Thursday, July 21, 2011

Budget Cuts Aren’t a Bad Thing

Some of you might just take that as gospel fact without me even saying it, but I think some people don’t really think about how much it actually costs to operate government.  I’m not going to get into numbers, because I hate them, so I’m going to just stick to concepts here.  Let’s start off with an example from my own personal experience.

When I was in the Navy I was stationed on the USS San Jacinto (CG-56).  Every division got a budget for the year for office supplies—pens, paper, chairs, whatever we needed.  Well, towards the end of the fiscal year we discovered that we had not spent about $800 of our supply budget.  If you don’t know how that all works, you either spend the money or give it back.  It doesn’t accrue after the fiscal year.

Well, what do you think happens if you give back $800 (mind you, we wanted for nothing and still had that surplus)?  For the next fiscal year your budget will be $800 smaller.  So what did we do?  We got Leatherman knives for each of us.

You might think that counts as waste, fraud, and abuse, but think about it: we’re on a ship, and on a ship everyone is expected to have a certain level of competency in seamanship.  Any one of us could have been called to help out on a Replenishment at Sea (RAS), or sea and anchor detail.  And we all had to perform various maintenance tasks.  So although we didn’t really need the Leathermans, their purchase was justifiable, albeit in a roundabout way.

That’s how government operates.

Government will never operate more efficiently just because we tell the people to do so.  If the Supply Officer had just told us, “you’re getting $800 less a year,” we would have dealt with it and been just fine.  Now if one year we ended up needing that $800 for something important, we would likely have been able to recover some of it.  But until that point, we could have operated efficiently without that extra $800.

You can bet that government agencies operate in the same way.  They’re given a budget, and they will always, always spend at least that much so as not to lose the funding for the following year.

It’s kind of like Brewester’s Millions, as mentioned yesterday by Silverfiddle over at Western Hero: spend all your money, even if it’s on ridiculous things, or you get none (way less) back.  When you think about spending at the agency level, doesn’t it seem kind of stupid to get angry at politicians who want to make budget cuts?

"If you don't like it then you can go fuck yourself."
Of course my personal example doesn’t explain the entirety of the issue we’re in, but I think it helps to at least explicate the inefficiency aspect of it.  Here in Ohio, Governor Kasich, for whom I voted, is growing unpopular because of his budget cuts.  But he understands that these are cuts that need to be made, because these government agencies can operate fully and efficiently on less.  We just have to make them do it.  I know that there’s a lot of talk about entitlement cuts, but shouldn’t everyone learn that they have to be more efficient with the money they’re given?

When you take into consideration that welfare recipients get more than they need to be comfortable, it kind of makes you scratch your head when people get upset about cutting welfare benefits.  When I worked at the Godman Guild, I worked with at-risk youth, most of whom lived in inner-city Columbus.  One of the stipulations for them to be in our program was that their family had to be on some type of government assistance whether it was food stamps, the income thing, or whatever.

Unless you visited their homes, you would never know that they were poor, because you had never seen so many god damned spotless pairs of Jordans, or so many pristine pairs of Sean-John jeans in your life.  The clothing of these poor kids (poor in terms of socioeconomic status) was more expensive than mine.  I don’t know about you, but I find that fairly fucking infuriating.  And in case you think they might have purchased their clothes at a thrift store, those Jordans usually still had the tags on them (eye roll).

Comin' again to save the mother fucking day yeah!
Harrison over at Capital Commentary wrote an excellent piece yesterday about the wasteful habits of Americans.  I think he was spot on, and wastefulness has infected not just our middle-class and upper-class citizens, but our government and even our poor.

A country in which even it’s poor people can afford to be wasteful is one that seriously needs to take a long hard look at the principles behind its money-spending habits.


Silverfiddle said...

Great point driven home by your personal Navy story. I can confirm that similar things happened in the Air Force.

I was in during the Clinton 90's when he slashed manpower and our budget. We all thought it was the end of the world, that our beloved military machine would collapse.

Guess what? The austerity forced us to throw the deadwood over the side and to weed out inefficient practices, and thanks to the Clinton cuts, we came out a leaner, meaner fighting force on the other side.

Based on this personal experience, I believe in my heart every government agency large or small would benefit from a 25% cut.

Anonymous said...

I know that happens in some higer ed institutes too.....

As far as being wasteful..ya. i would go on for hours about how avertising has us buyign shit we dont need...

I dont understand why more of this shit isnt more closely regulated... i mean dont get me wrong.. personal choice etc... but if you are taking aid from the govt i fully belive that they should have a say in what you are doing. if your getting fatter, you should be eating less. OR working out more.

If you dont have a job, you probably dont need TV cable TV (yes to internet, no to tv). you should be spending that time working on your resume or actually interviewing.

as far as the govt' spending goes, i do not understand. why, oh WHY do they punish the departments for being thrifty? that makes no sence ot me at all.

i mean seriously, does anyone know?

Peter McCullough said...

Remember the gas crunch of 1979? My company had it's own gas pumps. Gasoline was alloted on a monthly basis. If at the end of the month there was unused fuel, employee's automobile tanks were topped off and the remaining supply pumped onto the ground and washed away. If not used, as in Jack's case, the fuel allotment for the following month was reduced. The understatement here is that the douche bags in D.C. operate on this same premise. Between the socialist pigs on the left and the chicken shiters on the right, we are fucked.

Jack Camwell said...

Cutting the funding based on surplus is not punishment, it's just using that leftover money for other purposes, or just plain saving it.

If your department receives $1000 a quarter for office supplies, and the deparment only uses $500 of that money to operate fully and effectively, then it's pretty silly to continue to give that department $1000 every quarter. It would be better to cut it back to something much closer to $500, say $650 just to give them a little wiggle room.

It's not a punishment, it's fiscal responsibility.

William McCulloughc said...

Reminds me of Swamp People, those Cajun alligator hunters who if they fail to fill their quota of alligator tags, get less tags the following year - bureaucracy in action - keeping it real.

Peter McCullough said...

The point is gov't budget and overall fiscal policy fosters fear and dishonesty. If my quota of stuffed artichokes, italian style, will be cut if I don't eat them all I will gladly pay a visit to the vomitoriam rather than face a loss of that magnitude in the next budget.

Jersey McJones said...

In both the private and public sectors, bureacracies have a bad habit of installing these simplistic and misguided budget structures, in which they attempt to predict the costs of the future.

Seeing as how no one has scientifically proven we have these amazing ESP's, we pretty much have to assume that it's a stupid way of funding things.

We can, to some extent, estimate what things will cost, but depending on what we're predicting, our estimates can have a wide range of accuracy.

Bureacracies like this system, in that they are doing much of the predicting for themselves, and thus always have that impetus to raise the estimate.

The better system is the one most of us ordinary human beings apply: We don't just assume what things will cost - we try to get a better deal.

The key is auditing.

Take good ol' goofball Jersey McJones...

I'm renovating my home with my family. I'm converting a garage into a bedroom, bathroom, and washroom, and separating a third of my house into an apartment (family thing... sigh...).

Anyways... I negotiated and balanced the best deals, the best estimates, the best contractors, I could. When I told the family about the deals I was getting, they were astonished. I'm added tens of thousands of dollars to the home for about 50-60% less than they ever thought possible, with high-rated, quality products and people.

That's the way smart people get things done - we find the bargain - penny wise and pound smart.

In the private sector, we use auditors, not just to make sure we aren't playing hanky panky and/or to prove it, but to see how we can improve our budgets. To be more cost-efficient.

It would, however, take yet another large bureacracy to do that with our own government, especially when considering how many layers of gov't we have - local, municiple, county, state, and federal.

It's dangerous to financially reward cuts because it can lead to poor products and services, but it's naive to assume bureacracies won't inflate estimates.

Now, you don't want to privatize everything, because then you'd only have incentives to raise estimates, though producing a poorer product.

Remember, some things are not immediately profitable to an individual, but are profitable in long run for them and everyone else. That's where gov't fills the roll.

When it comes to spending (I'm more concerned with borrowing, myself), we have to find that balance between incentivizing efficient budgets and providing a quality product.

I say an effective auditing department, made up like the CBO, would do the trick. What we have now is a joke.

Congress could do this by the way.

Don't expect it from any Republicans, though. That's the steaming pile of morons who cut the IRS, regulatory bodies, and any budget for keeping an eye on the hanky panky.


LD Jackson said...

When you stop and think about how much money our government wastes, it's very troubling and sad. Instead of employees being rewarded for being thrifty and wise, they get into trouble for trying to do the right thing.

Silverfiddle said...

Where in the heck did that picture come from? It's interesting. Love to know the background.

Jack Camwell said...

Great sentiments from all.

Jersey: to be sure it's more complicated than I lay out, at least in the solution. But my purpose here is to present the problem. I don't pretend to have any viable solutions, and given from the first picture in this, numbers are not my forte.

And not only do I not expect it from Republicans, but I do not expect it from any politician. My thought is that many Democrats would oppose running government in this way because it would be too much like running a private business. Privatization is not always the answer, but government can take a lesson or two about efficiency from private businesses.

Larry: Yes it is sad, but I have to stress that cutting funding is not a punishment for being thrifty. Any business owner would cut costs where they see fit. If I have misinterpreted your words, please say so.

And Silver: I just image searched "fuck math," and that's what came up =)

Harrison said...

Government is the least effective way to allocate resources. The budget story... that's very real and I've heard it from many people.

LD Jackson said...

No, cutting funding isn't punishment. What I was talking about is how some employees are punished for being thrifty with their funds. I was told a story this week from a woman who used to work for the court system. Long story short, she was told that she was making the rest of the department look bad because she was doing the right thing. In no uncertain terms, she was told she was to stop or there would be a problem. She didn't last very long, less than a year.

Silverfiddle said...

I meant the picture of the person in the flag shirt. that one's priceless

Jack Camwell said...

Wow, that's pretty ridiculous Larry. Thanks for sharing that story.

Government doesn't operate efficiently because it's money comes from the people, and unlike a private corporation that makes its money off of its product, the people can't change brands on the government. We have to pay taxes or we face the penalty. Government agencies know that they'll always have money, and that they'll likely have all the money they ask for.

Why operate efficiently when you know you don't have to?

Jack Camwell said...

And yes, Silver, it's pretty damn awesome. I yahoo image searched "America Fuck Yeah."