Larry Kudlow argues that Mitt Romney’s experience at Bain Capital might be just what the doctor ordered. In this essay he suggests that what we need to fix the bloated and wasteful federal government is someone who has the skills of a turn around specialist. Someone who knows how to look at a troubled company and find a way to get rid of the fat and fix the problems. Someone who has turned companies around before and made them work again. It is an interesting argument to say the least. And Kudlow is nothing if not an optimist.
There’s a troubled company out there called U.S. Government, Inc. It’s teetering on the edge of bankruptcy. It badly needs to be taken over and turned around. It probably even needs the services of a good private-equity firm, with plenty of experience and a reasonably good track record in downsizing, modernizing, shrinking staff, and making substantial changes in management. Yes, layoffs will be a necessary part of the restructuring.
A quick look at the income statement of this troubled firm tells the story. Just in the past year (FY 2011) the firm spent $3.7 trillion, but took in only $2.2 trillion in sales revenues. Hence its deficit came to $1.5 trillion.
Just in the first three months of the new year (FY 2012), the firm’s troubles continued. Outlays for all purposes came in at $874 billion, but income was only $554 billion. So the shortfall was $320 billion. No hope of a self-imposed turnaround here. Indeed, both the senior management and the board of directors show no signs of making major changes to their business strategy.
Hope for future profits? That’s out of the question. The firm’s only chance of survival is a takeover.
