How Do We Reduce the Deficit and Still Invest in a Growth Economy?

Moderator Jimmy Henry (L) and panelists (L to R) Al Hubbard, Alan Simpson, and Jared Bernstein

Booz Allen Executive Vice President Francis J. (Jimmy) Henry moderated a panel titled “How Do We Reduce the Deficit and Still Invest in a Growth Economy?” on July 1, 2011, at the Aspen Institute’s Aspen Ideas Festival. Panelists included Al Hubbard, co-founder and CEO of E&A Industries; Alan Simpson, former Wyoming Senator; and Jared Bernstein, Assistant to the Vice President for Economic Policy. Henry is market lead for Booz Allen’s civil business, supported by a team of 6,000 staff and 170 vice presidents and principals. He is also member of the firm’s Leadership Team.

He shares his impressions and thoughts following the panel below.

As the panel progressed, were there any points you found to be particularly illuminating?

First, that all of the panelists agree that this is a “no kidding” time in the discussion about deficit reduction, and that we need some political will to make something happen.

Second, when asked if there was a single specific priority, all three localized in on healthcare and the need for containment of healthcare costs and finding improvements in that area. I was a little surprised because other topics get a lot of air time.

And finally was the idea that entitlements like Social Security and other programs that have existed for a long time need to be put in play. Everybody said it, even Jared. I was pleasantly surprised that despite big differences in opinions, there was a uniformity or coherence toward certain important things.

While the panel did not specifically talk about efficiency, it’s one area in which Booz Allen consults. Can you talk about how the firm can help its healthcare and entitlements clients manage the kinds of changes discussed today?

We are looking at a broader push to help clients look at balanced approaches to generating efficiencies. If you need to pull 5 or 10 percent out of a budget, there are better ways to do it, and there are less attractive ways to do it. We are creating some frameworks that we think will have great resonance with our client—new approaches that provide systematic, logical, defensible ways of making difficult choices.

We’ve had an emphasis in this area for a long time, particularly around healthcare economics and technology applications that apply to healthcare. They lead to two things: First and most important is better patient care. And second is how to squeeze costs out of the system. There are ways to squeeze costs out of a segment of the economy that is heavily regulated and running at between 16 and 17 percent of GDP, and rising.

How else is Booz Allen helping clients cope with potentially significant changes in programs in a very difficult budget environment?

We arm our clients with insights that allow them to navigate appropriate political channels, and to make better and better informed decisions. In the civil side of our business, our leadership and staff are eager to take on challenges that are meaty, substantive, and hard—certainly in healthcare, energy, transportation, and these entitlement areas.

What kind of talent are you trying to draw to firm to help with these difficult topics?

We’re looking for people in two areas. First, we’ve been working diligently over the past three years to add experienced people who have a deep understanding of the missions of the various agencies we work with. They have an in-depth understanding of their agendas, of the “no kidding” problems they face, and of the 3,000 things that have already been tried and discarded.

Second, with less experienced staff, my approach is that we have a crying need for really bright young students from top-quality undergraduate and graduate schools who have a passion for these topics. I want people who really want to tackle aircraft spacing issues balanced by safety. I want people who are passionate about wanting to solve environmental and healthcare problems. Helping our clients with these types of challenges all comes back to having people with a strong desire to work on these things.

Do you have any other observations about the panel?

There is so much clutter in the air, so much confusion and misstatement about the topic of deficit reduction, that it gives off a vibe like, “Uh oh, this ship really is going down.” For this diverse panel to have hope that we can muster the political will to solve this matter is encouraging. The greatest strength of our nation is the ability of people to make compromises. And that’s what we need to do.