A simple budget fix idea

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Politics wouldn’t be politics if it weren’t for the endless pissing match that is the budget decision making process.  The number of governments in the US whose budget is in the black is in quite a small minority now, and Americans want the budget balanced.

The budget balancing process has traditionally been having Congress trim the budget and then dictate to all the parts of government how much money they get (which you have to admit gives you some pause, considering that Congress gets to determine things like their own pay, but I digress).  This approach causes endless arguing and politicking like you wouldn’t believe, and I’ve read about California’s budget woes enough years in a row to be of the school of thought that this doesn’t work for us. It was Einstein who said that insanity is doing the same thing over and over again and expecting a different result, and so now it seems Einstein is calling us insane.  So, I propose we fix this problem in a different way.
I’m going to use a tool that has yet to be used by Democrats or Republicans: common sense.  Instead of providing wharrgarbl and opinions about the level of funding the entire spectrum of government departments (read; departments neither I nor Congress know jack shit about) will receive, I’m going to examine a systemic problem with budgets, and that is the “use it or lose it” mentality. Governments aren’t the only entities with this problem; I’ve seen it everywhere, but governments are place we need to fix it, and soon.
I worked at a company that recognized this “use it or lose it” issue, and offered a simple solution: don’t use budgets.  Instead, when making any decision involving spending money, people should ask themselves whether it’s really necessary to spend the money on that, and asking themselves whether they’d spend their own money on that thing.  The company’s been growing at an average annual rate of 30% over the last 10 years, and that policy seems to have worked.
That isn’t my solution, but it’s food for thought.
My solution is borrowing from common practice in the private sector, and that is incentivizing people to remove inefficiency from operations.  Translated, that means giving people money to save the company (read; their government department) money.  This can happen in a few ways:
  • Any employee can have the opportunity to show ways to save money on something, whether it’s a material thing being purchased that’s unneeded, or an inefficient process that can be streamlined.  If it provides one-time savings, give the employee 10% of those savings. If it permanently reduces the cost of something year after year, give the employee 20% of the savings from the first year.
  • Give managers and directors these same incentives for improving efficiency.  Here there is going to be a focus on eliminating extra staff, and keeping on only the best staff, and adjusting pay so that you retain the best staff.  If you want to be run efficiently, you want only the best people. Anything less, and you’re usually adding dead weight.  Offer the same 10% and 20% incentives.
  • To prevent abuse of these incentives, some checks may need to be in place. For instance, if a director cuts 90% of staff to cash out, saving a boatload in FY 2012 but causing mayhem that causes the department to need 2x the money in FY 2013, the director can’t just cut back again in FY 2014 and expect another bonus.

This approach has the ability to be far more effective than any other cuts, because only the people within a particular organization or group know it well enough to know its inefficiencies.  And by addressing inefficiency, we can cut budgets without cutting services.

Opening these incentives up to all workers is a boost for morale.  Workers need not feel they’re on the chopping block if they know that their hard work finding inefficiencies to crush will be rewarded and surely valued as directors decide who to retain.
I feel a program like this has the ability to transform our government departments from places associated with slowness and laziness into efficiency-seeking missiles constantly on the prowl for inefficiencies to obliterate.  And by causing these departments to be more introspective of how they are working, we can perhaps tackle inefficiencies that are the result of a lousy structure and hierarchy, which a normal budget cut might not previously have tackled.
This isn’t a difficult solution to come up with, and it’s proven to be quite effective. So, why is it that it hasn’t been implemented? Are our elected officials more interested in using budget talking points as political leverage rather than actually doing something that would alleviate not only the symptom, but one of the root causes of the symptom of government deficit spending?

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