The U.S. National Debt - How Single Year Budgeting And Funding Cycles Lead To Unmanageable Government

By Ken Larson

Having dealt with the funding process in the government contracting industry (both large and small business) for over 40 years, I can discuss with some credibility a major weakness in the huge machine we call the US  Federal  Government — the one year budget cycle.   

A huge reason for much of the largess in the National Debt is the fiscal year funding agony in which the US Government is entrenched. Shutdowns, delays and spoon feeding funds to areas as vital as the environment, national defense and healthcare must cease.  

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About mid-summer every agency begins to get paranoid about whether or not they have spent all their money, worried about having to return some and be cut back the next year. They flood the market with sources sought notifications and open solicitations to get the money committed. Many of these projects are meaningless.

Then during the last fiscal month (September) proposals are stacked up all over the place and everything is bottle-necked. If you are a small business trying to get the paperwork processed and be under contract before the new fiscal year starts you are facing a major challenge.Surely the one year cycle has become a ludicrous exercise we can no longer afford and our government is choking on it. It is a political monstrosity that occurs too frequently to be managed effectively.

Government must lay out a formal baseline over multiple years (I suggest at least 2 fiscal years – ideally 4 – tied to a presidential election)  – then fund in accordance with it and hold some principals in the agencies funded accountable by controlling their spending incrementally – not once a year in a panic mode.

Naturally exigencies can occur, such as COVID and unanticipated world events like the Russian invasion of Ukraine.   A management reserve can be set aside if events mandate scope changes in the baseline due to unforeseen circumstances. Congress could approve such baseline changes as they arise.

There is a management technique for the above that DOD, NASA and the major agencies require by regulation in large government contracts.    It is called “Earned Value Management” and it came about as a result of some of the biggest White Elephant overruns in Defense Department History.

Earned Value Management Systems

We have one of the biggest White Elephants ever in front of us (a National Debt exceeding $35 Trillion)

National Debt Clock.

We must get this mess under control, manage our finances and our debt or it will manage us into default.