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January 2016 Brief: Volume 23, Number 1

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We Need ZBB!

 

by Dr. Don Racheter

 

 

Zero Based Budgeting (ZBB) is needed at the local, state, and national levels of our governments. Currently, we use incremental budgeting, which assumes that every agency and program in the budget will be reauthorized at least the same amount of spending, with an increment added to cover the cost of inflation.

 

If a government agency currently has a budget of 100 million dollars, and they request an increase to 120 million dollars for the next year, but the Legislature only appropriates 110 million dollars to the agency, the politicians and bureaucrats often speak of this as a “10-million-dollar cut” in their budget. Indeed, if they only ask for 110 million dollars for the next year, and the Legislature gives them their current 100 million, they call that a “10-million-dollar cut” as well!

 

Now, an actual 10-million-dollar cut to their budget would result in a budget of 90 million dollars for the next year, not 110 million dollars! Through Orwellian bureaucratic “double speak,” a 10-million-dollar increase has been turned into a “10-million-dollar cut,” and the worst part is, the media reporting on these matters don’t call them out on their misrepresentation! The cause of transparency is not served, and many taxpayers are gulled into believing that more money is needed to just sustain existing government programs.

 

How ZBB works, in contrast, is that the legislators creating a governmental budget assume that the government agency or program has been successful and can be discontinued, its budget line zeroed out, and the money reallocated to other higher priority items, or returned to the taxpayers in rebates or lowered rates. If an agency believes there is still a need for the program, they have to justify each and every dollar they request.

 

Wouldn’t that be too much work? Given how little time the legislators actually spend on the job (as opposed to campaigning for reelection), probably not! And if it really were, they could develop a five-year rotation for consideration of reauthorizations. Given how many duplicative programs and agencies there are in the federal (and even many states’) government, it is long past time for a top-to-bottom review of what is still needed and what no longer is needed.

 

And given that control of the purse strings is one of the primary duties of the House of Representatives (and to a lesser degree the Senate) and one of the primary ways they are to exercise oversight into how our government is performing its duties, they should “make time” to do this rather than the lower priority matters with which they are now filling their time!

 

For example, in 1917 the government created a National Screw Thread Commission (NSTC) to standardize spacing so that screws from all manufacturers could be used throughout the war effort. By 1918 the work had been accomplished, but the NSTC was reauthorized by Congress yearly until the early 1970s when President Nixon abolished it to burnish his “conservative credentials” after adopting several highly public liberal initiatives.

 

More recently, the Assay Commission was reauthorized for multiple years after the government quit using silver in our coinage and there was no work for them to do. A Non-ferrous Metals Mine Review Board was created and funded for three years even though it didn’t have a single case appealed to it. Most recently, a member of the Alaskan Denali Commission sent a seven-page memo to Congress outlining why they should quit giving the 12 Commission members a “base appropriation.”

 

Why go to all the trouble of changing the budget process to ZBB? Why not just introduce bills to defund obsolete programs and agencies? Because now the incentive structure favors continuing to do what has been done, and everyone who would lose revenue by passage of such a deauthorization bill only has to find one veto point in a very complicated legislative process to keep the dollars rolling their way.

 

But if the tables are turned, and all funding automatically stops unless reauthorized, then the champions of fiscal responsibility only have to find one veto point to stop the waste, fraud, and abuse that is rampant in our systems. We need to get the power of the rules and process on the side of the angels, not on the side of the tax-and-spend crowd.

 

Dr. Don Racheter is President of the Public Interest Institute, Mount Pleasant, Iowa. Contact him at Public.Interest.Institute@LimitedGovernment.org.

 

Permission to reprint or copy in whole or part is granted, provided a version of this credit line is used:"Reprinted by permission from INSTITUTE BRIEF, a publication of Public Interest Institute." The views expressed in this publication are those of the author and not necessarily those of Public Interest Institute. They are brought to you in the interest of a better-informed citizenry.

   

 

 

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