For Samsung, it was the Galaxy Note 7; for Microsoft, it was the Zune; and for Coke, it was New Coke. These famous flops exemplify that failures are a part of life – even for multi-billion-dollar companies.
In the private sector, successful companies own up to their failures and, if possible, correct them. In the face of a major consumer backlash, Coke pulled New Coke from the shelves a mere few weeks after its launch and returned to its traditional recipe.
While the timeframes differed, the same process occurred at Samsung and Microsoft. Samsung is particularly noteworthy as the company wrote off $2.3 billion in investments, and “sacrificed” what was supposed to be the company’s next generation technology, to save the company.
The government, on the other hand, rarely acknowledges when programs fail, or expenditures are unwarranted. Instead of acknowledging failure, when faced with evidence of waste or inefficiencies, government agencies obfuscate. An oft-used tactic is to distract would be critics by claiming, sometimes correctly, that other services provided by that agency create value.
Such claims are akin to Microsoft justifying continued production of the Zune because Microsoft Windows creates great value to customers. Just as the value created by Windows is irrelevant to whether production of the Zune should continue, whether a government agency creates value on net is irrelevant to the question of whether its budget should be reduced.
Given the dire long-term fiscal health of the federal government, fiscal discipline is no longer optional. Over the next several decades, the federal government must manage, among other costs, $14.4 trillion in debt held by the public, $12.2 trillion in unfunded obligations for Social Security, and $36.8 trillion in unfunded obligations for Medicare.
These impending fiscal crises require broad-based budget reforms. It is, consequently, imperative that all agencies scrub their budgets to separate the figurative wheat from the chaff. And, chaff is rife throughout the federal budget, even in agencies that provide fundamental public services to citizens.
Take the Centers for Disease Control (CDC) as an example. While the potential savings are relatively small, they are symbolically important – if savings exist in a vital agency such as the CDC, then surely there must be savings in other agencies with less vital missions. As a recent EconoSTATS study that identified duplicative programs at the CDC illustrated, there are many potential budgetary savings.
For example, the National Institute for Occupational Safety and Health at the CDC develops safety recommendations to ensure a “safe and healthful” work environment. This mission overlaps with the Occupational Safety and Health Administration (OSHA), which Congress established in 1970. OSHA’s mission is “to assure safe and healthful working conditions for working men and women” – clearly duplicative with the CDC. It is difficult to justify why taxpayers should fund two agencies to provide the same government service.
Similar duplication exists in chronic disease programs, where there are at least ten other agencies, mostly part of the National Institutes of Health (NIH), whose sole purposes are to address the problems associated with chronic diseases.
Then there is CDC’s Community Preventive Services Task Force that provides recommendations about community preventive services and health. This independent task force duplicates the tasks of the CDC itself, not to mention the Agency for Healthcare Research and Quality (AHRQ) that is part of the Department of Health and Human Services.
Despite the potential savings from eliminating these duplicative programs, CDC officials will typically portray any potential cuts to the agency’s budget as reductions in its core services, such as global disease detection. Based on these examples, clearly it is possible to cut the CDC budget without impacting core services.
More broadly, there is nothing unique about the potential budgetary savings at the CDC.
While it is widely recognized that the impending fiscal crises facing the federal government will only be solved by addressing the financial unsustainability of Social Security, Medicare, and Medicaid, the need for entitlement reform does not negate the benefits that can be gained by scrubbing the discretionary budget for potential savings.
As private sector firms continually demonstrate, facing past failures head on, and fixing them, is the best way to ensure future successes are possible. For the government, this means assessing where expenditures are not providing value to taxpayers, and eliminating them.