An Immodest Budget Proposal
..saving the US budget from itself
By Jmotivator
As the US budget deficit approaches $40 trillion, and US debt service becomes the single largest line item in the federal budget, it's clear that something needs to be done to curtail federal spending. I think the solution if fairly simple, but to understand the solution you must first understand the problem.
Part 1: More Power, More Problems
To understand the problem with the US budget you must first understand the problem. The problem, put simply, is $7 trillion. That amount of money represents an immense amount of power, the kind of power that is, in unequal parts loathed and lusted for. Lust is winning handily.
Having even a fraction of that money at your disposal grants the decision makers an immense amount of power. Asking Government to cut a budget is something akin to convincing someone for help in throwing the One Ring into Mount Doom. They will go along with you so long as being agreeable gets them notoriety and some semblance of power, but when the time comes to actually throw the ring in the volcano, they'll probably bite your finger off.
So the problem, as always, is power. Some might argue that money is the problem, but money is just a handy way of quantifying power.
Why the Federal Budget system fails is because, since at least the Impoundment Act of 1974, Government spending has been a Congressional monopoly. While it is true that Congress constitutionally has the power of the purse, the Impoundment Act essentially removed the checks and balances of that power. A President can't challenge or change a budget item without Congressional approval, and recission of a Federal Budget is like asking Congress to throw the ring into the volcano.
Luckily, there is a long standing, tried and tested answer to combat Power: Greed.
Part 2: Problems beget Problems
OK, maybe I was saying that for shock value but, in the end, Greed is the solution to Greed. In economics that Greed would be called Competition, and you just need to create competition to solve a Monopoly problem. To understand this we will need to discuss how Congressional Budget monopoly impacts Federal spending.
The current Budget Monopoly has created a Government budgeting system that rewards one thing and one thing only: Spending 100% of your Budget. If you spend less than 100% of your budget you are in legal trouble. It's not really a joke to say the easiest way to get fired from a position of power in the US government is by not spending your whole budget in a fiscal year.
Every July starts the Budget Panic Season in every Federal Agency. Agencies have a mostly fixed annual budget so it is necessary for every federal agency to be fairly conservative with spending for most of hte FY so that they have a "rainy day" fund if there is some major, unforeseen crisis that needs cash. Generally that crisis doesn't come very often so every agency is left in July with only 3 months to spend that rainy day fund.
Federal Spending is, at its best, slow and meticulous, but the normally calm and controlled budgeting of every fiscal year suddenly turns crazy in July. Most agencies don't really care what they spend their money on between July and September, only that it gets spent.
For instance, ask anyone who has worked in Federal IT for a few decades how July-September usually works. Back in the 2000s federal agencies would, like clockwork, buy electronic White Boards to round out their annual budget because at the time these Whiteboards were $10,000 each so the math was easy. They didn't buy PCs to connect the boards to in order to realize the use of the "electronic" part of these whiteboards, though, because that would make the buy too complicated.
The end result that that if you did an audit of Federal properties and checked their conference rooms you will still find those $10,000 White Boards, still not plugged in.
These agencies wouldn't consider those whiteboards a waste, though since they accomplished the only task they were purchased to achieve: They helped spend 100% of the annual budget.
So how do we fix this?
Part 3: Let's get Wonky
So now we have established both the source of the problem, the problem as it is manifest in the annual budgets, and what perpetuates the problem. The only problem is how do we fix it? With an eye firmly set on passing Constitutional Muster, I have a three part plan that will fix the Federal Budget. I won't make any claim as to a dollar value saved, but if implemented, the biggest problem we would face long term is spending too little.
Reform in three "easy"...
1) Amend the Impoundment Act to make Federal Budgets soft mandates. Return the checks and balances to the Budget process. Make recission easier, with a declaration, rather than a request. Make the deadline for any recission request be June 30th every year, the day before the crazy begins.
2) Require Congress to institute Goal Oriented achievement tracking, with every Budget and every agency budget there will be established minimum performance standards for that department to go along with the budget that Congress assumes will be needed to achieve those goals.
These goals will be graded on a point system and that point system converted to a final % Achievement score. An agency that earned all achievable points would get 100%, and so on.
3) By September 30th all agencies that submitted June 30th recission intents will submit an updated Recission final report on how far under budget the department actually ended up. This final recission request is automatically approved IF the final recission report confirms that the agency making the request met all mandated goals set by Congress in the FY budget.
That final budget recession will then be used as follows:
a) The valuation of the Final Recission valuation for the department will be Money Saved * Achievement %. So an agency that Saves $100 million but only hits 50% of its goals will have a Final Recission Valuation (FRV .. government loves abbreviations) of $50 million.
b) The FRV will be used for three calculations:
1) 5% of the FRV will be a Bonus set aside that will be awarded evenly to all agency employees at the end of Q1 of the subsequent FY (a "Christmas Bonus")
2) 10% of the FRV will be set aside as a Severance fund for those who lost their jobs due to budget cuts.
3) 5% will be transferred to the SSA
c) The remainder of the Final Recission will be be cancelled
d) The Soft budget that is passed by Congress and signed into Law for each FY will maintain the prior year's budget Cap unless there is an appreciable decrease in the agency Goals from FY to FY. When Goals of an agency are decreased, the budget to achieve those goals can also be decreased.
This policy will sunset within 7 years of it passing unless ended by an act of Congress, or extended by an act of Congress.
Conclusion: What's the point?
This system is created in order to tap into the competitive and self interested nature of mankind. It doesn't really force anyone to focus on cutting budgets, it makes cutting budgets in every government employee's self interest.
It breaks up the Congressional Budget monopoly by putting the real power of Government budgeting in the hands of ALL government employees, while not actually removing the Congressional constitutional mandate.
The only real corrupting incentive in this plan is for Congress to artificially overbudget in order to increase Government Christmas bonuses, but even if that is done, it means that the Government agencies achieved their goals, and only 20% of that Overestimate would actually be funded. We would still save money in the long run.
The FRV would also prevent truly greedy agencies from spending nothing and just pocketing that 5-10% since shuttering would yield $0 in the FRV account.
Make Government WANT to cut budgets, and make it worth their while, and the Government will happily cut their budgets.
