A Sarbanes-Oxley for Congress?
Every April 15 we ask: What is the government doing with my tax dollars?</br></br>We know how much Congress spends, but to what end? The Department of Education received $67 billion in 2004, but do children read better? The government spends $30 billion on agriculture annually. Most of these subsidies go to the wealthiest farmers, including Ted Turner, making it our largest corporate welfare program. Was this the intent?</br></br>Since 1993, the Government Performance and Results Act has required agencies to submit an annual performance report of goals and progress -- not unlike what shareholders expect from publicly traded companies -- an accounting of the agency's activities and financial condition. In spite of this law, some agencies still lag in transparently reporting on their goals and activities. According to the FY 2004 Annual Scorecard of agency performance reports (produced by the Mercatus Center at George Mason University), only 11% of the budget is covered by good reporting: The biggest agencies are still trying to articulate their goals and show public benefits, i.e. they don't know what results our dollars are delivering.</br></br>We are all shareholders in the largest fiscal entity in the U.S.: the federal government. This year's proposed budget equals $2.57 trillion, a figure likely to increase when the final budget passes Congress. The majority, 55%, goes to entitlement programs: Social Security, Medicaid, and Medicare. Discretionary activity consumes 37%, split evenly between defense and non-defense activities. The remaining 8% pays for interest on debt. Spending on entitlement programs will keep rising as baby boomers retire. And discretionary spending is also likely to creep ever higher. Without a change in budgetary behavior, spending as a share of GDP will rise to 40% by 2040. According to Comptroller General David Walker, balancing the budget in that year will require cutting spending by 60% or raising taxes to two-and-a- half times today's level.</br></br>Before imagining the horror of that tax bill, or the political fallout of slashing swaths of federal programs, such measures may be unnecessary if the government starts allocating money according to program effectiveness, not political calculation. It's common sense (but not general practice in Congress) that the government should only spend money on activities that show results. This concept, also known as "performance budgeting," has made inroads notably in President Bush's Management Agenda.