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The Plot Must Turn

In late 2009 Niall Ferguson wrote a piece for Newsweek (An Empire at Risk, December 7, 2009) that outlined a sobering sequence of decline – one the US seems to be following. Among the most prominent contributors to this devolution are runaway debt, restricted growth, high (and foolish) spending, warring political factions, low consumer (i.e. citizen) confidence, armed foreign conflict, and inequality among economic strata. I would add declining infrastructure, unwillingness to focus on the essential, a disregard for common community interests, and a general disregard for predictable outcomes. No one seems willing to reflect on even medium-term impact of these converging variables, which will bring enormous and complex consequences.

At a time when most Americans prefer debt reduction and ending unnecessary foreign conflicts, Congress dabbles in political brinksmanship bordering on criminal neglect. If Congress were a major corporation with competent management and a serious board, it would have taken action long ago. Debt would have been retired, new revenue sources would have been explored and new enterprises launched. There would be retraining, retrenching, re-visioning, and general operational restructuring. It would cut costs, eliminate nonsensical services and focus on ROI. Right the ship, THEN return to more sustainable management. Any fool knows the key is to act…now.

China holds around 13% of US government bonds and other notes. That’s leverage we should avoid. However, China has the cash and we need it…much like those hideous payday loan agencies that prey on those so far behind the 8-Ball they need cash, now. While state and local governments have done an increasingly good job of tamping down debt and balancing revenue with expenses, the trend is leading to greater contraction in services, maintenance, and community development.

As we head toward Labor Day, it seems clear that government must attend to several things. At the federal, state and local level, focus must turn to economic development. The same old tired approaches won’t work. Why? Because every state and community is offering the same things to attract commerce. Let’s get innovative.

Second, we must invest in our people, with training programs that not only build essential core competencies, but also build a public employee system that is much more efficient, effective, ethical and future-oriented.

Third, we are digging a hole from which this country can’t possibly escape without a totally ridiculous amount of economic growth, reduced spending, AND higher taxes. Rapid growth is a fantasy; this will be a slow growth decade – count on it. Spending reductions are possible but must follow a formula that has criteria grounded in a vision of a preferred future…and not a serendipitous approach driven by power and influence. Balance is the key. School districts are now charging for participation in non-academic activities. Not a new concept, but one that reflects loss of revenue for basic services. Unfortunately, many families will be unable to afford the cost of participation. Who will pick up the slack? Value added taxes will become more prominent, allowing those who desire certain services to elect to pay for them. The critical question will become, “What does this community need and what are people willing to pay for?’ Are parks more important than fire protection or police services? Who makes the call?

The question, ‘Are you prepared for challenge?’ is central to future decision making. What are the issues and challenges that are impacting your community? Who define ‘priority’ and who leads triage efforts that ultimately guide budget allocation? As a country, are we in an unrecoverable decline or can we pull out of this descent?

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). His new book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders, was released in October 2010. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at http://www.futurescorp.com).

Past the Tipping Point

With the summer more than half over, things have not been going as well as America had hoped. I would imagine that this observation is shared by many readers and has the potential to recast earlier feelings of optimism. To be truthful, these are troubled times. While exacerbated by Washington’s political gridlock, the greater fear is that they portend a future governed by small-minded powerbrokers who fail to grasp the complex needs of a great and growing nation. Decision-making should never be about power, influence and insuring one’s financial future after politics. It must be about serving the common good…the common interest. This has not been the case in Washington.

 At the state level, governors Chris Christie (R-NJ) and Jerry Brown (D-CA) have repeatedly and strongly stated that their states must begin to make very tough decisions. They believe that society must live within its means and that every service to which we’ve become accustomed must no longer be an entitlement. Both have also said that they would do what is right even if unpopular and the citizens could agree to a new level of fiscal restraint or vote them out of office. Leaders at the city and county level are leaning the same way- making the best possible choices to preserve their communities.

 Watching the wags and nincompoops who blather on talk and ‘news’ shows, it is clear to those paying attention that political guests and their advisors spend most allotted air time bashing the other political party. Blaming, deflection and outright lying have reached a level not seen in US history. And, there is no sign of abatement. At the federal, state and local level, common business sense must become the rule. It is always difficult to reel in emotional and fiscal entitlements. The longer they continue, the more vital they become to the recipient; and, the more they will be defended with anger and irrational exuberance.

 For rational people, it is clear that you can’t spend what you don’t have. While credit is available, too much too often leads to a deep, dark hole. The rule is simple: If the American people want a service cornucopia, it comes with a cost; government cannot keep borrowing to maintain programs and services (even those held dear) if revenue can’t support predicted need as the population grows. At some point (now), the country must decide what is important and what it can afford at current revenue levels, then ask society what else it is willing to contribute. It must not be about political control; it must be about a properly envisioned and managed government.

 Intelligent budget decisions need to be made now. Even though Congress has raised the debt ceiling 11 times in the past 10 years with no ill effect, the recent posturing associated with such classic housekeeping was unconscionable. Predictably, it has ignited a serious stock market decline – one that could erode many of the gains made since 2009. In terms of debt reduction, cutting small, targeted programs will not impact the nation’s debt. A broad and prudent plan is required – similar to the Bowles-Simpson Fiscal Responsibility and Reform Commission Report that published thoughtful but tough recommendations in December 2010 (similar recommendations were presented by the Debt Reduction Task Force of the Bipartisan Policy Center, in the Domenici-Rivlin Report, November 2010). Or, if you want a rush from good but frightening data, read Peter Coy’s analysis in the August 1-7 edition of Bloomberg Businessweek. Talk about a well-document dose of reality!

 This is not a time for party politics, nor a time to support officials who are not fully dedicated to the long-term common interest of all citizens. This is a time to determine what this society deems important enough to pay for and what constitutes a practical vision that preserves American ideals and the opportunity to build a sustainable economic future. There are many paths forward; isn’t it time we chose one?

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). His new book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders, was released in October 2010. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at http://www.futurescorp.com).