The newly created Department of Government Efficiency is on the right track. Most sensible people would agree that ferreting out wasteful spending and eliminating redundant programs and administrative bodies would go a long way toward more effective disbursement of tax revenues and in reigning in rampant government spending. However, one of the root causes of wasteful spending is baseline budgeting.
Baseline budgeting is a method of establishing the yearly budget for government departments that begins by using last year’s spending and adding in additional funds based on the inflation rate. In short, it would be akin to telling an employee that their salary is based on what they spend every year, rather than on the value of their service to a company. Or basing your child’s allowance on what they spend in a week, rather than what is reasonable for that child’s age and needs. Baseline budgeting actually incentivizes waste, as unspent funds at the end of a fiscal year cannot be carried over but actually reduces what is allocated to the agency with those unspent funds.
A great example of this involves my role as the customer service rep for a company that was on the list of suppliers for the Department of Defense. Every July, I would receive requests from several military sites that bought from us. The requests would let me know how much the procurement officer had to spend, and asked me to prepare a shopping list that would use up their available funds. I did as requested, keeping in mind that at that time, the state also had an inventory tax. In 1987, the navy received a nice supply of notepads, measuring tools and a few slide rules. This end-of-fiscal-year game is played by every division of every federal government agency. My sister worked in the federal judiciary, and described essentially the same thing going on in the court in which she worked; they needed a new copy machine, but had to put off that requisition until the new budget went through. Instead, they loaded up on office supplies and other items that weren’t essential to clear out their remaining budget.
While DOGE will do an awesome job at making wasteful spending more visible to the American people, the elimination of baseline budgeting would create an environment that eliminates the motivation to waste money.