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Robert Brown

Digital Advisor,

TEDCRED 200+

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How can we fix the budget process?

How can we fix the budget process?
An entity requests a budget to deliver a product or service. It may be approved but in my experience they are never given what they ask for and it is usually reduced by some amount. This reduction forces the entity to adjust their ability to deliver based on the allocated budget.
1. Do entities ever offer up an inflated budget to get what they really need? If so, how do we identify an inflated budget?
2. If the entity doesn't spend their entire budget should shareholders, investors or taxpayers get a rebate?
3. What if the entity was innovative and delivered cheaper/faster/better? Should the entity be rewarded for saving budget dollars? Should it be handled differently if the entity is public, private, corporation, non-profit, government etc...?

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  • Oct 10 2013: Just one option....
    Examine the degree to which our democracy is corrupted systemically, correct them, and then sit and wait for individuals with a higher quality of Conscious Awareness to begin moving into place. The current state of the system selects for well-meaning but inferior players. Funny how we actually expect the current crop of leadership to be able to manage such a lift. They are kindergartners who wage war. We can't expect a ton out of them.
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    Oct 15 2013: The US is facing a critical budget situation in a couple of days. World financial entities are discussing changing the world's reserve currency from the US dollar to another currency. This action if undertaken could have a dampening effect on US society and economic well-being. The country could slip from a dominate super power to just another country and second rate at that. On one hand that may not be a bad thing. We would no longer have to sustain expensive military presence in many areas of the world. US influence on world affairs would be minimized.
    US citizens would find themselves facing difficult economic times. Many government services would have to be reduced or eliminated altogether or the US government can redirect any available wealth into programs they deem most critical to sustain the government.
    Self-reliance may be the new order of survival. It will be difficult..
    But, since 2006, when the people became frustrated with the course of events that the then US administration was undertaking, voted in a congress that began to lay the foundation for change. In 2009, the new US administration addressed the situation and announced that the US had exceeded it's place in the world community and should seek more equality on world stage.
    By design or happenstance, that is happening. The completion of the removal of the US "superpower" status would be to allow an economic default and allow the deflation in the value of US wealth.
    This may cause world realignment of power and that could lead to war... hopefully the US would not become involved.
    So, would this retraction be a good thing. It would appear that some are seeking this new order and would welcome this situation as they believe it could help realign the American model.
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    Oct 14 2013: Where I believe this conversation is going, it missed the first rule of budgeting.... you need an income. and then you can figure expenses and prioritize and and and. but that's the not way governments budget. Private budgets know better.
    What I see happening is that these governmental entities add up expenses, pad the list,find new ways to spend funds etc, etc and then are surprised the income doesn't cover all the bills. It is not a concern the income is insufficient. When it is a governmental entity there is this flurry to raise more taxes..
    Is government there to solve every problem that citizens can face? Can it be said that every problem can be solved by throwing a tom of money at it.
    At the federal level, we have our congressmen to thank for wasteful spending, same with most states where we elect our representatives and of course the elected city officials.
    So the problems is not budgeting or addressing economic planning failures, the problems is us. We continue to elect these people and tell them our wallets are your wallets and we really don't care how you spend or waste our money.
    In the words of Pogo "I have met the enemy and he is us"
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    Oct 14 2013: RB, First we have to establish that there is a budget and a consequence for exceeding it or a reward for coming in under ... that usually incurs a punishment.

    I have retired from state and federal government and also from Industry. As a supervisor, facilities, and capital assets manager I can tell you that there are only punishments and no rewards ...

    At the state and federal level you are playing with other peoples money ... the citizens. Almost always when you exceed ... or fail to manage .... you ask for and are granted a override. I have never seen a public employee punished for missing their target budget ... thus no accountability. It does however inspire creative bookkeeping, illegal movement across fenced lines, .... and plain ole cheatin.

    to answer questions 1 thru 3 above:

    1) There are models for almost every project. Most models allow for base cost plus 10%.
    2) Again there are models available .. when a entity demonstrates efficiency, effectiveness, and employs cost saving techniques they deserve the profits. The contracting agency should learn from the methods employed and evaluate the model for changes.
    3) Three is really no different than two. A contract is a contract regardless of who gives or receives it. The basic problems exist in how contracts are written, tax laws, federal regulations and policies, and, regretfully, Political kickbacks to those in power and those who are in the loop.

    Laws MUST apply to all citizens. As an example we send citizens to prison for insider trading and yet Nancy Pelosi who is casting a deciding vote that will make Visa stocks jump or fall, makes a large block purchase of the stock and then casts her vote making millions. That is criminal, unethical, and everything bad in the business world ... however for a Senator it is legal .. only those they govern over go to jail for the same acts. Opting out should not be allowed.

    Role models should begin at the top. That's a start. Bob.
  • Oct 10 2013: Let's talk about the deficit spending and eventually bankruptcy or default on the debt payment. Look at the city of Detroit, or for that matter, countries like Argentina which had defaulted once before and possibly will default again in near future. The reason for these problems, of course, is due to unchecked deficit spending, i. e. consistently "living beyond its means". This kind of reckless actions have always consequences which were loaded onto the society of the citizens after the bankruptcy or default by the following austerity and heavy taxes and shortage of services to them. Of course this is grossly unfair to the citizens aftermath and the creditors loss from the defaulted debts. (even though the creditors won't lend their money to the entity, or buy their bonds, again, that exacerbates the citizens' misery during the austerity process.)
    One of the solution of the reckless deficit spending is to cut off the cozy relationship of the city or central government between the special interest political lobbies and the elected government officials. It is well known that the elected mayor and city council members were frequently helped by the unions, or business interest too, and the unions, in turn, will extract a pound of flesh, by demanding higher /unsustainable pensions or other benefits for their workers. In other words, unions or other special interests should be prohibited from contribution to, or campaigning for, the candidates in the election. Every citizen can contribute to the candidates but the money should come from their own pockets. And similarly for the campaign activities; not as a union member/employee.
    For any government, there should be a numerical limit on how much it can borrow, something like 200% of GDP or revenue base, but there could be a minor limit, say, 150% of GDP that causes a "warning" to slow down the additional borrowing when required.
    The effect of default by individuals or corporations are minor, unless by too-big-to-fail ones
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    Oct 10 2013: Thank you for your input. Your comments are targeted to the current federal budget folly but the issue happens at every level of our economy -
    1. Household budgets - do you have full visibility into your household spending or does someone have some mad money or hidden purchases?
    2. school budgets - have you ever examined a school budget? I've battled my BOE for the last 3 years on their inflated estimates for various line items. If there is a budget surplus we don't get a rebate. They just find other items to fund and the budget continues to grow since they are allowed to expand at 2% per year without a vote.
    3. corporate budgets - the 2014 budget season is in full battle. Departments asked the head office for X but are told they can have x- some% leaving the departments to scramble. BTW, if they don't spend their entire 2013 budget their 2014 budget will be reduced by the unspent amount. This causes some department to burn the remainder on frivolous items...

    So do we address this top down, bottom up or from both ends and meet in the middle?
  • Oct 10 2013: Maybe had we grown individual incomes instead of shrinking them there would be no problem. Average weekly wages in real terms in America have been falliing for over forty years.
  • Oct 10 2013: Get rid of them all, any incumbent and elect no one representing a major party or movement. Let this shock the system and maybe compromise will be back in vogue until money, influence, power creeps into the system again and then we should do another house cleaning.