During the 1980s, though a practicing physician, I decided to wade into the arena of small-business ownership by opening a franchised restaurant. Made confident by early success I began opening additional stores as fast as I could. By the mid-1990s I noticed that sales growth was great, but my cash and financial statements looked terrible. So, what went wrong? Upon reflection I realized that I had no tools to decipher where money was being wasted, how to price the products or even whether I was making any money! I also discovered that the part-time bookkeeper who simply recorded numbers and reported them to my accountant was far too insufficient for the complexities of my business that had grown to about 10 stores.
Though it was counterintuitive to commit to spend another $250,000 to hire an army of bookkeepers and equip the department; that is exactly what I did.
What happened next was remarkable. With an accounting and operations staff firmly in place, we began to set goals for cost and revenues, metrics to measure our success, and a method to analyze the benefit vs. cost for each line item in the budget.
With effective systems established, we quickly identified waste, whether it was overpaying vendors, paying for redundant services, or paying for things we didn't need or ask for. Within months, our operations and service improved, profits were established, efficiency increased and despite seemingly draconian cuts, we missed out on nothing. These trends continue today though the company has quadrupled in size.
I see no evidence of this process in Congress today. Prior to being elected to Congress, I held no state or federal office, yet my supporters often remind me why they feel I make a good representative for them: I know what it takes to create and run a successful business and more importantly, to make a payroll.
Likewise, voters across this country are desperate for leaders in Washington who will operate our government in a responsible businesslike fashion. However, because the budgetary process and traditional way of doing business is flawed, even the most robust of budget cutters may continue to fail. Therefore, not only must we cut spending, we must fundamentally change the process of spending.
In a broad stroke, here are the fundamental reforms that would make cutting spending rational and less painful. First, each budgetary line item should be assigned a value reflecting a benefit vs. cost ratio.
Annually, such metrics should be reviewed and ranked and those ratios falling below par should require expiration or reform of that program for the coming year. There are a number of decades-old programs costing billions of dollars that no study has ever shown a net benefit. If expired, will they be missed?
Second, a Base Closure and Realignment Commission-type panel should be established to evaluate agencies to delete overlapping, wasteful and unnecessary functions. Through this agency realignment we can stop redundancy if not pare down or end bloated, bureaucratic agencies.
Third, all future spending should have an automatic expiration date placing the burden on future Congresses to justify continued spending. In addition, the current tax cuts should be made permanent so citizens and businesses should never again have to guess about their financial futures, and so Congress will know that controlled spending and efficient government are the only available solutions to future budget shortfalls; not higher, job-killing taxes.
In summary, reducing spending to balance the budget should begin with a continuous, rational process of cost analysis and discipline, not a political food fight that may hurt the innocent yet leave government inefficiency intact. Let's begin this reform with the 112th Congress.
Rep. John Fleming is a Republican who represents Louisiana's 4th Congressional District.