Friday, October 10, 2014

The federal government wastes more money in one week than 99 percent of Americans make in a lifetime

The federal government wastes more money in one week than 99 percent of Americans make in a lifetime:

  • The end of Fiscal Year 2014 was last month and, as usual, federal agencies spent tens of billions of ‘leftover funds’ on frivolous, unnecessary and unwanted goods and services
  • Agencies and departments do this so they don’t see their budgets cut NEXT fiscal year
  • Critics say funds that are unspent should be returned to the Treasury, not recklessly spent
By Charles Greene

If you’re one of those people who is considered a reckless spender, don’t worry – the federal government is far better at wasting money. At the end of each fiscal year, federal agencies engage in all-out spending sprees that would make even the filthy rich blush.

The fact that agencies cannot roll over their funding from one fiscal year to another leads to the annual shopping binge on September 30th. The spending sprees are also partly in response to the fear that if the funds are not completely used up by the end of the FY, the agencies in question might not receive as large a share of the taxpayer-funded pie in the next budget allocation.

Brianna Ehley of The Fiscal Times cites a few examples which serve to reveal the extent of the annual “use it or lose it” spending flurry on the part of the feds:

“Last year, the government spent about $50 billion the week before October 1, according to NPR’s Shankar Vedantam. That total included apparent impulse buys like artwork worth $562,000 for the Department of Veterans Affairs, and toner cartridges worth $144,000 for the Department of Agriculture, as noted last year by The Washington Post. It also included $178,000 worth of ‘Cubicle Furniture Rehab’ for the U.S. Coast Guard.”

And that’s just the tip of the yearly squandering iceberg. The Pentagon managed to blow $5.5 billion all on its own on the last day of the 2013 fiscal year. If you don’t find that outrageous enough, consider the fact that the Department of Defense actually sent an email memo urging employees to spend as much as possible before the deadline.

Defense Information Systems Agency (DISA) contracting and budget officers are responsible for the email, which read in part:

“It is critical in our efforts to [spend] 100% of our available resources this fiscal year. It is also imperative that your organization meets its projected spending goal for June…”

Never mind that the email seems to be in direct contradiction of a 2012 memo from Pentagon undersecretary for acquisition Frank Kendall, and comptroller Robert Hale, who wrote:

“The threat that funding will be taken away or that future budgets can be reduced unless funds are obligated on schedule is a strong and perverse motivator.”

The 2012 memo clearly addressed the issue, saying that the agency should avoid “spending money primarily to avoid reductions in future budget years.” But somehow that memo seems to have fallen on deaf ears. And of course, who doesn’t love a good spending spree, especially if someone else is picking up the tab?

Kendall and Hale also noted that:

“…we risk creating incentives to enter into quick but poor business deals…”

That’s an aspect of the yearly federal shop-til-you-drop practices that were explored in a study referred to by Ehley in the Fiscal Times piece:

An analysis by Harvard’s Jeffrey Liebman and the University of Chicago’s Neale Mahoney using data from 2004 to 2009 found that 8.7 percent of total federal spending occurs in the last week of the fiscal year.

Since the government spends so much money in such a short amount of time, some people have concerns that hasty purchases could result in problems down the road – like poor product selection.

The same researchers tried to answer that question by reviewing contract performances from nearly 700 major federal information technology projects worth a total of $130 billion. After examining them, they concluded that projects awarded in the last week of the fiscal year were 2.2 to 5.6 times more likely to be of lower quality, according to the analysis.”

This illustrates the fact that not only are the agencies blowing huge wads of taxpayers’ cash at the end of the year, they are doing it in a particularly reckless manner.

The not-surprising conclusion reached by Liebman and Mahoney (among other budget reform advocates) is that agencies should be allowed to roll over their unspent budget dollars into the next fiscal year. But perhaps this easy and obvious solution is beyond the grasp of Congress and others in charge of creating budget policy.

And besides, who would have the heart to spoil the fun of an annual squandering orgy on the part of our federal agency employees, right? After all, it’s only money – your money.

What are YOUR thoughts on rampant end-of-budget-year spending for often trivial and unnecessary things by federal agencies and the military? What do you think these agencies should do with their extra money? What kind of a system rewards people who waste taxpayer funds? TELL US!

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