Frank Bernheisel: The View From Here
Frank Bernheisel
Frank Bernheisel
Posted 12.09.14
Just Outside Washington


Priority Number One: Pass A Budget

The U.S. Constitution in Section 9 states:

No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.

This clearly gives the Congress the responsibility for passing the laws that authorize spending on whatever projects and activities that it created through other legislation. We will call those authorizations the Budget.

In 1974 Congress passed The Congressional Budget and Impoundment Control Act, which established the federal government's fiscal year as the 12-month period beginning on October 1 and ending on 30 September of the next year. We are now over two months into fiscal year 2015 and there is no Budget. Congress has not passed the Budget before October first since before 2000.

So, why doesn't the federal government just stop? Because Congress passes a "Continuing Resolution" (CR), which says, in effect, just go on spending money like last year.

The impact, based on a Government Accounting Office study in 2013 is:

    Agencies delayed hiring or contracts during the CR period, potentially reducing the level of services agencies provided and increasing costs. After operating under CRs for a prolonged time, agencies faced additional challenges executing their final budget as they rushed to spend funds in a compressed timeframe. All case study agencies reported performing additional work to manage within CR constraints, such as issuing shorter term grants and contracts multiple times. Agency officials reported taking varied actions to manage inefficiencies resulting from CRs, including shifting contract and grant cycles to later in the fiscal year to avoid repetitive work, and providing guidance on spending rather than allotting specific dollar amounts during CRs to provide more flexibility and reduce the workload associated with changes in funding levels.
Parsing out the bureaucratic language, we get; reduced services, increased costs, more contract paperwork, delay and more bureaucratic work. An example might help.

The DOD has contracted to buy a new HUMVEE and the production schedule calls for 100 in the first year, 500 in the second, and 1000 in the third. The manufacturer's price depends on a three-year run with those numbers and so do prices of their suppliers. At the end of the first year – say September 30 – there is no Budget but a CR.

Under the CR, DOD can continue at the 100 per year level for the HUMVEEs. And to do that the manufacturer's contract will need to be modified. More management and bureaucratic work! Also, the manufacturer has no guarantee there will be money for 500 units in Year Two. He slows down, but the production line was set up for 500 resulting in layoffs and supply chain backup.

When the CR is finally replaced by a Budget, the 500 units are authorized. The manufacturer ramps back up but now he is behind schedule. He asks for a contract modification and an increase in price to cover the cost of the change in production schedule. Congress is appalled and calls for hearings. All the DOD and manufacturer's program managers must go to the Hill and testify. Senator Foghorn holds a press conference on Waste, Fraud, and Abuse.

All this is very entertaining and sells newspapers (and other media). However, it costs money and destroys the public trust in government.