The Comeback (17 page)

In the next chapter, I suggest some principles and strategies to help extract our country from our economic mess and once again put us on the path to real growth in our economy and jobs. But I should end this chapter with a paean to leaders like Governors Pawlenty and Christie.

Leadership matters because it sets a tone for governing and gives a behavior example for all of us. It matters both in the private sector and the public sector. It has been regularly and widely written about, but it’s doubtful too much can be made of it. Fortunately, when real leadership is demonstrated, it galvanizes clear-minded citizens and rewards those leaders; and when it is absent, it is readily apparent, disappointing to those same citizens and unrewarding to those who fail the leadership test.

Americans see vivid examples of top government officials repeatedly failing to lead on matters of fiscal responsibility and integrity. They see it when the President travels to another city by Air Force One for a date to see a show and have a meal, and when the first lady takes her daughter to Europe for a vacation at a cost to U.S taxpayers approaching a million dollars. They see it when the Commerce Department takes out a $2 million, thirty-second ad on the Super Bowl to promote the Census. They see it when the Obama Administration insists on putting terrorists on trial in a major U.S. city and ignores the additional security costs of $150 to $200 million compared to a relatively inexpensive and secure trial in the demonized Guantanamo base. They see it in the lavish pensions and gifts Congressional leaders bestow on themselves when they retire.

I vividly remember a 2007 meeting in Washington with two top executives from Best Buy and Circuit City. The Circuit City executive had flown on the company’s private jet from Richmond (barely 100 miles away) and had been picked up in a stretch limousine to be taken to our meeting. In contrast, the Best Buy executive flew the cheapest commercial flight possible from its Minneapolis headquarters—a dawn flight to Dulles Airport—despite the inconvenient time and location. He then took a bus to the Washington Metro, where he boarded the subway to our meeting place. At the time, Circuit City was in financial trouble whereas Best Buy was doing well, but the Best Buy’s executive’s message of frugality resonated positively through his company.

In the incredibly competitive, cost-conscious consumer electronics industry, this focus on spending prevails. Crutchfield, Wal-Mart, and Panasonic are somewhat famous for their focus on costs, and their leadership not only talks the frugal talk but walks the frugal walk.

Similarly, I was impressed when Britain’s new leader, David Cameron, flew a commercial jet to the United States, explaining that he was cutting government spending and raising taxes and needed to lead by example.

Yes, leadership matters. And leadership with integrity matters even more.

The five-hour drive in a rickety old bus from New Delhi to the Taj Mahal is one I wish every American could take. It is not that the road is unpaved or bumpy; in fact most of the trip is on a straight road of smooth concrete. Nor is it the multitude of animals, overloaded rickshaws, vehicles of every type going every speed, or the constant blaring of horns that stand out in my mind. The confusing cacophony and constant shifts in speed are at first amusing and then just accepted as part of the reality of Indian transportation.

Rather, it is the human misery. On my 2008 trip, this unbelievable impression I had as we drove is one that has stuck with me. I just kept thinking we were in the bad part of town and would soon be out of it. We never did get out of it. The abject poverty, the beggars, the high incidence of deformity, and the medley of people living alongside the garbage simply trying to survive under the deplorable conditions— which includes oppressive heat and undrinkable water, inadequate plumbing, and hardly any electricity—this is what has stayed with me. Meanwhile every American takes these basic services for granted.

Americans just assume the basics of life: shelter, clean water, electricity, safe food, and a functioning toilet. Few Americans give real thought to our bounty, our luck, and our health. All were the result of the huge sacrifice and investment our predecessors made so that we could live this comfortable life with heat in winter, air conditioning in summer, wonderful showers, clean parks, schools, libraries, highways, working plumbing, and clean air. The average American has over twenty-five consumer electronics products, and the electricity that makes them work is just simply assumed.

But our future is clouded by a lack of investment in the most basic infrastructure. Our bridges are crumbling; our water systems were designed to last only fifty years, and many are hitting their limit; and our politicians refuse to invest in infrastructure.

Moreover, our partisan political system makes infrastructure a low priority. Republicans use infrastructure debates to find deficit discipline. Combined with their refusal to raise taxes of any kind, Republicans often see infrastructure investment as a politically painless way to cut the deficit. On the other extreme, Democrats fight to make all government-funded infrastructure projects as expensive as possible. For Democrats, infrastructure projects are ways to boost employment numbers, which is why they insist that union labor be used for all these projects. So this unhealthy political elixir of financial prudence, tax-increase avoidance, and union protectionism combine to deny Americans real investment in infrastructure.

When the parties’ political worlds suddenly combine to allow an investment in infrastructure, they do so in political rather than strategic fashion. Thus the 2009 stimulus packages were more a wish list of “shovel-ready” projects designed to gather votes and protect political constituencies, rather than focused attempts at rebuilding our crumbling systems. It was like hiring lots of painters
to spruce up the house while ignoring the termites destroying the home’s foundation.

President Reagan had the courage and leadership to propose and obtain a five cent per gallon of gasoline tax increase to fund infrastructure. This example is valid today, and these types of user taxes are necessary, for any entity, for long-term survival. So while activists and the
New York Times
editorial page harp on the “rights” of every group to use taxpayer money and government intervention to obtain equal status, I am more concerned that our entire nation is moving to second- or third-world status.

When our electricity flickers and shuts down more frequently, our running water becomes polluted, and our bridges and streets and highways crack and break, then we will blame our government. Only when we can’t heat our homes will we ask the government to respond immediately to ease the crisis, when what we should be doing is accepting that tough decisions are necessary
now
to avoid the certainty of a collapse of a geriatric infrastructure. We are becoming India, and it saddens and angers me.

I mention this now in a chapter on ways to cut our suicidal deficit because I want to be clear about my position on government spending. Not all massive government projects are bad. But they need a focus, they need a strategy, they need to be started with the expectation that we are solving a grave national threat. Our crumbling infrastructure represents just such a threat. When Americans are worried that there’s not going to be enough electricity to power their lights, they aren’t going to be worried about innovating the next great product. Innovation is defined by the context in which it occurs. No one in the Middle Ages could have invented an iPod, even if Steve Jobs traveled back in time and gave someone every detail of the design. Similarly, no American will invent the next iPod or smartphone if we cannot provide clean water.

Infrastructure investment requires resource allocation. Briefly, some principles for infrastructure include:

Any federal funding should be matched by state and local governments.

Excise taxes can be used for funding as appropriate: gasoline taxes for highways, water taxes for water, etc.

Projects should be selected outside the political realm by an independent commission. Decisions must be based on expert assessment using objective criteria (impact, age, etc.).

Congress should be forced to vote up or down on the independent panel’s recommendations. (This process has been successfully used to decide which military bases should close.)

Our politicians are getting in the way of ensuring that the quality of life all Americans take for granted will be there for the next generation.

What neither Republicans nor Democrats have the courage to tell the American people is that if we want to put the country on a sound fiscal path, it’s going to take hard, painful choices. There is no other way. Some of the following proposals might seem harsh; others, I’ll admit, are a bit peculiar. But it’s the kind of unconventional thinking that we need our lawmakers to be engaged in, as opposed to the popular but insignificant call to “end earmarks.”

The abomination of our federal government’s annual spending is beyond the scope of this book to definitively address. Instead, I will set forth some highly personal opinions about the principles
that should guide our citizens and our politicians. I’ll start with some first principles.

The first role of federal government is to protect our nation.
No challenge of government is greater than protecting its citizens, and in this global community that means national defense is the single most important priority for government programs and spending.

The second role of federal government is to protect our citizens domestically—through courts and a criminal justice system.
This is obvious to most of us, but somehow we have created a legal system that appears to have morphed beyond reason so that politically motivated prosecutors can bring charges against anyone for violations as vague as “insider trading” or RICO (Racketeer Influenced and Corrupt Organization Act) charges. In 2010, the Supreme Court recognized this when it unanimously threw out financial charges based on “theft of service,” a crucial underpinning of many RICO legal actions.