Productivity gains can help with the fiscal pickle.
C-SPAN's Steve Scully: "You know the numbers-$1.7 trillion debt, a national deficit of $11 trillion. At what point do we run out of money?" President Obama: "Well, we are out of money now." -May 22
California Gov. Arnold Schwarzenegger: "Our wallet is empty. Our bank is closed. Our credit is dried up. We are not Washington. We cannot print money. We cannot run up trillion-dollar deficits." -June 2
From Washington to Sacramento, government has been spending an awful lot of money in recent years. Now, with the recession hammering state and federal revenues, and huge new government spending programs under way, skyrocketing budget deficits are prompting assertions like those above.
One might think such talk would dampen demand for more spending, but there's little evidence of that.
Let's take the case of the State Department. At a recent luncheon, former ambassadors Thomas D. Boyatt and Ronald E. Neumann described a zero-based budget exercise the American Academy of Diplomacy conducted last fall. The foundation-financed study concluded that the U.S. diplomatic corps was understaffed by about 20 percent, or nearly 5,000 positions. Obama's budget would add some 3,000 new positions, thus relieving the military of tasks it had taken on to compensate for the shortages of civilian personnel. But the military isn't shrinking as a consequence; indeed, it is growing by tens of thousands of troops.
I may be hopelessly naïve, but I was surprised when Boyatt said the Foreign Service was achieving these and other goals in part because of its lobbying group's political action committee. It seemed just awful to me that modestly paid public servants, some of whom undertake dangerous assignments abroad, feel they need to finance campaigns for the congressional titans who control their budgets.
Polls are showing that the public is cooling on all the deficit spending the Obama program implies. In June, Obama himself felt obliged to pledge that the costs of his sweeping health care reform would be substantially covered by wringing savings out of existing programs. Further, the president decreed that a $500 billion bill to achieve badly needed reforms in the nation's transportation funding system is too expensive to enact this year.
Pressure to curb these and other programs has grown in the wake of a June 25 Congressional Budget Office report projecting that the outlook for deficits has worsened considerably-to the point where they will consume 4 percent to 15 percent of gross domestic product during the next 25 years under currently popular spending and taxation policies. "Having spent over a decade worrying about budget deficits, I can quite honestly say that things have never looked as bad as they do now," said Maya MacGuineas, president of the Committee for a Responsible Federal Budget.
Among the ranks of the civil service and the military, people might doubt they can possibly contribute to the righting of the foundering fiscal ship. But they can-by focusing on the productivity of agency operations.
This point is documented in a new publication by McKinsey & Co., one of the nation's top consulting firms, titled "McKinsey on Government." In it, Nancy Killefer and other government consultants say huge savings, or quality advances, could come from productivity gains they estimate could reach 15 percent in the next 10 years and more in subsequent years. One chapter describes how the Air Force is working toward productivity gains of more than $5 billion, 11,000 years of air personnel time and energy savings exceeding 30 percent.
As McKinsey says, a Winston Churchill pronouncement rings true in our present pickle: "Gentlemen, we have run out of money. Now we must think."