It’s Not Your Money! A Radical, But Necessary, Solution to Government Waste

In the Congressional hearings on the GSA excesses, several members of Congress expressed outrage about the way GSA executives spent money on meetings – lavish hotels, parties, gourmet meals, etc.  More than one committee member shouted out, “It’s not your money!”  But for all practical purposes, it is the executive’s money.  They receive money in their budget that they have the authority to spend much as they please.  They make decisions every day about who will get the money, how and when it will be spent.  They fly where they want, stay where they want and eat where they want.  No they didn’t earn the money; it comes from the taxpayers. I have written on the problem of government spending before and will doubtless, do it again.  I have stated that government spending will continue to grow because the contingencies favor more spending with little downside.  What is the penalty for asking for more than you need?  What is the reward for asking for more than you need?  The worst thing for asking is that you won’t get it.  The best thing is that you will get it and if you don’t ask, you will surely not get it. 

It is unlikely these days that any boss will say, “Hey I have some extra money.  Do you need any more?”  Although, having worked in government I must say that it is not out of the realm of possibility.  Every year Congress seems to struggle with cutting the budget.  Every congressperson favors cutting any part of the budget that doesn’t impact their congressional district or their chances of re-election. I have a radical solution.  Let’s make it their money!  Give the executives and managers a financial stake in how much they spend.  In business, author Bill Abernathy (Pay for Profit) calls this “profit-indexed pay.”  In government it would take the form of efficiency or proficiency pay.  That is those government managers who demonstrate the ability to do more with less will get a part of the savings.  I know that on paper this kind of program presently exists, but in practice I am sure that it does not. 

If it did we would see billons in savings every year. I have often heard that, “In order for things to change around here, many have to retire.”  One way to get rid of entrenched managers who have grown up under the system of ask for four, expect two and get one philosophy of budgeting, we need to go to what I have named “the Buchwald Plan.” (See related blog)  Basically, The Buchwald Plan is that any government manager who can demonstrate that his/her department, division, section, etc. is unnecessary will be retired at full pay plus a one-time bonus of 10% of the budget.  Try that and see what happens to the size and cost of government, and more importantly the efficiency. Although I recognize that may not be a perfect plan, the current financial incentives for government employees are far from perfect.  If you have a better plan, let’s hear it.  One thing is for sure; something needs to change and it is not the rhetoric.