Inside DOGE, The IRS & How to Scam the US Government - Sam Corcos

you got a new job. Congratulations. >> How'd that happen? >> I uh I had a lot of friends reach out to me from the administration uh saying that they really needed help doing really looking into IRS modernization. It's one of the worst managed IT projects in the government. Uh I think maybe second only to the VA's attempt at implementing an electronic health record system. Uh it's about $15 billion over budget. It was actually started right around the time I was born and it's still ongoing. It's still 5 years away. It was 5 years away in 1991. It's still 5 years away. So, they said they really needed somebody to look into this and see if we could fix it. So, um I I've always wanted to do government service. It's a thing that has been important to me. I I care a lot about the future of the country, especially the national debt, but I I kind of assumed this would be a thing that I would do in my 50s after I'm retired. Um, but my my wife really encouraged me to uh to give this a go. So, about 6 months ago, I made the plunge and and here I am. >> What are you? >> I'm uh I'm the chief information officer of the Treasury Department. That's my official role. >> What's that mean? What's that guy do? So the chief information officer in in private companies, it's usually the CTO is the the primary technical leader. In the government is the chief information officer. Um it's an interesting one. I think a lot of what I've learned is tracking the history of a lot of these things can be interesting. So the chief information officer really stems from if you go way back it stems from when it was effectively a librarian role if you want to call it that where it >> the the the legacy of chief information officer is when things were in filing cabinets where is the information how do you keep track of this stuff and it slowly evolved into what it is today but part of the challenge that I've seen internal to government is that most of the chief information officers, at least before this administration, were non-technical. And the main reason is there's no technical standards or requirements for the role. And so you can kind of see how you get there where when it's a librarian role, it's not there there's no requirement to really know how computers work. And if you never update the standards, >> you just sort of fall into this situation. Is that precient that not only were the systems not updated, even the job title wasn't? >> I think it's it's less the job title, it's more the qualifications for the job. Like we have standards for being like the chief counsel of an agency. You have to be a lawyer. I think most people would think that's reasonable. We just never updated that for technology or in government. They really call it IT. That's the that's that's the more common way they would describe. >> Also feels like an outdated term. >> Yeah, for sure. How technical you? >> Me? Um, I've been a software developer for more than 10 years. In my most recent role, I was the CEO, so I didn't do as much coding. I did in the early days. Um, I actually poked around in my GitHub account a few months ago. I I've contributed about a million lines of production code. So, I'm I'm not the best engineer that I know, but I've I've done a lot of it. >> That sounds like a H index for engineers compared with academics. Yeah, it's it is definitely something that if you if you optimize for it, it becomes useless because it's very easy to just like create a bunch of boilerplate code and pretend like you did it. But it's uh it's I'm sure it's correlated. >> What's your relationship with Doge? >> I was originally brought in through Doge in March. So that's when I started. Uh, I was put in at the Treasury Department with my primary focus uh being the IRS, which is trying to figure out how to land the plane on this on this uh IRS modernization program. >> What did you think you were walking into? >> I really didn't know. I've read a lot of things. Uh I've heard stories from friends of mine who have been in the government in the past. Uh some of those things turned out to be true. Some of them turned out not to be true. Um, I think my the thing that I was really encouraged by, which is an expectation that I had coming in, is that my friends told me that this administration is willing to make changes that have never been on the table before. when it requires significant structural changes to an organization uh that requires a lot of courage that historically we've been shuffling things around that >> people are willing to make those changes now that for the most part has been true which has been very exciting I think one specific example which uh >> when I was about when I was about a month in I started to recognize at the IRS that we had a major problem with the uh the technical background of the leadership team in IRST, which is to say there were not enough people in leadership that knew how computers work. And that was the upstream problem of a lot of the other issues that we have because if you don't know how if you don't even know what the words are in the scope that you're responsible for, it's very hard to make good decisions. And these are not insignificant decisions. These are multi-billion dollar technology decisions made by people who don't understand it. >> So, uh I this would have been in April, so really peak tax season. I made the recommendation that we put effectively the entire leadership team of IRS IT, which was about 50 people on administrative leave, which I we can get into what all these terms mean. uh which effectively means we're removing them from their roles. We're not firing them, but we're we're putting them on leave and we're replacing them with the people who are technical enough to do the job. And that requires a lot of courage. Nothing like that had ever been done before as far as I know. You said uh you had been assured that going in people were ready for change. I have to um predict that the 50 people who were put on administrative leave were probably not so keen on the changes that were being made in that regard. So it sounds good from the outside coming were ready for change like this is there's been enough that's been done. People are sick of the oification and the slow lumbering behemoth that is internal government systems that need updating. >> Yeah. >> But that can't be everybody and maybe it's not even most. Perhaps it's some key decision makers. So that power struggle between move fast break things dogeens and existing government bods that are scared they're going to lose their job. >> I mean anybody that's worked in an office understands that navigating politics in the office is difficult. You are in politics. >> So what are the politics of politics like when it comes to that power struggle? >> So the the specifics the the interesting thing about we'll take the specific example. So, a lot of the folks that I talked to, uh, some of the people who we ended up putting on administrative leave, um, I have a lot of empathy for them because a lot of them really didn't intend to be in that role. Uh, they were put into that role and several of them, I can think of some specifically from conversations that I had, they knew that they were not technical enough to be in this role. and they knew that they were not making good decisions and they felt some guilt about it and they were put into that position for uh because it's largely promotions are largely tenure-based. So just by being around long enough you end up in these roles. That's a whole set of problems in the government is that uh almost everyone in the performance reviews almost everyone gets a four or a five no matter what. And so it's very hard to make sure that the people in these roles are actually the ones who know what they're doing. So, some of these folks are really hardworking, good people. They're just put in a position where they could not be successful. >> And I talked to some of them afterwards and like they're obviously not happy. They didn't lose their jobs. They're just on administrative leave so that we can shuffle things around. But, you know, it's a lot of them really understand why this is happening and they they know deep down that this is for the best. Uh, but it is it is uncomfortable. Just lingering on your appointment first. >> Yeah. >> What is the role that this executive order thing plays in what you do and how you arrived at this? >> Um I think the Doge executive order sets up the ability to create the office. I was actually never I think this this is a a common question is like what even is Doge? >> And uh it's it's a it's an office in the Executive Office of the Presidency, the US Doge Service. Um, I've never been a part of that organization. I've I was brought in directly as an employee of Treasury. I get my deliverables and my instructions from the Treasury team. I coordinate a lot with the Doge people. I think the uh there's been a lot of court documents that describe me as Doge affiliated. So, >> you're Doge adjacent. >> Doge adjacent. Yeah. So, like >> alt Doge. >> It's like whatever these definitions are, it's kind of amorphous. Um, but yeah, I it's it's allowed us to uh there's there are specific authorities in that executive order that give us the ability to review contracts and to make sure that we have review on a lot of the things that are being done in these agencies. >> Are you different as a political appointee rather than a career public servant? >> Um, functionally there is not a huge difference. Uh I think the only big difference is that you can be more easily fired as an appointee. It's very hard to get fired as a career civil servant. >> Right. Okay. I think obviously America is pretty politically divided and we're still in the aftermath of November. >> What made you feel comfortable about stepping into a political position? Um, I mean it's technically called a political appointee, but the reality is everyone wants the IT systems to be good. Everyone wants the government to work better. Um, I I did a I did a news thing with Secretary Bessant a while ago and there was some concern that I had that there would be negative repercussions from that. But uh I was surprised that really in a bipartisan way people that I know on any side of the spectrum were just really glad that somebody who knows what they're doing is trying to fix the stuff. So I think it depends a lot on what it is that you're doing. In my case, I'm I'm really just there to fix the computers. >> America has the fifth highest government expenditure per capita in the world. >> H >> is that a good thing? >> I did not know that. That's uh probably not. I think in theory it's fine if there wasn't such a large deficit. If we were if we were not going into such debt in order to pay for this, I think it would be fine. But the uh our national debt is reaching a a critical point where we will never this is like some runaway effect that we need to we need to get that under control. I want to know how the go Oh, there we go. This is the US debt clock.org and all of the numbers are massive. What stands out here? >> I mean, the $ 37 trillion. >> Where's that? >> Right over there over my shoulder. >> That's really the topline number. >> Uh it's a just an astoundingly large number. We have uh $100,000 in debt per citizen. Um, >> and it's going up at about $100,000 a second. >> Yeah, pretty much. Yeah, that's the that's really the intent of Doge. And >> what's the Doge clock? What's that? >> I don't actually know. I think that's maybe counting the amount of money saved from Doge. But >> yeah, it looks like it. >> Maybe the based on the goals of the organization. >> So, I'm interested in how the government operates internally. Uh, what's it like inside of it? Everybody thinks about this. You hear the stories of, you know, the sort of um >> hallowed halls, the Chesterfield sofas, the sort of cigar lounge. I might be speaking a bit British here, but still, uh, what is being inside of the government like? How slow and oified is it? How keen are people to change? Are people just sort of sat back with their feet up not doing any work? I'll uh I'll give two different examples that show how how it can go. So, this kind of ties back to when I mentioned around I from the conversations I've had with friends of mine who have been in previous administrations that things are slow, decisions don't get made. Everyone the whole name of the game is cover your ass. Everyone is like every decision is made by committee so no one can be blamed. That's the whole game. It's all about optics. Um it at least in my limited experience I've only been in government for 6 months and I've only really been in treasury. Uh we're lucky as I think many of the other agencies are that we have a secretary, somebody who's leading the organization who's willing to make the hard calls. Often times everyone knows what needs to be done but there's just a lack of willingness to do it. So uh the example that I gave before putting those people on leave uh that was a decision that the secretary's team had to make and after we did it there was about a week of everyone panicking and then everything almost immediately got better as in better than it was even before >> as in our things that were stuck for years started getting delivered in weeks because we put decision makers technical decision makers in technical decision-m roles and so we were able to make decisions way faster. And I remember one of our best engineers who's a who's been there for more than 10 years. He uh this is right after we made this change. He said, "Uh, I don't know if this is good yet, but this is definitely the most different it's ever been here." And so the the willingness to make that hard decision, I think, comes from the top. And there's a lot more of that than I think has been historically the case. And now I'll give you a totally different example of a thing that I have been stuck on for a long time that's driving me nuts, which is uh I'm trying to get to the bottom of why the IRS does so many things by facts. I I'm working on trying to get the customer service software to be better. And I'm listening on these calls. I'm working with the reps to try to improve these cycles. And often times when they when you're a taxpayer and you need to send us documents, we say, "Okay, great. Uh, here's our fax number." And this is the most common response is, "I don't know how to send a fax." Like, "Well, it's the only way that we can receive data is by fact. So, you have to figure out how to fax this to us." >> And uh I I asked, why are we doing this by fax? And the answer is, well, there's a a policy. There's a belief there's some there's some reason why we do this which there are many people who believe that faxing is the most secure way to send information and that email is not the internet is not it's facts that's like the gold standard of information security and I've talked to the federal siso I've talked to a whole bunch of people in cyber security in the government saying am I missing something or is this crazy >> and uh this might have been true 25 years ago, but it's definitely not true now. And I've been trying to get to the B. We we receive 60 million faxes per year at the IRS. We have, I believe, 50,000 active fax lines. And the the struggle that I have is trying to figure out why do why are we still receiving faxes? What policy says that we need to how do I change this? And it's like I'll talk to somebody, they say, "Oh, the Office of Tax Policy is responsible for that." I'll talk to them, they say, "Oh, no, that's over at the IRS." I talk to this person. And I just I cannot for the life of me still right now, this is I'm actively working on this. I cannot figure out h like where are the levers? Who makes this decision? And then how do we implement this change? >> Uh there's just there's so much inertia and I guess you would call it bureaucracy. I don't think this is unique to government. I imagine this might be similar at very large corporations, which I've never worked in. >> Yeah, that's a that's a great point. How much of this is a unique issue that is to do with government and how much of this is when you get an organization of this size, diseconomies of scale come along for the ride and change is difficult. >> I think the I think most of it is probably the same as you would see in like a legacy large corporation. I think the added complexity is the fact that you have a staff that you have very limited leverage to change. So, uh there was one guy who came in uh I forget which agency uh and he was brought in to make some pretty significant changes to the agency and he asked me like all right so how do I do this? It's like in my experience, he's he's been the CEO before of a company. My experience, you come in, you find the good people, you find the bad people, you fire all the bad ones, and you promote all the good ones. And I said, "Okay, well, you're going to have to figure out how to do this without any of those things because you can't >> you can't fire the people who are not good. You just can't. It's not >> Why? Well, this is this is a whole long conversation about civil service and what it means. Um, there there is a reason why it exists and we have to go back to like 1880 to explain why this exists. Um, and it exists for reasons that make sense. We may be at a point where we've overindexed, but uh back in the day, this would have been like Andrew Jackson era. They used to call it the spoil system where when your party would win an election, you would fire basically the whole government and you would install all of your buddies and there was a lack of continuity. So like major government functions would just stop working because we have these new people in who don't know how any of these things work. Uh they would make a whole bunch of money and then they would leave when they lose the next election. Uh so this is this is not good. So the civil service reforms I think it was like 1883 uh they created this concept of like a permanent civil service where there's some class of people who are apolitical who you cannot just willy-nilly fire all these people just because you won an election. They have certain protections which I think is generally a good thing because you do get continuity of service for these functions. Um, it is now the case that I think there's roughly roughly a couple million people who are civil servants and you have something like 4,000 appointees. So, we we might have too many people that have these sorts of protections. And in theory, you can fire them, but there's a whole process to doing so. They have to get uh they have to get a poor performance review I think three times in a row. It's it's multiple times in a row. Uh and they're spaced out pretty significantly. If you ever give somebody a poor performance review, the unions come after you and it's like 10 times more work to deal with it. So a lot of people just give everyone a five and just like move on. So the most common way that I've heard from inside of government, people have been there for a long time. The most common way to get a poor performer off your team is to promote them. Yeah. Yeah. This is absolutely ubiquitous. Like everyone does this. >> You pass the parcel up. >> Yeah. You just like give them a promotion, move them to another team and we can keep this. There are some people who are really diligent about doing performance reviews and keeping quality teams. Um but they are fewer and far between. >> I think a lot of people assume that government employees are lazy or incompetent. What's been your experience with that? What's the proportion of people who are fit for purpose and not? >> I think there's there are there are some people who are really excellent. Um most of my exposure has been at the IRS. Um we have when I came in we had about 8,500 people in the CIO's office which is the product design engineering but mostly ostensibly it's mostly engineering. Um I interviewed a lot of people. We have from the folks that I talked to at least at least a couple hundred good engineers. There might be more, but from the people I've talked to, at least a couple hundred. There are a lot of people who just they don't pass the what would you say you do here test. You ask very basic questions about their role and they can't even answer the simplest questions like if you're if you are if your job is you are the engineer responsible for data integrity and I ask you a basic question of like okay so how does data go from here to here? and they go, "Oh, I I don't know. We should ask uh so and so." It's like, "Okay, is is that just your answer for everything? Like, what what do you actually do other than set up meetings?" There's a there's a really good book. Do you ever read the book [ __ ] Jobs? >> Uh no, but I I have an idea about what it is. >> Yeah, there's a lot of that. >> And because you can't really fire these people because you can't really give them negative performance reviews, they just sort of they're just sort of there. um as like a a maybe a a data point uh at most software companies that I've worked at or had exposure to the ratio of engineers to non-engineers within like a product design engineering function is something like five engineers to every one non-engineer. >> Uh or if you're like a really tech heavy company it might be 10 to one. We're basically the inverse of that. It's like one to 10. There are so many people whose job it is is to like manage managers of managers of contracts of managers. >> There are some really good people, but it is not the majority. And so finding those good people is really the name of the game. >> Mhm. Mhm. 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If you don't like it, they will give you your money back. Plus, they ship internationally. Right now, you can get up to $350 off by going to the link in the description below by heading to eight.com/modernwisdom using the code modernwisdom a checkout. That's eigle.com/modernwisdom. Modernwisdom a checkout. How hard is it to get change to happen then? Just across the board, it seems like there's some protections in place. Um, there is this odd tenure professor thing going on. Uh, very procedural. Uh, there is a disincentive for starting that process because you're going to get kicked in the ass off the unions. Uh, there will be social pressure as well. Did you hear about Sandra? Sandra got, you know, let go by that that Sam guy from Doge again. uh if you want to make some changes happen, how much of a solvent have you been able to be with these new sort of powers to step in and and actually make [ __ ] happen? >> Yeah, I would say there are there are certain things that are relatively easy to get the first step in. This is this is one of the biggest surprises for me is uh specifically uh as having been a CEO before, one of the things that you learn is that you have to be very careful with what you say to the team because if you suggest an idea, it might just become the new company priority without you realizing it and people just immediately action this Uh it is about as far the opposite of that as you can imagine in the government. Um >> you can say whatever you want and people just continue on the existing train >> like the president puts out an executive order that says this is the new priority. The secretary sends a message to the whole comp the whole organization and says this is the new priority and then you check in a couple weeks later and everyone's like what which thing? And the the number of times that I have had to just like really hound people to get these done. You can often find these sometimes you you have this thought of you know what we should really have we should have this policy in place but nobody's doing it so we should write this policy and then you discover that's actually been the policy for 15 years. Somebody 15 years ago had this idea but it didn't actually happen. >> Could you give me an example of something? >> Yeah. I mean, do not pay is a specific one. So, do not pay is like it's a list of whenever there's like a a fraudster using a particular bank account. Before you send out money to that bank account, you want to check it against the list of known fraudulent bank accounts. And that's a that's a thing that makes sense that you'd want to do. Um, that's been a thing that was supposed to be implemented in like 2013. So, this isn't this isn't new. Um but the I would say if I was to say it concisely the biggest surprise is that uh executive orders are not self-actualizing. Just having the policy is a very small part of the amount of work that actually needs to get done to get these things implemented. And under the hood you really have to you have to hound people. I think if if I were to say the one thing that the Doge people are particularly good at, it's knowing what the priorities are and making sure they get done. >> The enforcement in a way. >> Yeah. >> Interesting. >> And sometimes just doing it. There's there's a lot of times when there just is not the talent or capacity in house to get it delivered and the process for outsourcing it to a contractor is so cumbersome and ownorous that sometimes you just have to do it yourself. >> Have you spoken to Dominic Cummings? >> No. >> You know who he is? He was uh Boris Johnson's uh enforcer right hand during COVID. M >> he was also the guy that Benedict Cumberbatch played in the movie about Cambridge Analytica >> for Brexit. >> So um technically proficient has a substack. You know he's like sort of modern DGN does podcasts wearing a baseball cap. Anyway, I think it'd be interesting for you to speak to him. I'll I'll I'll intro you. But >> he famously brought up a bunch of stories. I'm going to just give you a few that will maybe make you feel a little bit less bad about your situation. uh one was during co uh there was no way to keep the figures centralized. So they were written on pieces of paper and then he would write them on a whiteboard and Boris apparently was just shooting from the hip based on what newspapers were put in front of him that day and that was where the policies came from. M >> there was a need to find a way to have cloud document storage that people could live work on at the same time but they didn't know if Google Docs was sufficiently secure uh or the same for Microsoft Teams and stuff like that. So they uh engaged a consultant company who I think spent multiple years and multiple millions of pounds to tell them that we need to do it. we can build, we'll bootstrap it ourselves. Um, most impressively, up until 2020, a good chunk of the NHS was still run on Windows XP and there was a special ransomware virus want to cry or something else that got released that affected like 1% of NHS and thousands, tens of thousands of patient data went. Uh, pages and fax machines still quite heavily used. Um the rail system in the UK still famously uh uses fax machines and can't really explain why or how that gets unwound. So I guess >> uh it's not just you. Uh we do have a much older country. So I perhaps we have a little bit more of an excuse than you do. But when it comes to building tech inside of government, does government do that? What what what does building software and tech inside of government look like? >> Yeah. The interesting challenge about building software in the government that my vantage point is a little bit skewed because the IRS is basically a technology company and a lot of other government organizations the technology is very much a secondary consideration for them. But for the IRS almost everything we do ultimately is downstream of technology. If you want to do enforcement of tax, you have to use computers to figure out who is non-compliant. If you want to pull up somebody's tax information when you're on the phone with them for customer service to resolve an issue, you need the IT system to be good in order to do that. Virtually everything we do is is based on IT systems. So, uh, a lot of our systems are internally built. A lot of other systems are built with vendors and these these vendors are I think the biggest challenge you have is there's this core incentive misalignment issue that you have with the vendors where because the people making the decisions on whether to sign a contract or not, it's not their money. You have this very large budget. This is one of the other uh I'm not sure I would call it a misconception, but it's commonly said people say, "Oh, the budgets are so tight." I can tell you firsthand, especially within it at the IRS, the budgets are not tight. We spend so much money on these things, but nobody cares. Nobody's paying attention. the we would we will gladly spend hundreds of millions of dollars with some vendor to build a thing over the next five years, but we won't pay our engineers slightly more money because of some weird statutory thing where you can't compensate engineers at even close to market rates once you reach a certain threshold. >> Uh so uh I'll give you like a very specific example that I'm dealing with right now. There's a vendor that uh we wanted to work with to build a particular system and >> when you say vendor what you mean >> a vendor is like uh Accenture, Deote, Booze Allen, Hamilton, Lidos, Palunteer. There's like a whole list of companies that are contractors that work commonly with the government. I'm sure there are thousands of them, but there are there are some that are bigger and more wellknown than others. I think Booze Allen Hamilton gets something like 97% of their revenue from the government. Like they're they are like one of the quintessential vendors. Um the one of these that I'm talking to now, there was a previous vendor that we were using and they were really taking advantage of the government on pricing. And so I talked to one of the new vendors and said, "Can you do this for us and how much would you charge?" And it was a much lower rate. I think it was something like $2 million a year is what they offered. And I said, "Okay, great. But that's the price, right? I just want to make sure that that's going to be the price that we pay." They said, "Yep, you know, we're not like those other guys. It's 2 million and there's a couple other projects they're working on as well." The first 6 months go really well. Great. Then the contract comes up for a renegotiation and now they want $100 million a year. And I'm asking them, I this is I thought we talked about 2 million for this, 250,000 for that. It's like, oh, that was our pilot pricing. It's like, but if I had known that you were going to raise your price arbitrarily by 20x for no reason whatsoever, I would not have agreed to this. But now we're in a position where we can't just stop because now they're in our systems. And so now there's going to have to be this whole we can either we're either going to come to terms with like a more reasonable price or we're going to have to find a new like we're going to start with a new vendor or we're going to have to bring it in house and it's just so tedious. >> Is that not what happens with all businesses though that you use a third party, they come in, they pull the wool over your eyes a little bit. Is this unique to government in some way? The only reason why it's unique to government is that historically nobody in my seat says no. >> Right. You're seen as a soft touch. >> Yeah. Like >> this is how you negotiate with government. >> Yeah. Basically, normally they would come back with a price like 100 million and they just check, oh, is this within our budget? Yes. All right, sign off. But I'll say, where did you come up with these numbers? How are you defining this price? and they'll say, "Oh, well, we didn't actually change the price. It was just a change in scope." It's like, but no, it's the price is 20 times more. And then they come back, this actually happened. Like, well, what if it was like 50 million? It's like, you can just you can just like arbitrarily change the price like that, guys, what are we doing? This is crazy. >> Yeah. >> And uh this is another thing that they they said directly. They said, >> well, you know, usually when we talk to government, they don't negotiate on price. people, government entities usually prefer a fixed price. It's like I I don't see that's this is completely irrelevant to me. Like I'm I want to know what it is that we're paying for and what we're paying for seems to be something completely arbitrary. Mhm. >> So I think they're just used to not dealing with this cuz actually this maybe ties into a broader problem which is that I'm I'm in this role for some limited duration of time as the chief information officer of Treasury. Um this role I'm responsible for something in the range of like 10 billion of spend per year. This role is paid I think $160,000 a year and you're not allowed income from any other source. There's like a there's a rule against like I can't do consulting. I can't do anything else. Um you also have to like publicly disclose your finances. There's all these limitations that come with it. Um and so historically these people are not like super experienced people who have run large technology organizations before. Uh it's historically been a role where you get promoted internally from some some role usually a non-technical role uh and then you end up the CIO and you're responsible for making these decisions. And it uh it I think over the last several decades at IRS, it has led to a lot of very bad decisions. >> What have you had to give up to take on this role? >> Uh well, the simplest one is money, but like you can make money later. The I think the biggest the hardest selling point for this is that uh it's not just that you make less money. That's fine. But for the types of people that they want to bring on, the pitch that you have to tell them is like, I hope you have a lot of money in savings because as a result in taking this job, you'll probably burn down a lot of your savings. And so I've been trying to advocate for uh just make it these are called a lot of these leadership roles are SCES. There's the general GS, which is like most government employees, and then there's the SCES, which is the executive leadership group. There's about 8,000 SCES memory serves. Um, just make the compensation average. There's like industry average. I think the the role that I'm in should probably be compensated something in the range of like a VP of engineering at Walmart would be probably a reasonable comp. But, uh, this role, the CIO often makes less than the engineers on the team. And I think that uh it leads to a lot of challenges when it comes to both keeping people in there who actually care >> like this is I I have found myself uh struggling with this where there was some contract there's one that comes to mind that was a couple weeks ago $35 million for some set of new toys that we really didn't need but it's technically in the budget and I just said no we don't need this and a lot of people were upset and I found myself in the back of my head going like why do I care? This is not my money. I could just say yes and then this problem goes away and no one will care. There's not a single person that will care by me saying no only there are only people who are upset and there's like this ambiguous win for the taxpayer. Mhm. >> Uh, of course I still did say no, but you can you can feel that in the back of your head and you're thinking like you really need people in these positions to care enough to be willing to make those hard calls. >> A quick aside, if you've been feeling a bit sluggish, your testosterone levels might be the problem. They play a huge role in your energy, focus, and performance, but most people have no idea where those are or what to do if something's off. which is why I partnered with Function because I wanted a smarter and more comprehensive way to understand what's actually happening inside of my body. 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I would say why should they trust people with substantial relevant industry experience versus people who often times stumble their way into these leadership roles. I think that's probably the way that I would frame it. Um, and it's not even like trust as in they're going to do anything nefarious. It's just when you work in an organization, you want your leaders to make good decisions. And I think especially within technology, you want people who make good decisions in these roles. And one of the consequences of not having this is just this contractor bloat. And like a very specific and relevant example is the amount of money that we were spending at the IRS on cyber security contractors was just astounding. It was hundreds of millions of dollars a year. And we were doing a contract review and we asked all of the leaders of these groups to justify their contracts like which of these are missionritical, which of these are not, which can we descope? The cyber team came back said 100% of their spend was missionritical. Not a single thing could be changed. We moved on during that administrative leave portion. We we put those leaders on leave. We brought in the cyber engineers who really understood what these contracts do. And we just went line by line. And on I I would guess about a third of them, we hadn't even used this vendor in years. And we were still paying them 10, 20, $30 million a year. And just nobody cares. And when it's not your money, there is some nonzero risk that if you cancel a contract, something bad might happen. And there is zero benefit of cancelelling it for you >> at all. There's zero benefit. you can just ask for more money and you will probably get it and then that's it. So finding people who are willing to make those calls and this kind of ties into the the industry comparison. If the IRS were a private company, it would have gone bankrupt many many years ago because people would stop buying the service because it's bad. >> You'd have some feedback loop where people recognize these problems and they they stop funding it. Government contractors have been pretty vilified I think by Doge and other people over the last few months. How come like what is it specifically about the contractors that have uh got the eye of Sauron turned around on? >> There are many things. I think the biggest one is uh this core incentive misalignment problem which is the pricing is often arbitrary and they will claim that it's not. They say, "Oh, it's firm fixed price." Kind of like the one that I mentioned earlier. They said, "Oh, we didn't change the price at all. It's firm fixed price. We charge the same price to everyone. It's just a scope change." It's like, "Okay, but like we're not getting anything different and it costs more. So, what's going on here?" Um, a lot of the contractors, some of this is not even specifically the fault of the contractors. So, like I'll give you I'll give you a specific example of a type of problem that you experience. So, if you want to do something simple like, hey, I want to sign up for this online service and it's like $10, there might be some threshold where you can do it, but in general, it's like, great, we need to set up a contract vehicle, which could take a year and you have to go through this whole rigma roll of like a competitive bidding process is what it's called. the the procurement systems that we have today, the process that we go through to procure things is totally and utterly broken and it leads to disastrous and bad outcomes. So like if you wanted to do that, you'd have to do this competitive bid and this is at least the case for IRS. I I know from other discussions is the case a lot of other agencies as well which is that the uh if you are in technology and you need a specific piece of software you'll write up the RFP the the proposal for what you need that then goes to the procurement team at that point it's basically a black box usually the engineer has no further input into what is selected who selects that's what they'll often just end up with some random vendor for something that is somewhat related to what they ask for and then they just have to make do. The other challenge is that because we have these salary caps for most for all roles really but for a lot of the very specialized technical roles we can't really be competitive with hiring some of these roles. So uh in the early to midcareer we can actually be reasonably competitive. We can pay engineers something like 160 180. The cap is 226 I believe. So you can be reasonably competitive for those roles. But once you get into like mid to late career which is when people really specialize there's just no way to pay $250,000 ever. It just does not exist. And so there there are some I think there's a special thing where there are a total of 800 people in the government that can exceed that number and it requires a whole process to do. But the only way you can hire about that $250,000 person. The way that you would do it is you would hire some contractor, one of these large entities that I mentioned before. You pay them $500,000 to funnel $250,000 to the person that you actually wanted to hire >> and they'll arbitrage off the top. >> And then they'll arbitrage off the top and this whole system incentivizes those kinds of things. >> How important is getting above 225 for the sort of technical talent that you need to run the government? Well, this is the this is the interesting thing is that for the most part you don't, but there are some that are crucially important. Um, the IRS, as I mentioned, has when I arrived had about 8,500 people in it. It's now about 6,000 plus another, I think, 6,500 contractors. >> Yep. And so the the numbers are often misleading and you it's hard to really get a handle on who is doing what and how many people are there. Um, there are maybe a hundred of those roles in total where you would really like to be able to pay up to maybe $300,000. >> And it would make such an impact on the organization to be able to retain your really technical high context people that are there already >> and to be able to bring in people who have a lot of experience with this stuff. >> If you fix the contractor problem, what would improve? Well, uh I'll give you another specific example of like the contract the the procurement process generally is we we have this big initiative for uh to eliminate paper processing at the IRS. We spend something ballpark with like labor and all this stuff ballpark a half a billion dollars a year on paper processing. Um the uh we want to use external vendors. This is what people in the commercial uh in the commercial space do all the time. There are vendors, they take in paper, they use uh robots to digitize them and they basically just send you an API request. So it technically you're still receiving paper, but your your organization doesn't even need to know about that. It's just >> you don't need a warehouse. You don't need >> any of that. Yeah. We have this gigantic warehouse in Kansas City. I can show you pictures like there's paper stacked to the ceiling >> and it's just some of these things are >> months sometimes even years backlogged just like sitting there because it takes so long to process these things. So >> um the uh when I first started I said this is really obvious. It's way less expensive to use the vendor. It scales way better. There are far fewer issues using these vendors. So we should just do that. Great. We started the process. We we have to write up the proposal. We we do a competitive bidding process to get the vendors. We get a bunch of vendors who sign up. Cool. We pick a couple of the vendors. Then it gets contested, which is a thing where if you believe, if you're one of the other vendors and you believe that the process was unfair or that one of the other vendors was selected unfairly, you can contest it. It costs, I believe, $100 and you can just do it. Anyone can do it. And then the process stops for 30 days and then there was some situation we had to recompete it which then takes another however 30 60 days then you have to do like you have to do a new analysis then it gets contested again and then it's just like we I don't even we started this process of zero paper in April. We don't even have the contract awarded yet to start on the project. And this costs us more than a million dollars a day that we don't have this implemented. And nobody cares because we just have to follow the process because if you don't, it can get overturned and it can get contested. And it's just like the like it's just it's maddening. It's it's a million dollars a day. And I'm trying to make this point. We need this done. We need to start. I don't care which vendors we use. we need to start moving on this project. And it's like, well, you know, we have to wait for another 30 days before we can do anything because of this rule. And then, but you can also see how this exists for a reason, which is you don't want you don't want people to just choose their buddies company, right? That's I'm sure this >> checks and balances. >> You need some checks and balances. And you can kind of see how you got here, which is I'm sure there was a time when as soon as people got into government, they just like traded favors with all the people in the past or they traded future favors of like, hey, company X, I'm going to get you all these contracts and then as soon as I leave government, you're going to give me this cushy job. So, you need some some checks and balances there. It feels like we are way overindexed on process and on like competitiveness to the point where I'll give you another specific and absurd example. Value added resellers. >> So this is a thing because everything has to be a competitive process for the most part. If you want licenses for some generic product, the kind of thing where you could just go online and sign up for right now, be it like I don't know, think uh licenses for Adobe or licenses for Figma or licenses for any like web application that you would use like any SAS product, right? When when you're looking for the thing, you're not looking for any similar tool. You need this one specific license, right? But you can't compete that because you might end up with some different license which doesn't actually serve your purpose. So what you have to do, this is a common thing, is you have to create what's effectively a fake auction where you find a value added, you find three or four value added resellers who are all reselling that license and they're competing on the price for that license. >> So they all just take a cut off the top. They don't do anything, but they're there to provide cover for it looking like a competitive process. This is ubiquitous. And I think this is one of the things that the people over at GSA are looking to fix. General services administration is responsible for the procurement process broadly. >> This is one of the big things they're looking to fix because they just they just take money right off the top and they almost always do nothing. it. There's sort of a strange um contrast going on here because people say the budgets are tight. >> Yeah. >> In government, >> but you seem to be saying the opposite at the same time. Which one's true? Are there misconceptions about how much money government spends? I think the if I'm a if I'm in a steel man, the way that like when when people are in the government and they say that budgets are tight, I think probably the fairest way to describe it is they're saying that for the things that are important that we want to spend money on, we are not allowed to. I think that's probably the fairest way to describe it. It's not that there's a lack of money overall, like the overall budget. Yeah, the overall budgets are astoundingly large. But when they say, "Hey, we'd like to spend $10,000 on this thing." It's like, "Well, which contract vehicle are you going to use?" "Oh, well, we don't have one." Okay. Well, you need a competitive bidding process. Maybe in a year and a half you can get that. And we will have spent a million dollar to try to come up with some contract vehicle so that you could spend $10,000. And so the amount of overhead I I've described it to a friend of mine recently is in government everything is at least medium hard. There is no like just go oh yeah that's simple just go you can handle that. Everything requires so much time and overhead to do, especially with all this contract nonsense that it's uh the if you want to do something very simple, if you want to hire good people, the the problem is you you can't spend money on things that are useful because there's so much overhead to do all these things that you're you're trapped. And so the amount of I don't want to call it discretionary, but it's really like the if you know what's important like the the paper initiative that I mentioned, I could argue budgets are tight because like we can't get money for this thing, but we have money for this thing. We just can't do it. We're stuck. >> So legislation is tight. Budgets are wide. >> You could say that or you could say the rules are tight. the rules are cumbersome and ownorous because most of the stuff for it's called FAR um >> federal acquisitions regulation I think is what it stands for. >> I don't think hardly any of that involves legislation. It's just like compounded rule making from GSA and other groups that just make it really hard to do these things. When it comes to the big spend in government, how much of this is negligence, fraud, incompetence, waste? Like how culpable is anybody here? Because it sounds like everyone has plausible deniability. Yeah. I I think one of the things that's been a a strange observation is this this term waste, fraud, and abuse. Um it's it you know Trump in his first campaign ran on drain the swamp. This has been a longstanding campaign goal. Um I think what was most surprising was discovering how uh how gray the boundaries are between these concepts of uh what is waste, what is fraud and what is abuse. I'll give you like a very specific example. This was not at our agency, but I was talking to another CIO who's dealing with this. They were doing contract review and they disco they found a contract for a piece of software that's like $20 million a year that has been on the books for like 5 to 10 years. And one of the Doge initiatives was uh matching the number of licenses that we pay for with the number of licenses that are in use. >> Mhm. and they discovered that we'd been paying for these licenses. And not only was nobody using it now, no one had ever used it. Not a single license had ever been activated for this product. And it was set to just effectively autorenew. And every time it would come up for renewal, people would say, "Oh yeah, it's mission critical. We have to keep it." Because nobody really knew what it was for, who used it. So is that waste? Is it fraud? Is it abuse? I think we could say it's wasteful at a minimum, but you start looking into like, oh, well, who runs the company? It's like, oh, that's interesting because that guy used to be in the government. I wonder if there's anything there, but nobody really looks into it. >> These these boundaries get very fuzzy and it's really hard to know what's going on. Um the uh I would say in in terms of like abuse as well. This ties into some of the other procurement problems like uh there's this whole program within uh the small business administration that has some requirements on how many of your contracts go to small businesses. There's this it's the 8A program and there's something called uh the small disadvantaged businesses and frankly it's just a huge scam. the if you if you give a contract to a small disadvantage business, you can basically skip the whole procurement process. You can skip the competitive bidding process. You can pick the vendor that you want. It's like you get the fast lane, but it's capped. Uh for some of these groups, it's capped at $25 million. So, this is one of the things when I was doing contract review >> and you see all these things like 24.9 million, 24.9 million, 24.9 million. you're like, "Okay, something's going on here." And you can skip it. And these contractors or these these this workaround, they will often take 10, 20, sometimes 50% off the top of a contract to do actually nothing on the books. They're supposed to do 51% of the work is what it says, but they never do 51% of the work. >> I shouldn't say never, >> almost never. I have yet to find an example, >> having looked. good >> for this. I have yet to find an example where they do any of the work really >> and they just funnel money. I I think when when I was talking to somebody who's investigating this, uh they estimate that this might be as much as $80 billion a year in just graft. Yeah. My estimate puts it at about 30 billion. We'll get back to talking in one minute, but first, Momentous make the highest quality supplements on the planet, and I have fallen in love with their whey protein powder. It is grass-fed, and each batch is exclusively sourced from EU dairy farmers whose cows are free of hormones, steroids, and all of the other junk. 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And how's that feel as an American? >> I would say from the inside it's uh it's obviously very frustrating. I think it's in some ways being in the role that I'm in I feel encouraged because you can see how to fix it. >> Look at these big glaring problems. >> Yeah. It's it's uh it's both concerning and encouraging at the same time >> because you can see you can see how bad it is, but also you have such an impact on being able to change these because you have the willingness and the authority to do it >> and you can have, you know, $10 million swings with very little effort >> because people just haven't really looked at these things before. So, uh, I think the the the biggest surprise to me has been for so many of these things just the the scale of how problematic a lot of these contracts are. I think everyone kind of knows that the government is inefficient and that's kind of okay. We all know that and >> but we all think >> these things might be 2x or 3x inefficient. But you find examples where things are 100x a,000x beyond what you pay in the commercial sector and it's just uh there's just no excuse for it. It's crazy. Is there anything in addition to the technical talent problem that's contributing to dysfunction of IT systems in the government? I think upstream of all of these things is leadership and uh I would I would separate out the call it political leadership from administration to administration and much more the career civil servant leadership. >> Um there are some examples of uh entities that are within my purview that are pretty well-run. um Fininsen, which does a lot of uh they do a lot of uh international finance uh investigations. Uh they have their CIO, Amy Taylor, who's technical. She's been there for a long time and she runs a tight ship. And you can see downstream of good leadership tends to lead to good teams. They tend to have technical talent. Mhm. >> And you see some of these organizations that have had uh like Tim Gribbons over at Bureau of the Fiscal Service, he's been running that for 6 years. It's had stable leadership. He is very intentional about who's on his team. Uh they do performance management. They they take it seriously and they have a pretty good team. Um, so if you have good leadership, things like what is the technical talent of the people on the ground tends to work itself out because the people at the top care enough to follow through on ensuring that you have that >> they continue to find people until they get the right technical talent. Yep. >> Yeah. I I it's a rule of business that Agrade players hire Agrade players, but B-grade players hire C and D-grade players. >> That's right. and the uh so many of these things. So at the IRS, which is to be blunt, has had poor technical leadership for roughly 40 years. It's just this compounding issue. So we at the IRS, the policy for a long time has been we don't do technical interviews. We just do resume review. >> So if you were to apply and you just wrote the word Java on your resume, we will just assume that you know how to do this. Mhm. >> And so the this is sort of a joke, but it's not really a joke. Somebody told me they said historically if you want to hire a good engineer, you have to hire five >> because you just don't know what you're going to get. So if you need five engineers, you got to put out a you got to put out 30 roles to find five or six good people >> because the hiring process is not sufficiently scrutinous. >> Yeah. And this I'll give you again this is a thing that I'm dealing with right now because I'm >> I'm loving the I'm loving the examples. It it sounds, you know, sort of uh very conceptual and and fluffy until you bring it into land with with real stories. >> Totally. And this is the the benefit of just being in the weeds trying to solve these problems. >> Whole face. >> Yeah. The uh the specific thing I'm working through right now is we we're in the process of uh recomposing the engineering org in the IRS which is we have too many people within the engineering function who are not engineers and where they end up I think it's going to be in chief operating officer some of them in product and design it doesn't really matter but I have a I have a memo O that I'm still drafting that I'm probably going to publish at some point. Uh the memo is titled engineering is for engineers and it it argues that if you're in engineering you should be an engineer and if you are not an engineer you should not be in engineering. >> Mhm. um anyone from the private sector would view that as a tautology because why would you ever have somebody who's not an engineer in engineering but in government this is going to be very controversial because most people in these roles are not engineers. Um so the goal is let's find who our engineers are. Let's move the people who are not into some other function and then we're going to bring in more engineers. I think we currently have 100 engineering roles open right now at the IRS >> which if anyone listening wants to apply that's uh it's at USA jobs. That's the that's the website. We have a 100 roles open. Um the challenge though and I'll just walk you through the process why this is such a problem. M >> at the IRS we have six job openings, right? And as a point of comparison, if you wanted to hire somebody, you would write up the job description. This is what you do. You post it. You interview those people. You decide if you want them. You hire them or you don't hire them. It's not like that here. So, let's say you want an engineer who specifically does this one thing. Well, you send it to the HR team. They decide if it matches one of the existing, they call them PDs, position descriptions, I think, um, if it matches one of the existing approved PDs, which in the case of our current hiring pipeline, many of them did not. >> And so, they ended up getting posted with some fairly generic thing. >> But by the time you've written the position description, the engineers are no longer in the loop on this process. So, it gets handed off to a mid-level person in HR. They decide if your job description is accurate or not. They then post it. You get a bunch of people apply. The mid-level in HR decides whether that person is qualified. The engineer is not in this loop at all, by the way. >> Yeah. The HR person does not have technical capability. They can't assess whether or not this person can actually write in Java or whatever. >> They just look at a resume. They make the determination. is this person qualified for this role? And then eventually this person, the engineer, will finally get like a packet of PDFs to review. It's like here's 10 people that we think are qualified for this role and they don't get to see the people coming into the pipeline. They don't get any of the stuff. Um I'm currently in the process of trying to figure out is this a law that says that the engineers are not allowed in this process? Is it is it just thftdom building where somebody is trying to just exclude them so that they have a role that can't be >> uh disintermediated? Um how do we uh how do we get the people who are the hiring manager, the engineers, the engineering leaders who need more engineers, how do we get them back in the process of actually hiring our engineers? I'm actively working on this right now. Uh, I'm working with the Office of Personnel Management to try to figure out what the issue is there. I'm working with IRS HR to try to figure out what the issue is there. And this kind of ties into the other set of problems that I found. Uh, one thing that is fairly unique about what's happening right now is the amount of collaboration between agencies is probably the highest it's ever been. So when you have an issue with the office of personnel management, I can just call and I know legal counsel there and I can call them and I can say this is what we're seeing. Is this an OPM policy or not? He'll look into it. He'll get back to me. Usually these things are done in such information silos that uh that sort of collaboration never happens. The the people at OPM might say, "Oh, it's not my problem. That's a treasury problem." So they'll just ignore it. But there's a there's a level of collaboration and mission orientation to get these problems solved that that's probably the biggest difference from what we're seeing now from what's been the case in the past that I think really is leading to a lot of these changes. >> Doge became uh famous for hiring young people. >> Yeah. >> Uh infants somewhere accused. >> Why is the federal government behind the private se sector typically when it comes to hiring young people? >> Yeah. Uh I think the the biggest reason is uh there are there were actually some quite successful programs. There's one called Pathways. I think it was maybe before Pathways, but there was a program that used to exist where you could recruit people out of colleges and there was an internship program. But this actually maybe ties into what we were talking about before of like so many of these things are just unforced errors where we used to have this internship program. We'd get people out of college or grad school. They would be in the job. They'd see if they like it and then we'd want to hire them and then we could hire them. That worked. This was like early 2010s. Then there was a change that said, well, you can't just hire them because that I I believe it has something to do with like they thought it violated something around veterans preference or something. There was some reason why they didn't want you to just be able to hire people normally anymore through that. So, they had to go through a competitive process, finger quotes, right? Which is the one that I basically just described before. And so, uh, it was often and some of some of the people who've been there for a long time told me it was usually the case that those interns who were actually really good who they really wanted would not be the ones that could be selected >> because they were deemed unqualified or they were deemed uh insufficiently experienced or they did not have enough of a veterans preference to make it to the top of the stack. Um the a lot of the hiring processes that we have are uh they for a lot of these roles you are you are specifically instructed to hire the minimally qualified candidate which which means you are instructed to hire effectively the first person who meets the minimum threshold. >> Okay. That sounds like it would be quick though. >> It is quick. >> All right. It's it's quick if you don't care who you get, >> right? But it's it's quick to get people in who are often underqualified and not fit for purpose and slow to get them out. >> Yes. Effectively impossible to get them out. >> So you hire quickly, fire slowly. >> Yeah. Or never. Fire never. Yeah. You you can hire slowly. There are different hiring authorities. There are some roles where you have something called direct hire authority >> which just allows you to pick the people who you want for specific roles. There's very limited number of roles that have direct hire authority. Most of these are in this competitive process. Um and the competitive process often means that you will end up with candidates that are not the ones that you want. >> You are painting a picture that is almost exactly what I thought it was going to be. >> Oh yeah. Yeah. You know, as a immigrant foreigner who doesn't really pay much attention or care about what goes on inside of the US government, this is precisely what I thought it would be. >> Yeah. >> Uh it is >> oified, right? It's big. >> It's inefficient. Um, and I have to assume that it is causing even well-meaning people who really want to try and make change to sort of regress back to the mean of government. So, even the high agency, you know, upwardly mobile talented people that want to drive things forward learn over time that their efforts are kind of wasted. And actually when they do try and move things forward, they rock the boat so much they're probably disincentivized from doing that too. So ch change is highly uh highly push back against. >> Yeah. And I would say there's the call it 100 or 200 people that I've really come to rely on at the IRS >> out of 12,000 13,000 >> including contractors. Yeah. Um they're they're really quite good and I uh I've had conversations with them about like why are you still here? Cuz if I was in their position I don't think I would have lasted 3 months >> and every one of them has said like oh believe me I've thought about leaving but several of them have said I just I care enough about the mission. I recognize that if I left very bad things would happen >> and they have the sense of responsibility and that's why they're still here and uh I I really admire that and I'm glad that they're still there. I would I would not be able to do this if they weren't there. >> What's the federal government missing that the private sector isn't? Is it uh competition, incentives, accountability? I think there's one thing that it it is always missing and will always miss and this is just a I would describe it as an assumption that you have to make when you're thinking about designing any system and it's kind of how we got here to begin with which is there is no feedback loop when it's the government. It's kind of like why FDR was so opposed to public sector unions is because in the private sector you can unionize but if you demand too much from the company eventually the company will just die. >> But the government won't. You can just demand more. You can just work less. The there is no counterbalance to the unions in the public sector. It just >> you can just always say yes and nothing happens. The debt just gets larger. The amount of money just goes up and there is no force that pushes against it. So um the the assumption that you always have to make and why we end up with so many of these rules around personnel around contracts is that there is no natural incentive structure that prevents government from doing bad things. I I I think it doesn't surprise me that this is the sort of challenge that people are facing. But also 16% only 16% of Americans trust the federal government. That was some Pew study from 2023, I think. Is that surprising to you given that you what you've seen from the inside? I don't know what trusting the government means, but you would trust somebody to uh look after your dog. Okay. So, what are the things that they need? Well, they need to be driven. They need to be competent. They need to be conscientious and aware. uh they need to have the skill set that's required to be able to look after a dog. Um they need to not be uh malicious against dogs. So there's you know the fraud, waste, abuse, you like insider tra all of those things. There's a a number of different levels that you need to get through in order to be able to think I trust this person and not all of them are malicious and not all of them are competence based but 16% of Americans trust the federal government. >> Doesn't seem surprising. >> Yeah. I think it's generally good for people to be skeptical of the government. It is the entity with a monopoly on violence. That is a thing that one should inherently be skeptical of. Um I do wonder how much of that is just a an overexposure to the news. I think that's uh there's there are a lot of things that are either completely not real that people believe are true or they are sufficiently nonrepresentative of reality that they are effectively not real. >> And if you go way back, people cared a lot more. I'm sure you you know all this stuff. People cared a lot more about their local community. There was no 24/7 national news coverage, >> but over time it's basically become a team sport and people watch it like they're watching football. And these these things that have always happened sort of on the edges of the government are now front and center and they look like they are representative of reality when they're not. >> Right. So I don't really know and I it's been interesting to observe from the inside how the tail can wag the dog in a lot of these things. Like a specific example is at the IRS we hosted for the first time ever we took 50 of our best engineers who have been there many for 10 15 years across all the different teams. We brought them together for a strategic planning session at Treasury to discuss across all these teams which rarely talk to each other. What are you seeing? How do we land the plane on this modernization program? It was incredibly useful. People were finding data sources that we didn't even know about. Uh we were finding all kinds of issues. problems that were just a coordination problem that had been stuck for years got resolved on the spot because people could just talk to each other. Because historically when you have this many layers for an engineer to talk to another engineer, they've got to tell their supervisor who tells their director who tells the subject matter expert who goes across to the other team and then it's got it goes through like eight layers of filtering none of whom know anything about this topic. >> You can't just slack them. >> You can't just like communicate with them. What is communication? What what's the platform that you guys use? >> Teams typically or email. >> Microsoft Teams and email. >> Yep. >> I I haven't used Teams apart from >> It's very similar to Slack. >> Okay. Right. >> Uh how many people are in your team? >> That's a good question. Um I don't know if I have any actual direct reports. I've just sort of um co-opted a bunch of other teams. >> You're flo you're floating in you're like a a mercenary >> basically. >> Yeah. free freeloader. Um, >> so there there's this communication gaps that are a huge problem. Uh, we hosted an event of strategic planning. Wired magazine put out a piece that says that we hosted a hackathon. That Doge >> Oh, this was what that was. >> Yeah. >> Ah, >> Doge, they said Doge hosted a hackathon with a bunch of Doge people. >> What's a hackathon for the people that aren't familiar? Well, so typically it's like you do 48 hours of a bunch of coding and you have some deliverable at the end. And what's >> Navy Seal hell week for? >> Yeah. For software developers. Yeah. And what's what's weird about it is they requested like, hey, we heard you guys are hosting a hackathon and we said, you know, most of these people didn't even have their computers open. This is a strategic planning session with 50 career IRS engineers >> to talk about IRS modernization >> and they invented the story out of whole cloth that it's a Doge hackathon. It's completely made up and this is sort of the tail wagging the dog thing where I still get requests from Congress asking about this hackathon. >> Would that be a bad thing if you had hosted a hackathon? >> I'm not even sure it would be. But like none of this is real. >> What do you think? What do you think's the subt is the subtext of the hackathon this is Silicon Valley degeneracy caffeinefueled aderall addicted young people >> in their Chick-fil-A and coding up the Matrix. I think what this story intentionally implied, which is not real, but is what they want people to think is that the the young Doge engineers are hacking around with taxpayer data and we're doing something nefarious. >> I suppose the word hackathon, it's not got great optics. >> Yeah. They're they're using these words intentionally and they they suggest certain things that you ever read Ryan Holliday's book, Trust Me, I'm Lying. Yeah, >> he has this great concept called trading up the chain which is about how you start with something that's like a halftruth that you suggest which then like it started out I think it's even in that article they say that I am SpaceX affiliated because my brother interned there many years ago and then if you look at a lot of news stories today they say Sam Corkos SpaceX engineer I have never worked at SpaceX like the closest affiliation I have is that my other intern there like I have nothing to do with SpaceX at all. >> But they just like they they imply something which suggests something which then just becomes reality and then all of these news stories start to say that. >> It's like a slippery Men Bailey type thing. >> Yeah, exactly. And it's just it it becomes the new narrative and they just build on top of it. >> How big of a deal was trying to deal with this hackathon story? Was that a huge pain in the ass? >> It was a huge pain in the ass. Yeah, because like people kept asking this is the tail wagging the dog thing, right? I started getting emails from IRS engineers saying, "Hey, can I join the next hackathon?" It's like, "Guys, there is no hackathon. There was never a plan to do a hackathon. None of this is real." And it's just like I I still >> I have enough to do already. I don't need to be, you know, pushing back. That is fake news. >> It's 100% fake. >> Fake news. In other news, if you thought that lemonade couldn't get better, it just did. Element has taken the classic taste of lemonade and actually made it useful and functional, giving your body back the sodium, potassium, and magnesium. It actually loses when you sweat. No sugar, no junk, just the stuff that works. And that's why I'm such a huge fan. That was horrendous. You're nowhere near me. Uh lemonade in an ice cold glass of water. Just Okay, that was better. Hits different. Hits different. 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Obviously, a lot of people associate >> Doge with Elon. >> Elon left recently. >> Yeah. How big of an impact? Well, actually even before that, how much of a driving force was Elon in Doge? >> Um, in the stuff that I was doing, not a lot. I had very little interaction with him. Um, the we primarily worked with the secretar's team and within our agency. Um I think the biggest effect was um there was uh more how would I describe it? I think the the biggest impact was when there was the initial blow up. There was a week of real uncertainty on what it all meant. Um but over time the uh the teams had already been so embedded with the agencies and the departments and since we really take our instructions from them it didn't have that much of an impact. I think some of the impact is that the inter agency communication weakened a little bit um just because there's less of a central connecting force for these things. But for the stuff that I do, it has not had a particularly large imped that probably was more impactful. But I think it's very possible that part of the reason why it hasn't impacted us at Treasury that much is that Secretary Bessant is able to get a lot of these things done himself, >> right? So you don't need that big hammer, that big Elon shaped hammer coming to >> fix things. Okay, >> I guess Doge has kind of taken on a a meme >> all of its own. Um, what do you wish more people knew about what Doge is as uh a movement, as an organization? I don't know what you call it. An entity, a loosely connected [ __ ] group of morals. >> Yeah, it's like a loosely connected group of missionoriented people who want to >> uh fix a lot of the things that are broken in our government and uh stop the ever growing national debt from collapsing the country. It's probably that's that's probably the main driving force that we all share and why we joined >> uh why we joined the government is to get this solved. Um I would say the the the biggest thing is that uh these are some very smart people, some very high agency people. That's something that I've uh it's a word that I've taken to using a lot more. I I didn't in the private sector so many people are high agency that it's never been a thing that I've thought >> you don't need to select for it. >> Yeah. But the in government there are certain people that I have come to rely on and when I say I rely on them they are the people where when I say that this is important and I need somebody to do it they will actually do it and far fewer people will do that than you would expect. the the number of people where you say, "Hey, I need this by Thursday." Thursday happens and you're like, "Hey, did you do that thing?" "Oh, yeah. I'm on it. I'll do it right now." Next week goes by. "Hey, did did you do that thing?" "Oh, yeah. Yeah, I'll get right on it." And it's just I don't know if it's malice. I don't know if it's incompetence. I don't know what it is. It might just be the fact that they know that they can't get fired. >> I have no idea. I I don't know genuinely for a lot of these people why I cannot seem to get any deliverables out of them. But once you find the people who can actually deliver, you've got to hold on to them for dear life. >> Doge website says that you've saved $200 billion or so, >> maybe. Yeah. >> I've heard a lot of people say that's not accurate. What's the truth there? >> Well, so this is a a long and nuanced conversation about how you calculate savings. Um, so the I've actually had many internal debates on how we calculate this stuff. So the way that we've been tracking it is the most common type of contract is a firm fixed price or it's basically just like a think of it as a normal contract. We're going to buy this thing from you for this amount of money. Um, there's several other types of contracts. BPA, which is a blanket purchase agreement. There's an ID, IQ, indefinite duration, indefinite quantity. The way that savings are generally calculated is when you have a contract, let's say you're my contractor, I'm going to pay you a million dollars to do this thing. Uh, if I have already paid you 500,000 of that and then I cancel the remainder of the contract, then we will book that $500,000 as a saving. The problem is that doesn't fully capture the amount of savings because that contract probably would have been autorenewed. The other challenge is for like a blanket purchase agreement. It's really more like a credit card limit. An IDIQ is basically the same thing. Uh they tend to be for different stuff. So it's these BPAs can be very large. I think there are some Idiqs that are like a trillion dollars for something like 9 millimeter ammunition for the military. It's basically just saying if you need it, just buy it. >> Like just this is who you buy it from. This is how much it costs. Just buy however much you need. Um a blanket purchase agreement says like you can buy up to $100 million of services from this company. And it's fairly open-ended. Um the the challenge comes down to how do you decide what a savings is? If you have a $2 billion blanket purchase agreement and you cancel it, how much do you book as a saving? Well, we've tried to do some math of like, well, all right, how much was the average spend on that BPA over the last 5 years? And however much we haven't spent so far this year, we can book the remainder of that as a savings. But the data quality in the government is so poor that it is effectively impossible to do that. And so when you're trying to figure out how you use this calc like how much are you actually saving? It's really hard. And I can even give you a specific example at the IRS. Right? So one of the first things that I did at the IRS is I said, "Hey, all right. We've been brought in to do contract review and to look at our budget. What is our budget? I heard 22.5 billion. I heard 10.8 billion. I heard 12 billion. He said, "Guys, what is our budget? What how is it possible that I cannot get a straight answer to this question?" It took 6 weeks for me to get a clear answer to what our budget even is. Part of the reason is because of these continuing resolutions where I think at that point we still didn't even have a 2025 budget defined or something like that. This is all kind of outside of my wheelhouse. Part of it is the fact that a lot of the money from the IRS came from the inflation reduction act which was uh had $80 billion that was given to the IRS specifically. And so accounting for that was very challenging. So uh we eventually figured it out. It was something like 22.5 billion if you include inflation reduction act money. Great. My scope was in it. How much of that is it? I think it was 10.8 8 billion for 20 for FY 2025. >> So then we worked from that and we said, "All right, what are we spending on now? Which things do we count? Which things don't we count?" I think we we would conservatively say that we've saved $2 billion in contract cancellations. It's roughly correct. Um the reason why I say it's conservative is I think we're on track to spend something like $4.5 billion and our budget was 10.8 billion with MIT. And so you would naturally say, wouldn't that mean you saved 6 billion? But when you count savings, you don't count canceled solicitations. You only count the way that it's currently calculated. You only count money where a contract was signed, but the money had not yet been sent, which is like this very narrow window of contracts. So for all of the things that we said, "No, we're not spending 400 million on that. No, we're not spending a half a billion on that. that doesn't even show up. And so this is one of those tricky determinations of what is saved. Is it one-time savings? Is it annual savings? The inflation reduction act money has a time duration. It isn't an indefinite amount of money. It's for some set number of years. So how much of that do you count? Because you couldn't count it as annual because it's not permanently recurring. It's only recurring for a certain number of years. So all of this to say, it's a lot more complicated. And so when when there are these journalists who say, "Well, we did our math and it only saved X." Like it it fundamentally misunderstands what savings even means, they're using some of their own calculations to try to come up with like the most conservative, least accurate version of how much was saved. And so I think my opinion on this, and I know people are still going back and forth on this, is really the amount of money you saved is however much you were planning to spend minus how much you actually spent. >> Mhm. >> But you're not going to know that until the end of the year because these things get reconciled at the end of the year. >> Well, you're certainly not going to know it if the budget's never actually defined. >> Yeah. >> How do you know that you're not cutting stuff that's important? Now if if the priority is we need to have cutbacks presumably one of the huge concerns is cutting [ __ ] that you actually needed. >> Yeah. I mean in some organizations they are higher risk than others. In some organizations you can cut things that are important and just put it right back and nobody even knows. That's not the case for the IRS. That's not the case for something like the SEC. If you mess something up, it can have significant market moving effects. >> Like when I was talking to the team about some of the changes we wanted to make at the IRS, the uh we were calculating the cost of like really bad decisions. If we like totally blew something up, the amount of money that we could cost the American public would far outstrip any of the savings we could make in Doge just because we collect. >> You have to be gentle. >> You have to be very thoughtful. It's a scalpel. It's not a chainsaw. >> And so we went through really diligently line by line on every one of these. What is it for? What does it do? What is the risk? >> And a lot of the people, as I mentioned before, especially the initial leadership team just said everything is critical. Everything, you can't cut anything. In fact, we need more. >> Nothing can be cut and we need more. >> And when we swapped them out for people who were more in the weeds, who knew what these things were, we found actually quite a lot that we could cut. M and it's not just cutting, it's really this reallocation. There's this historic problem that we have where we we assume the vendors are going to save us and we just keep repeating the same cycle, which is we give vendor X a billion dollars to finally modernize this thing. It's now years, it's years behind schedule. It's all just gone up in smoke. And we say, "Oh, wow. That was bad. Maybe this other vendor will fix it." And then we do that for five years and then they just blow it up in smoke. and we just keep repeating that cycle over and over again. >> Why is it important to cut spending in the government? >> Well, the the most tactical reason is that if you run out of money, bad things happen. Um the amount of leverage on that is pretty significant, especially if you can do this across all of the departments. I think the other uh the other thing that we've observed just specifically within the IRS is that uh by spending less money the organization is running much better because we have fewer of these competing vendors who are uh building totally disperate systems that don't communicate with each other. This is kind of ties back to the earlier incentive problem we discussed which is if you're a vendor your incentive is to lock in. You want to create a custom something and you want to make sure that we can >> only you know how to work it. >> And we see I see the archaeological evidence of that everywhere in the IRS. Like >> the the compliance team >> told me early on they really need help with their software systems. They said we have at least 60 different systems that do not communicate with each other at all. I assume this was an exaggeration. I spent two full days now at the compliance facility just watching how these systems work. They are if anything they are under uh they're underestimating how many of these systems there are. Um in in software when you're building these types of systems one of the just core principles is you want to have a single source of truth for any piece of data. This is foundational. Sometimes you might have two sources of truth if you're doing like a really messy migration or you have some caching layer and you you're kind of balancing those two, but really one is the goal. As of last count, which I think is last week, the IRS has about 108 competing sources of truth. I'm not talking about data sources. This is like the most complex Rube Goldberg I've ever seen in my life. It's just these systems don't communicate with each other. So there are some specific examples that the customer service team showed me where if you want to know what somebody's current address is, you have to check a whole bunch of different places and they just have to use some judgment on which of these is actually the current address because there's so many different places where we store this information that don't connect to each other. So this is our our foundational number one priority is data quality >> is just we need to get to the point where all of our systems are using the same information under the hood. We just lose stuff. We we have all these data integrity problems. This should have been a thing that we did 20 years ago, but we're finally prioritizing it now. If Doge is saving billions, cuz you're one cog in a big Dogey wheel. If Doge is saving billions, how come Americans aren't feeling these savings in their everyday lives? >> Um, I mean, the tax rate's the same, so I don't really know. It's uh if the Doge dividend does eventually happen, they will see something from that. Um, but I don't I don't know the status of that. that's not really in my in my wheelhouse. I think the uh >> my hope is that if we are successful, specifically in what I'm focused on at the IRS, >> that when you call the IRS, somebody will answer. You can go to the internet to solve problems. Uh one of the big priorities that we have is digital correspondence. This is something where uh right now when you get a letter in the mail from the IRS uh often times we don't you can't just go to the internet and like see that letter. The only evidence that you got it is the piece of paper and then to respond to it you either need to fax it to us or you need to send it by certified mail and then we may or may not receive it and you have no the the feedback loop is like months and so this whole thing is just such a mess. And so one of the big focuses right now is you still get a letter in the mail and it says go to IRS.gov to respond. >> You can go to the internet. You can log in. You can see the message. You can respond to it. You can upload documents on the internet. >> This is basic stuff. We don't currently have this. >> So instead of instead of that, what we have today is the call to actions. Give us a call. You sit on hold for some number of hours. and then they say, "Great. Yeah, we need some more documents. Can you fax them to us?" It's like this whole thing is such a mess. And so we're I think if we're successful, a lot of those things will start to feel like the government is able to solve basic problems. >> Is there a fear that uh modernization or updating is just code for breaking stuff that already works but imperfectly? So, uh, I I have one of the other CIO memos that I'm writing is about, um, why we need to stop doing modernization just as a concept because I think it stems from a general lack of understanding of the software development process. this whole concept of like we need to modernize, we need to throw a bunch of money one time at solving this problem and then never touch it again. Um I I would I've analogized this to some friends of mine who are not in the software development space where if you have two ends of the spectrum, one end is like building a house where almost all of the work goes up front and then there's like this trickle of maintenance that comes afterwards. on the other hand is like getting a puppy where there's some some extra work at the beginning during the puppy phase, but you can't just not feed the puppy for like a year. You can do that for a house. You can just like forego maintenance and it's not just going to immediately collapse. >> But software systems are effectively living systems that require constant maintenance and updates where you get feedback from the people using it and they say, "Hey, this thing doesn't work. Can you fix it?" and then you fix it and they say, "Hey, what if this thing was over here? What if it added this thing? What if it pulled in data from here?" And you're adding to it over time. our current software development process in the IRS. >> And this is another one of those things that I'm spending a lot of my time working with the team to try to reorient our thinking on this actively is normally we'll spend a billion dollars$5 billion some number of billions of dollars one time on building a software tool and then the explicit directive is never touch it again. It is now done. Now we only do new stuff. That is now a legacy product. Now we're going to build the new system to replace that old system. And then of course what you end up with is just two systems. And then you do this again. Now you have three systems. >> And that's how you end up with 108. >> Yeah. >> Yeah. And it's just a total mess. And it's not the way we should do this. So I think the the question that you had of like is is modernization ultimately even a good thing >> I think is totally valid and it's not one that gets asked enough. the question about like mainframes are not strictly speaking bad and the way that we define legacy. Uh we actually changed this a few months ago, but historically the definition of legacy at the IRS is just anything that's 25 years old or more. And if it's legacy, you've got to redo it. And we have there are systems that are more than 25 years old that are fine. >> Just leave them alone. In fact, they're more than fine. They have been battle tested. >> I was going to say they've stuck about for this long. We have a rule with my friends that um >> we always get excited about new life hacks. Oh, this is the new You need to try Obsidian, dude. The best new note takingaking whatever the this new meditation app you this is a way to make a toasted sandwich in a in a [ __ ] toaster. Um and if the person that's proposing it hasn't been using it for at least 6 months, >> yeah, totally. It doesn't count because yeah, you've got shiny object syndrome about this new toasted sandwich process, but what you didn't account for is that after five toasted sandwiches, it breaks the toaster. >> Yep. Absolutely. Yeah. And it's it's absolutely true in this case. Like for some of these things, these mainframes are totally fine. In fact, they are maybe the optimal solution for this problem. The thing that mainframes have been optimized for for half a century is batch data processing. And you know what? We do a lot of batch data processing. it is it is maybe the perfect solution for that problem. The challenge is when you have other things that you need to do where that gets in the way of it. >> And so for individual master file and for a lot of the functionality we want at the IRS, the fact that it's based on a mainframe does cause problems because there's a there's a latency and there's a delay in getting data because a lot of these things you end up getting weekly batches and you can't have a weak delay on these things and it's really hard. It's when you have such complicated tax logic, it's really hard to get data in and out of the mainframe. And so you have these issues where this is how we ended up with what we often refer to it as shadow IT. You have all these different IT orgs that have basically created their own universe within IT that doesn't connect to anywhere else. And so it's very hard to get that information to places where they need it. uh shadow it is also this is an interesting uh symptom of the type of dysfunction and I think this might also exist at very large corporations where because it as a function has failed to deliver for so long each of these subcomponents like the compliance team the customer service team they've basically lost confidence that whenever they need something done they can ask it to do it so what they do is they create their own secret IT group with their own with their own contract with their own team and they build their own product that doesn't connect to the rest of the universe and then compliance does that over here and then automated under reporter does it over here and everyone ends up building their own shadow IT org >> and you can see how it happens because if if you're responsible for delivering on something and your counterparty cannot be relied on the only option you have is to do it yourself but then cost of that is like hyper fragmentation >> which then causes all these other downstream problems and so figuring out how to make the IT org functional I think is front and center for all of these other problems we need to solve. I want to talk about security. You know Doge has had a lot of criticisms. There's 300 million American citizens bits of data that have been put up in the cloud. This is contributed to by stories about hackathons which have got scary names and make people think that it's you being uh flippant uh with sensitive data and stuff like that. Um is there a risk that move fast break things in the US government is a strategy that is too dangerous to to do? Basically does speed really matter if it risks security? I think that so we're even in the current implementation pretty far from move fast and break things. The almost all of the work is being done by people who have been there for 10 or 15 years. Um it's certainly moving faster than has been done historically, but the bar is so low for how fast things have been done historically that making them go faster is uh I would say pretty low risk. Um the I think there's a lot of fear-mongering about these things about you know how how this data is used. It's going to the cloud. It's already in the cloud. Like it it was in the cloud before we got here. Like a lot of these a lot of these things come from like a misunderstanding of what it is. Like there's a I've had to answer many many questions. We are part of this fragmentation problem we have at the IRS of our data quality issue is we have something like 15 different fragments of APIs. APIs are basically just how two computers talk to each other and we have all these different systems that don't communicate. And so we we're building a unified API. So there's a central place within the IRS where if you are building an interface for one of the compliance teams, you can see the same data that customer service sees. So when they're on the phone with that person, they can have a conversation about the same piece of information. But because most people don't know what APIs are, there's been a whole bunch of fear-mongering articles saying they're building an a mega API to do something. It's like APIs are how computers communicate. Every company has API. This they're using scary words. And I don't think they know what the words mean because if they did, they would just know >> this is this is normal. This is this is so normal. It's a complete nonstory for any software engineer. >> How secure were the systems when you first got in? Did you have any concerns around security? Um it's it's very dependent on the organization. So IRS pretty good, Treasury pretty good. Some of the other agencies where they don't really think of it as their core competency, um not as good. Um I I would say it definitely could use a higher priority. The the core challenge with a lot of this is that cyber security engineers are in very high demand >> and it is super hard to attract senior cyber security leadership with a salary cap of >> there was a really famous uh job listing I think it was the UK head of cyber security >> and the annual salary was I want to say about £65,000 something about $85,000 >> um you're talking about a rounding error on countries that want to get access to our cyber security or people that just got Bitcoin at 100 bucks. >> Yeah. Like there is that that is not a difficult amount of money for you to uh counterbalance if you want to try and turn somebody. >> Yeah, that's exactly right. And it the core challenge there is I I've been trying to recruit people to be in the chief information security officer role across a lot of these departments or agencies within Treasury. And the the challenge is that it's it's a massive pay cut. The other thing is this ties back to people say, "All right, great. You know, I've got I've got 10 people on my team that I think would come with me and we can get this done." It's like, "Oh, you can't do that." And also, if you don't like the people on your team, there's nothing you can do about it. >> And the just the the number of handcuffs that we put on them even when they get here. The other thing that's I would say especially challenging within cyber for a lot of these agencies, especially the ones that need it, is the the best way to destroy your career as a chief information security officer is to have a major cyber security breach under your watch. >> The problem is if this was the private sector and you came in, people people care about reality. So if you came in and you changed around the systems, you started observing things maybe for the first time and you discover, oh, the Russians are in our system and they've been in here for 3 years, >> you would then immediately ring the alarm bells in your company and you would get them out and you would be praised as a hero for having found it and remove them. But because this is politics, what's going to happen is they're going to say, "Oh, it was under your watch that the Russians were in there." And you can say, "Well, what do you mean?" Like they were they were in here before I got here. Doesn't matter because it's politics. That doesn't make the news story. It's like there was a massive cyber breach under such and such administration. >> No, they discovered a massive cyber breach under such and such administration. >> But that's not the tail wags the dog here because that's not that's not the news story. So it's it's very challenging to convince them to be in this role because especially if they're coming into some of these smaller agencies who have had real challenges with this. You're rolling the dice on it. In fact, if you are successful and you find these things and you stop them, you better hope you're like at your retirement age because it might be a lot harder for you to >> right. That's the encore to your career. Footnote. What do you say to people who accuse Doge of being unvetted and unchecked? I I mean they've said that about me like I have security clearance. I've like gone through all the normal processes as has everyone else. So that's what they say. I I don't really know. I uh I think everyone has gone through the normal clearance processes. They've gone through the uh background checks. They've gone through all of the stuff that you would normally go through. What about I think when they use the word unchecked uh it means sort of unchecked in terms of remmit internally able to enact change uh and make decisions hire fire spend save cut in a manner that other people uh the bypasses some of the Chesterton's fence that probably should have been left there. I uh I can really speak mostly just to treasury and IRS because that's where I have the most visibility. Um pretty much anything that you want to get done, you have to go through the career staff. Like there is no it's very challenging to like find the button to push because usually by rule it's done by a different person. And so, um, there are definitely times when there's some normal set of clearances or steps that you'd have to take that are not actually required, but they've just been done sort of by ceremony or something like that and you can shortcut them. But typically, at least in our case at Treasury, this is done with the the Treasury leadership team bought into this. They say like you guys are responsible for looking over this and then that's that's what we do. So, uh, it's >> it's very hard to fire people. Um, the the only way that you can really reduce the size of government is through the reduction in force process, which is a big thing that the the Doge team was pushing for. >> What is that? So reduction force is the it's really the only mechanism historically to have like a a sizable reduction in the number of people employed by the government. Tech companies are doing riffs right now, a reduction force. And the the most common methodology you would use in a riff is you find who your low performers are or maybe your relative low performers and then you cut them. Um unfortunately uh in the government it is it is almost the opposite of that uh because of all these extra rules uh the people who stay are there based on tenure and veterans preference and so you're almost guaranteed and this is to your earlier point why do we have so few young people in the government I think it's >> 7% are under 30 whereas in the private sector like 20 >> wow okay >> so it's way less it's like a third of what you typically see. Um, a big part of the reason for that is when you do these reductions in force, it's basically tenure. So, it doesn't matter who your top performers are. It's effectively irrelevant to a riff. The only way you can do it is you take, if you want to do a 20% riff, you take your 20% youngest people who are often your top performers >> and then you you got to remove them. And it is a really painful process. And there's this whole thing you have to create a com you have to look for competitive areas. You can do a 100% riff of a competitive area. It is this bizarre cumbersome process. But kind of tying back to the the the steelman which is you don't want riffs to be that easy if your goal is to retain civil service because you don't want new administration. You don't want to revert back to the spoil system. But I think most people would probably say that performance-based riffs >> is probably good instead of tenure-based. I think uh I I'm sure that's something people are pushing for, but that uh that would make a really big impact. >> Doge removed at least some nonzero number of government employees. >> Yeah. >> Talk to me about the process there and uh the fallout. So, some of that was through reduction force, some of that was through uh DRP, which I think stands for deferred resignation program. It's basically asking people to voluntarily resign for uh severance. Um we had I think about 25,000 people at the IRS take DRP out of I think we had 10,000 when we started, something in that range. Um the in in the IRS we haven't seen that much fallout yet because really we we had we had increased our staff to a historic levels. I think the IRS historically has something like 80,000 staff and we had increased it well over 100,000 in the last administration. So this isn't like a huge change compared to that. Um I think the uh the biggest thing that we're focused on primarily within IT is this recomposition. And so uh trying to make sure that our technical staff is technical >> and the the more we can do to uh encourage the people who are ostensibly engineers but are not actually capable of doing their jobs to move to a different part of the organization, find a job elsewhere. M >> I think that would be uh that would be a net benefit. >> What are some of the errors or biggest blunders that you think Doge made? Like if you could go back and advi if you were king of Doge, what would you go back and suggest that they change? There any sort of face plant moments or or real sort of uh unforced errors that you wish hadn't happened? I know of some secondhand of like specific things that were done that upset some people that were just unnecessary. But I I really think the biggest one fundamentally is that at a certain stage we really should have brought in more people into the conversation. Um there there became this media narrative >> them and us. >> Yeah. Them and us and like Doge is doing these nefarious things. But anytime I would bring somebody in and say, "All right, these are my priorities." They're like, "Whoa, that's amazing." Like, these are these are all of the things that we want done. I didn't realize that you were involved in making that happen, but there was a a degree of secrecy that I don't think was useful. >> Yeah. I mean, it just plays into >> bad optics. >> Yeah. >> Right. That Yeah. It is young ADHD, you know, super intelligent infants coming in and and vibe coding their way through >> very precarious government systems. And it plays into a broader narrative that's kind of a skepticism about the rich at the moment. Um I was having a conversation with George Mack yesterday and we were talking about how um Elon for all that people have huge criticisms about him. Uh he continues to deliver largely and his most recent $1 trillion compensation package thing um sounds absurd or obviously is but is basically predicated on him reaching another stretch goal that is so insane. you know, it's autonomous robots in every home within this time and it's 10xing the value of Tesla and it's this and this and this and this and this. You think, well, if the guy does it, then that's that's fine. And, you know, I think a lot of criticisms can be hidden uh rightly if uh a lot of concerns around someone can be hidden rightly if that person continues to deliver. Which is why if Kanye drops a new slamming album, people will probably still listen to it. And in this very bizarre way, even though this shouldn't be the way it is, he's redeemed for transgressions of the past simply because he's good at the thing that he's supposed to do. It's like kind of just a bias that humans have got in this way. >> So, you know, there's this broader narrative at the moment. Uh, Peter Teal, I think, has maybe taken the new mantle of kind of like tech oligarch, billionaire man that is the scary lizard person accusation type thing. Uh, Mark Andre's in there, but he's not a big enough name. If when you say this person, the uh person that you're explaining this to goes who? Like, that doesn't work. And if you're not sufficiently VCP, you don't know who Andre or Naval or whatever these people are. Um, my point being there is this broader narrative at the moment that's kind of like uh the tech billionaire critique 3.0. You know, you sort of had the first wave and then you had kind of Zuckerberg, but he's had a rebrand. He's got curly hair and an oversized t-shirt now. So, he kind of doesn't really work. Like, what's he really do? He just spends loads of money on Apple engineers and steals them. Like, we don't really understand that. >> And then, well, like Bezos is just kind of like in his Conor McGregor arc now it seems. you know, he's got a hot new wife and a wedding in Tuskanyany and he spends all his time on a yacht and like and I like Amazon like even though it's kind of, you know, a bit dodgy and stuff and Bill Gates, you know, like [ __ ] what's he to even do? like we're not really too sure like so I think we've left that world behind and now we've got this new one and the protection that at least as far as I can see Elon has had and has is he keeps delivering on stuff like lots of people like Teslas and they are the best electric car as far as I can see and he keeps on doing stuff that kind of is good for the planet at least in uh some pocket lots of blast radius of this stuff that I'm super uneducated about but there is an argument to be made that his push for EV has done an awful lot to improve climate change even as people sort of throw the usual accusations ofah >> um my point being if this is the world that you're coming into the optics of we welcome the input of people that exist here already we will stick by the rules of um like decorum to some degree and I understand that if you come from the world of business I I don't have a uniform that's required for the guys that work for me. I want them to be comfortable and to just maximize the way that they operate. And they understand like if they're going to turn up on set, they're not going to be in their pajamas, right? But like largely that doesn't really matter. When you get to government, there is a sense of sort of pump and circumstance that kind of people need to the hallowed halls of that run this great nation etc etc. And I think that these two worlds clashing, this sort of skepticism around move fast, break things, tech oligarch, billionaire, oh tendrils going into this is part of a tech enabled shadow government run by adult infants on stimulants with we need to there are uh checks, balances, rules and procedures that exist for a reason like Chester's fencer scale, right? at a governmental scale. And I think that at least from as far as I can see, uh the optics game has not been played as well as it could have done by Doge. And what that's resulted in is people that say don't like like a Elon approach like don't look at what I say or what other people say about what I do. Look at the outcomes that I get. Um but unfortunately >> politics is different. >> Yeah. So, politics is an optics game. And how what is it? Some insane percentage of uh Congress people's time is spent fundraising and going to dinners and lobbying. It's like more than 50% or maybe even like 75% of their time isn't doing the thing. >> It's doing the thing that enables people to pay them to do the thing or support the thing or whatever the [ __ ] is. >> And um >> yeah, I get how we just need to focus on this is a big [ __ ] mess. It's a big octopus and I a Gordian knot and I just need to take a a a scalpel to it, a flaming scalpel and s through the middle of it. Um but yeah, at least my total, you know, bro science off the reservation uh perception of what's going on, at least that contributed to it in a a pretty significant way. I think the optics have been quite poor and you think, am I more concerned with how I look or what I do? I only have so many hours in the day and so many resources that I can deploy. Where should I put it? Um, just, you know, if you could run it back, I'd be like, "Hey, let's have a a director of Doge Communications and and brand and have like a little team of people that go, maybe we don't say that. Maybe we shouldn't tweet tweet that. Maybe big balls. Maybe that's not, you know, can we scrape that from the internet somehow?" Like, is that a way that we can, you know what I mean? >> Yeah. Yeah. I think the the interesting thing having spent obviously a lot of time with these the young Doge engineers >> including big balls >> including big balls. Yeah. These are extremely smart people. I think this is uh the the perception of these that they I've seen some people some politicians call them infants as well. And it's it's interesting because the founding fathers were roughly the same age when they wrote the Constitution. and led the revolution against the British. >> What age? >> In their early 20s, typically. >> Wow. >> Early to mid 20s. >> These are not children. These are adults who are very capable people. I think they might be perceived as infants because our governing class is typically in their 70s and 80s. Mhm. And >> so to them it seems like they're infants, but uh they're generally very thoughtful people who are challenging a lot of the institutions and systems that have been calcifying over many many many decades >> and that can be uncomfortable. And uh the one of the things that we we often will push on for people is if we go back to some of these examples like the hiring process that I described, it's like where does it say in the law that this is what we have to do? And it usually doesn't, but everyone sort of thinks that it does. Same with like the fax machine thing. Where in the law does it say we have to do faxes and nobody can find it >> because it probably isn't. It probably isn't actually a law. It's just many, many, many decades of inertia that has been built up that require somebody to challenge it. >> I can't imagine that being associated with Doge in DC gets you a particularly warm welcome. >> You know, it's it's an interesting I haven't had any issues. Um, even like within the IRS, I I really I've had a couple circumstances where my first interaction they react in a sort of frightened way because of everything they've heard, you know, the hackathons, the all this stuff and then usually pretty quickly they realize that none of that stuff is actually real and that our goals are largely the same on how to solve these problems. M >> yeah it's just it's been it is interesting to see how different perception can be from reality when you're in government. >> Was there actually a challenge in moving Doge from being a meme to a a meme about a problem to actually solving a problem or was it um solutions first sort of from the beginning as far as you could see? >> I mean that's that's I think a a meta question that's like outside of what I've been working on. I think in my particular case, like we were told, look at these contracts, figure out for me personally, why is this modernization program so bad? How do we fix this? How do we land the plane before the end of this administration? And so, uh, when you go in and you talk to people, a lot of the people, especially an engineer, the engineers on the team, they want to solve this problem. They don't feel good about the fact that this thing has been ongoing for 35 years and will probably never get done. M like they actually want to solve these problems. >> Do they see cuz I think from the outside what a lot of people will assume about Doge is that you guys have come in and are at odds at loggerheads. There is this small pocket of uh people drinking Newtonic in in the [ __ ] corner of the office, the new bit that they're allowed into. >> Uh and they are um in conflict with the rest of government. How much from your vantage point and then I guess anyone else is outside of the Treasury too. How much of has that been wow this is enabling and this is good versus this is threatening and can you [ __ ] off please? >> I think it very much depends on the agency. >> Have you heard of any that are particularly canankerous? >> Oh yeah, for sure. Do you can you say >> I think the ones that know deep down that their entity serves no purpose and they know that if we found out what was going on we would seek to eliminate it. Those are the ones who are particular. >> Yeah. Like they know from what I understand I was not here when the US ID thing happened but from the people I've talked to on the ground who were actually looking into it. uh there was no intention to shut down USA ID when it started. They just knew that there was a bunch of problems. They knew which is better grammar. They just knew there were a bunch of problems and they came in, they started talking to people, they started looking at the books and then over time they realized this whole thing is a giant ball of worms. Like they were they first came in saying like, "All right, what do we cut? What do we retain? How do we fix this?" And very quickly they realize like this whole organization is a problem. And they've seen that at a few other agencies as well where uh I'm this is kind of obvious but it's very different in my experience at the IRS. The IRS serves a very obvious purpose. >> Mh. >> Um and so there was never a question of like do we just blow the whole thing up or not? >> Right. Yeah. Yeah. Yeah. Yeah. Yeah. I understand. Okay. What does the IRS actually do? >> Yeah. Well, so this is an interesting misconception. So the IRS functionally, it's basically a software company. Uh almost everything we do involves a lot of software. Very little of what we do actually involves collecting taxes. The Bureau of the Fiscal Service collects most of the taxes. Uh the best way to think about it is uh BFS, Bureau of the Fiscal Service is more like Stripe. They collect they do payments. >> Mhm. >> The IRS is more like QuickBooks. >> It says it all that you're having to use. >> Yeah. >> Yeah. Like we don't analogies. >> We don't uh we don't >> we do we do very little in terms of big ledger. >> It's a big ledger. Yeah. and we check to make sure that the amount of money that you say that you made is the same as the amount that we know you made. >> And if those numbers are different, then we send you a strongly worded letter. And if they continue to be different for very much longer than that, then there's an enforcement action taken against that person. >> Are you guys in charge of the enforcement thing, too? >> Yes, to an extent. We have a criminal investigations group. There's a whole compliance team. The compliance team is quite large. Um, I don't actually know at what point like DOJ maybe gets involved, but there's a pretty significant compliance arm. That's one of the major functions of the IRS. >> How does the IRS stack up against other parts of the government in terms of efficiency and efficacy? Does it do what it says it can do? And and how how easily does it do that thing? >> So, some of the things that it does very well are things like compliance because there's so much leverage in it. there's effectively an infinite amount of money to make sure that we are collecting the proper amount of taxes. Um we have some very sophisticated teams and people. Part of the reason why I think we do is also that if you are interested in solving these kinds of problems, there's really only one place that you get like $5 trillion worth of leverage on this stuff. So for like a a really good data scientist, >> this is a really really interesting problem. people will take a pay cut to work on this kind of problem because it's very very interesting. >> Where we struggle is in a lot of the software systems on uh especially with customer service individual online accounts. Uh a lot of that taxpayerf facing stuff has just generally not been very good. >> Are you in charge of corporate tax too or just individual? >> All taxes. >> Wow. Okay. So this is huge. So you guys, I mean the obvious challenge uh the obvious interesting thing here is I think uh many commentators online, many uh political parties run on increasing or reducing taxes. >> Mhm. tax is a massive part of a lot of different political messaging and also um the sort of thrust of on the ground uh activists at some point that needs to come into contact with reality. So we want to raise taxes for the most wealthy people. We want to cut taxes for the middle class. We want to uh streamline the tax system and just have a flat tax, you know, cut out [ __ ] 95% of the people that have to work for you because it's all super super simple. >> Yeah. But at some point that has to be enforced. So you can have all the policy that you want and then it arrives presumably at you your desk or one of the guys in your very small cohort of Cale people's desks and they go this is what's happening with tax rates. Change the change the code on the ledger so that we know that that's happening. So just >> dig into the specifics of tax policy, the talking points that people get to play around with when that meets the road. >> Yeah, I can actually give a very specific and timely example. So in the one big beautiful bill which is typically referred to as OB3 internally, when OB3 was passed, it has a bunch of changes to the tax law. The first step is it has to go to the office of tax policy and a bunch of other lawyers to interpret what it means and how it will actually work in practice. So there's this whole step of the lawyers have to say, "All right, what is no tax on tips? What does that mean? How does that impact these the the thing that's really interesting about a lot of the stuff that it does is that a lot of what we do the the first the first 80% of the work is usually pretty easy. >> It's that second 80%. Everything gets very challenging. It's those edge cases like there's sort of an internal asterisk to everything which is like this is all fine but what about the Amish? It's like, well, yeah, it's like, well, they're not going to send it on computers, so we have to have some backup for that. And it's like they're they're more of like a placeholder for all of the edge cases that you have to be aware of >> for people. >> Everyone we it needs to be >> um I'm reminded of a friend of mine who worked at Google. It's pretty high up at Google. >> And uh I was asking about like why does it take so long to get things shipped there? and he said he had a conversation with Eric Schmidt and uh Eric said that uh remember that every problem we have is a problem at scale. There is no small problem at Google and it's the same thing at the IRS. Every every change to the tax code we make affects a vast number of highly diverse people >> and you have to account for every one of those possible edge cases. And so that's the core challenge and why it's slower to do these things, but because you have to account for all of these things. There are people who are blind. There are people who are deaf. There are people who don't use computers. There are people who just aren't capable of using computers. Like there are so many different edge cases you have to handle for. >> Um there are people who don't have a social security number, people don't have a driver's license. There's like >> every possible edge case you have to figure out how to account for it. So a lot of that gets done in the policy realm where they say for all of these things, how are we going to handle those things? What is the the cap for how much is exempt for no tax on tips? What is what is the interpretation of the statute? How will we actually implement it in practice? >> At the end of the day, for almost everything, where the rubber meets the road is in technology. >> And so this is a an interesting thing that I did not really expect in my role. I thought it would be like IRS modernization is the one and only thing. But what I've discovered is that in almost everything that you want to actually do in the government in terms of full implementation, almost everything touches technology at least a little bit. So I end up engaged in conversations on the Trump accounts which are coming up which is $1,000 to every newborn American. >> Okay. >> Yep. That's a another thing. There's a whole bunch of policy stuff, but eventually computers are going to be the ones doing it. We've got to figure out how to do it. >> Almost every policy change or anything you want to do eventually touches an IT system. So >> if you take the if you take OB3, the tax policy folks are going to come up with their interpretation. They're going to work with us on the implementation of like how do we actually do it? Then we have to turn that into changes to the core mainframe system because that's where a lot of the business logic lives. Then you have to figure out how do you change whatever interface you have. Does it does this require a change in the tax forms? That also requires a change in technology both to print the forms to send out the forms to receive the forms to digital forms. How does that connect to all the other things? >> The tax code is very complex and so there are so many intermingled parts that you have to solve for. So that's like a thing right now that we're working on. It's mostly sitting right now with the tax policy folks, but we know enough about where it will likely land that we're starting on the implementation. Now, I suppose the interesting thing about tax, as a person who is a super [ __ ] noob about how this occurs, tax has to account for a big amount of income for the for the government. >> Oh yeah. >> Right. Do you have any idea how much that is as a proportion of where money comes from? >> It's almost all of it, >> right? >> Yeah. >> Okay. So, you are the guy >> Yeah. >> who is technically technically in charge of the systems that acquire the revenue that the country needs to run. >> You could put it that way. Yeah, that seems like a big deal. >> Yep. Yep. It's uh the amount of leverage in the role is very interesting >> in both directions. >> In both directions. Yeah, it's pretty high stakes. Um the good news is that there are a lot of people working on this who have been working on this for a long time. And so I've only been there for 6 months, but this is maybe to give credit to the civil service system that we have. A lot of these people have been there for a long time. the trains are going to keep running and things are going to keep getting done. Um, and even though I've only been there for six months, I can have leverage one way or the other, but there's a very low probability that any one person can come in and like really cause major problems in the organization. >> Mostly so far you've spoken about like implementation. It's been a little bit more dirt than clouds I would say. >> Yeah. Um, when it comes to the cloud side, at least in IRS, is there an argument to be made for simplifying the tax code? What would you do? Let's say that you were in charge, which you kind of are, but not in that not in charge of that bit. >> Um, what do you think would be some good solutions? >> I mean, everyone largely agrees that a simplified tax code is better for >> How complex is it currently? maybe the most maybe the it might be the most complex tax system in the world. I would not be shocked if that was the case. Um I I spent some time in Estonia a while back and they have probably the simplest tax code in the world. It's a flat tax. If you make this amount of money, this is how much you pay. If you make this amount of money, that's how much you pay. Um I think the average Estonian spends 2 minutes per year doing taxes. It's like how much did you make? Multiply that by 0.2. That's how much you pay. That's it. That's the whole system. >> Um, >> our system is massively more complex than that. Um, >> the problem is it's very hard to do that. The IRS also doesn't do policy. So, it really has to come from Congress. They have to be the ones who are willing to do it. And uh, >> yeah, but you're the guys that have got to work out how to code it right into the ledger. >> They've added they've added another bylaw. This is going to take ages. Oh yeah. You talk to the people who've been here for a long time. That is a thing they talk about a lot. Like whenever there's a change of the tax code because this often comes pretty late in the game and you have like a very short timeline because you have to deliver it by roughly February 1st. >> And so if you hear in September like, "Hey, by the way, massive change to the tax code. Good luck." It's uh it's a struggle to get it done. But I think historically they've done a pretty good job of getting those things done. >> It's so funny. I just I keep thinking about the um sort of flaming sword wielding politician or online commentator talking about we need to tax the rich, we need to tax the poor or we need to simplify the whatever. And um there is just this total ignorance around you and what you do and the 12,000 people that in some form or another have to make that happen. >> Yeah. >> And uh that's one of the main realizations that I'm taking away thus far is that uh yeah, the rubber really does meet the [ __ ] road at some point. And like what does this mean to enforce? What does this mean to implement? How do we change the systems on this? What's the interpretation of this? I went to uh the Moody Center uh the big uh arena thing downtown here in Austin and there was a automated uh corner shop type scenario. You can get drinks and snacks and stuff like that and you go and you do it yourself and you scan the thing and then you pay. There's no staff. There might be one member of staff stood at the front who is just ensuring people like generally seem to be going toward the till once they've got stuff in their hands. >> But it asked for a tip. >> Yeah. >> This automated system asked for a tip. >> And I think to myself, well, >> is that exempt? >> Is that a special type of tip? >> It's an interesting question. I don't know >> because who who the [ __ ] am I tipping? >> Yeah. >> Am I tipping the coder that made this system? Am I tipping the guy that stood at the front? the only member of staff that's physically here. >> Yeah. >> Is this being fed into the servers so that the the you know AI agents get a day like what what is this? >> I think this is exactly the why why these things are so complex is that is one of the edge cases that I'm sure the office of tax policy folks had to think about. It's like who is this tax exempt for whom? Who knows? >> Where's it going? >> Where is it going? Eventually we have to figure it out. And I I think your analogy of like in the clouds versus the dirt. I I probably spend 90% of my time in the dirt. >> Most of my conversations are with the engineers on how do we implement this stuff? How do we get it done? How do we change our systems? If we need to hire, why is our hiring process bad? We have this other thing. It's called an atto process. I believe it means authority to operate. It's basically imagine you wanted to use an iPad or an app in your iPad. Whatever it is, you want to use a tool. >> Somebody needs to check to make sure that it is secure, that it meets our standards. That's the ATO process. Um, >> the IRS has probably the worst ATO process in the entire government. I've like cataloged a lot of other systems and how other agencies do it. Ours, I think, is the worst. And it's uh it takes oftentimes multiple years to get simple tools authorized to use. And so as a result, we're using code editors from 20 years ago. >> These are the only ones that have been proven secure previously. >> Yep. >> Yeah. Yeah, I mean I think about trying to speak to my accountant in America and if I want to send documents I I I can't do it through a ton of different services because she is at the mercy of her organization's atto equivalent and I think oh [ __ ] this is clunky but you know at least it's secure and I suppose there is a trade-off between speed and security in this way and uh yeah the systems do need to be I mean [ __ ] me when was it Boxing Day, PlayStation in 2014 or something got hacked and like hundreds of thousands of people's data got diddled and then Microsoft had one and recently in the UK Marks and Spencer that are sort of uprange supermarket. Um >> the online ordering seemed to stop almost immediately. Uh and then their shelves started to become empty and it looked like some sort of ransomware. I don't even know if that ever got revealed. Uh I spoke to the BBC cyber correspondent the same week it was happening and he sort of uh like I can neither confirm nor deny uh but basically said like from what I've heard it's [ __ ] like you've just got this big ransomware thing that's going on. All of this shit's held. You go oh it's impacted the supply chain like ordering logistics thing. Oh that's held for ransom and now you're just seeing there's fewer sandwiches on the shelves. they're just dwindling and people are like, I need to go to Tesco because Mars and Spencers doesn't have this thing anymore. And then the same week co-op got popped and I think the same week as well like Harrods got popped too or some other big high street, you know, department store luxury thing. Um, so yeah, when you get this wrong, it's not like, oh, let's just look to the private sector. They they nail this all the time. Like they [ __ ] it, too. >> Yeah. Yeah. Yeah. And the stakes are pretty high for a lot of these things in government. So I think the uh there there are There are things that exist right now that have helped with a lot of these processes. So there's something called Fed Ramp which is a set of standards that give broad authority to work within the government. So, in the past, I've heard stories because I wasn't here in the prefed ramp days. Anything you wanted, you had to go through like your own custom process to like check to make sure. And then if you as the vendor, if you had a software product, if you wanted to go over to a different department, you had to go through this whole thing and it was just a major pain. I think it was GSA or maybe it was OM office management budget created this centralized concept called Fed RAM, which is kind of like SOCK 2. If you know what that is, it's a security standard. It's basically saying, "We're going to verify that you do all these things, and if you do, you can be used across government at that level of security." >> And it it's it's a Fed ramp comes in several different flavors. They're not the the ones that most of them use, Fed Ramp Moderate, is not that bad. It's not that cumbersome for a company to use. So, it's it takes some time, which I think is okay. Uh but it it talking to people before Fed Ramp existed and how incredibly painful it was shows that there's there's some progress being made in these things and that that that's existed for some time. >> Do you think it's healthy that taxpayers are skeptical of the federal government? >> Yeah, for sure. I mean, I think the the general skepticism of how these how the power is used against people. I know that there's some of the skepticism comes from a world that I have really no exposure to, which is like the intelligence world. Um, I think when it comes to um the the stuff that I have the most exposure to, which is within Treasury and IRS and how the government uses our money, I think peak skepticism is probably warranted. The uh there's an old joke of uh what's uh what's the best kind of military aircraft? >> Okay. And uh the answer is one that has a factory in every state and a part made in every district. >> Right. And uh I now understand that joke a lot better. >> How so? How does that relate to what you do? >> Well, I don't have as much direct exposure to it in the Treasury, but I see it like friends of mine who are in DoD or friends of mine who are in all these different agencies. the uh all of the stuff that gets crammed into these bills from Congress are really where a lot of the challenges stem from. >> It's there's a there's a classic example of this, the latoral combat ship, which is a failed initiative by the US Navy to build a type of ship. It's pretty widely recognized as a major failure. Um the the simplified version of this problem was they there was a simulation done that said okay at the end of the we recognize that we need a very lightweight ship that can go in shallow waters very inexpensive because in the future instead of having a few very expensive ships that can be major targets we need lots of very inexpensive ships that can be in shallow waters. Okay, cool. Makes sense. during the process of development. This is what I've heard and I think this is all in like government accountability office reports and things like that. >> They said, "Oh, well, you know, my district makes missiles. We should put missiles on it. My district makes this thing. We should put that on it." Next thing you know, you have this completely pointless outcome, which is this actually quite large and very expensive ship that no longer serves a purpose for why it was originally commissioned. But many many billions of dollars have been spent on it >> which for some people was the goal but for other people we still don't have that ship that we wanted. So that's where a lot of these things end up getting stuck is in that congressional churn. How long would it take do you think if you were to overhaul the whole IT system for the government like to fix this legacy behemoth and actually get it up to speed. I'll I'll start by by specifically talking about IRS where I have the most exposure. Um I think the the core the the primary fix is going to be solving the data integrity problem that we have. That is the first first and most important deliverable that I would say that we have. We should be able to solve that within call it 3 years just based on the timelines that we're looking at. Assuming that we don't run into problems with procurement, assuming we don't run into all these other kinds of issues, we should be able to do it within three-ish years >> just about in time. >> Yeah. Right. The uh but there will be obviously incremental deliverables along the way. that will solve a lot of problems. I say like absolutely fully resolved by that point. Um the I think the uh the fix if you want to talk about how do we actually fix it, it's less about a specific fix to the software and it's much more a fix to the organization. Um we we don't have a budget problem in it at IRS. we really have a management and leadership challenge within the scope of that organization and have for many many decades. Um, if we can change the mindset from pay vendors a whole bunch of money to solve our problems and we can learn how to listen to our internal stakeholders. This is the this has been my main focus for the last several weeks is just because a system is old does not mean that it's bad. So it is it is hubris to think that a system that has had quite literally a million hours of labor put into it to make it good at this thing that you can rewrite it from scratch and then cut over one day and then it will suddenly start working. It's just completely and utterly unrealistic. And so how do we take the existing systems, how do we incrementally improve them? How do we change the culture to where we are building software in the way that software is really meant to be used? Which is this is more like the puppy in the analogy earlier where you're feeding it, you're you're training it, you're evolving it over time, you're not just throwing a bunch of money at it and then just ignoring it for 20 years. We need to figure out how to get into a a software development life cycle that's actually relevant for software. >> And what about the government outside of the IRS? >> Different organizations have different challenges. And so I mentioned earlier some of the the data quality problems. Um I wish uh maybe we can do this afterwards. I can call my friend Clark who's uh he's the CIO over at HHS. >> Mh. and he's been trying to figure out how to fix their payroll system, which is I I'll go into the specifics just because it's it's indicative of the kinds of problems that you see all over the place when you're actually like in the dirt trying to solve these problems. Um HHS, they have 30ish people full-time whose job it is is to run payroll. And most private sector, this is done by a company like ADP or Rippling or whatnot. There there are companies that just do your payroll here. They have to do uh they have to request all of their records from all of the different subcomponents. I think there's roughly 40 of them. They then send over spreadsheets of all their employees and how much they should get paid. Those 30 people have to reconcile those to make sure they're all formatted properly. They then send that spreadsheet to a mainframe at the FAA to run a bunch of Cobalt scripts, which I don't think anyone even knows what they do anymore because they're they've just been running. They're all on these calls. Just every time there's an error, they just manually reconcile it. They then take the output of that FAA mainframe. They then send that over to a DoD computer for processing. They then get the result from the DoD computer. They then chop it up. And then they send that information to each of those groups and then they manually enter it into their into their financial system. That is how they do payroll. That is like the full-time job of dozens of people. And these things are not that hard to do with computers, but it's just always been that way. >> And so, uh, there hasn't really been a push to fix it because it technically works. like it they are able to do payroll >> but that's sort of indicative of the kinds of problems that you see all across the government. There's just there are so few people who are thinking upstream of what why are we doing it like this? Why are we doing this at all? >> It's like the fax problem I was mentioning. It's like why are we why are we getting faxes still? What are we doing? It's like I don't know. It's the way we've always done it. It's like right but these other ways are so much better. It's like well I don't know. too much of a challenge to change it or maybe we don't think we can. It's not really clear. So, um the to take that as like a specific example from HHS of your question of how do you fix it in government? It's not really about fixing specific systems. It's about changing leadership within it. making it so that more more of the people who are leading more of the chief information officers making them technical so that they know how to build software that would be a huge improvement. Um having more people in engineering who are engineers that would be a huge improvement. Um, if you have people whose jobs are to if they are non-technical people whose jobs, which is a huge chunk of the population at IRS, if your job is to manage a vendor, but you don't know what the vendor's doing, you're probably not going to do a great job at managing that vendor. So I think that's the core shift that we need to have is uh in the same way that we treat the the legal function council's office as having some set of standards and some expectation of what it is their job does. I think we need to apply that same logic to engineering across the government. Mhm. So I guess I'm interested in personally for you uh you were famous are famous for a lot of time tracking complex system of executive assistant virtual assistants helping you do the things at levels and all the other [ __ ] you were doing in your life. How much of that has been able to transition over to this new life? >> Less of it than I would have liked. I think the the biggest change in my current role in the government historically I uh historically I really optimized for having a lot of deep focused time. uh my phone for the better part of 10 years just defaulted to do not disturb and uh I would have consistently 5 6 8 hours of just uninterrupted focus time. Um I am now almost as far in the opposite direction of that as can be imagined. I have multiple phones. they ring constantly and uh I've largely just accepted that I'm not going to get very much focused time. Um I am I have set a goal that I'm I I want to try to contribute production cobalt code before the end of this year because I've never really been in a system like that before. Um so I'm going to try to find a way to block off some time before the end of the year to do that. But generally speaking, like very little of it translates. Some of it is helpful in just being able to block off time for when I know I need to review things, making sure I have capacity to resolve the things that need to get resolved. But >> are you still tracking your time in the same way? >> Generally speaking, um I track it in my government calendar. Um it's like my my days now are mostly meetings. It's like meetings, phone calls. >> You were famous for not >> for not that. >> Yeah. >> Yeah. For trying to minimize the number and actually still I try to minimize the number of meetings already and I probably have a solid 6 to eight hours of meetings every day. >> What about the army of assistants you had? Have you been able to bring those over with you? >> Nope. No. Not. >> So, you're a oneman band now largely? >> Yep. And I have I do have somebody who helps me with scheduling, >> which interestingly is like the one thing I didn't use an assistant for before because I used Calendarly or some similar scheduling tool. But uh >> that's not OAP. >> It's not atact. >> Yeah. >> So you're telling me that inside of the government there is not a like calendar scheduling. This is when I'm available >> and there might be one in government, but we don't have one at Treasury as far as I know. I think uh >> presumably it would be APOed for you if it was right. >> Yeah, I think that we have one. I think that the GSA has one because they're a Google shop. We're a Microsoft shop and I think Google has one pre-built into their calendar but yeah, >> Microsoft needs to >> Yeah, >> add that in, please, if that's okay. >> Um, what's happening with levels? >> It's still going. Yeah, I I tried I was uh a little bit too ambitious with how I thought I could manage my time and uh I thought I could be the CEO of Levels and take on this role at the same time. >> And after after a couple months of frankly doing a very poor job as the CEO of Levels, I recommended to the board that we put my co-founder in as the CEO. And uh so he's been running it as the CEO. So, I'm I'm on sbatical >> and uh he's been doing a good job. So, I I feel I feel much better about it. I was getting it was really stressing me out cuz I was uh >> I would schedule time. It's like you schedule three hours to do my level stuff and I'm I'm liter I'm in a meeting with the level's leadership team and it's like the White House is calling me. It's like ah [ __ ] what do I do? >> It's like you got to take the White House call. Like, what are you going to do? >> What was it like? You know, you've got this business, co-founder, CEO, people working, technology, new stuff. Exciting. Isn't that cool? >> Yeah. >> Guys, I'm going to leave to take 160 grand a year position inside of the treasury. >> Yeah. >> How'd that go down? I was uh so part of the reason why because people had been asking me to consider this as far back as December when uh after the president won the election and I said no because I'm running this company. We have a baby. We have another one coming in this December. Like there's so many things, so many reasons not to do this. And uh eventually with my wife's encouragement and then really actually the encouragement of our board, they said like if there was ever a time to do this, this is it. We are we have enough cash. We the the major decisions that need to be made by me have largely already been made. The major decisions that need to be made outside of my scope, those people are still there. M >> so if there was ever a time to take a sbatical to do this this is it. I think we also made some false assumptions about how much capacity I would have to still contribute to levels, which I'm still I still have regular conversations with my co-founder, now CEO. So, we're in touch pretty regularly on this stuff, but um >> it was originally going to be 6 months. It's looking like it's probably going to extend through at least the end of the year >> because there's some >> there are a handful of things that we really need to get delivered before I I go back. Mhm. >> That's that's really where it stands now. >> How long do you think you're going to stay in this position? >> The current plan is till January. Um >> what's the likelihood of you extending that again? >> I think if you know if the Treasury Secretary or the president says like we need you to do this, you probably say yes. Um, if it's just if if I no longer feel that I can be effective in this role, if it's just like trickling off in terms of my effectiveness, then I I think that's fine. I think we've already >> we've already made some very significant changes that would be long lasting. >> I think the longer I can do it, the better. But >> a big part of it is like >> how long can you tolerate burning through your savings? >> There is a there is a factor for that. And uh there's, you know, there's opportunity cost. It's part of the reason why I thought this would be a thing I do when I'm retired, not in the like peak earning years. >> Mhm. Right. Yeah. Because it's not just burning through savings. It's the loss in potential additional revenue for you. Yeah. >> So I mean it is, you know, uh government servant. There is a big sort of arc of service. >> Yeah. here. Especially when you compare it to being CEO of fast growing exciting tech company that can do wearables and health and stuff like that. >> Um, it is a sacrifice in order to be able to do that. >> Should it be that way? Should it be a sacrifice to work for the should like it not be a it should stand on its own two feet as a position in and of itself? I think on the salary that you can make in these roles, you can make it work, but it's certainly a lot more challenging than it would be if you took an equivalent role in the private sector >> that wasn't in DC. >> That wasn't in DC. Yeah. >> Mhm. I wonder whether just from an influence perspective, um, you know, birth rates not great in America, not great anywhere, but >> specifically in America at the moment. And I wonder what the downstream impact of the selection effect of having a bunch of people who really find it hard to have families being in government who are the ones that are contributing to and thinking about these problems. >> Yeah. >> Because you are selecting out anybody who does have a family or if not they're having a family in a very particular sort of unique kind of way. um that you when you think about sort of elected officials, they are representatives of the constituents but they are unrepresentative of the sort of life that so many people lead. So you have this kind of detachment between the two. Uh I know I wonder if you've thought about that. Yeah, it's definitely a real impact and you see this in uh you see this especially in the the leadership roles. That's where this divergence gets quite large is once you get past this early to mid-career where the government can actually be reasonably competitive um people start to leave for the private sector and those tend to be your most capable people, the people with the most context knowledge of the systems that they're working on. Um, I think there's also this general issue where uh when I'm when I'm looking to hire right now, uh, when I'm trying to bring people on for these appointed roles or these leadership roles, the only two categories of people that are in a position where I've been able to get them converted are either sufficiently young that they have no expenses >> or they are either at or near retirement. where their kids are off, the kids are already in college or off like beyond college. They have enough money saved up and they want to do this to like do public service and that's it's effectively their retirement project. Um, those are really the only two camps that I I have been able to convert on these things because the the amount of effort that you have to put in, the opportunity cost of people who are in these peak earning years is too high. Uh, they have to relocate to DC for the most part. >> It's just too much of a lift to get people to be able to do that. How do you ensure that the changes that you implement are permanent? Because you leave >> uh teachers gone out of the classroom and the slow regression back to the mean begins all over again. >> Yeah, we we talk a lot about how do we make sure the weeds don't grow back. Um that's a big part of the reason why I've agreed to stay for longer is some of the weeds would grow back. I can I can already see it happening. and pulled the roots. >> Yeah, exactly. I I already see it happening on some of the things that I've tried to change. Um and so I need to stick around for long enough to make sure that it gets solved. I think uh procurement reform is going to be a big one. A lot of personnel reform. This is one of the other interesting observations because I've had many of these conversations. Uh people talk about how it feels like the momentum is slowing. Uh it feels like, you know, the amount of money being saved is it's all slowing down. And it's it's a surreal experience because from the inside it feels like the exact opposite. We're just now starting to figure out how this actually works. It feels like we're only just now starting to figure out how do we actually fix the procurement system at its root? >> How do we actually make changes? How do we implement a better performance review system? How do we fix the hiring process you across all of Treasury? How we're we're thinking more more fundamentally instead of just cutting contracts, which is good, but it's it really feels like from my perspective, somebody who's in the dirt for pretty much all day every day, we're we're only just now starting to understand how to affect these systems in a way that will be permanent. So, it feels like we're uh there there are a lot of reforms. Some of these things require uh a a legislative fix, requires an act of Congress. Um I haven't really seen a lot of movement there, but I know there are now people thinking about we as we make more progress within the executive. How do we uh how do we start to look towards changes in legislation that will change these things in a permanent way that are even outside of what's available in the executive branch? Well, Godspeed over the next few months, man. I uh it it was not a predicted pivot. I think we went for coffee maybe eight months ago, something like that. >> And uh if you'd said, "Yeah, I'm going to be the secretary, the CIO of the [ __ ] Treasury Department." Um >> would not have been on my 2025 bingo card. >> Yeah, same. Um, I I hope you survive it and I hope that the the next kid thing comes through and I look forward to doing the postmortem with you as well when you come back up for a >> Oh, yeah. Let's do it. >> I appreciate you, man. Thank you. >> Thank you. >> Thank you very much for tuning in to a 3-hour conversation about how the US government is still run on fax machines. If you enjoyed that, here's a chat with Tulsi Gabbard before she was in office. It's great. Come on. I had 10 million plays. Join in.