Matching Expenses & Revenue:
Imperatives & Constraints
There are many constraints to making changes
— ~90 million citizens (29% of Americans)’ have grown accustomed to entitlement programs - 47MM on Medicaid, 45MM on Medicare, and 51MM on Social Security, and many of them vote.
— Politicians depend on re-election campaigns, which can create conflicts, especially given that only 12% of the population are willing to cut Social Security and Medicare benefits, per Pew survey in 2/11.
— Low personal savings rates (near 6% of disposable income in CQ2:10), high unemployment (near 10%) and economic uncertainty, which can limit ability to make radical change.
- 14 million healthcare-related workers? have grown accustomed to relatively high healthcare spending.
Note: 1) as of 2008, exciudes double counting of beneficiaries of multiple entitlement programs; 2) as of 2008, per BEA. Source: K P Social Security Administration, Dept. of Health & Human Services, BEA. (@)E) www.kpcb.com USA Inc. | What Might a Turnaround Expert Consider? 235
And Then There’s the Constraint of
USA Inc.’s Weak Economy
[The] typical error most countries make coming out of a financial crisis is they shift too quickly to premature restraint. You saw that in the United States in the 30s, you saw that in Japan in the 90s. It is very important for us to avoid that mistake. If the government does nothing going forward, then the impact of policy in Washington will shift from supporting economic growth to hurting economic growth.
Timothy Geithner, Secretary of US Treasury The Wall Street Journal, September 12, 2010
KP www.kpcb.com USA Inc. | What Might a Turnaround Expert Consider? 236
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