What Did the Latest Impasse Teach Us?

Remember last week that there was another impasse on a continuing resolution to keep the government open.   The whole disagreement hinged on $3.65 billion spending increases for FEMA (disaster relief) and the Republicans in the House offset a portion of that with $1.0 billion spending reductions on Democrat pet green projects (like Solyndra).  The Democrats in the Senate (and sadly many Republicans) voted against it because they are no longer following the paygo strategy that was promised during Obama’s presidential campaign.   

Now the situation has changed and it turns out that FEMA will have enough money to get them through the next budget cycle (which ends this Friday) as long as we don’t have a national catastrophe in that time period.  Today, the Senate passed an overwhelmingly popular continuing resolution and since it didn’t require an additional $3.65 billion (and its corresponding $1.0 billion offsetting cuts) it should pass the House quickly tomorrow.  Whew, that was close, right?  Well, not really.  Before we move on to the next crisis du jour, let’s see what we can learn from this one.

I think this past week highlighted a major problem with our current government fiscal policy – Requests for increased funding are not challenged by anyone in Washington.  When the Obama administration made this request for more funding I don’t recall hearing any member of Congress calling up FEMA and requesting clarifying information.  Did someone ask FEMA to reveal their calculations that prove they would run out of funding?  Did FEMA have other accounts that could be used for the next week to get them through?  What services would be impacted if this increased funding is not approved?

I’ve worked in private industry all my career and spent it mainly in manufacturing environments and when new capital projects or spending increases are requested there is a fairly lethal gauntlet that I had get through to prove I really needed the money.  Will the project improve quality?  Will the project reduce long term costs?  Will the project satisfy a market need?  Did I have existing funds that I could use for this project?  This is standard practice and businesses don’t have the luxury of printing money to finance all request so that forces them to be good stewards of their capital and use that precious resource to fund projects that have a positive impact on the business.  This is apparently not so for our Federal Government.   

I think Mitch McConnell said it best today, “This entire fire drill was unnecessary.”  The past few days have been nothing but political theatre and gave politicians on both sides to posture and bloviate their talking points.  It is now obvious that FEMA didn’t need the extra money so I’m curious as to what changed in the past few days.  Did FEMA uncover an unknown source of money that they had overlooked?  Were their original estimates wrong?  Did requests for assistance drop off?  I think it is important to know why this request for additional funding suddenly was reversed.

Whatever the answer and no matter how you feel about the bickering and logjams in Congress right now, the bottom line is that the latest impasse in Congress saved the tax payers $3.65 billion.  And while this is only 0.1% of the total outlays of the government in 2011, it makes me wonder what other savings we could find if we took the time to ask basic questions.  Should there be more inaction in Congress to reveal other wasteful spending that isn’t needed?  Shouldn’t our paid representatives be asking these questions to show us that they are good stewards of the money we give them?

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