American governments collect and spend too much money. Each year, billions of dollars are wasted through fraud, duplicative and/or obsolete programs, and mismanagement. In the 1980s, the Grace Commission calculated that one-third of Federal expenditures should be characterized as waste. If that ratio holds today, the Federal government this year will round-file more than $1 trillion, an outrage of mythic proportions. As Americans look down the barrel of looming deficits and realize the boomer generation is about to make mincemeat of Social Security and Medicare, now is the time to begin trimming the fat from our bloated public sector.
Government overspending is nothing new. In 1952, Democratic Senator Paul Douglas identified four causes of what he termed the “elephantiasis” of federal bureaucracies. He noted that ”(1) the agencies have no incentive for cost control, (2) managers come to believe that their agencies are vitally important and deserve larger budgets, (3) managers’ egos and salaries expand as their budgets and staff expand, and (4) it is almost impossible to fire ‘deadwood’ employees,” as noted in Chris Edwards’ excellent book, Downsizing the Federal Government, a favorite of mine listed in Books I Recommend.
Senator Douglas’ analysis was spot on, and nothing has changed in the fifty-six intervening years. Government agencies never face bankruptcy. In fact, running out of money is a powerful argument for increasing next year’s budget. Kingdom building is rampant within governments of all stripes. Inflating the department’s assignments, trumpeting its indispensable mission, and hiring cronies improves a manager’s status and income. Cashiering unproductive employees is harder than ridding ourselves of Bill and Hillary.
Of course, the rock-bottom reason for government waste is: they are spending money not their own.
Multiple efforts to correct these problems have failed. “Vice President Al Gore had a ‘reinventing government’ plan to fix the bureaucracy. President Ronald Reagan appointed the Grace Commission to reduce waste. President Jimmy Carter proposed budget and civil service reforms to create a leaner government. Even President Herbert Hoover tried to reorganize the executive branch to eliminate duplication and waste. And President Taft appointed the Committee on Economy and Efficiency in Government [you've got to love it] in 1910 for the same reason.” Here’s the bottom line. Since politicians have a stake in big government, average Americans cannot expect public servants to fire themselves. We must do that for them. For today, here is one solution that could work wonders.
Currently, governmental budgetary units have a built-in disincentive to save money. If a department’s annual budget is $100 million, but only $99 million is spent in the fiscal year, that savings of $1 million can be a liability when it comes to the following year’s budget. “The Paper Shuffle Department didn’t need every penny it got last year, so let’s shift the unused $1 million to my very important Pencil Sharpening Department.” Either you get the idea, or you are a mid-level or higher government employee. The system forces managers to spend every penny budgeted to them. Years ago, I found myself in the middle of just such a scam.
I operated Caterpillar track-loaders for a company hired by the County of Los Angeles to clean out catch basins in the hills above the San Fernando Valley. It was June, the last month in the fiscal year. Over the period of a couple weeks, we moved from basin to basin, but the operation never varied. At 7:00 am, I would load the trucks, an effort consuming about an hour. The round trip to the dump site and back should have taken about one hour, so as I was finishing with the last truck, the first truck should have been returning. But, I didn’t see that first truck until 9:00 am or so, and every round played out the same way. We could have completed eight rounds. In fact, we never made more than three. I was so bored, after a couple days I brought reading material to the job. Moreover, working the largest catch basin took four days, during which we always had a swamp dozer and a water truck on the job site, machines with diametrically different purposes. Swamp dozers can operate in soil that is super-saturated; water trucks are required when conditions are dry and dusty. The ground was wet, so the water truck driver would fill his truck at 7:00 am, park by the roadside, and wash the street once at the ”end” of the day, about 1:30 pm instead of the usual 3:30 pm. We all signed our tickets for eight hours. I was working about three hours, and the water truck driver put in maybe 15 minutes. I really wanted his job.
My curiosity finally got the better of me, so I asked a County employee about the wasted time and money. “Oh,” he said without batting an eye, “we’ve got to spend some money by the end of the month. Too much money left in the budget,” his voice trailing off as he reached for another cup of coffee. Your tax dollars at work.
Here’s the fix. Rather than rewarding waste, let’s reward savings. If a budget is $100 million this year, but only $99 million is spent, the department gets $99 million the next year. If more than $99 million is spent during the current year, the department gets only $98 million next year. Even for NASA’s budget, this is not rocket science. The numbers here are arbitrary, but the concept is not. Do we need the Clintons to devise a clever saying: “It’s The Savings, Stupid!”
Chris Edwards, among many others, has proposed hundreds of ways to trim waste in government, too many to list here. However, it will never happen if average Americans don’t demand action, and accountability. If we shoot just one or two wasteful department heads — just kidding.
The waste is no joke. If government dissipation continues for even another decade – into the age of boomer entitlement – we’ll have spent our way into economic oblivion, a fate we’ll all deserve if we let it happen.
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Posted by Jerry Pomeroy in Budgets, Economics, Limiting Government, Politics, Video