Modern Wisdom

#1004 - Sam Corcos - Inside DOGE, The IRS & How to Scam the US Government

October 9, 2025

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  • The US government's IT modernization efforts, particularly at the IRS, are severely hampered by non-technical leadership, outdated role standards, and a tenure-based promotion system that rewards longevity over competence. 
  • Government procurement processes are fundamentally broken, leading to massive waste, contractor arbitrage (like using value-added resellers for simple SaaS licenses), and delays, as exemplified by a paper processing contract stalled for months due to contestations. 
  • The difficulty in firing underperforming career civil servants, combined with low compensation for senior technical roles, forces the government to rely on expensive contractors and incentivizes internal inertia, making significant change highly dependent on courageous political appointees willing to make unpopular decisions. 
  • The US government's hiring process is severely dysfunctional, exemplified by HR teams without technical capability vetting engineers based on generic position descriptions, leading to difficulty in hiring qualified technical staff like engineers at the IRS. 
  • The federal government lacks a natural feedback loop or counterbalance to prevent inefficiency, as demonstrated by public sector unions not facing the same existential threat as private sector unions when demanding too much. 
  • The perception of government work is heavily skewed by media overexposure to fringe events (like the misreported 'hackathon'), while fundamental issues like data fragmentation (108 competing sources of truth at the IRS) and outdated processes (faxing documents) persist due to inertia and poor incentives. 
  • The IRS primarily functions as a software company focused on compliance and processing, with the Bureau of the Fiscal Service handling the actual collection of taxes. 
  • Implementing tax policy changes is slow and complex due to the necessity of accounting for a vast number of diverse edge cases affecting all taxpayers, which ultimately requires technology implementation. 
  • The biggest challenges in government IT modernization, such as at the IRS and HHS, stem from organizational management and leadership issues rather than solely budget constraints, requiring a cultural shift toward modern software development lifecycles. 

Segments

Sam Corcos’s New Government Role
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(00:00:27)
  • Key Takeaway: Sam Corcos was brought into the Treasury Department, focusing on IRS modernization, due to his technical background and the administration’s willingness to enact significant structural changes.
  • Summary: Corcos was recruited to address the IRS modernization program, which is noted as one of the worst-managed IT projects in government, costing $15 billion over budget since its inception around 1991. He accepted the role, encouraged by his wife, to apply his expertise in government service, a goal he previously assumed would come later in life. His official title is Chief Information Officer (CIO) of the Treasury Department.
CIO Role Evolution and Qualifications
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(00:01:46)
  • Key Takeaway: The government’s CIO role historically stemmed from a non-technical librarian function, leading to a lack of technical standards for the position, which often results in non-technical leaders making multi-billion dollar IT decisions.
  • Summary: The CIO title evolved from managing filing cabinets, meaning the role historically required no knowledge of how computers work. This lack of updated technical standards means that many CIOs appointed before this administration were non-technical. Corcos, with over 10 years as a software developer and having contributed a million lines of production code, contrasts sharply with this historical norm.
Implementing Immediate Leadership Change
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(00:05:22)
  • Key Takeaway: To fix systemic IT issues at the IRS, Corcos recommended placing the entire 50-person IT leadership team on administrative leave to replace them with technically competent decision-makers, a move unprecedented in recent history.
  • Summary: The upstream problem for IRS IT issues was identified as a lack of technical background among leadership, preventing good decision-making on multi-billion dollar technology projects. This drastic action, taken during peak tax season, was supported by the Secretary and, after initial panic, immediately improved project delivery speed. Some of the removed leaders understood the necessity, as they knew they were unqualified for their roles.
Politics of Government Change
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(00:07:38)
  • Key Takeaway: While political appointees can enact swift, structural changes, the default government operating mode prioritizes covering one’s own liability through committee decisions, leading to ossification and slow progress.
  • Summary: Corcos notes that many career civil servants are hardworking but are placed in roles they are not technically suited for due to tenure-based promotions, often feeling guilt about poor decisions. The willingness to make hard calls, like removing leadership, comes from the top, and once made, progress can accelerate rapidly, as seen when stuck projects began delivering in weeks.
DOGE Affiliation and Political Appointee Status
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(00:09:21)
  • Key Takeaway: Corcos is technically a political appointee at Treasury, not a DOGE employee, but utilizes the authorities granted by the DOGE executive order to review contracts and drive agency changes.
  • Summary: The DOGE executive order enabled the creation of the office and provided authorities for reviewing contracts across agencies. Corcos coordinates with DOGE staff but reports directly to Treasury, distinguishing himself as ‘Doge adjacent.’ As an appointee, he can be fired more easily than a career civil servant, but his focus on fixing computers has garnered bipartisan support.
National Debt Scale and Government Spending
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(00:11:46)
  • Key Takeaway: The US national debt is reaching a critical point, currently exceeding $37 trillion and increasing by approximately $100,000 per second, despite the US having the fifth-highest government expenditure per capita globally.
  • Summary: The sheer size of the national debt is viewed as unsustainable, driving the need for efficiency improvements like those targeted by DOGE. The high per capita government spending is only acceptable in theory if it were not financed by massive debt accumulation. The US Debt Clock visualizes this massive and rapidly growing financial burden.
Inertia and Bureaucracy Examples
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(00:13:35)
  • Key Takeaway: Government inertia is exemplified by the IRS continuing to receive 60 million faxes annually because decision-making authority for changing the outdated policy is fragmented across multiple offices, creating an accountability vacuum.
  • Summary: The default government mode is ‘cover your ass,’ where decisions are made by committee to avoid blame, contrasting with the private sector’s ‘move fast and break things’ mentality. Corcos struggles to find the specific lever to eliminate fax usage, as different departments deflect responsibility for the policy. This inertia is likely shared by very large corporations but is exacerbated in government by civil service protections.
Civil Service Protections and Performance Management
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(00:19:07)
  • Key Takeaway: Civil service protections, established in 1883 to prevent the ‘spoils system,’ now make it extremely difficult to fire poor performers, often resulting in the common practice of promoting underperformers to move them off a team.
  • Summary: The system was designed to ensure continuity by protecting non-political employees, but it now over-indexes on protection, making performance management nearly impossible. Giving a poor review triggers union involvement, leading many managers to simply give everyone high ratings to avoid extra work. The ratio of non-engineers to engineers in the IRS IT function is inverted compared to private tech companies (10:1 vs. 1:5 or (1:10).
Executive Orders and Implementation Failure
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(00:26:52)
  • Key Takeaway: Executive orders are not self-actualizing in government; policies can be established at the highest level, yet implementation stalls because employees continue existing trends unless actively and persistently ‘hounded’ to act.
  • Summary: In contrast to the private sector where a CEO’s suggestion becomes an immediate priority, government employees often ignore new directives, even those from the President or Secretary. For example, the ‘Do Not Pay’ list implementation, mandated years ago, still requires constant enforcement to ensure compliance. DOGE’s effectiveness often comes from providing the necessary enforcement and capacity when agencies lack the internal means to deliver.
Contractor Bloat and Misaligned Incentives
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(00:32:27)
  • Key Takeaway: Government budgets are not tight for spending, but rules restrict useful spending; large contractors exploit this by using arbitrary pricing, often inflating pilot rates by 20x after initial low bids, knowing government entities rarely say no.
  • Summary: The CIO role at Treasury manages $10 billion in annual spend but is compensated poorly ($160k), leading to a lack of incentive for leaders to fight over small savings. Contractors like Accenture or Deloitte often inflate prices because the decision-makers are not spending their own money and are unfamiliar with market rates. This dynamic leads to massive contractor bloat, such as hundreds of millions spent on cybersecurity contractors where a third of the spend was on unused services.
Broken Procurement Process
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(00:45:40)
  • Key Takeaway: The competitive bidding process for government procurement is so cumbersome, often taking years and costing millions in overhead, that it can be halted for $100 by any losing vendor contesting the award, leading to massive delays like the IRS paper elimination project.
  • Summary: The Federal Acquisitions Regulation (FAR) creates excessive overhead, making simple purchases extremely difficult; for instance, a project to eliminate paper processing, costing $1 million daily in delays, is still awaiting contract award after starting in April. The process is often gamed using ‘value-added resellers’ who compete only nominally to provide the appearance of a competitive auction for standardized software licenses.
Waste, Fraud, and Graft in Government
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(00:56:55)
  • Key Takeaway: The boundaries between waste, fraud, and abuse are often blurred, with significant graft potentially occurring through programs like the 8A small business set-aside, which allows skipping competitive bidding for contracts up to $25 million.
  • Summary: Contracts for software that is never used are routinely auto-renewed because leaders fear the risk of cancellation outweighs the benefit of saving money. The 8A program is frequently exploited, where contractors take 10% to 50% off the top for funneling money to a small business that often performs none of the required work. Investigators estimate this specific form of graft could amount to tens of billions annually.
Engineering Roles at IRS
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(01:06:54)
  • Key Takeaway: The IRS has 100 open engineering roles, but the hiring process excludes engineers from technical qualification assessment.
  • Summary: A memo titled ‘Engineering is for Engineers’ argues that only engineers should hold engineering roles, which is controversial in government where many incumbents are not engineers. The hiring pipeline involves HR teams making qualification determinations without technical capability, preventing engineers from assessing candidates’ actual skills like Java proficiency. Sam Corcos is actively working with OPM and IRS HR to reinsert hiring managers into the technical hiring loop.
Government Collaboration and Hiring
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(01:10:31)
  • Key Takeaway: Current inter-agency collaboration is unusually high, enabling faster resolution of procedural issues compared to historical information silos.
  • Summary: Collaboration between agencies like OPM and Treasury is currently high, allowing direct calls to legal counsel to clarify policy issues that would previously be ignored. This mission orientation is leading to significant changes within the government structure. Past successful programs for recruiting young people, like an early 2010s internship program, were dismantled due to bureaucratic hurdles, often related to veterans’ preference.
Hiring Minimized Qualification
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(01:13:15)
  • Key Takeaway: Government hiring often instructs managers to select the minimally qualified candidate, leading to quick but often unfit hires who are slow or impossible to remove.
  • Summary: Many government roles instruct hiring managers to select the first person who meets the minimum threshold, which is quick but results in underqualified personnel. The system is characterized by hiring quickly but firing slowly, if at all. Limited ‘direct hire authority’ exists, but most roles are subject to the competitive process that favors minimally qualified candidates.
Governmental Ossification and Talent Retention
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(01:14:39)
  • Key Takeaway: The ossified, inefficient nature of government disincentivizes talented individuals, who often remain only due to a strong sense of mission.
  • Summary: The US government system is perceived as ossified and inefficient, pushing talented individuals back toward the mean or disincentivizing them from pushing for change. Only a small fraction (100-200 out of 13,000 contractors at the IRS) are highly effective, staying primarily because they care deeply about the mission and recognize the negative consequences if they left. The lack of natural feedback loops prevents government from self-correcting inefficiencies, unlike the private sector where failure leads to death.
Federal Mistrust and Media Influence
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(01:17:46)
  • Key Takeaway: Low public trust in the federal government (16%) is exacerbated by 24/7 national news coverage turning edge cases into representative realities.
  • Summary: Skepticism of the government, the entity with a monopoly on violence, is inherently good, but overexposure to national news turns non-representative events into perceived reality. A strategic planning session with 50 IRS engineers was falsely reported by Wired magazine as a ‘Doge hackathon,’ illustrating how media narratives can be invented and persist, leading to congressional inquiries about non-existent events.
DOGE Savings Calculation Nuance
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(01:30:31)
  • Key Takeaway: Calculating DOGE savings is complex because standard accounting methods fail to capture savings from canceled solicitations or indefinite contracts like BPAs.
  • Summary: The reported $200 billion in savings is nuanced; the official calculation often only counts money under signed contracts that was not yet disbursed, excluding canceled solicitations entirely. Determining savings from large, open-ended contracts like Blanket Purchase Agreements (BPAs) is nearly impossible due to poor underlying data quality. The IRS IT budget alone was difficult to define, taking six weeks to confirm the $10.8 billion scope for FY 2025.
Spending Cuts and Reallocation
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(01:36:33)
  • Key Takeaway: Cutting spending in high-stakes agencies like the IRS requires a scalpel approach, as poor decisions can cost the public far more than the savings achieved.
  • Summary: Cuts must be thoughtful because mistakes in agencies like the IRS can have significant market-moving effects, necessitating careful, line-by-line review rather than broad chainsaw cuts. Initial leadership often claimed everything was critical, but swapping them out for operational experts revealed significant areas for reallocation. A major historic problem is the cycle of overspending on vendors who create disparate, non-communicating systems, leading to 108 competing sources of truth in IRS IT.
IRS Modernization and Shadow IT
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(01:41:29)
  • Key Takeaway: The government’s ‘modernization’ approach often creates new legacy systems by funding one-time builds that are then never maintained, leading to fragmentation and shadow IT.
  • Summary: Software systems require constant maintenance, but the IRS historically spends billions on a tool once and then declares it ‘done,’ leading to duplication and the accumulation of legacy systems. This failure of the central IT function causes sub-agencies to create their own secret IT groups and contracts (shadow IT) to deliver necessary functionality. The immediate priority at the IRS is establishing data quality by creating a unified API, as current systems rely on 108 competing sources of truth.
Cybersecurity Recruitment Challenges
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(01:52:01)
  • Key Takeaway: Recruiting senior cybersecurity leadership is extremely difficult due to massive pay cuts compared to the private sector and the political risk of discovering breaches under one’s watch.
  • Summary: Agencies like the IRS have decent security, but others are less secure because attracting senior cybersecurity talent is hard when salaries are capped far below market rates. In politics, discovering a pre-existing breach under your tenure is career-damaging, unlike the private sector where finding and removing threats earns praise. This political disincentive makes it challenging to convince top talent to take on these high-stakes roles.
DOGE’s Unforced Errors and Optics
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(02:01:30)
  • Key Takeaway: DOGE’s biggest unforced error was maintaining a degree of secrecy that fueled negative media narratives, despite the high quality of the actual work being done.
  • Summary: The secrecy surrounding DOGE created an ‘us vs. them’ media narrative suggesting nefarious activity by ‘adult infants on stimulants.’ If DOGE had prioritized optics and communication earlier, they could have countered the perception that they were bypassing necessary checks and balances. The clash between the tech world’s ‘move fast’ ethos and government’s need for procedure (Chesterton’s fence) created discomfort, which a dedicated communications team could have mitigated.
Agency Resistance to DOGE
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(02:12:40)
  • Key Takeaway: Agencies most resistant to efficiency efforts are those that know their function is unnecessary and fear elimination upon scrutiny.
  • Summary: Resistance levels to DOGE efforts vary significantly by agency, with cantankerous agencies often being those aware their entity serves no purpose. An example cited is USAID, where initial reviews revealed significant problems, leading to realization that the entire organization was problematic. In contrast, the IRS, serving an obvious purpose, did not face this existential threat during initial reviews.
IRS Functionality Misconception
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(02:14:14)
  • Key Takeaway: The IRS is functionally more like a software company (QuickBooks) than a tax collection agency (Stripe), with the Bureau of the Fiscal Service handling most collections.
  • Summary: The IRS’s primary function involves software and processing, with very little direct tax collection; that task falls to the Bureau of the Fiscal Service. The IRS focuses on ensuring reported income matches known income and issuing letters if discrepancies exist, involving compliance and criminal investigations teams. Compliance is a major function because there is effectively an infinite amount of money available to ensure proper tax collection.
Tax Policy Implementation Challenges
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(02:17:04)
  • Key Takeaway: Implementing any tax policy change requires extensive technological work to account for every edge case affecting diverse populations, which is the core challenge slowing down changes.
  • Summary: Political discussions about tax rates must eventually meet the reality of implementation, which involves lawyers interpreting new laws, like the ’no tax on tips’ provision in OB3. The challenge is the ‘second 80%’ of the work, addressing edge cases like the Amish or people without computers or SSNs. Ultimately, nearly all policy changes touch technology, requiring updates to core mainframe systems and tax forms.
IRS IT and ATO Process
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(02:24:17)
  • Key Takeaway: The IRS struggles with taxpayer-facing software and has one of the government’s worst Authority to Operate (ATO) processes, leading to reliance on outdated tools.
  • Summary: The IRS’s core IT fix is solving data integrity within an estimated three years, contingent on avoiding procurement issues. The necessary fix is organizational, shifting culture away from paying vendors to solving problems internally and adopting modern software development lifecycles. The ATO process, which verifies tool security, can take years, forcing the IRS to use code editors from two decades ago.
HHS Payroll System Dysfunction
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(02:39:03)
  • Key Takeaway: The HHS payroll system exemplifies government dysfunction, relying on manual reconciliation across spreadsheets, an FAA mainframe running COBOL, and a DOD computer.
  • Summary: Dozens of full-time HHS employees reconcile spreadsheets of payroll data received from 40 subcomponents. This data is then sent to an FAA mainframe for COBOL processing, with errors manually reconciled, before output is sent to a DOD computer for final processing. This convoluted, multi-system process is indicative of widespread government inefficiency where legacy methods persist because they technically still function.
Personal Sacrifice and Time Management
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(02:42:58)
  • Key Takeaway: Sam Corcos’s role in government requires abandoning his previous optimization for deep focus time, resulting in constant meetings and reliance on government-approved scheduling tools.
  • Summary: The government role is the opposite of his previous life, demanding constant availability with six to eight hours of meetings daily, forcing him to accept a lack of focused time. He is on sabbatical from Levels, having recommended his co-founder take over as CEO due to the overwhelming demands of the government position. The inability to use external scheduling tools like Calendly means he relies on a government-approved scheduler, highlighting security constraints on basic productivity tools.
Ensuring Permanent Reform
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(02:52:59)
  • Key Takeaway: Sustaining reforms requires staying long enough to pull the roots of old processes, with procurement and personnel reform being critical areas needing legislative fixes.
  • Summary: The speaker notes that regression (weeds growing back) is already visible in changes made, necessitating a longer tenure to ensure permanence. From the inside, momentum feels like it is accelerating as they move beyond simple contract cutting to fundamental system fixes in procurement and hiring. Future permanent changes will likely require legislative fixes from Congress, beyond the scope of executive branch action.