There’s an old story about how to interview and select a public accounting firm for your business.
You speak with the Managing Partner of the first firm and ask, “How much is two plus two.” He looks at you and confidently says, “Four.” You thank him and let him know that you will get back to him to advise whether you are going to hire his firm.
You speak with the Managing Partner of the second firm and ask, “How much is two plus two.” He looks at you and after giving it a moment’s thought, asks hesitantly, “Three?” You thank him as well and tell him you will get back to him if you decide to select his firm to represent you.
You speak with the Managing Partner of the third firm and ask, “How much is two plus two.” He immediately and confidently responds, “How much do you want it to be?” You shake his hand and tell him that you have decided that his is the perfect firm to represent you.
This morning I listened to a debate on the unfunded liabilities of our social entitlement programs (Medicare and Social Security). Interspersed with the debate, pictures were broadcast of the violence which occurred this last weekend in Athens.
Two members of Congress, Jeb Hensarling of Texas and Marcy Kaptur of Ohio were interviewed by the CNBC anchors. Their “guest host” for the morning was David Walker, formerly the head of the Government Accountability Office (GAO). Mr. Walker had also served as Comptroller General of the United States.
Mr. Walker has been a consistent voice (one of a few) who has spoken on behalf of fiscal prudence. He bases his statements not on opinion or emotions but on numbers. It was startling to hear him make the comment that Medicare is underfunded by $37 Trillion and Social Security by over $9 Trillion. (Our “official” deficit is put at $15 Trillion).
Congressman Hensarling was one of the major players in the “Super Committee” which was empowered to come up with a plan to help get our economy back in shape and our burgeoning deficits under control. You may recall that last fall the Committee failed to reach an accord because of partisan differences.
The Congressman bemoaned the Committee’s failure to reach a consensus and “hoped we would get serious” about really tackling the deepening fiscal crisis this country faces. Well – every thinking American hopes that – but that hope can only be realized by those in the Congress and the White House.
When asked by the anchors whether Congresswoman Kaptur had ideas on how to fix our fiscal woes she discussed the fact that she had “seen great improvement” in the Ohio economy because of the revival of the automobile industry. Her solution was that by getting unemployed people back to work we would “grow” our way out of the problem. When she was asked about incorporating spending cuts into a possible solution she avoided that question and returned to her statement that by creating jobs, the economy would recover on its own.
Mr. Walker pointed out that for her scenario to work the economy would have to create full employment and experience double digit growth for decades on end (something which has never happened in the history of this or any other country). The good Congresswoman didn’t seem to be impressed with these plain mathematical facts.
Frankly, I was disappointed in the responses from both these Members of Congress. The only person who made sense in the conversation was Mr. Walker – and he holds no vote on these crucial matters.
So I was thinking about how we could get our Representatives to move from the mind-set of being politicians to the higher state of being statesmen. A simple thought occurred to me. It’s the principle of “having skin in the game.”
In years where the economy runs at a deficit, all 535 members of the House and the Senate forgo their salaries and benefits. (Since a high proportion of these elected officials are multi-millionaires this shouldn’t cause them to require a tag day to support themselves and their families).
Those who have spoken out about “excessive corporate compensation” should feel comfortable with this idea. Whether we agree on the definition of “excess” or whether that should even be a matter for our concern, it is hard to deny that at least these corporate bigwigs are doing the job for which they were hired – to earn a profit.
The same can hardly be said of those we elect to represent us in Washington, D. C. They are running the business of the country at a loss – and it isn’t a one time event. They have been doing so for decades on end and doing it with impunity as we continue to reward them term after term and paying them handsomely for the privilege of doing a bad job.
There isn’t a Board of Directors of any corporation in the country that would tolerate this malfeasance. So it’s time that we, as Board members of the corporation of the United States of America exercise our responsibility and remove the incompetents from the Washington aristocracy. If we do not take the initiative and responsibility – who will? And if not now – when?
By the way, while the government may be happy to have the services of the third of our accounting firms to perpetuate the illusion generated by flim-flam accounting, I would have rejected the second firm for giving an inaccurate answer and have chosen the first firm for providing the correct solution to my question.
Math is, after all, an exact discipline.