Righting the Financial Ship-of-State

Lee Iacocca, one of America’s most legendary executives is known for reviving the Chrysler Corporation in the 1980s.  Iacocca was famous for his business acumen and cost-cutting mindset.  One of his well-known principles was that he could cut 15% of the fat out of anything—meaning that most organizations, businesses, and bureaucracies carry inefficiencies that could be streamlined without harming productivity or performance.

Iacocca successfully applied this philosophy during his tenure at Chrysler, where he aggressively cut costs to save the struggling automaker from bankruptcy and turned the once-proud ‘Big Three’ automaker from the red to the black in just three (3) years by eliminating unnecessary management layers, wasteful spending, and streamlining production.  His ideas remain widely used in corporate restructuring, government efficiency initiatives and business optimization strategies.

~ Cultural Differences ~

Iacocca was able to do this because businesses operate under a profit-driven model, meaning they must maximize efficiency to remain competitive.  Waste, redundancy, and inefficiency impact bottom lines and leads to layoffs or even bankruptcy.  Meanwhile, government agencies are not profit-driven, and inefficiencies are often tolerated for the simple fact that the heads of government agencies don’t face direct financial consequences.  They don’t have any ‘skin in the game,’ and seldom, if ever, face personal financial repercussions.  After all, they have an endless supply of tax dollars

Not surprisingly, bloated bureaucracy and layers of administration slows decision-making, reduces responsiveness and results in inferior work-products.  At the same time, government agencies frequently lack clear performance metrics beyond budget usage.  Exacerbating matters, incentives are often structured around maintaining or increasing budgets, leading to wasteful spending, and a “use it or lose it” mentality.

In the business world however, employees and executives are held accountable for results while performance is measured by clear metrics such as profitability, customer satisfaction, and efficiency.  And to give just one illustration of the differences between the two, when I was in the Marine Corps, at the end of each fiscal year, the squadron commanders of our air group would “strongly encourage” pilots to take cross-country “training flights” on weekends ensuring that we used the base’s full allotment of fuel for fear of having that allotment reduced the following year if we didn’t.

~ How Long Can This Continue? ~

The United States government is composed of 15 separate federal departments, 350 agencies, 42 boards, commissions and committees and 3 million civilian employees.  Meanwhile, in fiscal year 2024, the Biden administration collected $4.9 trillion in revenues, but spent $6.8 trillion, which means $1.37 left the treasury for every dollar that came in.  Forty years ago, Iacocca’s Chrysler Corporation employed roughly 100,000, so comparing its turn around to the task Trump & Musk face is tantamount to the difference in turning an aircraft carrier 180* versus a PT Boat.

Chrysler had no choice in the 80s; it had to reduce payroll and eliminate waste, abuse and inefficiency or face bankruptcy.  But the United States can’t go “bankrupt,” per se, rather in government, it’s known as a “sovereign default” when a nation fails to meet its debt obligations.  But unlike the business world, when a country defaults or when it carries too much debt vis-à-vis its GDP, it’s the citizens who endure the consequences, and they can be beyond severe.  And if a government chooses to “print money” as a way to pay its expenses, as the Biden administration did, the result was the inflation we all experienced.  And if allowed to continue it would result in hyperinflation an event that has devastated entire populations throughout modern history.

In fact, I still have a Zimbabwean “$1,000,000,000-dollar bill” from a trip my wife and I took Africa to photograph wildlife that was worth roughly 10 cents in a nation once  known as “the breadbasket of Africa.”  The grinding poverty we saw there was crushing!

The democrats scream it’s the job of congress, not DOGE to locate & address all the waste, abuse, and fraud.  But every president since Reagan has talked about gaining control of the country’s finances, yet since Reagan, the national debt has increased from an inflation-adjusted $2.2 trillion in 1981 to $36.56 trillion in 2025, representing a sixteen-fold increase.  But even more concerning, the debt-to-GDP ratio has risen from 25.2% of GDP in 1981 to approximately 123% of GDP in 2025 – and unlike the Bernie Madoff debacle, this Ponzi scheme has the ability to cause ripples around the world.

Turning the former Chrysler Corporation around in just 3 years was a herculean accomplishment on the part of Iacocca, but similar to the aircraft carrier/PT Boat analogy, righting our financial ship-of-state will not happen overnight.

Thought for the day:  “Instead of focusing on gender pronouns, perhaps our schools should first teach our kids what pronouns are!