It doesn’t pay to save

26 May

We’re not sure if we’re back – or not.

But there are some things to talk about and maybe it’s time to breathe some life back into this old blog.

But not at the high story rate we did before.

Here’s something you probably don’t know about when it comes to the federal budget.

The money is flying around like crazy right now.

Agencies that have a few bucks left over are trying to spend it before they lose it at the end of the fiscal year.

Why do such a stupid thing you ask?

Because they think they have to.

Let’s put it this way:
You work very hard for $1,000 a month.

You eat and live simply and manage to save some money each month.

At the end of the year – whatever you didn’t spend has to be given back to your employer.

And then he or she says, “Looks like you didn’t need that much money” and they cut your salary for the next year by the amount you had to give back.

That’s exactly what happens to federal agencies.

They submit a budget for the coming year, the White House makes its changes and Congress plays with it too.

Sometimes you get what you need, most times not quite enough.

But the agency managed to save some money.

Paperclips got cheaper, some people left that weren’t replaced.
Some new contracts were cheaper because competition for the bid was better.

In the end they saved a couple of million dollars.

That money is not rolled over.

At the end of the fiscal year it goes back to the Treasury.

Congress, always looking to score political points, looks at your next year’s requested budget and cuts you a couple of million dollars because it says you didn’t need it the year before.

But paperclips will probably go up, fuel will go up, people do need to be hired and as the economy gets better bids will come in higher.

So, what’s an agency to do?

They go on a spending frenzy the last quarter of the fiscal year so there is no money left over and a better chance of not having their budget cut the next year.

Sure, sometimes it’s 60-inch HDTV TVs, but usually it’s buying things they need but put off when the budget was first put together.

Like new PCs, replace rusty metal desks and get some phones that work.

There’s been a few attempts to try to work around this.

One was an idea that whatever an agency saved at the end of the year, they could keep half of it the next year for things they needed.
Died in Congress.

If you sell things to the government – these next few months are good times.
If you’re a taxpayer – you’re getting shafted again, courtesy of the people you put in office.

2 Responses to “It doesn’t pay to save”

  1. Anonymous May 26, 2012 at 5:14 pm #

    What a perverse system. What would happen if we let the agencies keep any savings and simply added to their budget next yr. as needed? Truly this needs reform above all else.

    • Honolulu Notes May 26, 2012 at 5:22 pm #

      It won’t work.
      The agency budgets are actually the Adminsitration’s Budget, submitted by the President.
      His (or her) political promises, concerns and potential votes will be reflected in those numbers.

      It then moves on to Congress where the same thing happens, with the addition of usually getting bogged down in partisan fighting. It’s been years since Congress didn’t flirt with shutting down the government by not agreeing to a budget.

      It’s the same way, from small town city councils, to state legislatures. They control the purse strings and that’s the so-called checks and balances of our system of government.

      Do we need a better system?
      But getting Congress to go along would be a bet no sane person would make.

      Honolulu Notes

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