George Gibbs Center for Economic Prosperity

RealClear Marke⁠t⁠s: The Federal Governmen⁠t⁠ Can’⁠t⁠ Be a Bus⁠i⁠ness Because I⁠t⁠ Isn’⁠t⁠ OneReal Clear Marke⁠t⁠s

By: Sal Nuzzo / 2023

Sal Nuzzo


George Gibbs Center for Economic Prosperity


July 12, 2023

Every four years, United States presidential candidates (traditionally seeking the Republican nomination) extol the virtues of “running government like a business.” This year is no exception. But here’s the problem: it can’t be. The federal government is too deeply inefficient to mirror anything remotely similar to the innovative spirit of the private sector. Its horrid track record in adapting to the 21st century technological age encapsulates this point well. 

A decade ago, Americans watched federal bureaucrats completely botch the rollout of, the website that formally launched the Obamacare exchange. According to the Government Accountability Office, the troubled website and its supporting systems cost an embarrassing $840 million. That’s over $747 million more than was initially estimated – for a web site that didn’t work.’s price tag wasn’t even the worst of it. The website’s rollout quickly became mired in lengthy crashes, glitches, and delays that prevented thousands of Americans from receiving healthcare coverage for long periods. According to the Washington Post, these issues occurred because federal bureaucrats ignored 18 unique, separate written warnings that the project was being mismanaged. But the federal bureaucracy didn’t seem to care. It knew it would continue getting its taxpayer-funded paychecks whether it took this job seriously or not. 

Fast forward to the present, and it’s clear that, 10 years later, the individuals within the federal bureaucracy have yet to learn their lesson or even consider running their operations like a private-sector business.

The Government Accountability Office — the independent agency tasked with auditing the federal government’s operations — just released a new report detailing how the U.S. Department of Agriculture (USDA), the Department of Homeland Security (DHS), the Department of Labor (DoL), and the Department of Treasury have refused to apply standard cloud security practices to keep Americans’ data safe and secure. The GAO report emphasized that “until these agencies fully implement” key cloud security practices identified in Federal policies and guidance, “the confidentiality, integrity, and availability of agency information contained in these cloud systems” are at increased risk.

Even the federal government’s human resources arm — the Office of Personnel Management — is refusing to keep up with technology norms and the security protocols that come with them.

In October, a federal court approved a $63 million settlement stemming from OPM’s failure to protect the data of millions of past and present federal employees’ sensitive personal information from hackers. A congressional investigation found “OPM leadership failed to heed repeated recommendations from its Inspector General, failed to sufficiently respond to growing threats of sophisticated cyber attacks, and failed to prioritize resources for cybersecurity.” As if that’s not enough, the agency misappropriated $1 billion to fraudulent benefit payments and didn’t start urging federal workers to come back to work following the COVID pandemic until April of 2023. 

If the last 10 years have demonstrated anything, it’s that the federal government can’t be run like a business because it isn’t one. The incentive structures facing private enterprises are simply not present – in fact, they are inverted. Many federal employees either do not care to remedy inefficiencies because they are often rewarded for avoiding it or they have no understanding of supply and demand, time preferences, and proper supply chain management. In the swamp, the incentive structures revolve around self-interest, political fiefdoms, and expanding the scope of power via politics.

Renowned economist Milton Friedman put it best: “When government – in pursuit of good intentions – tries to rearrange the economy, legislate morality, or help special interests, the cost come in inefficiency, lack of motivation, and loss of freedom.” That’s why he believed that “government should be a referee, not an active player.”

Senate Homeland Security and Government Affairs Committee Chairman Gary Peters (D-Michigan) and Ranking Member Rand Paul (R-Kentucky) should consider his advice as they continue seeking to increase the dexterity and efficiency of the federal bureaucracy. Maybe the answer isn’t moving around the federal chairs; maybe it’s in outsourcing more of those seats and responsibilities to the private sector — the nation’s true business leaders. Only then will accountability, competency, and fiscal responsibility finally be restored to the federal government once and for all. 

Sal Nuzzo serves as Senior Vice President for The James Madison Institute.

Originally found in RealClear Markets.