If the 2016 presidential election has proved anything so far, it’s that millions of Americans know something is seriously wrong in Washington and they want it fixed. They’re right.
The fact is that needless regulations, gross mismanagement and outright fraud have crippled our economy, stifled businesses and choked off job creation. The federal government collects $3.5 trillion in taxes and then forces us to pay another $2 trillion in regulation costs — and then another $1 trillion in waste and fraud. The gross domestic product has only averaged 1.7 percent annual growth over the last 15 years compared to 3.5 percent over the previous 50 years. That’s why the middle class has not had a raise in 15 years.
There are dozens of studies that confirm this. For example, a National Association of Manufacturer’s report in 2014 concluded that complying with federal regulations costs all companies about $10,000 a year per employee; manufacturers nearly $20,000, and manufacturers with fewer than 50 workers a whopping $35,000. A working paper from the Mercatus Center at George Mason University released last April shows that regulations have cost the U.S. economy 0.8 percent in growth every year since 1980. Without that, our economy would have been 25 percent larger in 2012. That’s $4 trillion more per year.
House Speaker Paul Ryan identified easing regulations as a priority earlier this month. His plan is a good start but doesn’t go nearly far enough. Here’s what should happen:
By executive order, the next president should scrap the present system and start over. Every government agency should be given a board of directors made up of seasoned business executives and eminent industry experts equally divided between Democrats and Republicans (and as many true independents as we can find) who either volunteer their services or receive modest compensation.
Congress would need to authorize funding for the agencies as it does now, but wouldn’t be able to block the new structure, which is the president’s prerogative. He is, after all, the head of the executive branch.
The first task of each board would be to name a CEO to run the agency in coordination with the Cabinet secretary appointed by the president, who would act as a sort of chairman.
The boards would follow the best practices of activist boards whose members use their knowledge and experience to drive management. They would gather the best information and then act decisively in the best interest of the country.
Why can’t politicians do the job? They raise money from special-interest groups, and then because they are indebted to these groups, they don’t make decisions that are best for the country. A perfect example is what they’ve done with the Internal Revenue Service. It has issued 74,000 pages of regulation and collects $288 billion in taxes from business — but thanks to the favors the politicians do for lobbyists, as much as $1.5 trillion of income is tax-exempt.
The federal government is like a company facing bankruptcy that needs help fast. Bipartisan boards of directors composed of serious-minded executives can supply the know-how and determination that’s missing now.
Think, to cite just one example, what such a board could do for the biggest department of them all, Defense. Imagine directors like former CEO of General Electric Jack Welch, Colin Powell, Bill Gates, David Petraeus, efficiency expert Michael Porter of Harvard, and John Chambers of Cisco. Would such a board put up with $900 hammers and multibillion-dollar aircraft the Air Force doesn’t want? I don’t think so. Would Jack Welch, known for firing the bottom 10 percent of his employees each year, tolerate poor performance? I think not.
The boards should institute whistleblower programs that reward, rather than punish, anybody who suggests ways to run an office better, eliminate red tape, and identify lawbreakers. Impartial bureaus should evaluate all the claims privately so that false, retaliatory or hurtful charges are weeded out.
Wouldn’t this create more bureaucracy? A little, but one that makes sense. Whistleblowers are the people on the ground who know the most but have too long been discouraged or even jailed for pointing out the absurdities in government spending. Given the proper protections, they can provide the information the new boards need to eliminate waste, fraud and inefficiency.
Our government needs to be held accountable for spending our tax dollars efficiently. The business executives with the talent and experience to do it are out there by the thousands. Voters have proved they want change. So let’s get the job done by the people who know how to do it.
• Walter Raquet, a business executive and entrepreneur, is the author of “Government Is Killing the Economy” (Significance Press, 2016).