Here’s an idea I had this morning - Could the Federal Government set up Cloud based services for use by various Federal Agencies (or even state and local agencies)? It wouldn’t really be a centralized IT department in that each agency would still get to own the applications and data. However the economies of scale and dynamic capacity and backups and recovery and even security management could be centralized. Obama had mentioned he wanted to create the "Google of Government". Maybe more than a search engine they should set up some Google/Amazon like Cloud Computing SaaS and IaaS too.
I’m sure that many government IT demands are fairly cyclical. Maybe leveraging this kind of technology could keep overall costs down by being able to offer that extra capacity to other agencies who have complementary requirements.
They could even hand out some cool sounding job titles titles such as "Assitant Deputy Secretary of the Cloud".
5 months later:
It looks like the Government is moving forward very quickly with adoption of Cloud technologies: http://www.informationweek.com/news/showArticle.jhtml?articleID=218500656