York City Budget Bureau were a great show. I could go on to talk about it all night, but it's only fair that some of you also have a chance to brag a bit about Fred Hayes, too. So I will close with a few comments on the years that followed 1970 when Fred resigned from Budget.

He did a number of constructive things in those subsequent years - although I have always regretted a bit that he never returned to government. He wrote two books, one on productivity and another on budgeting in local government. He consulted here, there and elsewhere. He was a continually good friend and advisor to many of us. His advice continued to be filled with anecdotes, some to the point and others, I've always felt, just because he liked to tell stories. Hanna and I enjoyed his company and Ann's over the many years when we visited them in Lexington and, later, less frequently, after he returned to his upstate New York roots in Utica.

Over a period of nine years, in two cities and three government organizations, through the writing of one book and a number of consulting assignments, I was privileged to have Fred Hayes as my boss. Looking back these past forty-some years, the only regret I have is that the redheaded chain-smoker I first met in the basement of the Executive Office Building isn't still around to share outrageous ideas with. Well, you can't have everything. I had a lot, though. Thanks, Fred.