PrintFebruary 22, 2010
Knights or Fools?
Amidst the usual fanfare, President Obama signed the executive order deputizing Erskine Bowles and Alan Simpson to head up his Debt Reduction Commission. "Without action, the accumulated weight of that structural deficit, of ever-increasing debt, will hobble our economy, it will cloud our future, and it will saddle every child in America with an intolerable burden," Obama exhorted the signing ceremony spectators. Of course, he is conveniently ignoring his own obese budget unveiled a few days before, while still cheerleading his party's grotesque cap-and-tax and health care monstrosities that have little hope of passage against daunting odds.
Bowles and Simpson are two more knights errant sent forth on a noble quest to find the Holy Grail. Will they return empty-handed? At least a dozen distinguished peers have been likewise brevetted for similar errands by past presidents Clinton, Reagan, and Ike. Harry Truman even commissioned former President Herbert Hoover in 1947 to discover the secret to efficient government. All for naught.
The last serious undertaking to blow up government was launched by Ronald Reagan. Many of us remember his radical but sensible plea to abolish the Department of Education. More seriously, he introduced the "Private Sector Survey on Cost Control" in June 1982, tapping W.R. Grace conglomerate Chairman and CEO J. Peter Grace. Reagan's Grace Commission was the most nimble and wide-reaching attempt in the 20th century to rein in runaway government spending.
President Reagan told Peter Grace and his lieutenants to "work like tireless bloodhounds to root out government inefficiency and waste of tax dollars." Anyone who knew Peter Grace and how he ran his company had no doubt that Grace would and did indeed turn over every stone in uncovering waste, fraud, and abuse.
Grace, a globetrotting workaholic, had a love affair with numbers and deal-making. I know of one W.R. Grace acquisition study that had thousands of spreadsheets taped together accordion-style; if unfurled from his office on the 57th floor of the Grace Building in NYC, this particular report would still have been unraveling when it hit the street. He read and made notes on every page. Woe to the wretched accountant who couldn't answer all of Grace's insufferably never-ending questions.
His recommendations two years later to President Reagan were deep, far-reaching, and unpopular. Grace wrote to the president, attaching 47 volumes and 21,000 pages of observations, analyses, and recommendations.
His cover letter started with:
Dear Mr. PresidentFollowing your directive to identify and suggest remedies for waste and abuse in the Federal Government, the President's Private Sector Survey (PPSS) offers recommendations which would save:
- $424 billion in three years, rising to
- $1.9 trillion per year by the year 2000 ...
If fundamental changes are not made in Federal spending, as compared with the fiscal 1983 deficit of $195 billion, a deficit of over ten times that amount, $2 trillion, is projected for the year 2000, only 17 years from now. In that year, the Federal debt would be $13.0 trillion ($160,000 per current taxpayer) and the interest alone on the debt would be $1.5 trillion per year ($18,500 per year per current taxpayer).
Peter Grace was both prescient and relentless. He detested government interference and delivered exactly what Reagan wanted. Yet it never made much of an impact when it came to results. While a Democrat-controlled House and a Republican-controlled Senate continued their profligate ways, deficits and the national debt continued to climb. Of course, the Dems holding both chambers during Reagan's second term pumped up the nation's debt even further. And it got worse under President George H.W. Bush, laying the predicate for reneging on his no taxes pledge. Meanwhile, Republican Senator Warren Rudman of New Hampshire quit the Senate in disgust after twelve years, blasting his tax-and-spend colleagues on his way out.
Will Erskine Bowles and Alan Simpson fare any better than Peter Grace? At least Grace worked for a president who nominally endorsed his findings and didn't work to openly and actively contradict and repudiate them while the commission was launched and doing its work. We have a president now who has already proposed trillions of new spending in his own budget the same week he set up the debt reduction commission. Surely this is a fool's errand assigned to and accepted by Bowles and Simpson.
Yet Bowles and Simpson have a running head-start, unlike Grace. We already know that the unspent Stimulus and repaid TARP money can produce a trillion in debt reduction. More easy pickings are obvious from abandoning cap-and-tax and health care reform. Next, they can dust off the Grace Commission report. Therein are 2,700 recommendations with only a handful ever considered, and fewer adopted.
Who shall ye be, Bowles and Simpson? Gawain or Quixote?
Geoffrey P. Hunt is a senior executive in a global firm.
