Zombies and Slashers

Back when I was a supervisor and middle manager in a U.S. corporation, one of the most frustrating things I had to do on a regular basis was employee performance reviews.

It wasn’t just a matter of giving employees feedback on how they were doing at their jobs. Managers were required to list everyone in a ranking of strongest performers to the weakest. Basically, the exercise was: if, over time. you had to let everyone on the team go, in what order would you do it?

Not surprisingly, the fellow who invariably wound up at the bottom of the ranking did not think this was a good system. He had a different idea. The team should be rated as a whole, he said. Everyone should get the same ratings, pay increases and bonuses, based on how well the entire team was doing overall.

Yes, there was something soul-destroying about the ranking system, but that guy’s ideal system wasn’t really fair either. He would have deprived people who did really beyond-the-call-of-duty work the extra recognition and reward they had earned. And he would have rewarded people, like himself, who were basically coasting.

It will be no consolation to him that, when it comes to the U.S. federal government, his ideal system is largely in effect. I don’t mean for individual employees. The civil service has its own structure for deciding who gets promotions, raises, bonuses and all of that stuff. I am referring to the government programs get evaluated—or do not—for increased spending and continued existence.

This was highlighted recently by a not particularly popular tactic of congressional Republicans, which was essentially a round-about attempt at de facto ranking of government programs. After the government—specifically, the 17 percent actually affected by the failure of Congress to pass a continuing resolution by the beginning of October—went into shutdown, House Republicans began passing piecemeal resolutions to fund popular parts of the government, including everything from parks to veterans to children with cancer and even letting the District of Columbia spend its own tax revenues. That Democrats did not take the bait was no surprise.

But imagine if, for some reason, they had. Every agency or department or program with a constituency would have been agitating to get its funding back, and most of them would have. And, it is also true, some would not have.

This is how the government used to get funded—one item at a time. But then the government got so large and complex that it wasn’t feasible for legislators to look at every single item individually, so staffers did the prep work and it was up to lawmakers to look through it all and make changes. The growing complexity of the federal budget meant that, in practice, the budget was largely the same from term to term, with adjustments for inflation—and the occasional addition of some new program or agency.

When Barrack Obama became president the budget process evolved again. During the president’s first term the Senate never even passed a budget—even though it was required to do so by law. It did pass one this year, but it was so different from the one passed by the House of Representatives that the two houses never even bothered to try to reconcile them—which, not that long ago, used to be the normal process of arriving at a budget.

Instead, under Obama the budget has truly been on automatic pilot, with Congress simply passing budget resolutions to extend the previous budget with inflation adjustments. That drove fiscal hawks crazy—not least because the spending baseline was inflated by the stimulus packages passed at the end of the Bush Administration and at the beginning of the Obama Administration. In other words, Congress doesn’t even debate the value of individual programs anymore or whether any of them should receive more or less funding or be eliminated entirely. Programs just continue on, kind of like zombies, but with larger amounts of funds arriving automatically.

In other words, we have arrived at a system where programs within the government are rated exactly the same way my old coasting team member wanted to be rated within his team.

So, for all you pundits gnashing your teeth and demanding, rhetorically, to know how we got to the point where every budget resolution becomes an existential crisis with the threat of the country’s good credit hanging in the balance, this is your answer. A certain number of members of Congress come from districts that elected them to shrink the size of government, and they never get the chance to debate or vote on individual programs. Is it any surprise that the most passionate ones seize the one chance they get to make their point—which also happens to be the point that brings everything to a halt and to the edge of default?

The president has been happy enough with the current autopilot arrangement, but he eventually made a miscalculation. After he got one tax increase out Republicans following his reelection, he wanted another one. An impasse was arrived at, so the White House came up with the idea of the sequester as a “compromise.” The reckoning was that when push came to shove Republicans, although happy with the sequester’s spending cuts, would balk at its slashing of defense spending and would have no choice but to accept more tax increases. A similar bait-and-switch tactic had worked before with the administration’s handling of the bipartisan Bowles-Simpson plan for correcting the government’s drift toward eventual insolvency.

But Republicans surprised everyone—perhaps including themselves—by deciding to live with the sequester. No one is really happy with the sequester. Across-the-board spending cuts do not make any more sense than across-the-board spending increases. But for all the gnashing of teeth over those cuts and the problems they have caused, it seems pretty clear that they have contributed somewhat to a modestly improving economy.

There are smarter ways than zombie spending increases and mindless budget slashing to make the government more efficient and to put the economy back on a more sustainable course. That would involve entitlement reform and tax reform—two things to which the president has repeatedly paid lip service since he was first elected nearly five years ago but in which he has never shown any real interest.