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Saturday, Sep 08 2012 10:00 PM

JOHN PRYOR: Solutions to federal debt are clear but not politically correct

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    John Pryor

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Dr. W. Edwards Deming was very wise. He created quality management systems employed throughout the world in all sectors -- private, not-for-profit, education -- even certain segments of government (mostly the military).

Deming emphasized root cause analysis. If only "surface symptoms" are treated, "patients" will not be healed. For example, well-intended arguments (pro and con) on extending or discontinuing the Bush tax cuts treat only surface symptoms.

Deming also emphasized other important disciplines. His principles have not changed since they were used to revolutionize automobile manufacturing in Japan in the 1980s. This was to the great detriment of U.S. auto companies who (other than Ford) refused to listen to Deming at that time.

His same principles are applied today all over the world. Some call them "Lean Six Sigma" or "Total Quality Management." Regardless of titles, it's the application of his principles that matters -- principles to continuously improve systems, to eliminate waste, to be "customer focused" -- all principles our representatives in Washington need to practice daily.

Deming was always succinct. Here's what he said about the role of government: "The function of government should be to work with business, not to harass business." (The New Economics for Industry, Government, Education, 1994.)

Stated differently: Let business do what it does well (create wealth and generate new jobs) -- and assure that government stays out of the way. That's Step No. 1.

Two other needed steps are:

2. Continuously improve all systems and processes in government.

3. Focus on the needs of citizens ("We the People") -- not on special interests and certainly not on corrupt politicians.

These seemingly simple steps translate into a series of major improvements in the performance of our federal government yet at lower costs.

Here are some specifics.

Step No. 1 means every agency within the federal government would significantly reduce its number of employees, its intrusion into our lives, and perhaps totally eliminate certain departments altogether -- if their functions are more appropriately (more constitutionally) performed at the state level. Examples are energy, education, agriculture, consumer product safety commission, occupational safety, environmental protection, trade commission, housing and urban development -- to name but a "few." Our federal debt would begin to disappear.

Step No. 1 also signals a major shift from our current progressive income tax with its complexity and favoritism to a "flat tax" system -- a system so simple it could be filed on a postcard. The outcome would be a significant reduction in the size of the Internal Revenue Service. It conceivably could eliminate the IRS -- with remaining minimal tax processing transferred to another department within Treasury.

In 1913, the federal tax code had 400 pages. In 1945, "only" 8,200 pages. Today it has 73,608 pages. A simplified tax code would immediately reduce federal debt.

Finally, Step No. 1 creates a free and open market for business to function with appropriate yet less onerous regulation. This would expand the creation of wealth and new jobs. It would raise tax revenue sufficient to reduce the federal debt year after year.

Step No. 2 is where much action would occur. Continuous improvement means elimination of waste within each remaining department. It means being more effective and more efficient -- doing the right things -- and doing the right things right. This means still more debt reduction.

Step No. 3 requires a major shift in the mindset of federal leaders. Instead of the all-too-prevalent internal focus that principally benefits officeholders (and their re-election goals) plus other vested interests within the Beltway -- their views and visions would shift to an external focus through the eyes of their constituents.

No longer would catering to special interests be condoned. No longer would arrogance and corruption of those with "Potomac Fever" be permitted. Focus would shift to the insightful and inspired provisions of our Constitution -- especially the 17 limited powers prescribed for the federal government (Article I, Section 8) -- with "all other powers delegated to the several states" (10th Amendment). Federal debt would disappear.

Only by addressing these issues "at their roots," as Deming prescribes, can we turn around our ship of state to achieve our compelling need not only to dramatically reduce our federal debt -- but ultimately to eliminate all such debt.

John Pryor of Bakersfield is a management consultant who was most recently with the Cal State Bakersfield Small Business Development Center.

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