Obama's Managment Style, Commit Then Decide How To, 2009 Federal Budget
Tuesday/Wednesday April 21,22,2009
Today’s Zinger:
Commitment Is a State Of Mind, Results Require Real Action.
Morning Briefing:
President Obama has taken office with a mandate for change. Health care, education, energy independence, international relations and national defense are just a few of the areas he has targeted. With each day President Obama appears on the national news signing some form of legislation, making a speech or in some way getting his agenda in front of the citizens. The President has been very active working his agenda.
Within hours of taking office he had signed legislation dealing with women’s rights in the workforce. Within days of taking office there was an announcement to close Guantanamo by next year. Within weeks he had signed a trillion dollar stimulus bill and within months he had met with allies and antagonists to re-brand America’s image.
Each day brings new announcements, new decisions. So far the decisions have been about planned events, like a stimulus bill with the majority of spending in 2010-2011 or closing Guantanamo a year from now. It seems that appearances count as much as action. For instance, you would think that before you close Guantanamo you would first determine what to do with the prisoners since no one is willing to take them and bringing them to the United States will have legal implications. You would think that the consequences of releasing classified documents, against the recommendation of all advisers in the CIA and never done by any past President, would be well thought out for future implications regarding other classified information. There has been little political capital spent by the President to accomplish his Executive Orders or fly under the cover of the Democratic Congress. All of that is about to change.
There is a dangerous pattern showing up in President Obama.
1. Guantanamo. He commits to closing without understanding how.
2. Health care spending: He commits to $600 billion in budget funding without knowing what he is going to do with it.
3. The Federal budget deficit. He commits to $4 trillion deficit without understanding how to ever balance the budget through reductions in other programs.
4. CIA national security document release. He releases classified documents without understanding the future implications on other classified documents.
5. Cuba. He commits to reopening relations with Cuba allowing money and people to flow without understanding what Cuba is committed to.
These are just a few examples of an emerging pattern. He commits……..then he must quickly figure out the implications and react. President Obama obviously does not play chess. Making a move to see the next move of your opponent leaves you vulnerable to players that can, and do, think several moves ahead.
Now that the easy moves are over, the President and Congress must tackle the ever-growing need to bring the federal governments financial house in order. With a $4 trillion deficit, the task in not small. His tool for dealing with elimination of government waste is the newly created Office of Performance Management.
Candidate Barack Obama laid out his vision for his performance management approach while on the campaign trail in September: "As President, I will go through the entire federal budget, page by page, line by line, and I will eliminate the programs that don't work and aren't needed." He also said, "As for the programs we do need, I will make them work better and cost less. I will create a High-Performance Team that evaluates every agency and every office based on how well they're serving the American taxpayer."
President Obama gathered his Government Performance Improvement team and yesterday they announced $100 million in identified savings over a five to ten year period. Let me put this in context.
Assume a family of four has an annual income of $100,000. They undertake a project to cut their annual expenses. In order to achieve the same result as the government Performance Improvement Team they will have to identify $5 in savings in year one. That is correct. FIVE DOLLARS. They need to identify (not even actually cut) the equivalent of $25 dollars over the next five years. You do the math. What an embarrassment.
The government has put in motion certain programs, through the stimulus bill, that are funded for a two to three year period with the assumption that savings and a revitalized economy led by new energy, education and 21st century jobs will fund the programs going forward. Based on the level of commitments, we will need an Office of Radical Surgery and not an Office of Performance Improvement.
Only radical change will provide the needed reductions and radical change has its enemies, lots of enemies.
As the President undertakes next years' budget process, where he has committed to go “page by page and line by line” to eliminate waste, lets not forget that the President does not have line item veto. Just about every President in the last forty years has put legislation forward to enact a Presidential line item veto and every time it is rejected by Congress. There is no way the President can affect change through line item reductions and there is no way to reach the required spending cuts through improvement programs unless there is a plan to significantly raise taxes to close the gap.
In order to reach a balanced budget the government must take on sacred programs. Here is where the money goes (2009 Federal Budget Spending):
The President's budget for 2009 totals $3.1 trillion. Percentages in parentheses indicate percentage change compared to 2008. Note the classification of Mandatory Spend and Discretionary Spend then look at the categories under each classification.
* Mandatory spending: $1.89 trillion (+6.2%)
o $644 billion - Social Security
o $408 billion - Medicare
o $224 billion - Medicaid and the State Children's Health Insurance
o $360 billion - Unemployment/Welfare/Other mandatory spending
o $260 billion - Interest on National Debt
* Discretionary spending: $1.21 trillion (+4.9%)
o $515.4 billion - United States Department of Defense
o $145.2 billion(2008*) - Global War on Terror
o $70.4 billion - United States Department of Health and Human Services
o $59.2 billion - United States Department of Education
o $44.8 billion - United States Department of Veterans Affairs
o $38.5 billion - United States Dep’t of Housing and Urban Development
o $38.3 billion - State and Other International Programs
o $37.6 billion - United States Department of Homeland Security
o $25.0 billion - United States Department of Energy
Here is a link to the Federal Budgeted Revenue and Spending for 2009. CLICK HERE.
I have highlighted the primary drivers of spending. As you can see, in order to gain control of the Federal spend there must be a major re-thinking of programs that affect most Americans, and in particular Americans that count on those programs (Social Security, Medicare, Medicaid, unemployment, welfare, etc). There is little variable cost in Federal Spending. President Obama will have to kill the sacred cow in order to have any hope of balancing the budget. The only category that does not directly affect Americans is national security and Global War on Terror. We can expect to see significant cuts in these line items as there are “citizen implications” to most other programs. But there is no way to balance the budget without radical change in Social Security, Medicare, Medicaid and other social programs. Will the president be strong when it comes time to cut these programs or will it be another good speech with commitments today about promises tomorrow?
The Conclusion:
The President has undertaken an aggressive program of change. The change will cost a lot of money. The President has demonstrated a willingness to commit to things without understand the implications or defining the required response. Zinger says that the government must prove they have the ability to cut costs, at a significant level, and reengineer core programs before making any commitments to future programs or spending. Without commensurate cost cutting, our national debt will drive us into bankruptcy. My hope is that as President Obama learns to play political and international chess that we the people don’t hear the disheartening cry of “checkmate” from our opponents.
Copyright 2009. All rights reserved. ZingerKing.
Today’s Zinger:
Commitment Is a State Of Mind, Results Require Real Action.
Morning Briefing:
- There is a dangerous pattern to President Obama’s mode of operation. He commits without knowing how to accomplish what he commits to.
- Congress’ budget deficit spending can only be sustained if there are commensurate cuts in existing programs. Even dedicated budget hawks have trouble making significant reductions in the Federal Budget due to special interest groups protecting programs and the resistance to change.
- Congress and the President must demonstrate significant cost reductions before they commit to any additional funding or we will be left with all of the legacy costs in addition to new, and very expensive programs, that can bankrupt this country.
- The only way Congress can meet this challenge is through a radical change in spending to Social Security, Medicare, Medicaid and national defense. Changes to these programs will be met with protests that will make Tea Parties look like a gathering of friends for crumpets and tea.
- President Obama, along with the Democratic Congress, has been very aggressive in signing new legislation. Close Guantanamo, women’s rights, and deficit spending. Congress and the President have committed to a robust plan of change that is funded with a $4 trillion budget deficit and at least $11 trillion deficit over the next ten years.
- President Obama has undertaken a program to reduce Federal costs through his newly created position of the Office of Performance Management. The first attempt has yielded $100 million dollars in projected savings over a five-year period.
- The anticipated cost of additional health care spending for the first year is $600 billion.
- Congress approved $1.2 trillion in stimulus spending which is primarily funding for green programs, health care, transfer payments and tax cuts.
- The economy appears to be recovering, yet less than $100 million of the stimulus has actually been spent. The majority of the spending takes place in 2010-2011.
President Obama has taken office with a mandate for change. Health care, education, energy independence, international relations and national defense are just a few of the areas he has targeted. With each day President Obama appears on the national news signing some form of legislation, making a speech or in some way getting his agenda in front of the citizens. The President has been very active working his agenda.
Within hours of taking office he had signed legislation dealing with women’s rights in the workforce. Within days of taking office there was an announcement to close Guantanamo by next year. Within weeks he had signed a trillion dollar stimulus bill and within months he had met with allies and antagonists to re-brand America’s image.
Each day brings new announcements, new decisions. So far the decisions have been about planned events, like a stimulus bill with the majority of spending in 2010-2011 or closing Guantanamo a year from now. It seems that appearances count as much as action. For instance, you would think that before you close Guantanamo you would first determine what to do with the prisoners since no one is willing to take them and bringing them to the United States will have legal implications. You would think that the consequences of releasing classified documents, against the recommendation of all advisers in the CIA and never done by any past President, would be well thought out for future implications regarding other classified information. There has been little political capital spent by the President to accomplish his Executive Orders or fly under the cover of the Democratic Congress. All of that is about to change.
There is a dangerous pattern showing up in President Obama.
1. Guantanamo. He commits to closing without understanding how.
2. Health care spending: He commits to $600 billion in budget funding without knowing what he is going to do with it.
3. The Federal budget deficit. He commits to $4 trillion deficit without understanding how to ever balance the budget through reductions in other programs.
4. CIA national security document release. He releases classified documents without understanding the future implications on other classified documents.
5. Cuba. He commits to reopening relations with Cuba allowing money and people to flow without understanding what Cuba is committed to.
These are just a few examples of an emerging pattern. He commits……..then he must quickly figure out the implications and react. President Obama obviously does not play chess. Making a move to see the next move of your opponent leaves you vulnerable to players that can, and do, think several moves ahead.
Now that the easy moves are over, the President and Congress must tackle the ever-growing need to bring the federal governments financial house in order. With a $4 trillion deficit, the task in not small. His tool for dealing with elimination of government waste is the newly created Office of Performance Management.
Candidate Barack Obama laid out his vision for his performance management approach while on the campaign trail in September: "As President, I will go through the entire federal budget, page by page, line by line, and I will eliminate the programs that don't work and aren't needed." He also said, "As for the programs we do need, I will make them work better and cost less. I will create a High-Performance Team that evaluates every agency and every office based on how well they're serving the American taxpayer."
President Obama gathered his Government Performance Improvement team and yesterday they announced $100 million in identified savings over a five to ten year period. Let me put this in context.
Assume a family of four has an annual income of $100,000. They undertake a project to cut their annual expenses. In order to achieve the same result as the government Performance Improvement Team they will have to identify $5 in savings in year one. That is correct. FIVE DOLLARS. They need to identify (not even actually cut) the equivalent of $25 dollars over the next five years. You do the math. What an embarrassment.
The government has put in motion certain programs, through the stimulus bill, that are funded for a two to three year period with the assumption that savings and a revitalized economy led by new energy, education and 21st century jobs will fund the programs going forward. Based on the level of commitments, we will need an Office of Radical Surgery and not an Office of Performance Improvement.
Only radical change will provide the needed reductions and radical change has its enemies, lots of enemies.
As the President undertakes next years' budget process, where he has committed to go “page by page and line by line” to eliminate waste, lets not forget that the President does not have line item veto. Just about every President in the last forty years has put legislation forward to enact a Presidential line item veto and every time it is rejected by Congress. There is no way the President can affect change through line item reductions and there is no way to reach the required spending cuts through improvement programs unless there is a plan to significantly raise taxes to close the gap.
In order to reach a balanced budget the government must take on sacred programs. Here is where the money goes (2009 Federal Budget Spending):
The President's budget for 2009 totals $3.1 trillion. Percentages in parentheses indicate percentage change compared to 2008. Note the classification of Mandatory Spend and Discretionary Spend then look at the categories under each classification.
* Mandatory spending: $1.89 trillion (+6.2%)
o $644 billion - Social Security
o $408 billion - Medicare
o $224 billion - Medicaid and the State Children's Health Insurance
o $360 billion - Unemployment/Welfare/Other mandatory spending
o $260 billion - Interest on National Debt
* Discretionary spending: $1.21 trillion (+4.9%)
o $515.4 billion - United States Department of Defense
o $145.2 billion(2008*) - Global War on Terror
o $70.4 billion - United States Department of Health and Human Services
o $59.2 billion - United States Department of Education
o $44.8 billion - United States Department of Veterans Affairs
o $38.5 billion - United States Dep’t of Housing and Urban Development
o $38.3 billion - State and Other International Programs
o $37.6 billion - United States Department of Homeland Security
o $25.0 billion - United States Department of Energy
Here is a link to the Federal Budgeted Revenue and Spending for 2009. CLICK HERE.
I have highlighted the primary drivers of spending. As you can see, in order to gain control of the Federal spend there must be a major re-thinking of programs that affect most Americans, and in particular Americans that count on those programs (Social Security, Medicare, Medicaid, unemployment, welfare, etc). There is little variable cost in Federal Spending. President Obama will have to kill the sacred cow in order to have any hope of balancing the budget. The only category that does not directly affect Americans is national security and Global War on Terror. We can expect to see significant cuts in these line items as there are “citizen implications” to most other programs. But there is no way to balance the budget without radical change in Social Security, Medicare, Medicaid and other social programs. Will the president be strong when it comes time to cut these programs or will it be another good speech with commitments today about promises tomorrow?
The Conclusion:
The President has undertaken an aggressive program of change. The change will cost a lot of money. The President has demonstrated a willingness to commit to things without understand the implications or defining the required response. Zinger says that the government must prove they have the ability to cut costs, at a significant level, and reengineer core programs before making any commitments to future programs or spending. Without commensurate cost cutting, our national debt will drive us into bankruptcy. My hope is that as President Obama learns to play political and international chess that we the people don’t hear the disheartening cry of “checkmate” from our opponents.
Copyright 2009. All rights reserved. ZingerKing.
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