The pressure of competition forces enterprises into efficiency in order to survive. If a business finds itself losing a competitive edge because of waste and poor investment decisions, such as inflated payrolls and non-critical projects, they either have to trim expenses or go out of business. This is obviously not true of the public sector, which has no competition and never gets threatened with utter dissolution. But what would happen if government bureaucracies did face such consequences?
Apparently, they can find paths to efficiency, too:
As Congress inches its way closer to a final deal—or a government shutdown—over 2011 spending, federal agencies have already been forced to make do with less and prepare for the worst.
Thanks to the three short-term government funding bills that have passed since the start of fiscal 2011, federal agencies have been required to fund their year-long budget in pieces, instead of planning for a full year of spending. That means agency budget officers have had to be conservative with their funds, in some cases holding off on hiring new employees to fill vacancies and slowing down grants or other contracts that require up-front government funding. The latest funding bill expires on April 8. …
If the agency is personnel-heavy—for example, the Social Security Administration has 68,000 employees—then budget planners can find extra federal dollars by not filling vacancies. If the agency primarily doles out cash to contractors or grantees, they can slow down the amount of money distributed. For example, in past budget crunches the National Institutes of Health has slowed down the release of funds through research grants.
Well, at least for a while, anyway:
The former budget officer also said agencies try to make the best use of any leftover, year-end funds in their budget, buying whatever supplies or equipment they can to make it through the next year’s funding cycle.
That’s typical public-sector behavior. Agencies won’t allow unspent funds to remain on the books, because that would interfere with their arguments for increased funding in the next budget cycle. Legislatures rarely use a zero-based budgeting process where agencies have to account for the use of every dollar requested; instead, they usually take the easier path of calculating increases (or much more rarely decreases) on the basis of a percentage of the previous budget.
Shutdowns can be messy affairs, but they have their value, too. It gives a demonstration of the value of the existing bureaucracies, which legislators can use to determine just how indispensable each may or may not be — if they’re inclined to learn lessons at all. But now we can see that the threat of a shutdown may be even more valuable, and teach even better lessons to legislators, in showing just how much of their own operations the bureaucrats think is mission critical as well.