Our government’s fiscal culture must change if we are serious about saving money.
Across agencies, people charged with managing taxpayer money are taught “if we don’t spend what we asked for this year, we won’t get it again next year.” True or not, managing money this way, and perpetuating this belief among subordinates, is an irresponsible disservice to American taxpayers.
The accuracy of this aphorism is largely unknown because no one dares test it. What is true is that it causes indiscriminate spending late each fiscal year, with budget managers scrambling to spend every dime. Most of the so-called savings realized by responsible spenders is expended simply to ensure the money is gone, resulting in waste and unfounded claims of saving.
Although military budgets have increased in total dollars, they have become much more restrictive since the end of the Cold War. As a result, saving money has become fodder for evaluations and awards. It would be instructive to examine even one year of performance appraisals in any federal agency and document the total monetary savings claimed. That total would easily climb into the hundreds of millions of dollars government-wide and lead reasonable people to rightfully ask where all the money went. In every case it was spent elsewhere, often unnecessarily.
One of the worst-kept secrets in the military is that not every program is broke. In many instances they are flush with money. This is especially true in Fiscal Year 2011; the extended Continuing Resolution—which severely restricted spending—has caused many programs to be under-executed. If anyone believes that these large sums of money will be saved and returned to the U.S. Treasury, they are sadly mistaken. Funds will be transferred to programs that are over-spent, poorly managed, or underfunded (according to program owners, not congressional authorizations). Even worse, much of the money will just be wasted.
Changing this spendthrift culture is no easy task because “spend it or lose it” is so deeply ingrained. We need a system that incentivizes savings and empowers budget managers to literally just give back those funds. Saved money could be held to meet future requirements (theoretically lowering budgets in ensuing years) or be used to lower the national debt.
Even responsible financial managers have little incentive for saving money early in the year because it invariably leads to a crisis later. Moreover, there is no incentive for saving money late in a fiscal year because there is too little time to spend it elsewhere. In reality, every penny saved adds to the year-end “crisis” and results in often reckless spending. It is common knowledge that agencies and organizations stock up on expensive electronics, office supplies, and furniture late in the year. In many cases, those purchases replace items acquired just a year earlier under the same circumstances.
Financial managers and program sponsors should have the option (and responsibility) to return unspent funds to the next highest echelon of leadership, who in turn must also forward it or justify expenditures with close scrutiny. Evaluations statements and award justifications should be accompanied by verifiable evidence that programs didn’t suffer due to savings initiatives and that unspent funds were returned. Eventually, some portion of saved money would find its way to the top with nowhere to go but back to the Treasury.
Sadly, no one within the federal government has the courage to challenge the perceived truth that under-spending a budget will result in lower funding the following year. Even worse, while it’s possible to justify over-spending and acquire additional funds, there is no avenue for responsible leaders to return saved money to Department of the Treasury coffers.
Leaders are quick to claim savings but are not willing to justify unspent funds. The fact that savings need to be justified, not simply stated, is evidence enough that our wasteful culture needs to change.
If we really want to save money and lower our national debt, we must truly incentivize savings and provide responsible fiscal managers a means to just give it back.