There is no mystery to budgeting. Whether you manage the finances for your family, your little league baseball team, or your business, you and everybody else in the private sector makes spending decisions the same way: you determine how much money is available, and you set priorities for how to spend (or save) it.
Why is our federal government incapable of writing and managing a budget?
Those of us who live in the real world use a process called zero-based budgeting. You may have never heard of the term. It is such a common-sense approach that we all do it instinctively. We categorize our spending into “needs” and “wants”. Needs get priority. We provide our families the necessary things like shelter and food before we start thinking about vacations, big screen televisions, and concert tickets. If there are remaining “discretionary” funds, we decide how to spend or save them.
Unfortunately, that’s not the way that government – especially the federal government – thinks.
The way government has operated for many years, every department is entitled to the amount they spent last year, plus an increase. Call it “continuing resolution”, “continuing appropriation”, or whatever – I call it flat-out laziness. One of the primary responsibilities of our congress is to make sure that the funds taken from citizens are necessarily and appropriately spent. Oversight of government spending should be priority one. Unfortunately, it gets little, if any, attention from our elected officials, who spend their days pondering such weighty issues as whether the one tenth of one percent of the population who are sexually confused should get to choose which public bathroom they use.
You see, it is hard work to dig into the details of how each department and agency spends its money. It’s much easier to just give each whatever amount they got last year, plus a kicker – because the employees probably deserve a raise, right?
Wouldn’t it be a refreshing change if congress did its job and started managing our money the way the rest of us do?
Maybe there is hope. I asked my congressman, Mick Mulvaney (R-SC), who sits on the House Budget Committee, if there is any chance that the federal government might adopt zero-based budgeting. I was surprised at his answer. “I fully expect the House to pass budget reform this year, and that will include zero-based budgeting,” Mulvaney said.
This could be big. Existing programs are never cut back, only increased. And new programs require new funding. Is it any wonder our national debt spirals out of sight? Imagine our government agencies having to justify every program, every expenditure, every employee, every line item, on a yearly basis. Just like businesses do. Just like your family does.
“There is a chance it will pass and get signed,” Mulvaney said. “The budget process is really, really boring but really, really important. And it hasn’t been reformed since 1974. It will be the biggest story you won’t hear much about in DC this year.”
Some political analysts advocate the “penny plan” as a budget-balancing measure. The penny plan would cut one cent across the board from every dollar the federal government spends for five years, and then put a cap on national spending at 18% of GDP. Mathematically it works, but it doesn’t address the fact that some spending is totally wasted, while not enough is allocated to other important work that taxpayers would support. Cutting back on totally worthless programs while starving worthwhile ones is not good oversight.
Many programs, like the corrupt, obsolete Export-Import Bank, continue year after year with no justification other than inertia. To this point, Congress hasn’t been able to muster the willpower to put these programs to bed even after they have long outlived their purposes, and they continue to stumble around like aimless zombies lost in timeless hell. If every program had to justify its budget annually, we could quickly gain the upper hand over our exploding debt.
Here’s hoping the most important number in government this year is zero.
Tom Balek – Rockin’ On the Right Side