Boston Bruins goaltender Tim Thomas refused to attend the White House ceremony for his team as Stanley Cup champions because the federal government is “out of control.” Who knew? Of course, we all knew.
Thomas did not define what he meant by “Out of Control,” but we can easily do that for him:
- Too costly: growing faster than the underlying economy that must pay the bills.
Federal spending grew by $1 trillion (35%) since 2007, yet GDP is lower in 2011 than 2008. Spending exceeds revenue by $1.1 trillion or 42%. No serious effort has been made to reduce costs. No budget has been submitted for three years. The President supervises more than 20 direct reports. Government continues to grow.
- Too distracted: focused on side issues rather than the main concerns of the population.
Polls show the priorities of the population are jobs, economic growth, mortgages, and government debt. 88% of federal spending is in defense, healthcare, pension/Social Security, welfare, and interest. Yet government has been working on temporary subsidies, raising taxes, increasing healthcare costs, funding inefficient energy sources, and regulating the financial sector.
- Too intrusive: issuing more new regulations than perceived to be needed.
4200 new regulations are in the pipeline, according to the Federal Register. Its page count grew 20% from 2009 to 2010.Agency budgets are up 16% and agency employees are up 13% since 2008, while private employment fell 6%. Rule-making is a growth industry!
- Too arrogant: government solutions are the first resort; market solutions and individual responsibility cannot be trusted.
Free healthcare guarantees excess consumption. Sarbanes-Oxley compliance costs increase prices and divert profits from shareowners to accountants. Interest rate controls damage pension plans and retirement investments while they reduce the lending that could support business growth. Ninety-nine weeks of unemployment insurance and other foolish subsidies distort job markets, energy markets, the housing market, etc.
The parallels to a distressed business are obvious to turnaround professionals: costs out of control, management working on the wrong priorities, and incompetent management too arrogant to change. The only classic symptom missing is a cash shortfall; foreign lenders continue to finance the US government.
How would turnaround professionals attack this problem? What business techniques can transform an “out of control” government? Comment with your ideas, and see them in the next part of this series.
Tom Gray is a management consultant focused on small business and telecom and a Certified Turnaround Professional (CTP). He can be reached at 630-512-0406 or firstname.lastname@example.org. For information on the scope of Tom’s activities, see www.tom-gray.com.
Business Techniques for Government
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