Budget uncertainty hurts business, government

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When asked to compare my experience as a senior business executive with my time as an Air Force general officer, my response is that the two are not all that different. People matter most; leadership with clear goals is essential; assessing risk and reward is a constant requirement.

Another common thread: Stability and predictability are essential to success. Unfortunately, in both of my careers, I have witnessed the toll taken due to unstable annual federal budgets. In the Pikes Peak region, where federal spending generates 40 percent of our economy, this is especially concerning.

Our government has operated with continuing resolutions for the past 15 years. “CRs” provide no long-term spending road map, so both public and private sector organizations are left to guess about future plans. More recently, sequestration has exacerbated the problem by indiscriminately cutting “discretionary” spending (which includes many “essential” government functions) without reference to priority.

The October government shutdown took the negative effects of instability to a whole new level.

These self-induced gyrations in public spending destroy productivity and jobs. Private-sector impacts are well known to those in the trenches. Publicly held companies with a large government client base cannot make valid revenue and profit projections, resulting in failure to meet market expectations. The effect on stock prices harms companies and investors, many in the middle class. Private companies, especially small businesses with little financial flexibility, face difficulty in procuring credit, managing cash flow (including the ability to pay employees and creditors), and generally keeping the doors open. Local businesses from coffee shops to retail stores suffer the “trickle down” effects.

For government organizations, the disruption in work and travel schedules, work-flow fluctuations and loss of productivity are hard to measure. The secretary of defense estimated at least $600 million in costs for the Pentagon alone during the recent shutdown. Morale can be devastated, as many start to question whether their public service is understood and valued.

The mere threat of shutdown or sequestration-based cuts is a major drag on productivity. Executives and supervisors in both sectors spend countless hours in “what-if” drills and additional meetings, strategy sessions and execution planning to prepare for what may or may not happen. As deadlines approach, these preparation tasks become the main function of those in charge, instead of the “real” work they are normally focused on. These costs are hard to measure, but the loss is easily in the hundreds of thousands of man-years.

Once the immediate crisis is over, the disruption continues. After shutdowns or furloughs, re-starting the “machine,” reforming teams, developing new schedules, catching up without adversely affecting quality, even small things like answering missed email messages, can take days or weeks. Again, routine work to support the daily operational mission gets put on the back burner.

Perhaps the most insidious negative impact of this near-constant uncertainty is the psychological effect on the workforce and business. People are the core of any enterprise, and they have lives and aspirations that are supported by their work. Many, even those with excellent salaries, are living on the financial edge, balancing mortgages, car payments, college tuition, vacation plans, retirement investments, family emergencies and the like. Leaders are challenged to sustain morale and focus in light of constantly changing direction, and the ever-present reality that tomorrow could bring more bad news. This constant unease has become the ultimate workplace Groundhog Day.

Public and private sector organizations cannot sustain instability and indecision over such an extended period without harm to the very fabric of our capitalist system. Business and government leaders, as well as their workforces, understand that requirements and circumstances change over time. But to do their best for clients and those whom they serve, they need a stable platform from which to work.

For our Congress and president, this means clarity on budgets, taxes and public policy. It wouldn’t hurt to know where and how investments in infrastructure, technology and education will be made as well.

Americans, regardless of where they work, are resilient, creative and dedicated to getting the job done. They can make any plan work — they just need to know what that plan is.

It’s time for elected federal leaders to make the hard choices and tackle the basic work of governing. Our people will do the rest.

Irv Halter, a Colorado Springs resident, is a retired Air Force major general and a former vice president at Computer Sciences Corporation. He is running for Congress in Colorado’s District 5.