Friday Rant: Why Can't Governments Cut Costs in the Recession?

Anyone reading a business magazine or local newspaper these days would be struck by the number of stories of corporate layoffs, cost cutting and facility closures. For the better or the worse, companies are clearly downsizing to allign their cost structures with expected revenues. But government is headed in the opposite direction, despite shrinking tax receipts. Just this week, the State of Illinois announced that it planned to raise corporate and personal income taxes. According to an article in Crains Chicago, Illinois plans to actually increase spending in the recession by $2.1 billion (4.1%). This includes what is expected to be a 30-50% hike in personal income tax and raising the corporate income tax to 7.2%. Personally, I have an extremely difficult time understanding how politicians are so quick to jump on the "raise taxes" bandwagon before looking at all of the cost cutting options that private sector companies (even those with unions) employ. For example, why can't government look first at strategic sourcing opportunities, "make vs. buy" analyses on potential outsourcing opportunities, technology automation and, of course, staff reductions before taking out the tin cup? In my view, governments worldwide should use the crisis of the recession to push through not only smart Spend Management and sourcing policies and programs, but also cuts and spending reductions that may be unpopular with employee unions and even constituents -- just as the private sector is doing -- instead of taxing corporations and families into oblivion.

Jason Busch

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