Quote:
Originally Posted by Dusty
That's a fiscal death knell.
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I'm taking your statement to mean that this would kill everything. Is that correct?
I may not have stated my position well. I'm not talking about completely eliminating cost avoidance as a factor, that would be ridiculous. I'm saying that they currently are completely funding bills through cost avoidance based on over-projection of those future costs. There needs to be real cost savings, measured against actual spend from previous years mixed with realistic projections for future costs. If you fund something completely based on guesses at the future costs you can "find" money everywhere that really never existed.
For example, If I did things the way congress does:
My roof has three loose shingles. I go out and get an estimate to replace the entire roof and am told that it will cost $2000. I don't negotiate or get other estimates, I just need a figure so I can save the money. I then run into a friend who says that he had the same exact issue and used a guy that patches roofs so I get an estimate on the patch of $100.
If I were Congress, I can say that if I replace those three loose shingles on the roof for $100, I can avoid paying for a new roof for $2000 saving $1900. Then I go buy a $1900 big screen TV using the money that I didn't spend on the roof.
There are several problems with doing things this way. First, if I shop around like I would in making a major purchase I may find someone that does a quality job for $1500 making the real cost avoidance $1400, not $1900. The other $500 in savings never really existed, but I still used it to buy the TV. Since I just took the one estimate at full value, my numbers are skewed from the beginning unless I got extremely lucky and got the best value on the first try.
Next, there is how I pay for it. If I already had all of the money to pay for the roof set aside in savings, that is fine. If I use guaranteed future income (such as part of my earnings) that I already had planned to use for the roof, that's fine too. A mix of the two is fine also. BUT, if I don't have either of those and FINANCE the TV through a loan or credit card because I didn't have to buy the roof, now I've borrowed money to pay for a TV based on cost avoidance even though I never had the actual money to pay for the roof. That's a budget trick. It's the primary way that Congress is paying for things and why our deficit and debt are out of control.
What I'm advocating is that cost avoidance be limited and require solid projections when evaluating how Congress pays for a spending bill. Maybe 75/25 isn't the right ratio, but we need to start somewhere. Forcing every bill to have real cost reduction, existing cash or actual revenue increase pay for the majority would automatically start us on a road to deficit reduction and better fiscal policies.