Stress testing federal agencies

The prez recently announced something like $18 billion in cuts from the federal budget. Turns out this is an amount similar to what John McCain had suggested during the campaign. Apparently the irony was lost on the White House or.... maybe not. The cuts seem to be mostly in national defense and security areas, though I'm not sure of this. (So stay away from high-rise buildings.)

I have a better idea, borrowed from the free market.

When a big business is ailing, one of the first things the managers do is apply their own kind of "stress test." They review all their operations to see which are the weakest performers and/or those that have nothing to do with the "core" business. For example, a company started out producing potato chips, then expanded into offering ceramic dishes for chips and dips. If the potato chips are still selling and the ceramic dishes are not, they'll probably dump the ceramic dish operation.

Anyway, they measure which are the most costly and/or least profitable divisions, which may have the most and/or least potential for future growth, etc. Some of these may produce a marketable product or provide a useful service, and then they're sold to other corporations or investors, spun off as independent companies, or they may sometimes be purchased by the division's own executives as a stand-alone company, etc. The divisions that can't be sold off or operated independently are usually just shut down. Nobody wants or needs them.

Why can't the federal government apply a similar stress test to its own operations? A few blogs ago, I talked about how difficult it is to get rid of a federal agency once it's been established. (see blog for 3/3/09 Just give it a try.) It's nearly impossible.

So why not do what commercial, profit-making organizations do? Take the Bureau for Studying the Early Demise of Pantyhose, for example. First you look at the costs, then you look at the benefits.... that is, the sales and/or profits it brings in.

Government organizations, of course, are non-profit. Well, they are now. But both the US Post Office and the Government Printing Office have "been encouraged," shall we say, to try to operate on a commercial basis to try to streamline operations and costs so that they can be at least partly self-sustaining -- or pay their own way to some extent.

The federal government generates a lot of data and statistics. These are mostly free to anyone who wants them. Sometimes you have to pay for a printed and bound copy, but the feds don't charge for the data itself. Like data collected and analyzed by the national census, for example. This is valuable information for marketing companies, who might want to know where young families live or senior citizens in order to open a store in those locations. Or, how much tin do US manufacturers import in a year? Very valuable to foreign tin miners who want to sell to the US.

The Census Bureau and other agencies in the Commerce Dept. could probably be self-sustaining if they were operated as independent businesses. And to tell the truth, I'd feel much more comfortable giving my personal information to a private business than to the government. But that's just me.

I don't think the Bureau for Studying the Early Demise of Pantyhose would pass any kind of viability stress test. And, unfortunately, probably about 80% of government agencies fall into this second "useless" category. Many have simply outlived their relevance and/or their work is duplicated by another agency in another cabinet department. They could and should be dumped. They're just boondoggles to keep prospective poliltical donors and voters on some payroll somewhere, or to demonstrate the "Your Tax Dollars at Work" concept.

Anyway, just a thought. But this whole idea would probably fall under the heading of "privatization," so I seriously doubt that this particular administration, which is making a beeline in just the opposite direction (toward socialism) would be interested in undertaking something like this.

But, you know, the feds are now stress testing banks. Maybe they should stress test their own operations before they set themselves up as abiters and referees of what's efficient and productive. I mean, do they really know?

Just a thought.