[The first twelve, m/l, pages] 






[page ii]

[start page 1]

January 12, 1984
The Honorable Ronald Reagan
President of the United States
The White House
Washington, D.C.

Dear Mr. President,

Following your directive to identify and suggest remedies for waste and abuse in the Federal Government, the President's Private Sector Survey (PPSS) offers recommendations which would save:

 These proposals would transform the Federal debt situation as follows:


Federal Debt

( $ Trillions )

Annual Interest on Federal Debt

( $ billions )

Without PPSS
Without PPSS


$ 3.2

$ 2.0

$ 252.3

$ 89.2











 You asked the American people to help you get the Government "off their backs." If the American people realized how rapidly Federal Government spending is likely to grow under existing legislated programs, I am convinced they would compel their elected representatives to "get the Government off their backs." In our survey to search out ways to cut costs in the Government, great emphasis was placed on the spending outlook, which is as follows: 

[See the scanned sheet for the graph that shows outlays exceeding revenues by a $2 Trillion deficit by the year 2000.]

If fundamental changes are not made in Federal spending, as compared with the fiscal 1983 deficit of $195 billion, a deficit of over ten times that amount, $2 trillion, is projected for the year 2000, only 17 years from now. In that year, the Federal debt would be $13.0 trillion ($160,000 per current taxpayer) and the interest alone on the debt would be $1.5 trillion per year ($18,500 per year per current taxpayer).

Mr. President, these projections are the result of a joint effort between PPSS and a leading U.S. economic forecasting firm. They are the result of very careful study and drove us to seek out every possible savings opportunity, "like tireless bloodhounds," as you requested.

In the course of the search by our 36 Task Forces, chaired by 161 top executives from around the country and staffed by over 2,000 volunteers that they provided, we came up with 2,478 separate, distinct, and specific recommendations which are the basis for the carefully projected savings. For practical purposes, these savings, if fully implemented, could virtually eliminate the reported deficit by the 1990's versus an alternative deficit of $10.2 trillion in the decade of the 1990's if no action is taken.

Equally important, the 2,478 cost-cutting, revenue-enhancing recommendations we have made can be achieved without raising taxes, without weakening America's needed defense build-up, and without in any way harming necessary social welfare programs.

Because we are starting from a deficit of $195 billion, every dollar we can stop spending is a dollar that the Government does not have to borrow. With future Government borrowing costs at 11 percent (versus 10.75 percent now and 14.5 percent when you took office) and inflation taken at 6 percent per year over the longer run, these savings compound quickly.

Applying these interest and inflation rates, the result is that a dollar saved today accumulates to $32 over 12 years and $71 over 17 years. Thus, any potential saving made, as compared to not making the saving, translates into a difference in cumulative spending of 32 times that amount through 1995 and 71 times that amount through the end of the century.

Therefore, $100 billion in reduced Government spending in year one equates cumulatively to $7.1 trillion in the year 2000. And since borrowings are decreased by this amount, so will the national debt decrease.

This is, of course, a horrendous prospect. If the American people understood the gravity of the outlook, they would not, I believe, support representatives who might let it happen.

Mr. President, you have been so correct in resisting attempts to balance the budget by increasing taxes. The tax load on the average American family is already at counterproductive levels with the underground economy having now grown to an estimated $500 billion per year, costing about $100 billion in lost Federal tax revenues per year.

The size of the underground economy is understandable when one considers that median family income taxes have increased from $9 in 1948 to $2,218 in 1983, or by 246 times. This is runaway taxation at its worst.

Importantly, any meaningful increases in taxes from personal income would have to come from lower and middle income families, as 90 percent of all personal taxable income is generated below the taxable income level of $35,000.

Further, there isn't much more that can be extracted from high income brackets. If the Government took 100 percent of all taxable income beyond the $75,000 tax bracket not already taxed, it would get only $17 billion, and this confiscation, which would destroy productive enterprise, would only be sufficient to run the Government for seven days.

Resistance to additional income taxes would be even more widespread if people were aware that:


Our survey studied the small as well as the major items of cost savings, items of broad national impact as well as those of a more localized nature. I believe you will be interested in a few random examples of what we found:





Mr. President, these are just a few of the absurd situations that we found throughout the Government that add up to billions of dollars per year and where the opportunities for savings are clearly available.

Some of the recommendations made by PPSS have been made before. Others are entirely new. Regardless of their origins, the focus must now be on implementation. The current economic trends are simply too serious to delay action any longer.

PPSS has submitted 36 major Task Force reports and 11 studies on special subjects such as subsidies and retirement. In total, these reports substantiate three-year ongoing savings of $424.4 billion, plus cash accelerations of $66 billion. These are all analyzed and supported in great detail. Capsuled in terms of the functional problems to which they relate, the savings are as follows:

PPSS Savings Recommendations

$ Billions
% of Total

Program Waste

$ 160.9

37.9 %

System Failures


35.7 %

Personnel Mismanagement


21.4 %

Structural Deficiencies


3.0 %

Other Opportunities


2.0 %


$ 424.4

100.0 %

These data confirm our findings that system failures and personnel mismanagement together comprise well over one-half, 57.1 percent, of the total savings possibilities. They are at the foundation of inefficiencies in the Federal Government. Program waste, which accounts for 37.9 percent of the savings recommendations, would also be substantially eliminated if proper systems and personnel management were in place.

The above underscores one of our most important recommendations, which is the establishment of an Office of Federal Management in the Executive Office of the President. This Federal Government top management office would include 0MB, GSA and OPM and have Government-wide responsibility for establishing, modernizing, and monitoring management systems.

If it is set up and staffed properly, it could go a long way to avoid in the future the thousands of deficiencies and examples of waste that we have identified. We would not feel our task complete if we just identified past deficiencies without recommendations for a management and organizational structure that would be best suited for preventing the errors of the past.

Additionally, the establishment of this new office would be beneficial in the implementation process of the PPSS recommendations.

In this regard, we believe that your Cabinet Council on Management and Administration, working in concert with the Office of Cabinet Affairs, is uniquely suited to lead a Government-wide effort to restore sound principles of management and efficiency to the Federal Government. While the Cabinet Council already has taken a leadership role in this regard, we urge you to call upon it to make implementation of the PPSS recommendations Government-wide its highest priority.

Mr. President, it was a great honor to have been asked by you to engage in this effort to identify ways to eliminate inefficiency, waste and abuse in the Federal Government. The project was structured and staffed to effect enduring improvement so that our children and grandchildren would not inherit a situation that would be devastating to them and to the values of our economic and social system. It was in this vein that we were able to enlist the 161 top executives from private business and other organizations to chair and to staff our 36 Task Forces at a cost to the private sector of over $75 million and at no cost to the Government.

All the participants join with me in thanking you for the opportunity to be of service and in looking forward to whatever additional help we may be able to provide to assure that the greatest practical results are obtained from the work of this Commission.




J. Peter Grace


[end page 7]

Forest refers to the above as the Cover Letter to the PPSS. It is a revealing summary which Congress ignores.

Page 8 starts the Report to the President, Volume I. Continuing pagination is 8, 9, 10, I-1, I-2, etc.

Except for bold, [page numbers in brackets] and necessary formatting for this web page, the above is a copy of the Cover Letter from the

President's Private Sector Survey on Cost Control,

also known as PPSS and the Grace Commission Report.

The cover letter is from 600 pages of Volumes I and II in my library.

Source: The hard copy was purchased from

U. S. Department of Commerce
Technology Administration
NTIS (National Technical Information Service)
Springfield VA 22161
(703) 605-6000


Forest Glen Durland

[Source: <>]

How was CAGW founded?

Founded in 1984 by the late industrialist J. Peter Grace and syndicated columnist Jack Anderson, CAGW is the follow-on organization to President Ronald Reagan's Private Sector Survey on Cost Control, also known as the Grace Commission. In 1982, President Reagan directed the Grace Commission to "work like tireless bloodhounds to root out government inefficiency and waste of tax dollars." For two years, 161 corporate executives and community leaders led an army of 2,000 volunteers on a waste hunt throughout the federal government. Funded entirely by voluntary contributions of $76 million from the private sector, the search cost taxpayers nothing. The Grace Commission made 2,478 recommendations which, if implemented, would save $424.4 billion over three years, an average of $141.5 billion a year – all without eliminating essential services. The 47 volumes and 21,000 pages of the Grace Commission Report constitute a vision of an efficient, well-managed government that is accountable to taxpayers. CAGW has worked to make that vision a reality and, in 17 years, has helped save taxpayers $687 billion through the implementation of Grace Commission findings and other recommendations.


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