Our nation faces a large — and growing — long-term fiscal imbalance driven by an aging population, which will dramatically increase health care and retirement costs. And while it is just one of many challenges, it is central to a question of whether the nation’s government will adapt new approaches to the management of government itself.

“The government is on an unstable path,” says the recently released Federal Government’s Financial Health. This report, prepared by the U.S. Department of the Treasury and Office of Management and Budget (with the assistance of the Government Accountability Office), puts the challenge in stark terms:

“This … is the year in which the first of the approximately 80 million baby boomers – those born between 1946 and 1964 – become eligible to draw Social Security benefits. Scheduled Social Security and Medicare benefits together with other federal programs projected long-term costs are much greater than the resources (revenue and borrowings) available to pay for them. Unless action is taken to bring program costs in line with available resources, the coming surge of entitlement spending will end in a fiscal train wreck that will have an adverse effect on the U.S. economy and on virtually every American.”

In 2019, the Medicare Part A trust fund, which finances inpatient hospital services for elderly Americans, will not have enough money to pay full benefits. In 2080, the total cost of government will be more than three times the revenue.

Other Challenges

The President and the Congress certainly face other challenges: the continuing war on terror, increasing economic competition from emerging world powers like China and India, rising energy costs, environmental concerns, and unknown new problems and threats. As the baby boom generation retires and health care costs rapidly rise, Social Security, Medicare, and Medicaid programs – as well as interest on the national debt – will account for a growing portion of government cost, creating immense budget pressure on initiatives to fund the other challenges. Interest on the debt in Fiscal Year 2010 totaled over $260 billion – about what was spent by the U.S. Departments of Education, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, Interior, and Justice combined.

Any one of the challenges would be a large enough agenda for our legislature and the administration. Their convergence creates an environment of unparalleled complication for the president and government management. Just look at the partial list of twenty-first century challenges prepared by the GAO.

· Large and growing long-term fiscal imbalance
· Evolving national and homeland security policies
· Increasing global interdependence
· The changing economy
· Demographic shifts
· Science and technology advances
· Quality-of-life trends
· Diverse governance structures and tools

The nation, then, has no shortage of problems to solve. The question is whether it will adapt new approaches to the management of government to meet the challenges it faces. Facing these challenges will require a “changed” government, a twenty-first century government transformed to operate on demand. With confidence in government at an historic low, the time for action is now.

Moving Toward a Transformed Government

In the aftermath of September 11, we heard again and again that government needs to be better managed. “Everything has changed” was the constant refrain. “Never has American history seen a time when management has been more important but the stock of new ideas has been so low,” argues Professor Donald Kettl of the University of Pennsylvania (now at the University of Maryland).

What characteristics would a transformed “twenty-first century” government have?

Although the outline of such a government is becoming clearer, the literature has yet to describe a real model. What are some of the elements of such a government? In the past few years, several texts – the Cisco study, The Connected Republic 2.0; The End of Government … as We Know It, “The Next Government of the United States,”; and others from the IBM Center for the Business of Government – have offered various visions:

· Several trends are transforming government: (1) the “rules of the game” are changing in human capital, financial management, and organization structure; (2) performance management is increasingly used; (3) governments are taking market-based approaches, such as competition, choice, and incentives; (4) government is moving from business as usual to performing on demand; (5) citizens are becoming more engaged; and (6) governments are using collaborative networks and partnerships to deliver services and solutions.

· These trends – and the formidable challenges facing the nation – will drive government to reconfigure itself to serve the needs of its citizens in the twenty-first century. As Professor Kettl has put it, “At the core is a fundamental problem: the current conduct of American government is a poor match for the problems it must solve.” Thus, Kettl notes five imperatives for the performance of government in the twenty-first century: (1) a policy agenda that focuses more on problems than on structures; (2) political accountability that works more through results than on processes; (3) public administration that functions more organically, through heterachy, than rigidly through hierarchy: (4) political leadership that works more by leveraging action than simply making decisions; and (5) citizenship that works more through engagements than remoteness.

· A new, transformed, on-demand government would have different characteristics than today’s government. It would be responsive, agile, resilient, flexible, dynamic, flatter, more connected, less hierarchical, seamless, more personalized, and transparent.

· Such a transformed government might deliver services by three different approaches to policy implementation: reinvented government, government by network, and government by market.

These trends will drastically affect what it is like to work in the public sector.
New forms of coordination and control will evolve. Governments will place a premium on the skills of orchestration and facilitation and the ability to recognize the credibility and authority of sources of policy insight and advice outside the formal structures of the public sector. New accountability methods will be developed to match the radically dispersed and collaborative nature of public purpose work. Governments will need to make their own workplaces flatter, more connected, and less hierarchical, more in tune with the values and behavior of the talented people that need to be attracted to the public sector.

The Potential of the Net Generation in Government

That is not merely my view, but the general conclusion of government experts whose views are assembled in the volume, “Transforming American Governance,” which I edited along with Terry F. Buss and Dwight Ink and published by M. E. Sharpe as part of the National Academy of Public Administration’s Transformational Trends in Governance and Democracy series.

The contributors view the question from the perspective of public administration theory and the administrative state, but they discuss it within the framework of such current policy challenges as the nation’s fiscal crisis and our on-going war on terrorism. They also examine how it affects state and local governance and ponder the question “Whither American Federalism?” And they speculate about exactly how government will respond, suggesting the answers already exist in past – or current and emerging – changes and reform models.

As a new millennial generation enters public service, it’s clear that powerful 2.0 social networking and collaborative technologies become more prevalent, and new model of citizen engagement, and even co-production, change the very nature of government itself.

This 21^st century government will need to be flexible, agile, able to quickly adjust, and ruthless in reallocating resources to new opportunities and challenges. Power and decision-making will need to be pushed down the organization as much as possible, rather than concentrated at the top. Traditional bureaucratic structures will have to be replaced with ad-hoc teams of peers, who come together to tackle projects and then disband. Information gathering will be broader and more inclusive. New mechanisms will need to be created for harnessing the “wisdom of crowds.”

All of which are the kinds of changes the Net Generation, with its inherently more collaborative and IT-savvy nature, are will surely embrace and let’s hope enable.

Alan P. Balutis is Senior Director and Distinguished Fellow, Business Solutions Group, Cisco Systems, Inc. Balutis is a founding member of the Federal CIO Council and was the first CIO of the Department of Commerce.