TCS Daily

A New Approach for the Budget

By Maurice McTigue - March 8, 2005 12:00 AM

President Bush's 2006 budget calls for $17.2 billion in net savings. That includes the termination of 99 programs, 55 cuts and 16 reforms. Consider that is about 0.66 percent of the $2.57 trillion proposed budget, and it's hard to fathom how those who criticized the President for overspending in '05, are now lamenting his heavy hand.

The reductions are in discretionary activity -- that is, everything except Medicare, Medicaid and Social Security -- about 39 percent of the total budget. Many programs on the cutting block are located in the Departments of Education and Health and Human Services.

But, these cuts weren't made on partisan prejudice. For the first time, budget decisions are being based on the systematic analysis of performance information.

In 2004, the Bush Administration unveiled a method for evaluating programs called PART (Program Assessment and Rating Tool), which subjects the budget to a performance assessment over six years. To date, 60 percent of programs have been rated. Based on agency information, they are graded from "Results not Demonstrated" to "Effective."

PART reflects a decade-long government-wide effort to move agencies to reporting results. Its roots are in a Clinton-era law, the Government Performance and Results Act (GPRA) which says agencies must state program missions and goals and be accountable for results.

GPRA requires agencies produce annual performance reports (not unlike a public company) informing the public of yearly accomplishments and future goals. The law set in motion Vice President Al Gore's Reinventing Government initiative, and President Bush's Management Agenda.

Of those programs suggested for termination, some duplicate private sector activities. Commerce's Advanced Technology Program provides $136 million in grants for emerging technologies, and Energy's Oil and Gas Programs spend $79 million on exploration. Both endeavors are well covered by private capital. Both programs are ineffective.

Other programs have completed their missions. Interior's $6 million BLM Jobs-in-the-Woods program was a temporary measure to help relocate timber workers displaced by decreased harvesting on Federal lands. With timber volume now increasing, the program has served its purpose.

Some programs are clearly broken.

A PART analysis of Labor's Migrant and Seasonal Farmworkers Training program found that 60 percent of participants receive no training.

Three independent evaluations of Education's $225 million family literacy program, Even Start, showed that participants didn't read better. For the second time, the administration asks that funds be redirected to more effective programs.

As one manifestation of GPRA's goals, PART is not simply a budget-slashing exercise, but aims to redirect funds to programs that produce results. Consequently, many programs are now measuring progress. In just two years, programs rated "Results not Demonstrated" fell from 50 percent to 29 percent. Programs rated "Effective" moved from 6 percent to 15 percent. Agencies have an incentive to measure successes and fix failures.

The PART is also the first clear view into the White House's decision-making. Now Congress and the public can easily access information on how programs are faring, and how executive decisions to fund them are being made.

Both GPRA and PART raise important questions: Shouldn't agencies know how they are doing? And shouldn't Congress care? It is Congress that has the final say over public money. To fund programs that claim to be solving a given problem when the problem is not being properly addressed is a deceit.

There are a few Congressional proposals to use performance information. Senator Sam Brownback (R-KS) is offering legislation called CARFA to force Congress to terminate ineffective programs, and shift funds to those that work. Representative Mike Brady (R-Tex.) is introducing a bill to sunset programs that have served their purpose.

The Federal government can no longer afford to run on autopilot. In the next 40 years, government spending is projected to increase from 20 percent to 40 percent of GDP. Most of this is due to the fiscal crises of Social Security and Medicare. These have eclipsed discretionary spending, and will only get bigger as the Baby Boomers begin retiring in 2008. Yet, discretionary spending has also grown astronomically. Demographic trends, rising health care costs, and undisciplined spending have given us a large and growing structural deficit.

According to David Walker, Comptroller General of the US, balancing the budget in 2040, will mean cutting 60 percent of spending, or raising taxes two and half times today's level. As Mr. Walker notes, "Tough choices must be made," -- including a new and innovative way of looking at the budget. Mandatory spending must be reformed. Discretionary spending must be scrutinized. In the 21st century, our government continues to use a bureaucratic system based on a 1930s economy, and a 1950s infrastructure.

The PART is just one (and not the only) approach to tackling a looming disaster. Asking common sense questions about program performance is not a full solution, but a step in the right direction. To work, initiatives like PART must also be transparent, accountable, open to public scrutiny, and up for Congressional challenge.

Resistance to evaluating programs based on evidence remains. For now, interest groups prevail. Those whose livelihoods are tied to the existence of a program will fight endlessly to ensure Congress keeps it.

It will be a challenge to look at the budget process with new eyes. There is a paradox at work in the minds of the public. People want government to solve problems without getting another dime. Those who believe government must help achieve social aims should welcome the chance to eliminate programs that are not delivering, and reward those that are. Are the homeless being sheltered? Are children literate? Are displaced workers finding work? Is the goal to preserve a program, regardless of performance, or to serve the greatest number of people, while delivering the best results possible? With the amount of money currently being spent to achieve these aims, the very least the government owes to the public are clear answers to such fundamental and pressing questions.

The Honorable Maurice McTigue is the Director of the Government Accountability Project at the Mercatus Center at George Mason University and a former New Zealand Cabinet Minister and Member of Parliament. Eileen Norcross is a Research Fellow with the Government Accountability Project.


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