Budgetary Gimmicks – We’re Only Fooling Ourselves

Anyone who has run a business or even a household budget, knows all too well that budget “gimmicks” will turn around and bite you sooner or later. Whether you are shifting overrun costs from one year to the next or spending more than you take in, most gimmicks are basically a deception and denial of reality. Unfortunately, this slight-of-hand is a common practice in our government budgeting methods.  These politically motivated budgetary deceptions are killing our infrastructure and eroding our economy and as The Wall Street Journal reported, it may soon impact our credit rating.

Moody’s Investors Service said in a report Thursday that the U.S. will need to reverse an upward trajectory in the debt ratios to support its triple-A rating.

“We have become increasingly clear about the fact that if there are not offsetting measures to reverse the deterioration in negative fundamentals in the U.S., the likelihood of a negative outlook over the next two years will increase,” said Sarah Carlson, senior analyst at Moody’s.

Our government exudes incompetence and a lack of true accounting practices today, when we look at the massive gimmickry they use in budgeting the taxpayers hard earned dollars. The truth in this statement is quite obvious in the following example.

TSA Hiring Project Runs 700% Over Budget

According to the Washington Post, in 2002, the TSA issued a $104 million contract to hire airport screeners. By 2006, the cost had skyrocketed almost 700% to $741 million.

“TSA officials then moved forward with no planning ‘or adequate cost control,’ the report said, and they ignored warnings from contractor NCS Pearson Inc. that project costs had far exceeded the budget approved by Congress.” When asked why the initial cost projections were so inaccurate, the TSA program administer who managed the program said, “That $1 billion was a number out of the air, frankly.” He continued, “All I got from the DOT was, ‘When you hit $1 billion, come back to us.’” With this level of insightful analysis put into estimating the true costs of the project, it is less than shocking that TSA’s contractor went over budget.

Fast forward to today. With the addition of the new scanners, thousands of new workers, and other assorted equipment that the TSA currently employs on American citizens when traveling, we cannot even form an educated guess as to the total cost overruns there. In this case, the original budget gimmickry is that there was an initial start-up cost assessment, yet there appears to be no long term Life-Cycle Budgeting. This is akin to a blank check for the never-ending expansion of the TSA, with no built-in accountability or transparency. As noted in the article above, when they hit 1 billion tax dollars, come back to us. There is the gimmick. “A no-limit budget.” It is impossible to declare any form of fiscal sanity with cost projections approved of $104M, and four years later you have spent $741M. Where is the oversight and cost-controls that should slow this money-train down?

In the TSA example, there was no Life-Cycle Budgeting involved, and there are no stated plans to install any. In the real world, the TSA would be declared bankrupt and closed down. This is a deceptive form of fraud against the taxpayer, as we are being asked to fund a never-ending expansion of the TSA with no transparent or accountable budgeting involved. We can do better, and our current economic situation demands it be done immediately.

Infrastructure projects are an important part of our economy and when not budgeted properly, can have devastating long-term economic consequences. These projects are a critical investment towards our economic growth and stability. When we neglect our infrastructure through short-sited, stop gap measures and temporary repairs, we are headed for a disaster of epic proportions. Our transportation system will eventually grind to a halt. Businesses will no longer be able to get materials and products from point A to point B. Our roads, bridges, rail systems, and shipping ports must be maintained and rebuilt with true a more complete and transparent set of practices – life cycle budgeting.

These projects must contain an honest level of transparency in all phases. Access to the budgeting process is necessary towards understanding the true costs of proposed, ongoing and future projects. This must include initial construction costs, plus long term maintenance costs over the lifespan of the project, and together they must be included in the initial proposed budget figures. When we fail to do this, we have people being killed by crumbling bridges due to lack of proper maintenance and inspections and transportation delays that have a massive trickle down effect on our economy. When this type of disaster happens, the reports state that the government didn’t have the money or resources to maintain the project. Wouldn’t they have had the resources if they had properly figured the complete life cycle costs for the project in the beginning?

When discussing our economic problems of today, we have to really look into how our Government spends our tax dollars to find a working solution.. Without transparency in the budgeting process, the nation is kept in the dark as a whole, and the problems of short-sightedness in our budgeting will continue to weaken our economy. Is our Government actually so incompetent and short-sighted ?

When people buy a new car, do they expect to have expense-free transportation for the next twenty years? Even the youngest generation of drivers soon learns that there are life-cycle expenses in owning a car. These include proper maintenance, such as oil changes, new tires, and operating expenses, such as fuel. Without proper budgeting for all expenses involved with driving a car, the person can end up with a car that isn’t able to get them from point A to point B when needed. They may get four years of use out of the car without any maintenance, but then their original investment is lost and they have to go out and buy another car. This isn’t cost effective, and people are quick to learn to use life-cycle budgeting when buying a new car. An ounce of prevention is worth a pound of cure, as they say. Figure in the cost of maintenance and related expenses when buying a new car, and you will never end up having to use your vehicle maintenance funds for fuel , which then leads to shortening the life of your investment. This should be common sense, but it doesn’t seem to apply to the people in our Government today. When it comes to calculating the actual lifetime costs of Infrastructure projects, our Government displays seemingly major incompetency and ineptitude. Why is that?

Politics, of course.

Our Federal and State governments today way too often try to score political points instead of trying to get more bang for the Taxpayer’s buck. This has been going on for decades with no end in sight. From funding bridges to nowhere, to Airports that only serve a dozen people a day, to paying out millions of dollars a year for maintenance on federal buildings that were tore down years ago, the abuse and malfeasance can almost always be traced back to political posturing, corruption, fraud or flat out cronyism. A lack of transparency is at the main root of these wasteful projects. Politicians that are more concerned with vote-buying through “bringing home the bacon to their districts,” than the actual betterment of our Nation, are robbing our Nation of critical infrastructure dollars. This is a direct threat to our Economy and National Security. Federal and State legislatures are supposed to be the guardians of our nation through the proper use of taxpayer dollars. The most effective, proven way to ensure this, is to demand transparent, full life cycle cost budgeting in all forms of government spending. The future of our great Nation depends on it. Daniel (@twitter mirac777)