Obama Needs Better Tools to Drive Lasting Change (December 24, 2008)

Summary – In addition to leverage science and technology, President Obama should adopt the principles of benchmarking, reporting of the performance against the benchmarks and program accountability in his new Administration.

As the new Administration rushes to address several pressing issues, it must overcome two institutional handicaps in order to be effective.

Specifically, the federal government’s performance has routinely been undermined by: 1) its unwillingness to tie spending authorizations to the achievement of specific objectives by dates certain and 2) its failure to use powerful forces such as science and technology to resolve the underlying causes of the problems it seeks to address.

The use of these basic tools is commonplace in the private sector, but their use is even more important in the government because there is no invisible hand of the competitive market to correct poor government performance. And government programs oftentimes go off-course.

For example, with respect to health care, the U.S. spends $2.3 Trillion per year, or 16% of its Gross Domestic Product (GDP). The government subsidizes $800 Million of this amount. Yet, despite having the highest health care expenditures per capita in the world, the U.S. ranks only 24th in healthy life expectancy. Not surprisingly, the government does not address the metric of healthy life expectancy as part of its health care programs.

Even more alarming, the Congressional Budget Office projects that health care expenditures in the U.S. will increase to 25% of GDP by 2025 and to 49% in 2082. Yet, despite this ominous trend, less than 10% of government spending on health care is targeted toward preventive or curative solutions that rely on science or other societal forces to drive advances. Additionally, little effort is put forth by the government to streamline processes or enable the market to work more efficiently through a better flow of information.

On a parallel track, the government spends over $500 Billion a year to defend the nation. Within this budget, the military spends almost as much each year purchasing weapon systems as it spends on military personnel. Additionally, there are about ten staff jobs for every pair of boots on the ground, representing the opposite ratio of line-to-staff positions in the private sector. In the absence of specific objectives covering specific time periods for each priority, there is every reason to believe that many military programs are being funded beyond their useful contributions.

In terms of reporting on its performance, the federal government has not been forthcoming. For example, the government consolidates the short-term surpluses from the Social Security program in reporting the size of the annual federal deficits, but it doesn’t report the long-term liability of the Social Security program. This practice violates Generally Accepted Accounting Principles, which means that it is unacceptable way to report performance.

Without adhering to the fundamental principles of benchmarking, accurate reporting of the performance against the benchmarks, and program accountability, the best-intentioned programs of any Administration will prove to be neither very effective nor efficient over time.

Facing such a reality, President-elect Obama should demand that these basic principles be part and parcel of all existing and new government programs. Said another way, program funding should cease once the initial objective or timeline is met. Any additional funding would require a zero-based budget justification.

In addition, Obama should require his agencies to drive change by leveraging preexisting societal forces such as science and technology as a mandatory first step in its program development. Agencies would be required to specify why these forces could not contribute to the program objectives if they were not included as part of the solution. Such an approach would provide a much-needed focus on solving the underlying problem. However, it will require a new mindset as well as a new skills pool to be developed in the government.

Once this enhanced toolbox is in place, President-elect Obama would serve the nation well by using his considerable oratory skills to set down a few key objectives for improvements in the health, longevity, prosperity and accomplishments of the nation’s citizenry.

Taken together, these steps would a good place for Obama to start the process of governing and would provide a solid framework to achieve the sort of lasting change from which we can all benefit.