Monthly Archives: August 2013

Why Is Washington Broke?

By Michael J. Weiner, CEO, PreConstruction Catalysts Inc.

When you boil all the rhetoric away and understand the underlying cause of Washington’s financial crisis, it comes down to spending more than one is making. Of course, people will point to the sacred cows which are untouchable, but there are other ways the government can tighten its belt.

The amount of money which is spent without a “return on investment” by the federal government is astounding. The mindset of Washington should be asking the question, “What value will the people receive by investing this money into XYZ?” If each agency focuses on its core mission, and asks the hard questions, it would not be a surprise to see the number of approved funds drop to some degree. Even if it causes only a 1% drop in spending, just because the question could not be answered satisfactorily, that is still a significant amount of money.

Another policy Washington needs to stop is the “use it or lose it” mentality prevalent throughout the government. Each year, when an agency finds at the end of the fiscal year that there is still money left to burn, the rush is on to find ways to spend on things that may not have a justifiable ROI. Why must they spend the money towards the end of the fiscal year? Because if an agency shows prudence in being able to save money not used in their budget, they lose that money the following year. What this does is cause agencies to find excuses to spend, instead of encouraging saving. Washington needs to allow the agencies to build up a savings budget that carries forward from year to year, instead of punishing them by reducing their budgets according to how much less was needed. This is one of the dumbest concepts and policies which could allow agencies to build up their saved funds for use in future projects.

There is another money-wasting behavior that Washington needs to curb. When a project is initiated, money is spent along the way. However, too many times, some reason comes along to stop the project in the middle of its tracks. The money that was spent has been wasted.

I once was hired by a contractor to do some public relations work on a project which had doubtful benefit to the greater good of the population. I was paid up front (thank goodness) for two months work. In the middle of performing, the project was suddenly cancelled for political reasons. Imagine this kind of thing happens in every agency, probably every day. All of the money which had been expended became wasted. Sure, things happen which cause a shift in direction. This is as true for the government as it is for business and individuals. However, if a project is weak to begin with, or its benefit is questionable to the citizens of the United States, there should be a review process which answers the above question.

There are many smart, hard-working people who work in public service. The mindset of the leadership needs to trickle down. Think like an Entrepreneur, and look for the greatest bang for the buck. Don’t penalize the people working for the many varied agencies for saving money—let them keep it and sustain their budgets, promoting more savings.

If Washington was a corporation (which it is) and it has many different divisions (agencies), leadership should evaluate how each agency is meeting the needs of the population. One of the Generals at the Pentagon recently took a program out of the budget for a specialized airplane, because, as the General said, it wasn’t needed. It will take other department leaders to have the same courage to eliminate or reduce those initiatives which are not needed or are doubtful. Let’s hope this change can be made soon, before the entire government financial system meets its end.

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