Crisis Budgeting Creates an 'Uncertainty Tax,' Senator Says

The uncounted hours federal employees have spent planning for budget contingencies amid political and fiscal uncertainty reduce agency productivity and lower morale, witnesses told a Senate panel on Wednesday.

The Senate Homeland Security and Governmental Affairs Committee hearing came just as President Obama and the House and Senate Budget committees met on Capitol Hill but made little progress toward a solution to the fiscal stalemate.

“By failing to provide timely, predictable budgets we are generating waste throughout our government and exporting some of that waste to our state and local partners and everyone who relies on us,” said Sen. Tom Carper, D-Del., chairman of the committee.

The absence of timely budgets, he said, creates “an uncertainty tax.”

Sen. Tom Coburn, R-Okla., agreed with Carper that the budget crisis is “a bipartisan failure of leadership.” The reason the Senate has not enacted a budget in four years, Coburn said, is that “it has sought not to meet the needs of government but to meet needs of politicians, focusing on the short-term and not the long-term.” The fact that Congress failed to pass all 12 spending bills in 18 of the last 24 years and relied on continuing resolutions, he said, “kills the agencies. It doesn’t allow for judgment or let them do what they’re supposed to do. The inefficiency and the increased cost I would lay at the feet of Congress and the president.”

Routine CRs are “at least as worthy of attention, and may indeed be more damaging, than sequestration or brief government shutdowns,” Philip Joyce, a professor of management, finance, and leadership at the University of Maryland School of Public Policy and author of a recent study on the harm from late budgets, testified. “Some of these costs are financial, and some represent inefficiencies and compromised effectiveness for federal programs. All of these negative impacts are self-inflicted, however, and are entirely preventable.”

Budget uncertainty also affects the federal workforce, Joyce added. “People leave government because of lowered morale,” he said, “and they’re not necessarily the ones you want to leave.”

He also noted that despite the Office of Management and Budget’s early prohibition on planning for sequestration for fear of harming productivity, “any rational agency would begin planning given what they could see coming. And once OMB pulled the switch, they went into high gear. But nothing about developing these plans contributes to mission success of these agencies.”

Colleen Kelley, president of the National Treasury Employees Union, recalled that during the prolonged budget battle in fiscal 2011, “federal employees faced the possibility of government shutdowns and unpaid furloughs due to appropriations lapses no less than eight times, including three in December of 2010 and one in April 2011…. In many of these cases, employees had only hours of notice as to whether appropriations had been approved that would permit them to come to work the next day.”

She noted that the Internal Revenue Service has had to delay the tax filing season and shuffle employees because its staff has shrunk by 10,000 over the past two years, accompanied by a pay freeze. “They see the waste that comes from lack of timely congressional action, and they can be forgiven for thinking the wrong people are getting the pay cut,” she said.

The agencies, Kelley added, “have not done a good job of communicating to employees what is going on. By letting rumors get around, they’ve made uncertainty a lot more frightening.”

Budget uncertainty also complicates matters for contractors, said Stan Soloway, president and chief executive officer of the Professional Services Council and a Pentagon veteran.

PSC’s 360 member companies, he said, would prefer that Congress “rip off the Band-Aid,” to restore predictability to the budget process and “return to regular order.” Agency officials’ “risk aversion” to hire or spend money on new contracts spills over into contracting firms, he said.

Witnesses’ recommendations for fixing the problem ranged from biennial budgeting, to improved communication with agencies, to banning continuing resolutions or limiting their duration, to giving agency budget planners more freedom to move funds around when they arrive late.

Most agreed that wasteful spending can be found to ease the budget stalemate. “Congress doesn’t do a good job of oversight and tends to oversee a crisis but not the operations,” said Sen. Mark Begich, D-Alaska. “Congress doesn’t do enough review of whether this or that program should exist.”

That’s because “there’s no incentive to do real oversight because it’s not sexy and doesn’t produce headlines,” Joyce said. “Real oversight is hard work and means getting into the weeds.”