Monday, February 23, 2009

Great start in Washington; a suggestion here

I was totally delighted to listen just now to the open press wrap-up of the White House and Congressional meeting. I cannot be overly complimentary when I praise both the taking place of this meeting (which was structured according to working groups on key topics and issues) and the open dialogue and feedback at the conclusion. This was an extraordinary event and a fine role model for what I hope is just the beginning of a new way of doing business in America. The President and the members of the Senate and the House deserve a lot of praise.

Now, I have just one suggestion that I hope will make everyone’s job easier as they wrestle now with the very urgent and complex topics. I address this suggestion to both conservatives and liberals, Democrats and Republicans, each with a slight twist but the same message.

Whenever our members of Congress contemplate legislation, it is natural to think first and foremost, “Can we pay for this and if so, how will we do so?” In fact, one of the greatest areas of unease is the feeling by conservatives that America has resorted to “printing money” and “throwing it at the problem,” and I share this unease. However, I am also sympathetic with those who argue that inaction is worse, as the economy continues to spiral further in crisis, than shelling out the money. Also, generations of politicians and bureaucrats, fueled by corporate mindsets, have grown up with the belief that “grown ups” always keep “how do we pay for this” in mind before contemplating any expenditure.

The problem is that if that attitude rules the entire analysis of a particular legislation or problem solving, it codifies a problem into only two possible solutions: spend money or not. As a result multitudes of other possible approaches fall off the table unnoticed. Consideration of “how to pay” has become a show stopper for doing the right thing because the “how to pay” argument overshadows problem solving too early in the process.

Legislators need to start the legislative process following a more classic approach to problem solving, which is open ended at the very beginning. In other words, they need to put all options for progress on the table, evaluate and refine them first and foremost by whether they are the correct, desirable and “right” thing to do. Consideration of “can we pay” and “how do we pay” must come later in the process. Let me give an example.

Suppose that the legislature needs to evaluate a specific health crisis, let’s say some sort of toxic compound poisoning has been discovered and there is an urgent need for new legislation to address this new crisis. (Stick with me on the example, even though I know that literally existing agencies and budgets would cover this scenario in reality). Instead, assume in my example that a totally new potentially dire but not yet proven dire scenario has come up that requires legislation and of course, by implication, funding.

If the legislators and their aides immediately jump into a “how do we pay for it” attitude, they cannot focus on the genuine extent of the need and all possible implications for solution. Those who are alarmed by the threat of the toxic compound will want to throw money at the problem. Those who are tight with the purse strings will be tempted to poo-poo the potential risk, arguing there is no proof that legislation or investment is needed. That is the danger of allowing money to set the stage for determining whether something needs to be done, or not.

In the ideal case committees do research and determine whether or not this problem exists in truth, and whether or not a solution is needed. THEN experts in this problem can put forth alternatives. Many of these alternatives might suggest creative ways to fund the legislation rather than budget busting straight out expenditure. Suppose in my scenario that a university is already doing research in this area. One solution might be to transfer government resources on temporary assignment to that university’s endeavor, rather than allocate new funding. So people in the educational sector already working (in theory) on research in this area now have a dotted line relationship to a program that is already funded, and the staff and their resources are now reassigned, and what they had been working on is demoted in priority. This is one example where a new legislative endeavor can be “funded” without the tradition approaches of allocating new budgetary funds and the problem of raising money or busting budgets.

Here is another example. Suppose that another country is already doing research in this toxic compound problem. Why not consider an alliance, rather than fund a parallel effort? Again, one could allocate some new funds for additional staff, or reassign, or “swap” with the other country for use of their resources.

It is crucial, especially in this financial crisis, that the President, legislators, their aides, educational institutions and corporations start first and foremost with dialogue on what is correct and what needs or must be done, and leave funding as secondary, as counterintuitive as that sounds. If one decides first and foremost that something is a genuine legislative need, with allocated resources of some specific type needed, one can then secondarily consider options that may not involve budget spoilers or new allocated funds at all. It can also force a fresh look at existing budget priorities, where the responsible agencies just have to push something further down the stack as a greater problem arises.

My suggestion is actually the MOST fiscally conservative approach, rather than the worried dollar signs in the head from the very beginning approach. That is because one is open to a host of alternative ways to procure and provide the resources needed for the new legislative initiative. Sometimes one can craft a better law and budget if one MUST do something but there is no NEW money to do it. That is because one can consider governmental partnerships, private initiatives, swaps and alliances with corporations. What if, for example, a private company was given an extraordinary tax break in return for using their existing staff to work on this problem? Some laboratory that was working on pure research gets the assignment to work on the new potential toxic compound problem and they reallocate their staff from pure to targeted research, in return for a tax break or other non-budgetary incentive.

So it’s actually not the most “adult” thing to think “how do we pay” first and foremost. The most adult thing is “what must we do (if anything) about a particular problem, and what is the correct approach with the most hoped for results?” Then one figures out how to procure the resources and staffing. It is extremely difficult to overcome the deliberate and unconscious programming that has taken place in everyone’s mindset, I understand that all too well, seeing it become a disaster of missteps in decision making in government and society for decades now. It is especially hard with entitlements discussions, where hardly anyone discusses what the right thing to do is, and instead, they just dissolve into quarrels and intransigent positions about money, such as in health care and social security. But if you continue to do that you totally miss out on 1) what is right and essential to do and 2) many alternative ways to do it. Both sides harden into an expensive proposal with one side saying yes and the other side saying no.

This happened with Social Security in the Bush administration. President Bush set his heart on a “free market” approach to actually investing some of Social Security in the money markets (heaven forbid). This is an example of where the President and legislators hardened into one proposal rather than starting by looking at comprehensive reform, where needed. This is because both sides assumed that it is the political “third rail” of politics AND that reform can’t be afforded. Therefore the President thought he was peeling off a piece that would be innovative and helpful, but not touch the third rail or “cost” anything. Can you imagine what would be happening now, in the financial meltdown, if Social Security were part of it? But I’m not criticizing President Bush for trying to peel off doing at least “something” that he felt avoided the third rail of budgetary explosion of costs, and political fighting if people feared reduced benefits. It seemed logical to him, but that logic is erroneous. It’s not his fault in this area because he has walked into a hardened environment of thinking that we must think “first” of “how much will it cost” and “how do we pay for it” before even determining if “it” is the right thing to do. So everyone is somewhat bipolar about it. They tiptoe around the need to do the right thing if it is going to be costly or they then swing to the other extreme and just warm up the printing press and manufacture some greenbacks. As a result very poor decisions are made one after the other because they are not based on the facts of the problem and the need to invest in some action.

I hope that you understand what I am explaining here and find it helpful. It is crucial that people try to change this mindset right away. In classic problem solving one does start with an assumption that is totally free of any consideration of funding. In other words, one must spend at least some time in the “problem definition” and “solutions exploration” stages of just assuming “money is no object.” It is only by assuming that in the beginning that one can determine what the “right” thing to do is. It is after the problem is defined and alternatives identified and sketched that one introduces the “resources needed” part of the process, where implications for investment become identified. After that is done then people can start to identify either staged or modified implementations based on budget realities or, as I am suggesting, how to do the “right thing” without classic check writing or money printing approaches, as I demonstrate in the toxic compound example, where several solutions can be reasonably pursued that are not budget busters yet are highly targeted and effective “investment”.