The President's Management Agenda promises hundreds of agency five year plans to study organizational structures, create "knowledge management systems," and assess personnel authorities. Fortunately, paper plans do not represent the real agenda. Like Ronald Reagan, George W. Bush's budget will continue to use tax cuts to drive management reform, rather than rely on the same old bureaucratic mumbo-jumbo.

Even presidential spokesman Ari Fleischer was confused by the magnificent misdirection in the new Bush Budget. When asked by a reporter whether it was a repeat of Reagan's, he replied: "The biggest difference is that President Bush has always emphasized there is a role for government. President Reagan used to emphasize that government made things worse and there are alternatives to government." It may be Mr. Bush's jargon but a close reading of the budget proves it is Mr. Reagan's beef.

The Budget plans to drive tax receipts down from 17.9 percent of GDP in 2002 to 17.0 in 2004 and limit the growth of discretionary spending to four percent. The problem is that the earlier Bush budgets also tried to limit spending to a 4 percent increase but Congress drove spending to 9 percent (excluding emergency response), higher than the average of the Bill Clinton years. And who knows what Congress will do to the tax cut, with even the Budget showing tax receipts up to 18.3 percent of GDP by 2008. To be successful, the president must break arms in Congress-mostly in his own party--to win the tax reductions and force the government to live within his limits.

The Budget announces the good news that the federal bureaucracy is down by 324,580 since 1993. The bad news is that non-defense personnel are up by 220,000 since Reagan and most of the increase is not related to terrorism or homeland security. All of the decreases since then has been from the defense civilian workforce, totaling 396,000 fewer defense personnel. But here is the real management lesson of the last decade-with 400,000 fewer bureaucrats, the Department of Defense is operating more efficiently.

The real management reforms are hidden in section two, following the human relations twaddle, titled "Competitive Sourcing." The government has long had a way to identify work performed in house that could be accomplished at lower cost by the private sector. The so-called A-76 process shows how to identify that work and provides rules for competing bids from the government bureau performing the work and private firms that think they can do it better. In recent years, this process has resulted in taxpayer savings of more than 20 percent for work that stayed in house and over 30 percent for that outsourced to the private sector. From 1995 to 2000, savings in the Department of Defense have averaged 34 percent, which is expected to reap more than $10 billion.

Obviously, career government officials would rather have their pensions cut than identify internal work that could be taken from them and moved to the private sector, even though the costing comparisons favor the agencies. For one thing, the Government Accounting Office documents that government agencies do not know how to manage the contracts--specifically citing NASA and the space program--and this government competency does need great improvement. But, basically, contracting out means loss of prestige and power to top bureaucrats. The good news is that the Budget promises to publish the work the agency identifies as the only kind that could be performed by the private sector--so that private firms can challenge omissions of jobs they think they could provide at lower cost.

The DoD experience, however, proves that real action only occurs when the leaders within the government get it. The uniformed military fought contracting out like banshees when it began. After saluting and sending the jobs outside, it became apparent they could invest the billions of dollars saved into more useful matters like futuristic weapons. Then the commanders realized that they could actually fire incompetent private contractors and not spend half of their time following or trying to get around foolish civil service and labor grievance system rules. Most of all, the work could be done effectively by others so they could concentrate on their core mission. Our military are serious people who recognized that being able to focus upon winning real wars to protect their country and their neighbors was a great advantage.

Cutting taxes, holding down discretionary spending, reforming the entitlements, and contracting out as much work as possible is the right plan. Add in a few vetoes to make President Bush's spending limits stick, make contract management his government's top personnel priority, reward political appointees for effective administration with some of his time and attention, and the management will pretty much take care of itself.

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Donald Devine, former director Of the U.S. Office of Personnel Management, is a columnist and a Washington-based policy consultant and a Vice Chairman for the American Conservative Union.