Lloyd and I meet for breakfast most Saturday mornings, and while we are eating we solve many of the world’s problems. Last Saturday, the topic was the sequester. How does the government cut a couple percent from spending without the collapse of Western Civilization? When viewed from the Pancake House in Oak Forest, IL, it should be very easy.
The situation reminds me of my former employer, Amoco Oil, just after being acquired by BP. I had retired a few months earlier, and like many retired old men became an energy industry consultant. I kept in touch with the people at Amoco who I had relied upon when I was still lobbying in Washington and several state capitals. In every large bureaucracy (government or corporate) there is an 80/20 rule. Eighty percent of the work is done by 20% of the people. The rest are pretty much superfluous. A year or so after BP acquired Amoco, the company had laid off about 80% of the former Amoco people. Interestingly, all the people that I had formerly relied upon were still there. BP figured out who had made up the superfluous 80% and terminated them, then everything went along fairly well.
The same 80/20 rule should apply to the government. The President has played the usual political hoax and warned that the government will soon start laying off firemen and TSA inspectors. He said that waiting time at the airports will increase by two hours. Interestingly, every time I fly I have a habit of counting all the TSA agents. About 20-25% are always standing around doing nothing but visiting with each other. The sequestration will reduce TSA agents by about 2-5%. In an ideal world, this should only reduce their visiting time.
My fear is that in the real world, the two hour delay will become a reality if the union institutes a “slowdown” strike. Has the President signaled the union to target a two hour slowdown? Thirty years ago we had an air traffic controller slowdown and strike, but we had a different President who successfully managed that situation.
But let’s get back to where rational cuts in government expenditures could be made. In March 2011, the U.S. Government Accountability Office (U.S. GAO) published a report entitled “Opportunities to Reduce Potential Duplication in Government, Save Tax Dollars, and Enhance Revenue.” They identified 81 areas for consideration. The programs highlighted by the report cost taxpayers between $100 and $200 billion annually. A 10% improvement in efficiency for those programs could cover nearly half of this year’s sequester, and not lay off one fireman.
Obama says food inspections are a potential problem area to cut. The GAO pointed out both the FDA and USDA are responsible for food inspections, with a lot of overlap and duplication. The FDA inspects all seafood, with the exception of catfish, which is the bailiwick of the USDA. Similarly, the FDA is responsible for eggs while in the shell, but once the shell is cracked, the USDA is in charge. Each organization has its own cadre of regulation writers, inspectors, enforcement lawyers, etc.
There are 82 programs spread throughout several government agencies all designed to improve teacher quality. Each agency has a separate department to administer these programs, and I suspect many of the programs are inconsistent with one another.
The report also points out that addressing duplicative federal efforts to increase fuel ethanol production could reduce revenue loss by $5.7 billion annually. The report goes on and on and on. And still without laying off any firemen!
To save money the GAO report did not even recommend that the U.S. General Services Administration (GSA) should stop more multimillion dollar retreats to Las Vegas—with or without strippers. Excuse me, the strippers were with the Secret Service.
Finally, I read that the Defense budget is being cut back to the level it was in 2007, when we were actively fighting two wars with a couple of hundred thousand troops in the field. Now we are essentially out of Iraq and are winding down in Afghanistan, but spending more. It would seem there is some room to save.
In the short term, the sequester will not hurt the U.S. economy. It is a rather dumb blunt instrument to try to instill some fiscal discipline. I am truly saddened by how dysfunctional our government has become.
A far wiser strategy would be to foster economic growth. The country could accelerate energy development, which has not been a government priority but has been happening wholly outside the governmental sphere. In the meantime, it would be great if the political leaders could come together to begin addressing the sequester, the budget and tax reform, and right the economy before the sequester does get scary.
Question: Should American military spending be cut dramatically?