Is the US President taking on too much, or does the media just have trouble keeping up?
—Tim Moore, Louisville, Kentucky
If only a dunderheaded media was the problem, we’d be a lot less worried. But no. President (Barack) Obama is taking on too much with his everything-at-once overhaul of the country’s $14 trillion (around Rs680 trillion) economy.
And we don’t say that because of politics. We say it because of Obama’s process.
Every leader wants to galvanize change; that’s what leaders are supposed to do. In times of crisis, the change imperative is even more heightened. People are scared, and many are angry. They want problems fixed fast.
But change—especially the sort of massive, mould-breaking change the President is pushing—can’t just be about getting things done. It has to be about getting things done right, and proper outcomes don’t usually occur when people are rushing.
They emerge from vigorous, informed debate, from grappling with ideas, and from wallowing in the details of options and their consequences, intended and not.
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Okay, so maybe grappling and wallowing don’t sound like much of a process, but when it comes to change, this is an absolutely essential part of the prelude. And this is not happening in Washington right now.
Part of the reason is that the US is currently, in effect, a one-party state, with a popular Democratic president and supportive Democratic Congress. To exacerbate the situation, the Republican Party has been acting discombobulated (confused) since the election in November, operating without clear leadership or from a cohesive viewpoint. As a result, we now have three major reform initiatives steamrolling forward before they should.
Let’s start with the overhaul of the healthcare system—almost 20% of our economy. The administration’s current plan involves spending money on new programmes—$1 trillion, give or take a few billion—to save money. Please! Can anyone identify a time when such an approach has worked? New government programmes only beget more bureaucracy and more spending (think Medicare), never higher quality and lower costs.
What’s worse, though, is the fact that the healthcare plan is moving forward without the nation’s having grappled with the difficult questions about the causes of the mess. For instance, why are malpractice costs so high? How much money should be spent on technology for end-of-life care? Such topics are controversial, but until we sort them out, the healthcare system will remain a bottomless money pit.
We’re seeing the same rush to reform the financial and business sectors. The Obama administration is working to install oversight and regulation over a wide swathe of this territory, arguing that it has to do so to save the system. But the “this is an emergency” approach is just another way to silence debate about the long-term consequences of these decisions. The government’s upending of bankruptcy law in the Chrysler bailout, for example, will undoubtedly have a chilling effect for years to come on capital formation in some industries.
And then there’s the President’s urgent push for legislation to create a cap-and-trade system for carbon emissions, a change that will affect virtually every American. Forget due process. In the current rush-and-hush environment, this legislation could be law within months.
Perhaps the scariest thing about the lack of debate is that there’s no real plan in place to pay for these changes. Instead, the President is doing what many leaders do when they want to overspend on programmes: He’s inflating revenue projections. His budget assumes that the US gross domestic product (GDP) will grow at a faster rate in the next decade than in the 1970s, 1980s, and 1990s. This possibility seems highly unlikely. Due to globalization, the world is more competitive than ever, and debt-laden companies and consumers are deleveraging, which leads to lower spending. The result will be slower growth in the GDP and a deficit that Americans can’t afford, even with the tax increases ahead, which will, in and of themselves, decrease GDP growth and thus revenue.
In business, revenue projections built on hope, especially when they’re used as the basis for a budget to support programme spending, rarely end happily. Instead, they usually undermine the leader who set them in motion. Will that happen to President Obama? We don’t know. Without question, every area of the economy he is trying to upend should be remade. Our concerns have to do with pacing and scope.
We’re never going to argue against change. But we need to follow the right process to achieve the right outcomes. Otherwise, we will all face unintended consequences.
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Jack and Suzy are eager to hear about your career dilemmas and challenges at work, and look forward to answering some of your questions in future columns. Jack and Suzy Welch are the authors of the international best-seller, Winning. Their latest book is Winning: The Answers: Confronting 74 of the Toughest Questions in Business Today. Mint readers can email them questions at email@example.com Please include your name, occupation and city. Only select questions will be answered.
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