Cheap Hawks; Not Cheap Talk
2018-03-22 · Guest: Jonathan Bidlack (COO of the Coalition to Reduce Spending) · 51:58
Fiscal Irresponsibility and the Congressional Budgeting Process
Bob Zadek and Jonathan Bidlack discuss the fiscal irresponsibility of the $1.3 trillion omnibus bill and the breakdown of “regular order” in the Congressional budgeting process. They explore how defense spending has become a metric for patriotism rather than strategy and highlight the structural incentives, such as “spend it or lose it” policies, that drive wasteful government spending.
Topics: Omnibus Bill, Federal Budget, Defense Spending, Regular Order, Fiscal Reform, Sequester, Zero-Based Budgeting, Property Rights
Speakers:
- Bob Zadek: Host
- Jonathan Bidlack: Guest; Creator and COO of the Coalition to Reduce Spending
- Caller (Jacob): Listener
Wise and Frugal Government [00:18]
Bob Zadek: Hello everyone, welcome to the Bob Zadek Show, the longest-running live libertarian talk radio show on all of radio. Thanks so much for listening this chilly early spring Sunday morning.
In the early days of our country, Thomas Jefferson, in his first inaugural address, famously said, and I proudly quote: “A wise and frugal government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread which it has earned.”
A wise and frugal government. Focus on frugal. The words of Thomas Jefferson in 1800. Don’t we wish today, don’t we wish at some time during the 21st century, we would have had a wise and frugal government? Regretfully, we do not. We have a government which is addicted to spending, and spending of the worst type. The worst type, the most uncontrolled type of spending, whether it’s done by a government or by a human, is when somebody is spending somebody else’s money. And the spending of somebody else’s money, with the somebody else being you and I, is the topic of today’s show.
The $1.3 Trillion Omnibus Bill [01:41]
Bob Zadek: Today’s show is, of course, timely with President Trump signing a $1.3 trillion—that’s trillion with a T—trillion-dollar stopgap emergency funding bill, a so-called continuing resolution, a bill which received no thought whatsoever from any human on the planet. When was the last time any human or collection of humans spent $1.3 trillion without thinking about it? With simply a matter of political negotiation, with the only goal being the political survivorship of those who enacted the legislation. How can a country survive when it is operated in that fashion? Or can it?
To help us understand these painfully relevant questions, I’m happy to welcome back to the show Jonathan Bidlack. Jonathan labors long and hard in the halls of Congress as the creator and chief operating officer of the Coalition to Reduce Spending. And what a laudatory goal that is. Jonathan’s organization has presented a Guide for a Strong America. We only can hope that members of Congress and members of the executive are wise enough, as Jefferson pleaded with us to be, to follow some or all of Jonathan’s suggestions. It looks pretty bleak as of now. Perhaps Jonathan will give us reason for hope. Jonathan, welcome, with that introduction that’ll put a spring in your step. Jonathan, welcome back to the show again this morning.
Jonathan Bidlack: Yeah, Bob, there’s no doubt it can very much be yeoman’s work. You know, most people want to see more spending, right? There are special interests who want to see more spending in pretty much all areas of the budget. And unfortunately, there tends not to be that special interest group that is tied toward the goals of what the taxpayer would want to see. And that’s, of course, what we are ultimately trying to accomplish.
Bob Zadek: Now, I gave a pretty, perhaps dramatic, dismal introduction where I introduced the topic as our elected officials and appointed officials to some degree supporting and ultimately putting into law a budget that nobody has read, nobody could probably rationally defend if they were being honest. So, is that a fair statement? And if you can, just to get us into this painful subject which affects every single human—I’ve discussed 11 years of topics on this show; there is no topic which more directly affects everyone, whether you are a taxpayer or a welfare recipient, whether you are in the military, civilian life, whatever your political persuasion, every syllable of today’s show profoundly affects you and immediately affects you. Here we have something which is so important, putting aside the fact that the effect upon our citizens is that their property is taken from them under the threat of force—taxes, we call them. So the government is empowered to take this money from the citizens for purposes that nobody has actually approved. So Jonathan, is that a fair statement? And give us the big picture of—because it’s awfully hard to follow for many of us—what happened? What is this about the continuing resolution? What is a CR, a continuing resolution? And what should, in the ideal world—and we are far from that—what should the budgeting and spending process actually look like as compared to what it actually is?
Jonathan Bidlack: Sure, that’s a loaded series of questions. We could probably do a whole show on that topic. Well, look, so you know, I have this picture on my desk that’s one of my favorite pictures, and it’s actually some graffiti that someone scrawled on a wall, and it says “Lower Spending = Lower Taxes.” And I think, you know, that is the core of it, right? When we have wasteful government spending, and whether we’re talking about programs we don’t need at the Pentagon, whether we’re talking about entitlement spending that’s on autopilot, the result of that is that, you know, the government ultimately has to get the money to pay for that from somewhere. And whether it’s borrowing or whether it’s higher taxes, ultimately American citizens pay the consequences.
One of the big problems we have right now, which you’re hitting on, is that, you know, we have a very broken budgeting process in Washington. And the short version is that, you know, we really can’t agree on much of anything. And so as a result, they just kind of take these, what they call appropriations bills, which spend money on all sorts of different programs, and bundle them together as a way of getting everyone to go and agree to vote for the whole package. And if you don’t support voting for the whole package, then the government shuts down because we don’t actually have funding.
The Breakdown of Regular Order [05:00]
Bob Zadek: Jonathan, let’s just back up one second, because it’s been so long since we had what is called in Washington “regular order.” What should the budgeting and spending process look like? And you have to dig into history because we haven’t had it in so long; most of the people who have seen it are dead. So help us understand what the process should look like and what is it today by comparison.
Jonathan Bidlack: Sure. So usually what happens is that, you know, Congress and the President would agree on a budget, and a budget is just the blueprint for how we’re going to spend money during the coming year. There’s nothing sort of binding about a budget; there’s nothing really special, but it’s basically just Congress saying, “This is what we’re going to end up—this is what we think we’re going to spend money on this year,” and so that you have a plan. And so for starters, you know, oftentimes we don’t even necessarily have a budget, right? During the Obama years, we did not have a congressionally approved budget. The House would go and approve a budget every year, but the Senate wouldn’t agree, and so we were sort of flying blind, if you will.
The actual budgeting process itself is sort of a two-step process, and this goes way back to the 1970s. But essentially what happens is Congress is supposed to go and authorize spending on certain programs and then ultimately appropriate funding for those specific programs. And so what happens now is that—I mean, there’s really a lot of issues—but you have programs that, you know, their authorizations have run out, but we continue to appropriate that funding going forward. And so there’s increasingly a large number of programs, even discretionary programs, they’re just on autopilot.
And then beyond that, you know, instead of going and having what are supposed to be individual appropriations bills that are geared toward different subject areas—so you might have, you know, say a defense appropriations bill or many different areas of government—now we can’t even agree on those individual appropriations. And so instead, what happens is we get stopgap measures, which are the continuing resolutions that you described, which basically just continue spending for a certain period of time until Congress can theoretically decide on what they want to spend on going forward. Or you have what just happened recently, which is they take all of these what are supposed to be individual appropriations bills and they bundle them together and vote on them together.
Bob Zadek: Now, let me back up, Jonathan. I just want to interrupt for a quick moment. So in the process as it was designed and as it took place for many years until around the ’70s, we had presumably specialists in Congress. We had the Agriculture Committee, the Defense Committee, the Commerce Committee, the Labor Committee, and they had presumably some specialization. And they put together spending based upon their understanding of their subject matter and what those priorities ought to be. And each bill was then presented to Congress and was voted on independently. So you had the bill for labor, and the bill for commerce, and the bill for energy, etc. And so Congress was told by its own specialists within Congress, “This seems to be a pretty good idea,” and Congress would vote it up or down. And Congress got a chance to vote on each subject, on each funding subject separately. That was the old days. That was what’s called regular order. That was the way it’s supposed to be.
But that all hasn’t been done, even though it’s required—required, of course, when you direct the word “required” towards Congress, there’s always quotations around it and you bend your fingers on your right and left hand to say “required” in quotes because Congress never requires itself to do anything very much except get paid. So therefore, the requirement of Congress has simply been ignored. And the average citizen is not going to take to the streets and have placards saying “We demand regular order.” So Congress gets a chance to get away with what it wants irrespective of the requirement. So now we have not individual bills that presumably are given some degree of thought, but we have in the dead of night a 2,200-page, or whatever the number is, page bill that by admission nobody has read. And therefore, the numbers are not thoughtful numbers; they are purely political numbers, like “We’re helping the Army, we’re helping defense, we’re helping national security. I voted for national security.” And that becomes the platform, not “I voted intelligently,” but “I voted for our military.” And is that pretty much a summary of what we have today?
Jonathan Bidlack: Yeah, and I think the really important takeaway for your listeners—first of all, I mean, we haven’t had regular order as you described since 1994, I believe it is. So it’s been quite a long time. But the big difficulty is that, you know, let’s say you have some objection with the level of, I don’t know, agriculture spending. In the past, you could vote against the agriculture appropriation but still vote for, say, funding troop activities. So there wasn’t necessarily a tying of one type of spending to other kinds of spending. Now, your choice is basically binary. Either you have to say, “I’m going to vote for this whole package because I don’t want the government to shut down,” or you have to say, “I’m going to vote against this package because I have a disagreement on one type of spending, even if I might be okay with some of the other kind.” And as a result, the result in that case then would be a government shutdown. And so there’s no longer—even though you still have specialists in Congress as you described sort of deciding on those different appropriations—the actual power of individual members to express their sense of what are reasonable levels of spending in those different buckets no longer really exists when you’re voting on them all together in this type of omnibus legislation.
Bob Zadek: So Congress is given no choice: either vote for this ugly, terrible, huge omnibus spending bill or shut down the government and pay the price dearly at the polls. That’s hardly a choice that invites thoughtful voting.
Jonathan Bidlack: And if you think about it from the standpoint of spending, it makes it far more likely that we’re going to get increased spending. Because now, you know, again, are most members of Congress, are most members of the Senate going to end up shutting down the government over a disagreement they have? Probably not. And so as a result, it makes it much easier to sort of bundle all these together and sort of give away goodies to all the different areas of government. And so that’s the big problem. And so what we’ve seen over time, of course, is that spending is increasing, borrowing is increasing, the national debt is increasing. And it’s not an accident that that’s been happening in an increasing fashion as we’ve sort of gotten away from regular order.
Defense Spending as a Jobs Program [09:15]
Bob Zadek: And now to get down to, Jonathan, where you are doing so much really important work, let’s focus on the big item in the budget, which of course, putting aside entitlements which is not budgeted because it’s mandatory, but let’s focus on defense. Now the problem really gets bizarre. Now it should be that the Congress itself becomes our greatest enemy. Now that’s pretty inflammatory language, but let me explain what I mean because I don’t intend it to be per se inflammatory.
The defense bill—one would imagine that any spending bill would be put together based upon a thoughtful consideration of what we need and what’s an effective use of tax dollars. In Jefferson’s words, a wise and frugal government. Instead, the only standard for being patriotic is to give the Defense Department more than they had last year. Unless you give them more than they had last year, you are a defense dove and you are putting the country’s safety at risk. Isn’t that bizarre? Isn’t that irrational and insane? But that becomes the only standard. And that, by the way, is irrespective of whether or not the risk—and I mean the risk to our national defense, not the danger that an isolated bad event could happen. That’s like spending a fortune to make sure you never get a cold. But not to prevent against an isolated, fairly insignificant event happening on our soil or elsewhere, but rather we spend money irrespective of the threat just because we, members of Congress, don’t want to be listed in the column of not supporting our soldiers. So isn’t it true, Jonathan, or is it true that the measure of whether we have spent enough for defense is how much more than last year have we spent?
Jonathan Bidlack: Yeah, I think the way that a lot of people view it is that, you know, dollars become a substitute for strategy. You know, normally when you operate a business, you say, “What do I need to accomplish?” and then, “What funds do I need to actually accomplish that?” In the context of a lot of Pentagon spending, like most areas of government, first of all, you have a lot of spending that’s on autopilot too, in the sense that these programs have existed and so we have inertia and we just continue them and we don’t always reassess whether or not we need to continue with those programs.
But the other big point too is that, you know, when you look at spending at the Pentagon, oftentimes people like to blame members or leaders at the Pentagon, but actually, you know, oftentimes presidents and then subsequently Congress are allocating way more funding for programs than what the Pentagon even wants. So you see programs that the Pentagon will say, “We no longer have a use for this,” but because of the fact that perhaps maybe they’re manufactured in a certain district or there might be some other sort of particular special interests that are lobbying for the continuation of those programs, Congress will continue to appropriate funds for those programs long after they’ve ceased to be valuable, if they were even valuable in the first place.
Bob Zadek: And which means in effect, the Defense Department becomes not a defense bill but a jobs bill, because it creates jobs and benefits local political districts with jobs and with business. So it is done under the political cover of defense spending, but it is not.
Strategy vs. Dollars [11:15]
Bob Zadek: And there’s one statistic, Jonathan, that became very apparent to me and to lots of other observers. I’m going to make reference to what seems like a somewhat irrelevant fact, maybe a factoid in the recent political campaign, which was the alleged Russian meddling in our political process. The reason I mention that in this discussion this morning is that it is alleged by many who have suffered from utter hysteria, it is alleged by many otherwise perhaps sane people that our very democracy, the core of our democracy, was and is at risk as a result of Russian meddling. In other words, our country could fail. Russia spent about—it’s not clear, of course, but let’s say $5 or $10 million—10 would be on the high side—million dollars on messing with Facebook and other ways to influence voters in our last presidential election. Five or ten million dollars. They didn’t spend $600 billion on tanks and missiles; they spent $5 to $10 million on some really smart, perhaps nerdy Russians in St. Petersburg in a nondescript office building playing with computer code. If Russia can spend $5 or $10 million and in the eyes of many bring our country perhaps to its knees, or at least threaten us, isn’t it all over if we have to spend $600 billion to counteract that? So the point of my story is there’s no correlation between the actual threat and the amount of the spending.
Jonathan Bidlack: Yeah, and actually, you know, I mean, I think again the assumption is usually made that more spending equals better outcome. But oftentimes that’s not the case at all. You know, when you talk to generals or members of the military, one of the things that I hear very often is a point being made that sometimes it’s the simplest systems that are the most effective when you’re on the battlefield because those are the ones that you can ultimately go and implement in cases of true danger. So, you know, we sort of had this attitude that, you know, if we just go and allocate more money for various things, that it’s going to result in safer outcomes. But that’s not necessarily the case.
I’ll give you one specific example. Let’s take the example of missile defense. You know, people I think think of missile defense systems as just, you know, good bullets hitting bad bullets. And so if we want to stop bad bullets, we need to go and have many more of these good interceptors. But actually, there are a lot of things—and set aside of course for a moment whether or not, you know, the degree to which you or your listeners might think that missile defense is worthy in and of itself—but, you know, let’s think about the other things that influence the effectiveness of a missile defense system. You know, how well you integrate your different computer systems, for example, has a huge effect. And we have a lot of these different computer systems that aren’t necessarily—they’re sort of all in a silo doing their own thing. And so Congress looks at missile defense and they say, “Well, let’s just allocate a whole bunch more funding for a lot more interceptors,” when in reality, changing the sort of way that those different systems link together may be way more cost-effective, but more importantly, even way more effective at accomplishing the goals that missile defense in particular attempts to resolve. So, you know, that’s just one example. And these kinds of things exist all throughout the Pentagon and really all throughout all of government. And, you know, this project that you mentioned at the beginning of the show, Guide for a Strong America, attempts to say, “Let’s look at all of these different ideas that are out there for reducing Pentagon spending or more importantly being more cost-effective and ultimately more effectively accomplishing the goals that we need to accomplish.” And the reality is, you know, to actually correct your math, it’s not $600 billion anymore; it’s actually $700 billion now a year. In fact, it’s going to be going up to $716 billion. So, you know, we’re allocating way more money than we ever have in the past, and we’re not necessarily getting any better outcomes. In fact, we may ultimately be shooting ourselves in the foot.
The Threat of National Debt [13:15]
Bob Zadek: This is Bob Zadek—I’m sorry, forgot my own name for a second—this is Bob Zadek spending a wonderful morning talking to Jonathan Bidlack. Jonathan is a trained economist, has an AB in economics from Princeton, has spent his life in finance and more importantly to us libertarian listeners and participants in libertarianism, is very active in trying to persuade and educate Congress how to and the importance of reducing spending. Jonathan has lots of fascinating ideas which he will be sharing to you after one short minute break. Please stay tuned, lots more to come.
[Sponsor Break Removed]
Bob Zadek: Welcome back to the Bob Zadek Show, the longest-running live libertarian talk radio show in all of radio. Thanks so much for listening this morning. Welcome to our friends in Seattle, Portland, Denver, Sacramento, and the San Francisco Bay Area. We are delighted to have you participate in, listen to, and send your communications to me at Facebook or online at thebobzadek.show. We welcome your feedback.
Jonathan, what’s interesting to me is in all of this wasteful spending—and the wasteful spending is sinister because it is structural. It’s not a question of a specific Congress made some specific bad choices. The problems are almost cancerous; they are structural. Therefore, it doesn’t require one intelligent vote and we’re done. Congress is—an individual member of Congress, senator, or member of the executive are all part of a very large, very sick system that needs to be repaired. And the point that I think those sane members of Congress maybe don’t make strongly enough is that while voting to spend more and more money on national defense seems like it’s a winner at the voting booth, in fact, spending as much as we do is a threat to our national security that perhaps in the long run will overcome the benefits of the spending itself. So if ever there was a case that the cure, the alleged cure, is far worse than the illness, it’s it with out-of-control spending. Now, spending in the trillions is almost pointless to talk about because a trillion dollars is too big for anybody, any listener, any host such as me, to even imagine. I can’t imagine what a trillion dollars is. It is purely theoretical. It’s like talking about 40 light years. Well, I know it’s a long way off, but I don’t really know exactly—I can’t imagine what 40 light years is. And 45 light years, the distance between 40 and 45 light years is huge, but to me, it’s only five. So numbers lose their meaning. So how do we help our listeners and more importantly, how do you help Congress understand the seriousness of this issue?
Jonathan Bidlack: Well, I mean, you know, first of all, I mean, you don’t necessarily need to take my word for it, right? We’ve had many military leaders or people who have been involved in Pentagon policy who have sounded the alarm on that front. You know, the most recent example is Dan Coats, the Director of National Intelligence, said that, you know, he thinks that federal spending, as he put it, is threatening our ability to properly defend our nation both in the short term and especially in the long term. So, you know, people who sort of are involved in this from a national defense side understand the depth of the problem that we’re facing.
To the more specific question of how you get people to really think about these numbers, I mean, look, I mean, I think oftentimes people don’t even realize how much their members of Congress are voting for to begin with. I mean, you know, one of the last times I was on your show, I talked about our tool spendingtracker.org, which attempts to track in real time how much every member of Congress is voting for. And of course, the vast majority of members are voting for, you know, what I would characterize as insane levels of spending. And so to ultimately hold them accountable, I think it’s important that voters know, first of all, how much they are spending, but also to understand the ways in which that impacts them. And we sort of touched on this at the beginning of the show, but you know, look, I mean, I always tell people that trying to reduce spending is kind of a two-fer issue in that you don’t just resolve our budgetary problems, but you also reduce the incentive to tax people more. And so to the degree that we all want to be taxed less, and that obviously has far-reaching economic benefits for people from all strata in our country, you have to at core reduce spending and reduce the sort of insidious involvement of government in our lives. And look, I mean, the Pentagon budget is one big portion of that, and it should be looked at just like every other area of the budget.
Property Rights and the Social Contract [15:13]
Bob Zadek: And you mentioned how the economic benefits to the country would be greater at lower levels of taxation, and of course that’s true. I always feel compelled, not in a big deal way, but at least to mention it, that while letting me spend my money the way that I want has an economic, collective economic benefit to the country, there’s, Jonathan, in my mind, a more important reason, and that is that it’s mine. And the issue of my freedom and my control and my dominion over my property, I don’t want to let it get cheapened. It’s mine. I earned it fairly, I earned it honestly, it is mine. And taking my property away by pointing a gun to my head at the threat of force is per se a questionable act. Now, of course, I have to pay taxes; that’s the deal. But I have agreed in the so-called social contract which binds citizens to their government—in that contract, I only agreed to give up certain specific items or points of dominion over my person and my property and for very specific purposes. And government over time has grown and grown and grown, and as it became more ambitious and more controlling over our lives, the costs of exercising that control grow. So Jonathan, I know you’ve been very active in this, but one of the ways to reduce spending is to reduce the mission. If government’s task is seen to be more modest, then per se the amount of money they need to accomplish those more modest tasks becomes less. So how hard is it, and what has been your success in persuading Congress? Just reduce the mission. Do a few things that you’re supposed to—you being government—supposed to be doing, do those few things very well, do it in a wise and frugal manner, and deficits will not be a problem.
Jonathan Bidlack: Yeah, I mean, you know, that’s a big part of our message. I mean, that’s a big part of the motivation behind Guide for a Strong America. I mean, there are many, many ways that you can reduce spending and you need to look at sort of those items that have the—that would be the small improvements and those items that would be the larger structural reforms. You know, one of my favorite examples on the site, which I think you and your listeners will enjoy, is you know, there was actually in 2017 the Navy figured out that they could actually save money by using Xbox controllers on their Virginia-class submarine rather than the sort of proprietary controllers they had used before. And it reduced their cost from something like $38,000 per panel to $30 per panel. Now, and that’s by using Xbox controllers. Now, obviously, that’s not sort of that item, right, isn’t necessarily the reason why we have the Pentagon budget that we do or the reason that we’re running, you know, the national deficit and running up the national debt in the way that we are, and there are more fundamental structural reforms that need to happen. But the reality is these kinds of items, these sorts of things can have a massive impact. And when you start adding up all these little pieces, they have a dramatic impact on federal spending. You know, former Senator Tom Coburn used to always say that the way that you get to this, you know, what’s now a $20 trillion national debt is by adding up all these little items.
So you’re right. I mean, really it’s a game on multiple fronts in a sense. It’s identifying those efficiencies and those savings, right, like using the sort of Xbox-like controller if you will, but it’s also fundamentally rethinking what the role of government is, what the role of the Pentagon should be, what our national security objectives are, and then determining what the funding is—what funding is necessary to accomplish those goals. And of course, you know, many people will have different opinions on, you know, what the role of the federal government should be and what the specific role of the Pentagon should be. But we have to start there. I mean, you know, in the case of the Pentagon, I think your listeners probably know it’s the only government department that’s never been audited. And currently, actually, to the Trump administration’s credit, you know, there’s actually now an agreement to audit the Pentagon. But that’s going to take five or ten years to figure out where all this money’s going, where we’ve lost money. And so, you know, it’s a process of more information, of identifying these small cuts, but also rethinking the bigger picture role of government in the individual departments within it.
Caller: Israel and Foreign Spending [18:30]
Bob Zadek: We have a caller. We’ll take Jacob in a second, Jonathan. After you are finished talking to Jacob, I’d like to explain with us what’s been the receptivity when you work the halls of Congress. How interested are members of Congress in the message of reducing spending? How serious are they? And is the seriousness dependent upon political party? Republicans used to be the party of smaller government; that of course is pure fiction; they no longer are. So I’d like you to share some personal experiences about what it’s like to work the halls of Congress. Give us some hope if you will. But first, we have a caller, Jacob. Welcome to the show this morning, and what’s on your mind?
Caller (Jacob): Yes, Bob and Mr. Bidlack. Regarding the categories that you’re trying to imagine in the budgetary process, there’s foreign spending and domestic spending. But in imagining what the meaning is of foreign spending, Israel says you’re not supposed to put us in the foreign spending category. We’re more like domestic spending, like one of the 50 states. Think of us sort of like a Maginot Line in World War I; we’re your present-day modern stationary aircraft carrier in the Middle East. And is that the correct budgetary imagination that we have to employ, that they’re our aircraft carrier in the Mediterranean there in the Middle East? And what about that $38 billion appropriation last year? And is that part of the regular military budget, or is that a special budget category for Israel?
Bob Zadek: Thank you for your question, Jacob. Jonathan?
Jonathan Bidlack: Yeah, so I mean, first of all, you know, there are I guess—to tackle that specifically—I mean, there are many different ways of categorizing many different types of spending. I mean, one of the things that we’ve tried to do is break spending out into different categories and to think of it with respect to the Pentagon in different buckets, right? So let’s look at acquisitions and figure out how we can go and better acquire the military technology that we need. Let’s look at, you know, VA services and planning for VA retirement. Let’s look at how we deal with personnel. Let’s look at things like foreign aid or sort of our foreign appropriations as your listener just described. And let’s also look at more fundamental department-wide restructuring. So, you know, I think it’s really helpful to start to think about spending in terms of these different buckets. And of course, beyond the Pentagon, right, thinking about spending in terms of many different buckets. And so how you categorize it isn’t necessarily going to necessarily solve the problem, but it starts to help you get a fuller picture as to what you’re spending.
With respect to your question, Bob, as far as the receptivity in Congress, you know, look, I mean, it depends on the member, of course. But it doesn’t necessarily vary by party. As you and I have talked about before, you know, if you look at the rankings on spendingtracker.org, what you’re going to see is that, you know, the best of the best tend to be Republicans, but frankly, the worst of the worst have tended to be Republicans. And as you scroll through those rankings, you’ll see, you know, a bunch of Republicans and then a bunch of Democrats and then a bunch of Republicans. It’ll kind of go back and forth because the reality is that there’s sort of this myth that, you know, we have one party that wants to spend and one party that doesn’t want to spend. And what we really tend to have, with some exceptions of course, but by and large those are relatively few, are two parties that just want to spend on different things. And of course, there’s also substantial agreement on spending on many big items as well.
So, you know, it really depends. I think, you know, I’m optimistic in the sense that I think that a lot of members of Congress recognize the problem. I think even those who don’t necessarily vote in the way that we might want them to recognize the problem. But I think that, you know, look, the incentives that they face are not on the side of reducing spending. And so it really requires a devotion to principle and a really deep fortitude to follow through and do what you think is right. And so, you know, you end up seeing people either voting for stuff that they know is adding to the national debt or increasing spending, or you see them not addressing items that we really need to address, like entitlement spending, which you pointed out is effectively on autopilot. So, you know, look, I mean, the first step toward solving any problem is sort of acknowledging that it exists. And I don’t think everyone does, or at least they don’t recognize it as sort of as big of a problem as you and I do. But I do think that, you know, there is a lot of that recognition. And a lot of the challenge now is starting to create a structure—for example, like we described earlier, talking about regular order and getting back to the traditional budgeting process—but to really put in place rules and have a structure that encourages, as Milton Friedman once said, the wrong people to do the right thing. It’s not just about getting some new people; it’s about encouraging them to do the right thing. And unfortunately, under the status quo, they don’t really have that strong of an incentive.
Spend It or Lose It [20:40]
Bob Zadek: Jonathan, you have—those of us who follow your writing have learned from you this rather sick process whereby various government agencies which are allocated a certain amount in a budget are compelled to spend it. It’s sort of “spend it or lose it.” Tell our listeners this very sick way that spending is handled in the executive branch in the agencies. And what can be done to fix it? And I’ll prepare the audience: this is going to sound pretty unpleasant and pretty gosh darn grotesque, but Jonathan will explain to you what actually happens on the ground.
Jonathan Bidlack: Yeah, it’s, you know, it’s one of the most insidious or I guess notorious practices that are out there. But essentially, you know, the government will go and allocate funding to different programs and to different people. And essentially, those funds need to be spent, otherwise they won’t get funding in subsequent years. And so what you have are—and I should be clear, this is not just a phenomenon in the Pentagon, but the State Department is actually the most notorious, where I think it’s roughly a quarter of the annual State Department budget is actually spent in September, the last month of the fiscal year. And they spend it because then they want to be able to go back to Congress the next year and say, “We spent all this money, we need all that money, and we need a little bit more.” And so you have this phenomenon where essentially it’s “spend it or lose it.” If you don’t go and spend the funds that you’re allocated, then as a result, you’re not going to go and get funding in the future. And so people who manage these different buckets of money are essentially incentivized to continue to spend even when they know it’s wasteful.
You know, one of my favorite stories that I heard secondhand was an embassy, I believe it was in an African country, that had a bunch of money left over at the end of the year, and so they spent hundreds of thousands of dollars on potted plants and sort of really nice flowers because if they didn’t spend that money, they knew they were going to have to go back to Congress and say, “We didn’t actually go and spend this money and therefore we didn’t need it.” And so this is a problem that exists, and there have been legislative attempts to resolve this problem. I think in the last session of Congress, Rand Paul and Mark Warner, a Democrat, introduced joint legislation that would have attempted to award bonuses to people who succeed in coming in under budget. So again, is that the problem that’s going to solve everything with respect to federal spending? Of course not. But that’s a bigger-scale reform that could have very real cost savings for the American taxpayer.
Fiscal Rules and Zero-Based Budgeting [22:40]
Bob Zadek: There was a concept that got a lot of press a while ago. It seems to have died; maybe there wasn’t enthusiasm for it, but it sure was in my mind. And that was the concept of zero-based budgeting. That is, you don’t start with what an agency had last year and determine if they need more, but you start with the presumption they need nothing and have every agency substantiate, or the sponsors of the agency substantiate every request for every dollar. And so an agency starts from scratch and says, “Here are the programs we want to continue and here is why,” which forces people, if “forces” is the right word, to think about every item in the budget, or at least somebody to think about it before it’s allocated, rather than the lazy approach of saying, “Well, let’s start with last year and see if that was okay.” So whatever happened to zero-based budgeting, or is that just a failed budgeting concept?
Jonathan Bidlack: No, as a matter of fact, you know, it’s potentially another source of optimism for you and your listeners. There’s been a big push, I think, by many, primarily on the Republican side, to essentially implement some sort of budgetary reforms. And one of those potential items on the table is the idea of zero-based budgeting, which as you described essentially tries to not have spending increases baked into the cake. And of course, you know, this is a budgeting practice that goes back to 1974. It’s been something that we’ve been doing for a long time in this country. And you’re right. I mean, really what should be happening, just like you would in a private business, is justify each of those individual items and not assume that we need to increase spending in subsequent years.
And so there are a whole host of budgetary reforms like this that are on the table. You know, one of the big things that we’re a fan of are fiscal rules. Basically saying that you’re only going to be able to increase spending by a certain amount. And many other countries have implemented very effective rules. If you look at Sweden, for example, or Switzerland, they’ve held their spending in check by limiting how much they can spend based on tax receipts. And so these types of rules can also be incredibly effective. So it’s really great. I mean, you’re touching on something that’s a very sophisticated reform, which is process reform. The process by which members of Congress operate, both on the budgeting side but also in terms of how they allocate funding, really has—in many ways, it may not be as sexy of a topic, but the impact that those kinds of reforms can have can be huge and in many ways can be way more impactful than the sort of constant debate about, “Well, should we spend here or should we spend there?” or “What should the top-line number be?” You know, if you create a structure that encourages more fiscally responsible outcomes, you’re more likely to get those fiscally responsible outcomes.
The Success of the Sequester [24:40]
Bob Zadek: Jonathan, my budget hero is President Obama in the sense that he signed the sequester bill. And sequester is the one bill I can remember that actually had a positive, positive effect upon the budgeting process, upon spending in a very profound way, with no detriments to the economy other than the closure of the Washington Monument for a couple of days and the World War II Memorial—a very minor inconvenience, and that was political. So it seems to me that somehow the great republic of ours survived by a reduction in spending for a couple of years, even though it was bluff meets bluff. But that was magic. Why not just have permanent sequester of funds? That seemed to work perfectly. And Jonathan, I say that a little bit tongue-in-cheek, and we have only a minute left in our show.
Jonathan Bidlack: Yeah, you prove the point, right? Rules matter. The Budget Control Act was very effective. We actually saw spending go down back-to-back years for the first time since the Korean War. That almost certainly wouldn’t have happened if we hadn’t had the Budget Control Act. You know, just to give a little bit more information to your listeners about us and this new project, first of all, if you’re interested in the issue of Pentagon spending specifically, check out strongamericaguide.org. It’s a really great resource. You know, we’ve talked in the past about our spending tracker; it’s also a really good resource for anyone who wants to know how much their member of Congress is spending; it’s just spendingtracker.org. And if you want to find out about our organization, the Institute for Spending Reform, you can go to spendingreform.org. So plenty of web addresses for your readers to check out and many interesting—a lot of information there that would be very useful, and certainly send us a note; we’re more than happy to get you involved in our work.
Bob Zadek: And as a fun fact, Jonathan is half of a power couple. Jonathan’s wife Rebecca is running for Congress in Florida. Good luck to Rebecca. Anything you can do to support her campaign, she will control spending. So Jonathan, you’re in that heady world of a power couple, and good luck to Rebecca. This is Bob Zadek thanking Jonathan for joining us again on the show and for sharing what is always an enormous amount of wisdom he has accumulated in doing the hard work and walking the halls of Congress and advising our listeners. When you vote for your elected official, if you only select elected officials or vote for them based upon their position on spending, I promise you, if they are on the right side of spending, every other issue will take care of itself. Spending affects everybody directly, profoundly, irreversibly, and if you have the right policy on spending, there’s not much else to fear. Bob Zadek saying so long for now. I’ll be back next Sunday. I sure am looking forward to it. Have a nice weekend.