Tech CEOs Tell US Gov't How To Cut Deficit By $1 Trillion 311
alphadogg writes "The US government can save more than $1 trillion over the next 10 years by consolidating its IT infrastructure, reducing its energy use and moving to more Web-based citizen services, a group of tech CEOs said in a report released Wednesday. The Technology CEO Council's report, delivered to President Barack Obama's National Commission on Fiscal Responsibility and Reform, also recommends that the US government streamline its supply chains and move agencies to shared services for mission-support activities. 'America's growing national debt is undermining our global competitiveness,' said the council, chaired by IBM CEO Samuel Palmisano. 'How we choose to confront and address this challenge will determine our future environment for growth and innovation.' If the cash-strapped US government enacted all the recommendations in the advocacy group's report, it could save between $920 billion and $1.2 trillion by 2020, the group said. The federal government could also reduce IT energy consumption by 25 percent, and it could save $200 billion over 10 years by using advanced analytics to stop improper payments, the report said."
But... (Score:5, Informative)
Being inefficient means that the politicians can easily hide what they're spending our money on. I seriously doubt this will gain any traction within the government. Then again, with potential cost over-runs and kick-backs to implement such a plan, who know? Political greed seems to get some things done.
Re:Oh and by the way (Score:3, Informative)
There is also a thing called a performance contract. Dunno if it'll work in the federal level, though.
A company proposes certain specific alterations to infrastructure/facilities/workflow and provides an analysis of how any why these changes will save money. It then provides a cost proposal to actually make these changes and a payback schedule.
The contract guarantees the payback at the responsibility of the contractor. The profit to be made here is log term: the client (government, in this case) fronts all the costs and the contractor takes their profit as a percentage of the savings above estimates, or must pay the client if actual savings fall below estimates.
=Smidge=
Re:Don't see how that would work (Score:3, Informative)
National debt != trade imbalance.
The national debt is a measure of how much the government owes to its creditors; what you are referring to is an entirely separate issue.
Special interest says: Spend more money on us! (Score:5, Informative)
Since the deficit is the annual difference between expenditures and revenues, reducing spending by ~$1 trillion between now and 2020 doesn't reduce the deficit by ~$1 trillion, it reduces the deficit by ~$100 billion.
Of course, this ignores the question of whether the money would actually be saved; one should be rather sceptical from a recommendation from an industry group saying that amounts to "if the government spent more money on our services, it would save money overall".
To quote Adam Smith on the attitude that should be applied to proposals of government action from groups engaged in a particular area of trade: "The interest of the dealers, however, in any particular branch of trade or manufactures, is always in some respects different from, and even opposite to, that of the public. To widen the market and to narrow the competition, is always the interest of the dealers. To widen the market may frequently be agreeable enough to the interest of the public; but to narrow the competition must always be against it, and can serve only to enable the dealers, by raising their profits above what they naturally would be, to levy, for their own benefit, an absurd tax upon the rest of their fellow-citizens. The proposal of any new law or regulation of commerce which comes from this order ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it." (An Inquiry into the Nature And Causes of the Wealth of Nations, Book I, Chapter 11, emphasis added.)
Re:how quickly we've forgotten (Score:3, Informative)
The Northrop Grumman perspective (Score:5, Informative)
First, you need to know (or remember) that huge corporations (be they defense contractor, Oracle, Microsoft, Google, whomever) are often a conglomeration of previously small companies. The company I've worked for has changed names four times as it was bought up repeatedly (twice in a three-month span one year) and is only most recently called "Northrop Grumman" but, for the most part, I still work with and for the same small group of people I hired on with nearly a decade ago. Yes, corporations add capabilities when they see opportunity. Who wouldn't?
Second, depending upon the work you do, adding all of the additional infrastructure required to meet the various regulatory requirements of a government contract is non-trivial - security clearances alone, if required, can be a nightmare. The company never says "Hey, I want to add more costs to my bottom-line and reduce my profits". Those bureaucratic requirements are driven by the government, not the contractor.
Third, often times the contracts awarded by the government require or strongly encourage the Bigs (like Northrop Grumman, Lockheed Martin, Boeing, etc.) to hire "Smalls" - smaller, perhaps more specialized corporations, that would not otherwise be able to get involved in these contracts. "Disadvantaged" small businesses, those run by minorities or other protected classes, are also highly sought after by the Bigs in order to meet various participatory quotas, etc. This type of thing allows the Big to address the regulatory and management issues while funneling funds to Smalls who might do much of the work. You learn after awhile, at least at Northrop Grumman, that you are an integrator first and a developer second - if you can reuse something someone else has built that is *much* better than building it yourself (you know, that whole "reuse" idea that we've all been chasing after for the past 50 years).
All of that aside, a huge amount of costs are associated with government bureaucracy. The profit margins on my contract, for example, are *limited* to 8.5%. No matter how much I spend, I'm only going to earn 8.5% - that profit margin is ridiculously tiny when you consider what a firm operating at commercial rates is going to make profits wise. "Oh...so you'll just drag it out so you make more money." Ha! Sure. The project drags out...but I can tell you from 15 years working with the US Government, it drags on and on not because I really want to keep working on the same stinkin' thing (redoing it over and over) for my own giggles and grins but because the US Government is a huge bureaucracy and it takes forever for them to make a decision on anything. Need clarification on a feature request? Well...first we have to work that through the Government Program Management Office (PMO) who oversees your project, then they need to potentially track down user-representatives, convene a meeting, possibly do a usability test and/or request a conference, get multiple disparate agencies who are going to use your tool to agree to put aside their differences and unique business processes, etc., etc., etc.
Meanwhile, the team is being held to an unrealistic schedule set for political reasons. To minimize risk of schedule slippage, you make a decision and press on accepting the fact that you may have to rework the feature you just developed. The government entities that are closest to you are just as frustrated as you are...and they know they can't let your team go onto other projects because then they lose the people who understand the project and its history - who have the requirements and design knowledge to meet the needs of the customer so they keep giving you money to keep your team together. You do your best to catch up on the copious amounts of documentation the government requires (for my 450K SLOC system
Oh, just remembered a real example. . . (Score:3, Informative)
My father is an engineer, and worked for a fairly well-known engineering company for a couple years while I was in junior high. The particular project he was working on was a contract for NASA, to build a new "Advanced Solid Rocket Motor" to lift the space shuttle. The project was started in the aftermath of the Challenger explosion, to design a safer (and I believe cheaper, also) lift system. The company contracted to do the job was, so far as I know, hitting all the milestones, and NASA was, I believe, pleased with the results, but just about the 11th hour, when they had all the designs finished, and most of the tooling built and setup at the manufacturing facility, and were about to start producing them - after a couple Billion had been spent on the project, it was *cancelled* so the contract could go to another company in a different state, and that state's Senator had just become the head of a committee or something, and used his position to mothball the ASRM project, and start up a different rocket motor project. 2 Billion+ dollars down the flusher, as quick as that.
What company would kill a $2 Billion+ project at the 11th hour when they are about to deliver product, and start all over spending 2 or 3 billion more to another company to produce a different but more-or-less equivalent product?
That's government waste for you.
Re:Don't see how that would work (Score:3, Informative)
Ah yes... "back when Reagan took office". I remember that. The economy was so bad they had to invent this thing called "The Misery Index" to measure how miserable everyone was. Yeah! let's go back to that.
That doesn't work. You're just shuffling chairs around. You've reduced the national debt by converting it into state debt, state debt which gets paid at a higher interest rate than federal bonds. With the added bonus that nearly all states have a balanced budget requirement.
So? If your state is spending too much and has too big of a deficit and fails, MOVE! Not really option when the problem is the feds.
Tax like Eisenhower. Fight like Clinton. (Score:3, Informative)
Tax like Eisenhower. Fight like Clinton. Problem solved.
Under capitalism, man exploits man. Under communism it's the other way around.
In the US this has played out in more subtle terms; but taxation and other structural elements in the economy have plainly shifted the balance away from labor towards capital. The tax code needs to be more progressive, and it won't kill the economy no matter how much the Republicans and TEA partiers scream. It just won't. Henry Ford was a huge honking capitalist, and he knew that the workers had to be able to afford the cars so he could make money.
Think about it--if one king had all the gold and silver, what would be the price of gold and silver? It wouldn't matter. People would abandon the metals and use something else. Same deal with dollars and any other currency. Of course, on the way to that extreme state, something else happens. The currency doesn't fall to zero, it just becomes worth less, and gets used less. That's what's happening with the dollar. The rich have more and more dollars, but the joke is kind of on them, because they're worth less and less. If you think buying gold will fix this problem, refer back to the beginning of this paragraph. Barter will take over, not gold, silver, or anything else that the working class doesn't also have.
Of course, we are nowhere near that point yet. There's still time. Just tax those who can afford it, and stop sending those who can't afford it off to pointless wars. It really is that simple.
Re:This will never see the light of day (Score:3, Informative)
They do, it is called the Congressional Budget Office. They run spreadsheets and analysis on just about everything Congress does. They also write human readable versions of bills before Congress. Generally, they are a respectable bunch although I sometimes think they as susceptible to Rosy Scenario, that temptress of all things bureaucratic. The proposal would have to be written up as a bill, but frankly, that is the only sensible way because the plan as written by the CEOs is going to be deficient in several areas. Of course, that is were the fun starts with The Porkos attempting to turn it into a feeding frenzy.