Just weeks before the Office of Management and Budget releases its latest report on the federal government's progress on Year 2000 preparedness, Treasury Secretary Robert Rubin yesterday warned a House subcommittee his department may not be able to fix its computers before the end of the millennium.
The remarks validate many concerns by observers who have criticized the federal government for moving too slowly on the Y2K problem and warned that government department systems are doomed to fail if efforts to purge them of the computer glitch aren't sped up.
Rubin made his comments before the House Appropriations Committee's Subcommittee on Treasury, Postal Service and General Government. He was requesting funding to replenish department budgets drained earlier in the fiscal year to address the Y2K remediation efforts in his department.
If the additional funds aren?t found, Rubin warned, the Treasury may not be able to remedy the problem before the turn of the century. "We have identified close to $200 million in additional needs in the current year that must be funded if we are to complete the fixes in time."
The millennium bug stems from decisions by programmers in the 1960s to save memory space by using only the last two digits of a year instead of all four when referring to the date, a kind of shorthand that programmers continued to use until very recently. But when 00 comes up for the year 2000, many computers will view it as 1900 instead, causing widespread problems.
After his request before the committee, a spokesman from Rubin's office was quick to point out that the fiscal 1999 supplemental budget proposed to Congress by the administration includes an additional $250 million that could be used to fund the requirements. However, she admitted the funds still need to be approved by Congress.
The Treasury secretary's admonition comes just days after the House subcommittee on government technology's chairman said the U.S. government's progress in preparing critical computers to cope with the Year 2000 was given a "D-minus" grade, based on a survey done by the committee. (See Related Story)
Federal Reserve chairman Alan Greenspan last month told USA Today the computer bug is already hurting the economy and warned of larger problems ahead. That's just one of several recent revelations by government officials which fuel further criticism from those who have long outlined problems with the way governments have prepared for the Y2K problem.
"If they had started early enough they would have had the time [and funding] constraints," said Peter DeJager, an outspoken pundit on Year 2000 issues. "Now that they've figured out the problem, what do they do about it? What will be the fallout? It's the next thing that needs to be answered."
DeJager was echoed by Deutsche Morgan Grenfell chief economist Edward Yardeni, who said he is waiting to hear what the government plans to do to allot funding and meet the deadline. "I think since [Rubin] has said this much, what's the rest?" Are there contingency plans in place?"
If the House appropriations committee turns down the secretary's request and Congress doesn't approve the supplementary budget, Rubin's spokesperson said, "He'll go to plan B. We have intelligent people in the Treasury Department," to figure out a solution.
But Yardeni said it's time for all government agencies to do more than what they?re doing. Beyond the OMB?s quarterly reports, "they owe us monthly reports on progress. What disturbs me is the important people are now acknowledging that the government may not be ready, but when are they planning to fix it. It's ludicrous."
Both DeJager and Yardeni saw Rubin's request as an indication of what to expect from OMB's fourth report, due out in about two weeks--a wake-up call to all federal agencies to move more aggressively to fix the problem.