Van Conway looks at the federal balance sheet and sees a classic turnaround situation.
“Absolutely it is,” he says. “The federal government has annual revenue of $5 trillion and debt of $36 trillion. So that’s a seven times debt-to-revenue ratio. Since 1990, revenue went up by 500 percent and debt has grown 1,000 percent. What Americans really should be concerned about is how are we going to deal with all of that debt? Obviously, it can’t continue.”
I called Conway, who has nearly a half-century of restructuring experience and whose Birmingham, Mich., firm assisted in the city of Detroit bankruptcy filing, to ask his thoughts on what President Donald Trump and Elon Musk are doing to cut the cost of the federal bureaucracy.
For the most part, he’s on board with their approach of taking a chainsaw to government spending.
“We need to get the debt down or really awful things will happen,” he says. “All these years when we’ve run out of revenue, we’ve just turned on the printing presses. So, we don’t really feel the pain because they just keep printing money to cover the deficits. And now we’re in a very alarming place.”
Conway says that once expenditures are reduced to the bare bones, the next step is to take a workforce inventory and jettison anyone on the payroll who is not essential to serving the needs of the customers, in this case the taxpayers.
Next comes an assessment of assets. What does the U.S. government own that could be sold? Do we really need all of those half-empty office buildings in Washington, D.C.? Could they be sold and their functions moved to less expensive places elsewhere in the nation?
Could the millions of acres of federal land be sold and the proceeds used to balance the budget? Nothing should be sacred when financial survival is at stake.
“The goal is to stay alive for another year,” Conway says.
The last piece is raising more revenue. Conway hopes Trump’s tariffs will serve that purpose. He advises against a tax hike, preferring instead to boost revenues by drawing more taxpaying businesses to America. And that may require a corporate tax cut.
“We may have to take some short-term pain for long-term gain,” he says.
If he has a quibble with Musk’s Department of Government Efficiency, it is the youth and inexperience of the team unleashed on the bureaucracy. They may be good at identifying waste, but not as experienced in figuring out what should be cut and what should be kept.
“They’re slashing without any sort of perspective or analysis of impact,” he says. “There’s no consideration of whether you could keep the expenditure but get a better price.”
But the spending addiction of politicians makes implementing a long-term plan difficult. At the same time Musk is trying to cut $1 trillion in spending, the Republican-controlled House approved a budget that will add $3 trillion to the deficit over 10 years.
Conway says keeping the examples of spending abuses constantly in front of taxpayers is a good strategy. But he also feels Americans need to understand the seriousness of the situation. Testing the debt limits is an existential game.
“Could you go to $40 or $50 trillion in debt and survive? I don’t know,” he says. “There will be a day of reckoning. At some point, the currency will get devalued, and then you have Armageddon.”
Nolan Finley is Editorial Page editor for the Detroit News.
