Government Cost Structure Review Lacks Specific Leads

Focus on Expenses— Reform Entitlement Programs + Focus on Operating Efficiency Focus on Expenses Review Federal Wages & Benefits Review Government Pension Plan Characteristics & Compare with Private Sector Plans Review Role of Unions Focus on Operating Review Government Cost Structure & Efficiency Consider Reducing Federal Headcount Determine if There are Non-Core ‘Business Lines’ That Can Be Centralized / Locally Out-Sourced KP www.kpcb.com USA Inc. | What Might a Turnaround Expert Consider? 329 Start with the Basic High-Level Math — Review Government Cost Structure Government (federal + state + local, including military) spending per household has steadily risen to 82% of median post-tax household income, up from 51% in 1967. Federal spending (ex. entitlement + interest payments + one-time items) per household has remained flat since 1967, while entitlement + interest payments + one-time items spending per household rose 3x. Including federal, GSE, state and local (excluding military) employees, there is one public worker for every six households in the country, unchanged from 1967 or 1980 levels. Note: *Real spending adjusted for inflation, in 2005 dollars. Source: Census Bureau, Bureau of Economic Analysis. (@E) www.kpcb.com USA Inc. | What Might a Turnaround Expert Consider? 330 HOUSE_OVERSIGHT_021006