Use it or lose it

It's not everyday that most business firms receive word from the federal government that they are the winners and beneficiaries of a contract worth upwards of $5 million. High-fives and expressions of satisfaction are natural and understandable follow ups to the announcement.

About two weeks ago, the Quechee-based glassmaker Simon Pearce got such a call from the U.S. State Department, informing them they were the winners of a $5 million contract to manufacture 20 different styles of handcrafted stem and barware for U.S. embassies around the world. Diplomats have to drink from something at the numerous social functions that are part of the job, and Simon Pearce has built a sturdy reputation over the years as one of the best in the business. If someone was going to get the contract, it might as well have been them.

Nevertheless, coming at a time when the a sizable portion of the federal government was closed due to the shutdown maneuver led by Senator Ted Cruz of Texas and the Tea Party wing of the GOP in the House of Representatives, did anyone else think that this is one drop in an admittedly huge bucket better known as the National Debt?

Five million dollars is a lot of money, even now, although it's closer to a rounding error when discussed in the context of the federal budget. But what was almost more interesting in the report originally printed in The Valley News, a newspaper that covers the eastern side of Vermont, was the "use it or lose it" nature of the contract. Apparently, as the nation's fiscal year comes to a close on Sept. 30, there is a rather frenzied rush to spend all the remaining, leftover cash that hasn't all ready been earmarked for one thing or another. Most of those expenditures are probably essential and important. Others - and over the years anyone who follows national politics for even a short period of time gets to hear of some truly egregious headscratchers - are more problematic.

Federal agencies, like the State Department, are forced to spend leftover budgeted funds or give them back and lose them in future budget cycles, The Valley News reported.

This process is sometimes referred to as "zero-based budgeting" and is actually fairly common in the private, as well as the public sector. While there's a certain logic to the concept, a somewhat perverse incentive to spend 100 percent of a budget, rather than rewarding thriftiness is built in. If you're the manager of a department whose annual budget is $100 million, and you only spend $90 million of that, the question then gets asked - why do you need $100 million again. Never mind that you were carefully monitoring the cash flow and got fortunate in one way or another - the assumption enters the picture that all your department "really" needs is $90 million the next year.

And that could be true or it might have been due to special factors, but spending money not strictly essential seems a little one-dimensional. So we're not blaming the person at the State Department who signed of on the expenditure, or blaming Simon Pearce for taking the money. Who wouldn't? But there's something funny about a "use it or lose it" mentality when it comes to spending public tax dollars.

As a nation, we have a total debt on its way to $17 trillion, and whether or not Simon Pearce provides the State Department with some excellent stemware isn't going to change that one way or the other. But multiply that contract by hundreds, maybe thousands of others, many of them small ones like the $5 million in question here. It adds up. We'd rather see the federal government have the resources it needs to mitigate natural disasters, like Hurricane Sandy last year, or have sufficient air traffic controllers at the nation's airports, or fully staffed Head Start programs. Somehow, we think the State Department could probably get by on the older stemware and glassware for another year if they had to.

It's nice that Vermont has gotten in the way of some federal largesse that will translate into more work and jobs for one of the state's most respected businesses, but really - isn't there something askew with this picture at a time when smart spending would seem more appropriate than ever before?


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