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O'Neill: U.S. lacking leadership

| Wednesday, Oct. 10, 2012, 12:01 a.m.

Paul O'Neill is on a one-man crusade to change the national dialogue about America's problems, including ballooning national debt, a health care system that injures patients and an education system that's failing many students.

“This is what I wish our politicians were talking about,” O'Neill, former Alcoa Inc. CEO and Treasury secretary under President George W. Bush, said on Tuesday.

Speaking to the Economic Club of Pittsburgh, O'Neill told the audience of about 50 people that the only way to fix those three problems is through strong leadership that's willing to address the fundamental inefficiency in each system.

Take the complicated federal tax code, which is “proof that we are not an intelligent people,” he said. It costs the government about $420 billion a year to administer, under-collects by about $400 billion and doesn't raise enough money to cover federal spending. Expenses have outpaced revenue by more than a trillion dollars for the last four years.

O'Neill would throw out the tax code, which he said totals some 60,000 pages, and replace it with a value-added tax, which applies to purchases of goods and services.

It's nearly impossible to avoid paying a value-added tax and it's much less costly for the government to oversee, he said. And it could be structured in a progressive way so that the poor would pay a smaller percentage on their purchases than the rich.

Another example of government inefficiency is the Dodd-Frank Act, O'Neill said. The 2010 law was passed to bring new regulation to Wall Street and the banking industry in an effort to prevent another financial crisis.

The law is about 2,500 pages long, but really only needs to be two pages, he said. The first page would state that all homebuyers must provide a 20 percent down-payment to get a mortgage. The second page would require all financial institutions to keep 20 percent equity in the bank.

Those two provisions “would forever prevent” another financial crisis because homeowners and banks would be substantially insulated from a drop in prices and prevented from taking on more debt than they could handle.

In health care, O'Neill said there is room for significant gains in productivity that could improve the quality of health care and reduce cost. He said the average hospital nurse spends half of his or her time performing activities not directly related to patient care, which leads to patient falls, infections and medication errors.

“There is no area in our society where there is more opportunity for productivity improvement than in health care,” he said.

He was particularly critical of UPMC, Western Pennsylvania's dominant hospital system, which has been touting its inclusion in U.S. News and World Report's ranking of the top 10 hospital systems in the country.

The magazine ranking is “a popularity contest, not a quality referee,” O'Neill said. He suggested UPMC remove banners advertising the ranking and replace them with digital signs showing how long it's been since one of the health system's patients contracted an infection from its hospitals.

“That would make a difference,” he said. “They wouldn't get above five minutes.”

UPMC officials disputed O'Neill's characterization of the U.S. News ranking and said the health system is a leader in reducing hospital-acquired infections.

“When UPMC benchmarks itself on two common hospital-acquired infections — central line associated bloodstream infections and urinary tract infections — we are significantly below the national and state infection rates,” said Tami Minnier, chief quality officer. “We continue to strive toward elimination of all infections to protect the health and safety of our patients.”

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or

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