3. Government Spending & Financing

Balanced Budget

Every country and all levels of government should operate under a balanced budget law that balances, ideally, over the business/economic cycle except during emergencies or threats of emergencies. There should never be a balanced budget requirement that forces balancing every year. Of course, it is always impossible to determine exactly at which point in a business/economic cycle we are in, but the idea is that the first thing governments should do when beginning to run up budget surpluses is to pay off the debts that have accumulated during previous years of deficit spending. When practically all the debts are paid and surpluses still keep coming, then politicians can consider increasing spending (preferably short-term spending), cutting taxes (preferably temporary tax breaks) or saving up for the next economic downturn (the ideal choice). A fairly accurate determination could then be made after a few business/economic cycles as to whether enough effort has been made to reduce debts during periods of economic expansion. Debts continually being carried over into new periods of recession would indicate that not enough emphasis is being made to pay off debts during periods of expansion.

Self-Funded Government Programs

As many government services, programs, or operations as practical should try to be financially self-sufficient, meaning that each program or line in the budget should try to generate its own funding. Some examples would include public school lunch programs, Amtrak, customs inspections, the National Park Service, etc. Though commercial advertising could be allowed as a source of revenue in some cases, the main method to increase revenues should be the charging of user fees.

Government Programs Funded As a Percentage of Revenues

The funding for as many non self funded government programs as possible should be automatically pegged to the increases or decreases in revenue taken in by the government. For example, if total government revenues increase or decrease by 5%, funding for such programs will increase or decrease by 5%.

Government Financial Accountability

No significant amounts of money may be spent by any level of government without being accounted for in an accurate, fairly self-explanatory line entry in a publicly accessible budget. Exceptions to this rule can be made but only rarely and only in cases in which disclosure as to the true purpose or quantity of the funds could potentially provide a significant threat to any law enforcement operations or to the security interests of the US. Nevertheless, on a national scale, in no case and under no circumstances should the true purpose and amounts of intentionally misidentified moneys be kept hidden from the members of the relevant Senate committee of the United States and from the President and Vice President. In other levels of government, officials within the top one or two tiers of leadership should know and be accountable for all funds spent in their departments.

Keeping Spending Within Estimates

Although there is no sure way to predict the future cost of a government project or program, perhaps the following suggestion would help keep these costs within estimated budgets. Each entity that enters into a contract with the government would have a sort of ‘on-budget’ credit rating. These credit rating scores would be derived by averaging the performance of each entity’s completed previous contractual commitments to the government (or to any other customer) in terms of percentage over or under budget that the final costs eventually came to be. The lower an entity’s number or credit rating (i.e., average final costs as a percentage of average estimated costs), the better that entity will look in relation to others in the industry and the easier it will be for it to win future contracts with the government.

Budgeting Rollover

Government agencies (or any kind of organization) should not be required or encouraged to spend all of a current year’s budget due to a threat or possibility of any unspent portions of that budgeted amount being revoked and permanently lost at the end of the funding cycle. All unspent amounts should automatically roll over into next year’s budget. Of course, it’s always possible that upper level budget planners could decide that the next year’s budget could be reduced by a certain amount, even up to an amount equivalent to the previous year’s surplus. However, responsible budgeting would ensure that sufficient funds exist to properly accomplish the stated objectives and that funding for subsequent years would not automatically be reduced because of reduced expenses in the current year. Several valid reasons exist for budget lines not being spent (deferred maintenance, planned large item purchases, etc.) and upper level budget planners need to make sure that none of these reasons are a factor before zeroing out a budget line.

An incentive system should be implemented to reward all employees with a bonus or other reward if their department or organization spent less than their budgeted amount, while still achieving their objectives.

Funding/Salaries for Safety, Oversight, Investigative, and Other Agencies

Perhaps a better way to determine the proper funding, staffing, and workload-per-worker distribution levels at several government (and even private sector) jobs including safety oversight (FAA, NTSB, etc.), investigative (FBI, ATF, DEA, etc.), social (unemployment, welfare, child support agencies, etc.) and other agencies or organizations would be to follow the suggested principles illustrated in the following hypothetical example.

Let’s say the National Transportation Safety Board (NTSB) has 400 employees and investigates 2,000 airplane crashes/incidents per year. The first step is to require the industry that is being overseen to pay for all costs relating to its oversight. In this case, the aviation industry would be required to fully fund the NTSB’s aviation branch. This funding structure could take the form of a small additional revenue tax on the industry (mandatory upon all industry participants) perhaps on the order of 0.05% of revenues or whatever will cover the cost. To start, we could take whatever funding that the NTSB’s aviation branch is currently getting from the government that year, and divide that figure by how many incidents it has solved (closed), not merely investigated, that year. For example, let’s say that this figure comes out to an average of $40,000 for each aviation accident/incident that the NTSB investigates. Every year or two, the NTSB would adjust the amount charged to the airline industry to fund the NTSB’s activities. The main point is that this system of funding should cause there never to be a significant disparity or fluctuation in the ratio between the number of incidents that the NTSB investigates and its level of funding.

The next step is to take a poll (which should be done periodically, like every 2-5 years) of all the employees asking them if they think that they are over worked or under worked and whether they think that the overall workload justifies more new hires or even some reductions in personnel. After a rough balance is found between an adequate workload and staffing levels, an employee pay system should be implemented based on a formula factoring the number of workers and the number of units of work completed (solved airplane accident/incident reports, in this example). Naturally, this system would be fine-tuned over time.

So with 400 people solving 2,000 accident/incident investigations per year, it comes out to an average of 5 investigations per person per year. With the NTSB’s aviation branch getting an average of $40,000 per completed investigation, each of the 400 NTSB employees would share a portion of this amount, for example, $10,000. These $10,000 divided among 400 workers comes out to $25 per solved case. In other words, each worker would receive $25 for every solved accident or incident. The other $30,000 would go towards covering the overhead costs of running the NTSB (office rent, utilities, janitorial staff, etc.).

If the investigative employees feel that they are being overworked, they could recommend that more staff be hired. Let’s say they ask for 40 additional investigators (10% more investigators). While the aviation industry would still be charged the same rate, the distribution of those fees would be altered. Instead of workers getting to share $10,000 per incident solved, they would share about $9,000 (10% less because of the 10% increase in the number of workers). In other words, the same earnings get distributed among more people. It would also work the other way. If the NTSB workers feel that they could do the job properly with fewer employees, then each would get higher pay. If things get too far out of whack, the fees charged to the aviation industry would need to be either raised or lowered or other adjustments could be made where needed.

To help insure that investigations are done thoroughly, there should be heavy fines against the organization when it is determined that an original conclusion was wrong, even if it was an honest mistake. Such fines against the organization should be equivalent to the earnings received from multiple successful investigations. The more egregious investigative mistakes would naturally require higher penalties. For example, if it is concluded that an original investigative conclusion was proven wrong, the NTSB’s aviation branch could be fined the equivalent of what it would have earned for two successful investigations, namely $20,000. This means that for each wrong conclusion, each worker would have $50 ($20,000/400 workers = $50) deducted from their take-home pay.

To help insure against the natural desire for workers to earn more money by saying that the caseloads are manageable even though the waiting list of cases being investigated may be piling up, managers can overrule workers’ desires and hire more workers. A maximum number of unresolved and pending cases may be allowed without mandating the hiring of more personnel. However, if the numbers of unresolved and pending cases exceed 200%, for example, of the average number of cases solved in an average year, then more personnel would need to be hired, regardless of what the workers think. Conversely, if the numbers of unresolved and pending cases fall below a certain threshold, then some workers would be let go.

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