Minus-three for Five

We noted with interest the President’s recent directive to federal agencies to reduce the bottom 5% of their discretionary operating budgets for the current fiscal year (Obama, June 9, 2010).  Given that budget cutting in Washington usually means continuing to expand, but at a slower pace, this constitutes real progress.

Of course, federal spending is 67% above tax receipts, so there is a ways to go before this would actually bring expenditures in balance with revenue . . .

A coworker once described a budget-trimming initiative at a major food products company, that required managers to reduce operating expenses by 3% the following year.  The managers implemented the program, and successfully maintained product quality while reducing costs.

The initiative was extended by senior management, requiring departments to reduce their budgets by 3% for each of the next five years, with the tag line, “Minus-three for five.”  Three years into the exercise, it was so successful, and so thoroughly engrained in department managers, that the owners mandated a 3% reduction each and every year.

The tag line was revised, and became, “Minus-three forever.”

Obviously, companies cannot cost-cut their way to profitability, and Minus-three-forever cannot actually go on forever, but the program successfully brought costs under control with no sacrifice to quality.

It is possible that something similar could be implemented, and work, at the federal level, to successfully rein in spending.

However, given the vagaries of political winds, the influence of lobbyists and PACs, and the inherent weaknesses of human nature — including members of Congress — we won’t pin our hopes on changing attitudes on Capitol Hill to bring about long-term fiscal discipline.

Instead, we are advocating Constitutional amendments, both to limit the size of government, and to require a balanced budget.

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