One Nation Under Contract: The Outsourcing of American Power and the Future of Foreign Policy

This event was hosted by Robert G. Shaw, Carnegie Council trustee & Friends Committee co-chair.

• Introduction
• Remarks
• Questions and Answers

JOANNE MYERS: Outsourcing is a word that you've heard often. Although there is a popular belief that outsourcing is a recent phenomenon, it has been in existence for quite some time.

Typically, companies have been known to outsource those functions that are considered non-core to their business, or which need specialized skills unavailable in the open market. Lately, outsourcing has been the subject of many debates—not only because of the transfer of U.S. businesses to India and China, but also for the proliferation of private companies providing a wide array of government services.

These services range from military advice and training, to operational and logistical support of our troops, to homeland security protection, drug interdiction, intelligence, granting of international aid, and more.

In One Nation Under Contract our speaker breaks new ground in describing how the emergence of joint ventures between the government and private sector is transforming government accountability and diplomacy. She tells us that the requisite government expertise to implement foreign policy, whether in defense, diplomacy, or developmental aid, is no longer viable. A new approach is essential.

She writes that "outsourcing, as presently practiced, is scandalous, but turning the clock back so that government is in control is no solution." Instead, our speaker advocates for government to reaffirm its role as chief custodian of the public interest.

Professor Stanger would like to see the Executive Branch discover new ways of encouraging private actors to be more responsible, while at the same time she argues for more government oversight, especially in this information age.

In exploring the impact of outsourcing, Professor Stanger has found private contractors everywhere, and concludes that "the very definition of power in the 21st century has changed. While outsourcing has its problems, it can also be a source of creative, bottom-up initiatives, with a positive foreign policy impact. Moving forward, we need to make sure this happens."

To learn how, please join me in giving a very warm welcome to a very delightful guest, Allison Stanger.

ALLISON STANGER: Thank you so much. It's great to be here. I really appreciate it.

Washington's dysfunction is on everyone's minds in the run-up to the November 2010 midterm elections. Government that does not serve the American people obviously has profound ethical implications.

Why have special interests and money so completely captured our politics? I want to suggest to you here today that the problem is more than the role of special-interest lobbying and campaign contributions.

One big reason that's unacknowledged is that money has been able to carry the day because our government today is but a shadow of its former self. The size of the Executive Branch work force in 2008—that is, the federal work force—is the same size as it was in 1963. Yet, the federal budget in that same period of time has more than tripled, adjusted for inflation, and the population has doubled. That enormous gap, in part, is filled by contractors.

A firm like Lockheed Martin is today doing more than servicing weapon systems. It also sorts your mail, tallies up your taxes, cuts Social Security checks, counts people for the U.S. Census, runs space flights, and monitors air traffic.

That we have become one nation under contract means that there is no longer any vigorous and disinterested government to turn to for help. The business of government is increasingly in private hands.

When government work becomes private-sector activity, governance itself becomes opaque, since contracts are considered proprietary information.

The underside to the sweeping privatization of government power has become all the more apparent as the gap between the fortunes of Wall Street and of Main Street has widened.

Since virtually every contracting grant represents jobs in some representative's district, focused lobbying can deliver bigger and bigger rewards. Special-interest campaign contributions make the difference in every reelection campaign, with predictable consequences.

The rapidly spinning revolving door between government and business is a standing invitation to corruption. The one interest that goes underrepresented in this mix is the public interest.

My book focuses on a smaller slice of this puzzle. It tells the story of how contractors came to dominate our foreign policy across the so-called "three Ds"—defense, diplomacy, and development.

It argues that while the core business of foreign policy has fundamentally changed, our strategies and our frameworks for thinking about it have lagged behind. The result is that outsourcing as presently practiced is scandalous, but turning the clock back and reasserting top-down government control, tempting though it may be to many people, is no solution.

Contractors are not the problem. The absence of good government is.

From a foreign policy perspective, turning the clock back is no solution because the threats of the 21st century differ so radically from those of the Cold War. A wholesale reinvention of what we mean by foreign policy is therefore required.

We don't need a new prescription for our glasses. We need a whole new eye chart. We need to change the things we see.

When we talk about the outsourcing of American power, we immediately bump up against Iraq and Afghanistan, because they are our first two contractors' wars. According to the Congressional Research Service, contractors in 2009 accounted for 48 percent of the Department of Defense work force in Iraq and 57 percent in Afghanistan.

Just to give you a sense of comparison, at the height of the Vietnam War, contractors constituted about 14 percent of the American presence on the ground. Today, the overwhelming majority of the American presence on the ground in Iraq and Afghanistan are contractors.

In 2010, just this year, contractor deaths have exceeded the number of military ones.

When we think of contracting as a tactical foreign policy issue, it has in reality become a wholly strategic one.

Consider this if I haven't convinced you already. If you look at the Department of Defense's budget in 2008, 82 percent of that budget went out the door in contracts and grants; 83 percent of the State Department's requested budget did the same; and the relevant figure for the United States Agency for International Development is a whopping 99 percent. These numbers mean that the core business of foreign policy has really changed.

In February of this year, the Department of Homeland Security revealed in hearings before the Senate Committee on Homeland Security and Governmental Affairs that it has more contractors—it has 200,000 contractors and 188,000 civilian employees. Senator Lieberman at the time argued that these numbers raise the question of who is in control of the department's mission, the private sector or our government.

Before we can decide whether Senator Lieberman is right, we need to be aware that there are both positive and negative aspects to this privatization or outsourcing of American power. I want to start with the positive ones, since these are often overlooked.

Just as globalization makes government contracting and outsourcing more attractive, it also expands the possibilities for independent action that has significant foreign policy impact. It is no exaggeration to say that it is now possible for individuals to make their own foreign policy when government falls short or lacks interest. This is really the positive aspect of the privatization of American power, and we shouldn't lose sight of it in all the tales of waste, fraud, and abuse. I want to give you a couple examples of that, just to illustrate.

The first example would be Sam Nunn's Nuclear Threat Initiative. If any of you are familiar with that, it really illustrates this new reality.

The Nuclear Threat Initiative has successfully intervened abroad to fill a vacuum that would typically have been entirely covered by the U.S. government. At Vinca in Belgrade, for example, the Nuclear Threat Initiative financed the flying of more than 100 pounds of potent nuclear material to Russia for blending down.

There were a whole range of bureaucratic obstacles that kept the U.S. government from being able to fund this initiative with federal funds. The Nuclear Threat Initiative, a nonprofit organization, plugged the gap and covered the $5 million cleanup fee. It has also done similar things in Kazakhstan.

Warren Buffett had a $25 million matching pledge for a nuclear fuel bank. Many people are unaware of this, but he asked the Bush Administration to put up a match of $25 million that would get them much closer to the $100 million goal that was needed to establish an international nuclear fuel bank. The White House said yes. The Obama Administration is currently pursuing that initiative. That gives you an illustration of the difference that one individual can really make on the foreign policy front.

A second example would be that of Kiva. Kiva's lending activities in Iraq are really interesting. They show how it's possible for innovative individuals to make diplomacy without explicit government authorization.

Kiva—which means "agreement" in Swahili—uses the power of the Internet to connect directly via PayPal willing citizens in the West who want to loan money for microfinance projects in the developing world.

In May 2007 Kiva added the first Iraqi entrepreneurs to its Web site, with the following disclaimer: "This entrepreneur is from a volatile region where the security situation remains unsettled. Lenders to this business should be aware that this loan represents a higher risk and accept this additional risk in making their loan."

Despite these warnings, all the loans were fully funded within a matter of hours, largely by American citizens who apparently wanted to lend a personal hand to the Iraqi reconstruction effort.

There are many other examples of the positive aspects of privatized power. Consider the relief effort in Haiti, which was almost wholly orchestrated by the private sector with the support of the Pentagon. Or think of the work of the Gates Foundation, or the Clinton Global Initiative, or the Grameen Bank. All have the virtue of a smaller U.S. footprint, even though American philanthropy, and sometimes even your tax dollars, fund the work.

That brings me to the negative aspects of the outsourcing of American power.

The biggest is what in my book I call laissez-faire outsourcing. Laissez-faire outsourcing takes place when government outsources oversight as well as implementation.

The most glaring example of laissez-faire outsourcing is the Coast Guard's Deepwater Program. It was launched in 2002 and was a 25-year plan, the most comprehensive in the Coast Guard's history, to modernize and update the Coast Guard's fleets of boats and aircraft.

The Coast Guard did something unprecedented with this project. They delegated overall management of the project to a contractor. Integrated Coast Guard Systems, a joint venture of Lockheed Martin and Northrup Grumman, was assigned the task of choosing who should perform the work as well as the task of evaluating itself. Not surprisingly, guess who Integrated Coast Guard Systems chose? Lockheed Martin and Northrup Grumman to do the lion's share of the work.

The results were catastrophic. Four years into the program, the Coast Guard had fewer operational boats and ships than it had when Deep Water was first launched. What had originally been a $17 billion project became a $24 billion one, practically overnight, with no end in sight.

One former Lockheed Martin engineer found that corruption was so rife that his only resource was to do something I'd never seen before. He posted a whistle-blower video on YouTube, a new strategy.

What are the consequences of this? What are the consequences of government's laissez-faire outsourcing? There are at least three we need to talk about here today.

The first is an accountability and oversight problem of unprecedented proportions. As of March 31, 2010, Congress had appropriated $53 billion for reconstruction in Iraq and $51 billion for reconstruction in Afghanistan. Since the government wanted results yesterday, oversight was often the first casualty, inviting waste and corruption.

To cite just one example, the Pentagon has publicly acknowledged that $8.2 billion of taxpayer money flowed through contracts into Iraq, sometimes in stacks or pallets of cash, without appropriate recordkeeping or oversight. For example, $68.2 million went to the United Kingdom, $45.3 million to Poland, and $21.3 million to South Korea, yet Pentagon auditors were unable to say why the payments had been made.

The second consequence of government's laissez-faire outsourcing is an overly ambitious international agenda. That is, in many ways, contractors, because you can simply throw money at problems, facilitate over-extension. We can see this with the wars in Iraq and Afghanistan. Just imagine if we had to have a draft to fight those wars, which we would if we weren't able to rely on contractors. You would have a very different political situation in this country regarding decisions about the war going forward.

The third consequence, which is perhaps the most troubling, is a lost sense of government purpose—that is, a lost sense of those things that only government can do well. This has a highly demoralizing impact on everyone, especially those who work in government, who see most of the real work going out the door to contractors.

Expediency, once this process is in motion, also makes it really easy to outsource things that you shouldn't be outsourcing.

In turn, our addiction to outsourcing has facilitated the inadvertent militarization of American foreign policy. By "militarization" I simply mean the rise of the Pentagon as the go-to institution for getting things done under both the Clinton and the Bush administrations. Since many of the things that the Pentagon has been asked to do are outside its standard purview, the Department of Defense really became "contracting central."

The Department of Defense's faithful execution of government wishes is admirable. But just because the Pentagon is able to do something doesn't mean that it should be the one doing it. I would argue that promoting American values through the U.S. military overseas, which is a massive symbol of coercion rather than choice, usually undercuts the very values that we seek to promote.

What do we do about this? This is a problem. What is the way forward?

In the last chapter of my book I argue for a post-industrial foreign policy and I lay out a number of maxims and things that we can do. I wanted to focus on just three of them here today and then open it up for discussion and see what sorts of things really interest you.

The first thing we have to do is to demilitarize American foreign policy. Secretary Gates himself has warned of the creeping militarization of American foreign policy and its negative consequences. This is not some kind of kooky, left-wing academic imperative. It's something the Secretary of Defense also wants.

If we look at the current ratio of military spending to civilian spending in the United States, it's now 10-to-1. Whereas if you compare us to the United Kingdom, that same ratio of military spending to civilian spending on international affairs is 3-to-1. There is some room for change here without really losing anything, in my view.

The second aspect I'd like to highlight is "smart-sourcing." I've been advising those who have said what we really need is not in-sourcing, which is the instinctive Washington reaction—"just bring it all back in-house," not really thinking what you're going it bring back in-house. I argue instead that we need smart-sourcing. What does that mean?

It starts off by just acknowledging how governance itself has changed, acknowledging the centrality of contracting and the private sector in the work of government. That means you've really got to recruit, train, and retain a work force of what I would call 21st-century network managers, which is something government is not used to doing. That's another way of saying part of our problem is we've got to re-imagine government for the information age. That's something that can be done.

The second thing we need to do, is what I have argued for on the Hill and have testified for three times in the last three months. I've argued that we need to ban the use of moving armed contractors in war zones, because soldiering is an inherently governmental function. Our current dependence on weapon-wielding private actors has blurred the line between the legitimate and the illegitimate use of force, which is just what terrorists want. That's what they seek to do, is to blur that line. In my view we shouldn't be aiding them in that blurring.

In devising plans for phasing out this practice we need to keep in mind that the reason the State Department hires armed contractors in war zones is because the military does not provide security and the State Department doesn't have in-house capacity. We need to examine this problem and think about whether we want to continue the path we have chosen thus far.

The third and perhaps the most important thing we need to do is embrace radical transparency. What do I mean by that?

In theory, the information age has made transparency very easy. You can simply post all the relevant contracts and a clear record of how funds were expended on the Web. That's what Web sites like USAspending.gov do. Legislation was championed by then-Senator Barak Obama that gave us USAspending.gov, which has the tagline "where taxpayers can see how their money is spent." That sounds really easy.

But it turns out to be not so easy. Great strides have been made in providing information to the public on a variety of topics. The stimulus package has its own Web site with information on contracts. The TARP [Troubled Asset Relief Program] does as well, financialstability.gov. The one thing that is lacking, is that information on subcontracts is unavailable. This is extraordinarily important, because much of this work gets done by a prime contractor and then that prime contractor can turn around and subcontract out the work, and that information is wholly unavailable to the public.

We have legislation on the books that said that was supposed to be available as of January 1, 2009. It is still not available. What that means in practice is that we're effectively pouring our taxpayer money into a black hole. That's in nobody's interest, particularly the interests of the American taxpayer.

It's a catastrophic state of affairs for both fiscal discipline as well as our cherished value of self-government.

If we are going to rely in unprecedented fashion on outsourcing the work of government to the private sector both in wartime and peacetime, and both to for-profit and not-for-profit organizations, this spending has to take place in the full light of day. Americans need to be able to see where their tax dollars are going.

Radical transparency will promote the right incentive structures for many of the people involved, which will preempt the need for unproductive regulation, because you will be encouraging self-policing behavior. What people do in the full light of day can be different from what they would be doing if they think that no one will ever discover anything they have done. That's why I'm an advocate of radical transparency.

Lest I be misunderstood, I'm well aware that the demands of national security must sometimes trump the public's right to know. But this imperative can be so easily abused.

Our enemy today is not another state, but a network of order-subverting terrorists and global challenges that transcend state borders. Fighting these new threats will demand unprecedented cooperation between the public and private sectors, unprecedented collaboration and information-sharing between federal, state, and local government and with our NATO allies.

Transparency serves each of these ends rather than undermining them. When our national security interests are properly understood, transparency does not threaten the national interest, but instead advances it.

I stand ready to be persuaded otherwise, but to date I have found most of the concerns about the costs of transparency to be misplaced, extensively focused on the short term at the expense of the sustainable, which is what we are all interested in.

While the inertia of the status quo is indisputably a powerful force, the positive aspects of the privatization of American power gives us cause for hope. That is, when we look at foreign policy today as it really is, we see that there are plenty of things that citizens can do, strategies that could be pursued by the general public over the heads of both government and even business.

In conclusion, the outsourcing of American power ultimately means we need a brand-new template for thinking about how government and the private sector should interact in the information age, both in wartime and in peacetime. The key players, however, are not just Wall Street and Washington, but each and every one of us.

Thank you for your attention. I would welcome your questions.

QUESTION: Susan Gitelson. Thank you for providing the solutions for the future. I'd like to go back to some of the problems.

Usually in this country, since we believe in free enterprise, many businesspeople, in particular, say you can't rely on the government bureaucrats and you should really privatize and let American business know-how deal with these problems. You are showing some of the shortcomings of the private sector. That is why it's so important to have a balancing and a critique and someone like yourself coming along.

There's another issue, and that is generally outsourcing is used in a negative way when it comes to giving away American jobs to the Indians, the Chinese or whomever. You probably just haven't had a chance to address this issue. In this economy a great concern is to find jobs for Americans, whether it's in the private sector or in government. The fact that there are Americans doing all these things, one would think would be a positive. We want to multiply the employment opportunities for Americans.

Of course, we also want to interact with others in foreign policy, trade, and many other ways.

ALLISON STANGER: That's a really smart observation. You're absolutely right. The whole impulse behind this privatization is a positive one.

This is not a partisan issue. Both Democrats and Republicans alike embraced outsourcing the work of the government to the private sector because they wanted to get around slow, sclerotic government bureaucracy and get things done in an efficient and cost-effective manner.

What's happened is, without us realizing, that impulse has gone too far in a number of ways because the private sector's job isn't to concern itself with the public interest. Its job is to concern itself with making money and being viable and profitable. We want it thinking about business, but we need government in that equation to ensure that things don't go off the rails. The real challenge is how you do that without undermining the enormous energy, initiative, and innovation that the private sector brings to everything it tackles.

I'm bullish on the private sector. But even someone like Milton Friedman, a real advocate of minimalist government, saw government as having core functions. We have lost that sense that there is anything that only government can do well, and I'm trying to restore that.

With respect to jobs, this is where we have to examine this whole macro problem of chains of contracting and subcontracting, because what often happens—and we can go through any project—is that the jobs are not going to Americans.

Take private security contractors in Afghanistan. We had the "Afghan first" policy, that actively sought to employ Afghans first. The result is we have 95 percent of security contractors in Afghanistan today that are local nationals.

This has caused a huge problem. Why? Both the House and the Senate have recently issued reports that show that taxpayer money is flowing through those contracts into the pockets of the Taliban. In other words, we are funding the people we are fighting against through this current system we have in place. Obviously that's in nobody's interest.

I just want us to examine the whole problem and think about it in a different way. The first thing you have to do is just acknowledge that something fundamental has changed, which is hard for people to do.

QUESTION: Susan Rudin. Are the contracts put out for bids, and who reviews those bids? Why are the contracts given to companies that are going to subcontract them? You're just giving money to the people who are going to make money and then there's no oversight whatsoever. Why can't it go right to the subcontractor?

ALLISON STANGER: That's a great question. That would obviously be wonderful for small business, because if the same big companies are receiving the contracts, there's unlikely to be real competition; you're unlikely to reap the benefits of real free-market competition if you have that kind of set of arrangements.

What I would suggest we do is consider who's going to be doing the work. The reason we can't do it, particularly with wartime contracting, is wartime contracting is emergency contracting. A lot of contracting is emergency contracting. The TARP had emergency contracting authority. In those situations, you just want to get the work done and you suspend a lot of the usual rules.

This is problematic because if you're in a state of emergency for eight to nine years, this is going to do all kinds of things to your country's bottom line. When I quoted those numbers from the State Department and the Department of Defense, 82 percent of the budget is going out the door in contracts and grants for Department of Defense, 83 percent of the State Department's requested budget.

Most people don't realize the reason why those numbers are so large is that we're funding those wars through supplemental appropriations, not through regular budgetary procedures. That's another green light for laissez-faire contracting, "We need this job done, someone do it, and we don't care how it gets done."

QUESTIONER: [Off-microphone] You wouldn't hire foreigners, would you?

ALLISON STANGER: You wouldn't. That's why I'm trying to get us to step back and say, "What are we doing?" and acknowledge that this is really in nobody's interest to continue down the path we've embarked upon.

QUESTION: Richard Valcourt, International Journal of Intelligence. Contracting is a big factor in our business as well.

The Defense Department in more recent times depends on an all-volunteer force in the military. The contractors are filling the personnel void, in most of these situations. How do you fill that void?

Do you at this point perhaps advocate the reinstitution of the military draft? Perhaps in this case support universal military training, since the military services are now kind of gender-integrated, so you have both men and women filling the void, again as government employees in the service, to fill some of the gap personnel-wise and eliminate the reliance on contractors?

ALLISON STANGER: Wonderful question.

We really have to restore the notion of national service, not just in the military, but national service more broadly defined.

My biggest concern about this country today is that we have become a nation of consumers. We need to return to being a nation of citizens. If a national service requirement of some sort, either military or otherwise, would advance that aim, I would definitely be in support of it.

I am a little bit uncomfortable about fighting wars that you simply throw money at, because it isn't good. It seems like it's good for our economy, because it's government spending injected into the economy, but I'm not convinced it has positive long-term consequences.

There is something also disturbing about fighting wars when the public is really disengaged from them. War is serious business. We're here to talk about ethics in international affairs. It strikes me that fighting wars in this way is ethically problematic.

You put your finger on a very important point.

QUESTION: This is a similar question to the one that was just asked about the use of professional armies and what you said about a loss of civic virtue. It seems to me that one of the big problems is the transfer of people who have been in procurement on the government side, whether in the Executive Branch or working in legislatures, and then moving them over onto the side either as consultants or working for the people who are contracting with the government.

I know in your book you talk about the need for some kind of a restriction on the ability to move backwards and forwards. I think it's a pattern. We see the problem in many other areas. We see it with people who worked for the SEC then going to work for the institutions that they were regulating. There's always the suspicion that maybe the possibility of a future lucrative job causes you not to be as rigorous as you might otherwise be.

So a solution to this problem, which obviously isn't very easily available, would be useful in many areas of government procurement, not just in military spending.

ALLISON STANGER: It's an excellent point.

It's a real conundrum, because you want the expertise of people in government. In some sense that revolving door serves that end of getting people really in the know in positions of power.

Unfortunately, it often sets up very perverse incentive structures. We're sort of assuming that the private sector is comprised of angels, that they're able to don different hats in different situations and not be compromised by enormous temptations. There are extraordinary individuals out there who can weather that challenge, but most people can't. You need to have some sort of system in place that addresses that problem.

For example, The Washington Post reported that 75 percent of the oil and gas lobby are former government employees. I have seen this pattern myself in doing work for government, where, just when college tuitions come due, the financial sacrifices really make themselves felt, that's precisely the moment where going to work for a contractor is enormously appealing. It serves your family.

That kind of a set of incentive structures is really a problem, because if you're supposed to be regulating and you are thinking down the road for your own self-interest, that you'd like to have that job with the private sector someday, that is probably going to influence how you regulate.

I'm increasingly convinced we need some sort of regulation mechanism that's akin to the Supreme Court, where it's an enormous honor to be appointed to this body, whatever it might be, and that's your job for life. You have all the experience, and then the crown jewel would be to be put in charge of the public interest in this sort of way. That's the sort of idea that I have been thinking about. Getting that into place is enormously challenging.

You can do intermediate things, with limits on the amount of time one has to sit out before one can go back in. That takes care of a big part of the problem.

What's clear to me is the system we have today is assuming that men are angels. You know, Madison told us that if men were angels, government would be entirely unnecessary.

QUESTION: Carol Spomer. It seems to me that outsourcing greatly masks the number of people dying and being maimed in the war efforts, because it's only the troops that are being reported as lives lost. It seems that the budget then with outsourcing is treated differently, so it makes it more difficult to pinpoint the enormous cost of the full effort.

My question is: Do you feel that there is a purposeful attempt to manage public opinion by reducing casualties, losses of lives, and the moneys expended by so doing?

ALLISON STANGER: That's a super question. When I go out around the country talking about my book, in the Midwest and so forth, people are really convinced that there's some sort of conspiracy out there, that government is doing this intentionally, because it's putting government work off the radar screen; whenever you contract out you can't be criticized. And it's true. You contract the work out, and it's suddenly shrouded in secrecy in a way it wouldn't be if you were a government employee.

Similarly, you contract the work out and suddenly government ethics standards don't apply to the person who is working as a contractor, even though they are ostensibly doing government work.

This is the standard response, "There's some kind of conspiracy at work."

What my experience has been, and what I have seen, is that this is just something that has happened slowly over time by well-intentioned people doing what they thought was best for their country.

Now it's time to step back and say, "We understand how this happened. Nobody is to blame." I really don't think a particular party is to blame for this, even though a lot of it was accelerated under the Bush Administration, because wartime contracting involves such immense sums of money. That's no point of departure for solving the problem. What's important is to acknowledge that this change has taken place and to have a public discussion about how best to get the country back on course.

The American people are hungry for that kind of conversation and would like, frankly, to have some leadership from people in positions of power on those issues. I hope we'll see that in the future.

The Congress seems to be focusing in on this more and more. When I first started my research, the standard response I would get from people in Washington was, "Nothing's changed. This is how it looks if you've been sitting in the same seat for a long time. It's just more of the same."

That's why I hope my Green Mountain perspective from the outside can illuminate some patterns that are more difficult to see if you are close to them.

Let's acknowledge there's a problem. Once you acknowledge there's a problem, you can do something about it. That's what I'm trying to do by going around talking about it.

QUESTION: Howard Lentner. As you've indicated, I think this means the erosion of the democratic system in the United States. The question is: How do we restore it?

It seems to me that one major contributing factor is ideology. The new liberal ideology that the private sector does things so well and the government really is incompetent has been a very powerful contributor to this development. Do you see any erosion of that ideology, or do you think it is as strong as ever?

The other question is how do we get this into the public process? Have you identified any groups or individuals advocating the recapture of the public interest and trying to find some way of bringing these matters into the debate?

ALLISON STANGER: We're at a really critical moment in this country. If you go back and read the Founding Fathers, you'll discover some really interesting things. I've been reading a lot of Thomas Jefferson lately for fun in the morning.

What you'll discover is that Thomas Jefferson says on a number of occasions that the whole reason the American experiment can work is because we don't have the vast disparities in wealth that Europe has. He says if we ever had those, the system would not function as we intended. That's essentially what he says.

When you read those founding debates in the Federalist Papers, I have this very powerful sense that we have reached a moment in American history where we need to have similar debates, and we need similar great minds to map out solutions, because the old solutions don't work.

We know that turning the clock back and reinstituting top-down government is a recipe for disaster. I was a student of Soviet foreign policy. I am well acquainted with command economies. Anybody who starts to tell me, "We just need more government employees and we need the government to do this," I instinctively respond negatively. It is not going to work to do that.

At the same time, to continue what we are doing now is a recipe for financial ruin. We really are at this moment where we need to return to big-scale, almost constitutional questions.

That leads me to tell you about a movement. You asked about movements. There is a movement. Anybody familiar with Larry Lessig, a professor at Harvard Law School? He has an organization called Change Congress. They are the institutors of the Coffee Party, which is supposed to be the counterpart to the Tea Party.

In other words, you look at the Tea Party, and they are enraged about a number of things. Some of their arguments are disturbing. But their core reaction is one that is shared on both the Left and Right. So how do you channel that energy, that anger, into something constructive and positive?

Lessig is arguing that we need—and I don't necessarily agree with this—a new Constitutional Convention. He wants us to reconvene everybody. He thinks that's the only way you can initiate a public debate.

I hear that and I start thinking about the Tea Party contributing enormously to that debate and where it might go given the current divisiveness in this country.

That's where we're at, a constitutional moment where tinkering isn't going to take us where we need to go.

JOANNE MYERS: I really want to thank you for a really wonderful discussion.