A problem worth addressing
Kudos for taking on the problem of defense overhead, specifically the explosion of personnel in the Office of the Secretary of Defense (OSD) and the military commands [“Pentagon, regional staffs growing despite orders to trim personnel,” June 3, www.federaltimes.com]. The topic of saving money in the defense budget so it can then be used to support the training and equipping of military forces is of paramount importance.
It is ironic that the defense industry long ago foresaw the coming decline in defense spending and took serious measures to reduce its overhead and streamline and improve its business practices. All major firms — Lockheed Martin, Boeing, General Dynamics, Northrop Grumman and Raytheon — began several years ago to reduce their overhead, specifically by reducing headquarters staffs. These companies, and many midsized and smaller firms, took steps to rid themselves of excess infrastructure, revamp compensation programs, simplify processes and sell off nonperforming activities. Some, such as ITT and Northrop, undertook major reorganizations to better focus on core businesses.
The government and the Defense Department in particular seem incapable of doing what is routine for the private sector in challenging times. As your article points out, the Pentagon seems bent on a suicidal course, increasing overhead costs at a time of shrinking defense budgets. The leadership may fear no overseas adversary, but apparently it quakes at the mere thought of reducing the size of the defense bureaucracy. Perhaps it is time for Secretary Chuck Hagel to hire an outside downsizing specialist. What is “Chainsaw” Al Dunlop, the former CEO of Scott Paper and Sunbeam, doing these days?
OSD should stop wasting time on strategy and management reviews and focus on reducing overhead costs, then take on the dysfunctional defense acquisition system. The future of the military and its ability to provide for the nation’s security hang in the balance.
The Lexington Institute
We have an estimated 2 million nonprofit organizations in our nation. Annual income for these groups is about $1.6 trillion. Revenue sources include donations, membership fees and other areas.
Over the years, a hodgepodge of rules for granting tax exemptions has evolved. It’s been suggested we allow exemptions for nonprofits that serve as alternatives to the governmental sector and that can demonstrate the budgets of specific agencies and programs will be reduced as a result of their activities.
For the remaining nonprofits, a 10 percent excise tax could generate about $140 billion annually. Let us put all our taxing cards on the table.
Carl A. Bernacky