5 Reasons the Government Should Be Run Like a Business

The federal government is in financial disarray.

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Kelly Campbell
One of the worst-run businesses in the United States is also the largest business in the nation. The federal government is in financial disarray. It spends more than it makes and its investments are not based on sound financial principles.

The question often asked is should the U.S. government be run like a business? Should it abide by the same rules that all businesses in the United States must follow?

The answer for most Americans is a resounding "yes," but how would that make our current government different than it is today?

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First, a big step for the government would be to spend less than it makes. The federal budget has a number of "unfunded liabilities," including Social Security, federal pensions, Medicare and Medicaid, which are preventing positive cash flow. Unfortunately, when the positive side of the income statement decreases as it has in the last four years, the expense side does not. And because many of those liabilities have cost of living adjustments, they are rising every year. Curbing those expenses or putting a cap on them would be a great step towards solvency.

Second, businesses do not have an unlimited checkbook, nor should the Federal Reserve. Right now, the government can print money at its discretion and as we have seen, it does more often than we care to remember. Printing money means there is more cash on hand to go around, which sounds good, but it dilutes the value of U.S. currency and therefore causes inflation. That means it will require more of that diluted money to purchase goods and services.

Third, the government should asses all of its employees according to their work flow, production, and output. And if any employees are not pulling their weight, they should be let go. But, we all know that will not happen. It is almost impossible to lose your job if you work for the government.

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That is not how a business is run.

Fourth, the benefit plans offered by the U.S. government are not balanced. Its health plan with all of its options is phenomenal, while its 401(k) plan (the Thrift Savings Plan or TSP) with its five investment options is awful. Having meaningful but fair, competitive, and economical employee benefits helps both the employee and the employer. It also could save us some tax dollars.

Finally, sometimes businesses need to realize that they are not productive or financially stable in one area or another. When that is the case, they should cease operations in that area. For example, the U.S. Post Office has been struggling for years, but nothing has been done about it. This is definitely one area in which our government could become more efficient. They could sell off that unit by making it a private entity. It would likely be more competitive and more efficient and not put such a burden on the federal budget.

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As you know, big businesses are not always easy to run, but you also know that if you are leading a large company, you must always watch your revenues and expenses and make good business decisions by looking into the future. If our government officials, both Democrats and Republicans, would begin to do that, we would have a better economy, a more productive nation, be the global power we once were, and our stock market would likely be doing much better.

All the more reason to run our government like a business. It is a business!

Good luck and happy investing

Kelly Campbell , CFP® and Accredited Investment Fiduciary, is founder of Campbell Wealth Management, a Registered Investment Advisor in Alexandria, Va. Campbell is also the author of Fire Your Broker , a controversial look at the broker industry written as an empathetic response to the trials and tribulations many investors have faced as the stock market cratered and their advisers abandoned their responsibilities to help them weather the storm.