Subject: Profit from Trends in Government Spending - January 2011


 

Profit from Trends in Government Funding

 

Quarterly Forecast

January 2011

 

Cut, No, Invest!

Remember "Tastes Great, Less Filling?" Or perhaps, "It's a floor wax! No, it's a dessert topping!" (See Hulu link, below). Welcome to Budget 2011, where we cut programs, but also invest. President Obama identified several key areas in which he hopes to have the Federal Government make significant investments: Keep an eye on funding for biomedical research; information technology; clean energy technology; wireless technology; light rail; and education.

 

Link to Hulu
 http://www.hulu.com/watch/61320/saturday-night-live-shimmer-floor-wax

 

 

 

914-633-3352

 

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Dear Shelley,

The Big Freeze

In his State of the Union address, President Obama called for a five-year freeze on all domestic spending, saying that "This would bring discretionary spending to the lowest share of our economy since Dwight Eisenhower was President."

 

A freeze would eliminate the approximately 3% raise in annual spending that we would otherwise anticipate. As underlying expenses increase, then, programs will have to be cut.

 

But which programs? To be sure, we'll have to watch the budget process as it is hashed out in Legislatures from the local level to the halls of Congress, but there is some consensus forming around key areas, and some related opportunities:

 

Education

K-12 and higher education remain among the most significant expenditures at all levels of Government. Look for Government to provide carrots around education reform as a way of changing processes and creating greater efficiencies. In discussing the Race to the Top educational funding in his State of the Union address, for instance, President Obama said, "For less than 1% of what we spend on education each year, it has lead over 40 states to raise their standards for teaching and learning." Look for this type of "challenge" funding to be the model for driving efficiency, results and reform in large-scale Federal education funding in the coming year. In higher education, look for initiatives that hasten students through the system by linking funding to the numbers of students who graduate, facilitating the transfer of credits from community colleges, and encouraging dual enrollment of high school students in college courses.

 

Corrections 

The New York Times reports that the US has less than 5% of the world's population, but almost a quarter of its prisoners. Turns out, that's an expensive proposition. But to ultimately cut costs, we have to reduce the prison population. To do so, Government will have to redirect resources to the community: Look for increased funding for social supports for at-risk youth, increased support to at-risk families, re-entry assistance for offenders, and greater attention to violence prevention among vulnerable populations. 

 

Restructuring

The National Governors Association reports that all States are looking to structurally transform Government so that it costs less to operate. That means a review of agency mission, purpose, costs and effectiveness, and the possible merger and consolidation of agencies. Watch this one: If programs are transferred from one agency to another, sometimes the funding line doesn't follow.

 

Technology

Inherent in talk of Government restructuring is the introduction of new technologies, with the potential to produce results quicker and at less expense - and to eliminate the need for Government jobs. Look for opportunities to introduce or leverage technology: electronic medical records, distance learning, social networking tools as modern comment boxes and, of course, greater transparency.

 

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