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Management Fails the Department

The Department of State has at times been more adept at the formulation of policy than the management of its resources. The Reagan Administration was no exception. The Under Secretary for Management was described at the time as responsible for “keeping the Foggy Bottom bureaucracy in paper clips and the embassies stocked with gin and hors-d'oeuvres.” This attitude was further reflected in the fact that Richard T. Kennedy, who held the position during Haig’s tenure, also served as the U.S. Representative to the International Atomic Energy Agency in Vienna. The American Foreign Service Association complained that Kennedy was therefore unable to devote enough attention to the Department’s budget and personnel. Secretary Shultz assigned a higher priority to management and chose Ronald I. Spiers, the first and only career appointee to serve as Under Secretary for Management. Spiers held the job for five years—longer than anyone else before him.

Secretary of State George Pratt Shultz

The Department of State faced additional challenges in managing its budget and personnel. “Reaganomics”—the effort to cut government expenditures and revenues despite a dramatic increase in defense spending—left little money to improve the state of the nation's diplomatic machinery. During the Reagan Administration, the Department of Commerce was the only cabinet-level agency to receive a smaller portion of the budget than the State Department. From 1981 to 1988, spending for State Department operations and programs decreased as a percentage not only of the federal budget but also of the gross domestic product. The financial situation deteriorated in particular when Congress passed the so-called Gramm-Rudman-Hollings Act in 1985, which mandated spending cuts to reduce the federal budget deficit. Under Gramm-Rudman, the Department endured what one high-level official called “its worst budget crisis in modern times.” Shultz pleaded for budgetary relief every year and some cuts were restored, but the Department’s infrastructure and employee morale were damaged by the forced economies.