Putting Uncle's Cash to Work

Billing earlier, paying later

While OMB's Director was under fire, two other officials of the agency were being praised by the White House last week for some ideas that they figure will save $125 million a year.

The ideas grew out of a conversation over a couple of Margaritas ten months ago. Wayne Granquist, 42, OMB's associate director, was trying to talk his old friend Dick Cavanagh, 31, into leaving a consulting job at McKinsey & Co. and joining Government. What precisely would Cavanagh do? Granquist had a simple but dramatic way of showing him. Check your personal records, he told Cavanagh, and see how long it took the Internal Revenue Service to cash your quarterly income tax check. Cavanagh discovered to his astonishment that it had taken 22 days. Granquist had made his point, and soon after that Cavanagh joined him at OMB with a clear mission: help the Government recoup some of the many millions of dollars it wastes annually through sloppy cash management.

The Government pays its bills earlier than necessary: during the first half of 1976 it shelled out $118 million in interest on money borrowed to make the quick payments. At the same time, the U.S. dawdles in collecting money owed to it. Customarily, the Government takes 23 days to send bills to buyers of goods from the nation's strategic stockpile, and nine days to cash the buyers' checks.

Cavanagh and Granquist, who is a former Norwalk, Conn., bank president, have moved quickly to improve these costly methods. Their biggest accomplishment so far: putting to work some $1.5 billion in taxpayers' money that was deposited without interest in banks around the country; on July 1, the U.S. will begin receiving $75 million interest annually on that cash. Other savings come mainly from cleaning up administrative procedures, speeding collections and controlling payouts.

On sales abroad--of weapons and uranium, for example--the U.S. will gain $3.5 million a year in interest by getting paid not by bank checks but by speedy transfer of funds via computers. By speeding up billings of income taxes sent to companies, the Government will save $1 million in interest a year.

Cavanagh and Granquist have the blessing of President Carter; on one of their progress reports, he scribbled, "Keep it up!" The streamliners are not doing anything that would be unusual in private business. Says Cavanagh: "These are very standard procedures. The Government should manage its money as well as the taxpayers do."

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