Congress and President Obama are at it again, fighting over taxes and spending cuts. It seems like a bad television show – the same story keeps getting repeated without any hope of a proper ending. In essence, there is too much spending and not enough revenue. The amount of spending currently in dispute is about $80 billion. It is this $80 billion, which needs to be reduced, that is the centerpiece of Washington’s fighting.
The fighting in Washington is always about overall spending and never about the efficiency or productivity of the spending that we do have. It is like a spigot turned on full blast; it has no controls for fine tuning. The Government Accountability Office cannot render an opinion on the 2012 consolidated financial statements of the federal government because of “widespread material internal control weaknesses, significant uncertainties, and other limitations”.
Maybe part of the $80 billion that is currently being fought over could be found by searching for more efficiency in the current budget. If we identified efficiency or productivity gains of 1.5 percent on the $2.6 trillion of annual U.S. spending (read: the budget minus Social Security) we could save approximately $40 billion, or half of what the Congress and president are fighting over. The Labor Department calculates that the productivity change in the non-farm business sector between 2007-2011 was 1.8 percent. Achieving slightly less in government productivity should be possible.
The Australian government annually conducts productivity reviews of its government spending. The chairman of Australia’s Productivity Commission, Gary Banks, wrote:
The conviction of governments that greater transparency about service performance would promote improvements across our federation has by now been vindicated. This reporting series has been remarkable, not only for what it has achieved, but also for the ongoing commitment of heads of government to what is effectively an annual ‘report card’ on the performance of their administrations.