The Price of Government
Getting the Results We Need
in an Age of Permanent Fiscal Crisis
By DAVID OSBORNE and PETER HUTCHINSON
Biscally speaking, the state of our union is a train wreck in the making, write the authors of The Price of Government: Getting the Results We Need in an Age of Permanent Fiscal Crisis. Consider these disturbing numbers:
• The federal deficit is heading for a record. If trends continue, President Bush’s plan to make most of his tax cuts permanent would increase the national debt by $4.1 trillion over the next decade — a 60 percent increase in one decade — creating a future obligation of $37,450 for every living American.
• By the year 2030, if current levels of spending and taxation continue, the entire federal budget will be consumed by Medicare, Medicaid, Social Security and interest on the national debt.
• In 2002, 38 states cut their budgets by nearly $13.7 billion. In 2003, 40 states — the most ever on record-cut another $11.8 billion. Kentucky and Washington released prison inmates. Texas cut 257,000 children from its health care rolls. Many districts closed down schools.
About the Authors
David Osborne is the co-author, with Ted Gaebler, of Reinventing Government, which became a national bestseller. He is also the author of Laboratories for Democracy and co-author of Banishing Bureaucracy and The Reinventor’s Fieldbook. A senior partner of the Public Strategies Group, he has served as an advisor or consultant to Vice President Al Gore, governors, mayors and city managers nationwide, and to public leaders around the world. He has written for Governing, The Atlantic, The New York Times Magazine, Harper’s and many other publications. He lives in Essex, Massachusetts.
Peter Hutchinson is a founder and President of the Public Strategies Group in St. Paul, Minnesota. He previously served as vice president of the Dayton Hudson Corp. (now Target Corp.), commissioner of finance in Minnesota and superintendent of schools in Minneapolis. As a management and turnaround consultant, he has advised governors and their administrations in Washington State, Minnesota, New York and Iowa, as well as cities, counties and school districts throughout the United States and internationally. He lives in Minneapolis.
What’s wrong with this picture? In The Price of Government, David Osborne, acclaimed author of the best-selling Reinventing Government, and Peter Hutchinson, a consultant and former Minnesota finance commissioner, describe what they believe public officials are doing wrong when it comes to matters of budgeting and spending and offer alternatives, starting with a fundamentally new approach they call “Budgeting for Outcomes.”
The authors also say that the presidential campaign so far has ignored the critical debate about the federal deficit because the solutions are too painful — and that both candidates are avoiding their role as leaders.
Eschewing quick fixes, The Price of Government exposes what the authors say is the fundamental flaw in the traditional approach to the preparation of public-sector budgets — a focus on what we cut, while ignoring what we hold on to. Instead, the authors propose a radically different approach to budgeting, turning the focus from what we cut to what we keep. Budgeting for Outcomes offers public servants at all levels of government a prescription for squeezing the maximum value out of every tax dollar collected.
It’s time, the authors say, to ditch the worry-about-it-tomorrow approach to budgeting now practiced by many municipal, county and state governments — and on Capitol Hill as well. Politicians, they contend, have become too adept at employing what Osborne and Hutchinson call the “seven deadly deceptions” as they work to balance their budgets (a requirement for all but the federal government):
• Rob Peter to pay Paul: use “off-budget” funds to make up for general fund shortfalls.
• Use accounting tricks to lie about spending or revenue: pretend that money you expect to receive early next year will actually come in late this year.
• Borrow: California has taken this daring feat to unprecedented heights with the passage of back-to-back $10- and $15-billion bond issues to balance a budget and pay off old debt with new.
• Sell off assets: sell surplus buildings, then use the proceeds to patch the operating budget by treating the real estate gains as “normal” revenue.
• Make something up: Reagan’s budget director David Stockman projected out of thin air a $28 billion federal surplus by 1986; in fact, the largest deficits following World War II soon followed.
• Nickel and dime employees: Missouri’s governor last year ordered every other light bulb in government buildings to be unscrewed.
• Delay maintenance and replacement of assets (and rely on hope): Alaska deferred repairs and maintenance on state office building elevators in Juneau for so long that the majority are inoperable.
The authors show policy makers and financial managers how to get a grip on the problem by determining the price of government (what percent of personal income citizens are willing to pay in taxes, fees, and charges), agreeing on the outcomes most important to citizens and setting the price to deliver each one. Osborne and Hutchinson provide targeted tools and strategies for leaders who want to master the politics of reinvention, with cogent examples of Budgeting for Outcomes and smart government in action.
• Read the excerpt
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