Inefficiencies within the auditing process raise questions about whether we are misusing taxpayer dollars in the name of accountability and transparency. //

Hugh Howard
4 days ago
This is the first time I've seen a reference to zero-based budgeting in any discussion of federal agencies. Zero-based budgeting is the norm everywhere BUT the federal government. Ask yourself why this is true. It is past time for a change.

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RTUT Hugh Howard
4 days ago
Good comment... Your comment got me hunting up an old article, Hugh:

Baseline budgeting is the product of the Congressional Budget Act of 1974. That’s when this process commenced that has now, in our opinion, gone so terribly wrong. The Act, innocently enough, directed the Office of Management and Budget (OMB) to project Federal spending for the, then, upcoming fiscal year, assuming that the, then, current level of government services would continue. It is that assumption that has now morphed into the annual practice of casting in concrete whatever the government is spending in any given year adjusted by whatever else the government decides it will do, along with the added cost of inflation. We are, thus, each year compounding the cost of operating the government. What the government tells us are spending cuts are really no more than reductions in the rate of increase. For the first few years there really was no formal definition of what baseline budgeting was other than a continuation of services as provided in the prior year. But then, in 1987 Congress added annual inflationary adjustments to the definition of baseline budgeting and we’ve been stuck with compounding budgets ever since.

There have been serious efforts to reform the process such as the Gramm, Rudman Hollings Act, and the Budget Enforcement Act of 1990, which provided rational multi-year targets, but the Senate and House members who wield budget-writing influence invariably protect their respective turfs by weakening all reform proposals. The budget process itself is not fatally flawed. Unfortunately, it seems that many of the men and women we elect and send to Washington are. The US Senate has refused to pass or even consider a budget, even the President’s own proposed budget, for the entirety of his Administration. Budget rhetoric is often so misleading as to be all but meaningless.

Let’s say a government agency is spending$250 billion and, using baseline budgeting, is slated to have its budget increased to $275 billion. The Administration (or Congress) may, instead, call for an overall increase to $262 billion, or, an increase of $12 billion for the next fiscal year, and then promote the new budget as a $13 billion dollar cut in spending ($275bln – $262bln = -$13bln). This is like an obese individual who is expected to gain 100 pounds gaining only 75 pounds and then claiming he or she lost 25 pounds. Sounds absurd, doesn’t it? Yet, that’s precisely how our government justifies its profligacy.

Given that repeated attempts to reform baseline budgeting, including budget caps and pay-as-you-go rules that would require that all new spending be compensated for by either increased revenue or reductions elsewhere invariably fail for the reasons cited above, we think its time to reconsider a modified type of zero-based budgeting, which is commonly used in business.

Realistically, pure zero-based budgeting would not be practical for the operation of the federal government. The very process of requiring every agency to re-justify every item of expense each year would become costly and wasteful. Building each agency’s budget from the ground up each and every year would take an entire green-eye-shade bureaucracy in and by itself.

We think a workable compromise between baseline budgeting and pure zero-based budgeting could involve a combination of so-called sunset budgeting for all new programs coupled with an alternate budgeting requirement for all continuing programs every year. It might work like this: All new spending programs would have a mandated sunset provision, meaning the program would expire on a date certain, unless reauthorized by a super majority in Congress for an additional life, not greater than its original mandate. Budgeting for all continuing or permanent programs (both discretionary and non-discretionary) would require the annual submission of alternate budgets at, say, 90%, 95% and 98% of the prior year’s expenditure for that budgeted activity. This would require that every agency or department head go through the process of determining whether there is a more efficient or less expensive way to provide the particular government service for which he or she is responsible.

We believe the cycle of compounding expense must be broken before the government itself goes broke. Anyone who believes the country can’t go broke because it can always raise taxes or print the money it needs is simply wrong. At some point squeezing taxpayers, regardless of from whom we squeeze, or running the presses to fund our profligacy will enfeeble the entire nation. Growth will diminish, and our currency will no longer be the prized coin in the realm of a free market. Time is growing short. The clock is ticking.