It’s Time to Treat America Like a Business

In honor of election day tomorrow, I wanted to share a column I wrote that appeared in the Atlanta Business Chronicle last year. When I wrote this column, in August 2011, we still had eight people vying to be the Republican nominee.  But it doesn’t matter that Mitt Romney finally clinched the nomination a year later, or even who wins the election tomorrow, if we don’t start running this country like a business.

* Extra credit if you can name all eight that participated in the August 11, 2011 Presidential Debate. Answer below.

The United States is a capitalistic society, so I often wonder why the government isn’t run like a business. We had a surplus 12 years ago, but now our debt is astronomical: nearly 14 and a half trillion dollars. This isn’t a political issue. It’s a business one — or at least it should be. When my clients have problems with cash flow, they don’t print money. They either raise money, close plants, lay off people or cut spending; they tighten their belts to survive.

No matter who wins the election this week, the only way we’re going to resolve this country’s financial crisis is by treating the government like a business.

When a business finds itself in this much debt relative to its capacity to repay, the bank, board of directors or shareholders say, “No more!” and send in a turnaround professional. We are America’s shareholders, and it’s time to send a turnaround guy — or at least the thinking of one — to D.C.

Despite insurmountable debt, the U.S. government isn’t taking key actions. Businesses with negative cash flow would have been bought, liquidated, merged or otherwise gone at this point, and I don’t want to see us become like Greece or Iceland in five years. Worse still, I don’t want to be a part of the United States of China, which we might become since in the business world a company with increasing debt is subject to acquisition or being carved up by a larger and wealthier business.

I always say that 100 percent of spreadsheets and projections don’t work because the assumptions are wrong, yet people rarely revisit and alter the assumptions regularly to produce more positive results. Even today, the Office of Management and Budget, which hasn’t made an accurate cash flow projection in years, thinks that our revenue is going to increase by x if we do a, b and c. But x is an assumption that’s based on the unlikely actualization of a, b and c, possible only if we overcome party politics. And as the deficit skyrockets, the assumptions are increasingly wrong and the parties are increasingly polarized.

The only way we’re going to resolve this country’s financial crisis is by treating the government like a business.

As we repeatedly hear, a balanced budget is the first step. The second step, however, is a repayment plan of our foreign debt. The next is a tax increase. No one likes tax increases — especially me — but it’s part of the solution. That said, we can’t just address cutting expenses; we need other plays from the Turnaround Playbook.

The corporate amnesty program allowed businesses to return profits from foreign soil to the U.S. at lower tax rates, which created more jobs in America. This was a wonderful and creative idea but it didn’t do what it was intended to do. While thousands of these ideas will amount to an aggregated long-tail effect, we need to begin with more drastic measures. And we need to start now.

Turnaround 101 dictates that we start by slashing all spending by at least 15 percent. We must tell every division, department and agency that it needs to cut its cash needs — no exceptions. The pain will be shared across the whole country as it would be across an entire business. This kind of mandatory budget cut provides time to fine-tune operational requirements based on the improved results. Before you ask, yes, this 15 percent cut would affect entitlements, Social Security, health care, the military and education — everything. No exceptions.

It’s easy to buck and cry, What about the children? Shouldn’t they be exempt from budgetary cuts? What about the sick? What about the poor? What about defense?

Here’s what I ask every department at a business: “The question is, do you want your company to survive until tomorrow or do you want to quibble about who’s more deserving of money that doesn’t exist? I don’t care how you do it. Just do it.”

Internal politics kills companies in the private sector because politics and business don’t mix. Similarly, politics has no place in America’s budgetary discussions, and our issues must be addressed by those who can truly set aside political or personal biases and run this country like a turnaround professional in the private sector.

As a turnaround guy, I act like an ER doctor; my first step is to stabilize the patient and prevent shock. As a country, we’re already in shock. Nobody wants to lose an arm or a leg, but if there’s only enough blood for the torso and the leg is gangrenous, you better believe I’ll lop it off to save the body. In five years, the prosthetic surgeon can make us pretty again. I’m in a unique business, but it’s the business of making sure we’re still alive in 2025 with or without a leg.

In addition to the 15 percent cut, we must freeze all raises and expansions. That means no more foreign aid increases (also subject to the 15 percent cut), and we put a reasonable mandatory repayment plan in place for foreign aid. We can’t continue to write off receivables and survive. It doesn’t work that way in business, and it can’t work that way in government.

This also means no cost of living increases for government employees, Social Security beneficiaries and pensioners. In addition, congressmen can enjoy normal health-care services — not VIP lifetime benefits for two years of service.

Unfortunately, tenured positions can’t be affected, but we can stop giving tenure. All rules for entitlements (e.g. pensions) must be reviewed. The private sector has largely eliminated pensions because it can’t afford them, and government needs to do the same.

I don’t have every last answer for how to save the trillions we need, but by making — and enforcing — these tough money-saving moves we can save America from bankruptcy, collapse and ruin. We must empower people to save money, and punish them for spending it needlessly in order to get a line item the following year.

Legislators keep asking that we have faith. Our economic stability has been built on faith. We can’t retain faith after 12 years of increasing debt. We need to deal with hard facts and run America like a business. Business is not about faith. It’s about trusting what works, and what works in business is what I know. Treat America like a business, and we’ll all live to buy another day.
* Bachmann, Romney, Pawlenty, Paul, Cain, Huntsman, Santorum and Gingrich

I Told the Radio What I Told the Papers: Cut the Burn Rate in Washington

I was recently on WSB radio, and I explained there the same thing I explained in my recent Atlanta Business Chronicle article.

We have to cut the rate of spending – the rate at which we’re burning money – in the government. 10 or 15% across the board – that’s every single department – is what’s going to be the beginning of necessary to start the process of recovery. And the road to recovery will be long, to take a line from someone else’s trite playbook.

The reason I’m bringing this up again is because I want to emphasize what the guys at WSB kept asking me about: the political aspect.

Party Politics is a Debt Party

Is it possible in a Washington as mired in party politics as ours currently is that we could get a sweeping cut in spending like I’m proposing without any exceptions?

Disappointingly, I think the answer is no. Things have become too politicized and though everyone there can say I’ll scratch your back if you scratch mine, nobody can end his own itchy back. That is to say that even when our representatives are not scratching one another’s backs they still want to have their own causes funded – or not defunded as the case may be in my proposal.

But if we don’t start treating the government like a business and money like it’s real and debt like it matters and ultimately do what we do in turnaround – slash spending immediately without question, qualm or hesitation – we’ll be hesitating and backscratching all the way back to a recession.

Blind Man, Dark Room

I don’t want to overplay the recent AA+ downgrade and the impact that it could have – or more importantly the impact that the reasons it occurred is going to have – but at the very least it should serve as a wake-up call that we are not behaving effectively and our policy makers are not taking the appropriate steps.

Stop spending money, now, Washington.

I don’t want excuses, and I don’t want politics.

I don’t want to keep hearing things in the news like the trade deficit unexpectedly widened to 53.1 billion dollars. That just means that once again projections and statistics are off and we need a collectively more conservative approach (and I don’t mean conservative in a political sense – I mean it in a spending sense).

Cut 10-15% of all spending immediately. This is not political. This is personal – 315 million people personal. Let’s fix this before it gets worse.

How would you help cut spending and eliminate waste in government?