The Commoner;
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Planning the Nation's Spending
What a Budget, a Wortand-Finance Program for the Gov
ernment, Would Save the Country
By R. E. Coulson in System Magazine
(Reproduced by courteBy of "Systom"
publishers.)
To the progressive business man, his account
ing system Is something more than a means of
keeping tab on outgo and lncomo and trans
actions with his customers. He plans his fu
ture operations buying, selling, manufactur
ing and forecasts his money needs for each, on
a basis of past experience, as shown by the
rocords of -what has happened, what the costs
woro and what returns were forthcoming in sales
or goods or service. Ho lays out tlio work pro
gram for his organization and sets down the
sums which each department will be allowed to
spend. If, instead of a business, ho were run
wing a government almost any civilized gov
ernment but these United States his work-and-financo
plan would bo called the national
budget.
That, in simple terms, is what a .government
budget is a bird's-eye view of the work to be
done and a summary of what each important
operation or group of operations should cost.
Based on broad facts and detailed analyses
of all money transactions of our government,
matching each lump sum of money to bo spent
the next year against results attained by a like
sum tho past year requiring actual and accu
rate figures from the past to support estimates
of the coming year's needs a budget should
show in sweeping outlines and vivid cross-sections
what the government would accomplish
with tho eleven hundred million dollars to be
disbursed this coming year.
"The largest, the most complex, the most
highly technical, the most widely scattered
business ever organized," is the way tho econ
omy and efficiency commission described this
government of ours. How large an industrial
and servlco business, it carries on can be
judged by tho activities of almost any ono of
Its branches. The navy department, for in
Btance, maintains thirty-four navy yards and
naval stations, thirty-one coaling plants, forty
threo wireless stations, twelve magazines, four
teen purchasing, pay and disbursing offices, nine
Inspection districts, sixteen hydrographic offices,
thirty hospitals, twenty dispensaries, fourteen
naval schools, throe schools for the marine
corps, seven medical schools, four training sta
tions, three medical supply stations, thirteen
recruiting stations, forty-eight marine; posts and
Btations, and a naval militia. In addition, there
Is tho fleet, the actual fighting machine which all
these establishments exist to serve any battle
Bhip of which costs more to build and costs
more to maintain than a dozen average fac
tories. Yet this immense government organization
has been driving along without financial chart
or compass appropriating money by guess and
spending it by guess because even the depart
ment heads, on whoso demands and estimates
the appropriations are based, do not know speci
fically how their millions will be spent or what
they will buy. It frequently happens, indeed,
that a department chief, if ho is called on for
tho sort of information the average business
man would dig out of his reports or balance
sheet is obliged to order a special investigation
to secure it.
When, for example, former President Taft
asked for an analysis of the traveling oxpenses
incurred by tho departments in 1911 (a matter
of some $12,000,000), ho had to withdraw tho
request because complianco with it would havo
cost at least $120,000. Tho only way to got
the information, it was found, was to scrutinize
- each individual travel voucher issued, and com
pile the transportation items a month's work
for nearly a thousnd clerks. More striking evi
dence of this failure to keep adequate records
and significant figures for future guidance is
the annual expenditure by congress of about a
million dollars for special reports bearing only
on appropriation matters. ,
This haphazard method of planning and con
ducting the money end of tho governments busi
ness extends virtually to every department, and
into every bureau and service. An enormous
burden of responsibility is shouldered by the
appropriations committee of the house. Of the
fifteen bills by which over $1,100,000,000 is ap
propriated, six must originate in the appropria
tions committee of the house. These six are
tho legislative-executive-judicial, sundry civil,
pensions, fortifications, District of Columbia, and
deficiencies.
Seldom is an appropriation for an entire ser
vice or department found in ono bili. Overhead
expenses of all tho services housed in Washing
ton are included in tho omnibus legislative-executive-judicial
bill, which means that ono sub
committee of the appropriations committee must
consider expenditures connected with all depart
ments and offices in Washington. Except pos
sibly in agriculture and forest service needs, in
no instance is a single subject handled by ono
committee. Public transportation facilities
estimates are required to be prepared in eight
different bills, and referred to seven different
committees besides those in which permanent
acts originate. Public health estimates aro pre
pared in four bills submitted to three different
committees.
What is the result? Except as sub-committees
act in co-operation, which is seldom, the commis
sion on economy and efficiency declares, "no
committee gets a bird's-eye view of the needs of
an entire service. All broad subjects of public
welfare must be considered piecemeal." And
again: "Expenditure statements in the annual
reports of the several departments are generally
lacking in almost every element of information
needed to give congress the data necessary to a
proper consideration of appropriations." No
blame was laid on individuals for tho condi
tions found. It was recognized that somo
department and office chiefs are accomplishing
excellent results and that still others aro
blocked in their endeavors toward betterment
by peculiarities and traditions of the service.
' The chairman of the appropriations committee
of the house cited this instance to the chairman
of the commission. "In a supplemental esti
mate, the secretary of the navy asked $1,000,000
for a world-wide wireless system. He stated
that the reason it was not included in the regu
lar estimates was tho desire to keep the esti
mates as low as possible. I would like to hear
your remedy for that kind of administration."
"The cure for that," was the answer, "is to
lay before congress regularly a statement of
what it costs to run tho government in each
of its branches, instead of simply having brought
before you tho unsupported estimates for ap
propriations for next year. We find that while
estimates ymay come in for, we will say, rivers
and harbors, amounting to thirty or forty mil
lion dollars, they may be expending sixty or
seventy million dollars? Why? Because the
appropriations or somo of them at least, may be
on a continuing or permanent basis, while others
may be on a two-year basis, and still other sums
may bo in annual appropriations for contracts
which have been entered into, and, therefore,
would not lapse until the end of at least two
years."
Out of this constant, repeated lack of essen
tial and trustworthy information havo grown
practices discarded in efficient private business
"Slush fund" is tho traditional term used by
appropriations committees of congress to de
scribe a salary appropriation in which the num
- her and amount of the salaries are not specified.
When Imperious necessity or a strong public
demand rises for a new service, like the bureau
of animal industry, the reclamation service or
the Panama canal, and such a service is or
ganized rapidly, there are few or no restrictions
to handicap its officials; they aro simply com
manded to produce results. As a service grows
older, howovor, year by yeaT, it is limited. The
number of offices and divisions, the salaries and
duties, aro specified and tho executives must
work out their problems under these restric
tions. This follows a3 a consequence upon tho
condition noted by the commission on economv
"Little if any information is provided either
in the book of estimates or in collateral reporU
VOLUME 13, NUMBER 25
which would lay the foundations for consid
(1) The economy or efficiency of any BPn,i
(2) the character of the expenditures
(3) the character of results obtained' (4? JJ'
extent to which the service has covered the 2!
or accomplished the purpose of its eatnhK.
ment; (-6) the extent to which state St
private agencies are co-operating. That is thPr
are practically no data laid before congress pi
cept a bare record of action taken by itself In
previous years in making appropriations"
Laws are not .lacking which would give con
gress this information. The trouble is that the
government takes on a new board of directors
at the capitol, and frequently a new general
manager at the White House every four or at
most eight years: and there is no continuing
trained and responsible authority to scrutinize
the 'accounts and business methods of all the
bnreaus and hold them to the standards of per
formance and expenditure maintained in every
successful private business. By the time a cabi
net officer begins to get the swing of his depart
ment, his tenure of office is about to expire.
During most of that term, too, he has been so
submerged with unorganized details that he has
not had time or an opportunity to find oat
whether his organization is operating along
efficient lines or whether it is even complying
with the law. Right here is where a budget
framed by a competent organization would re
lieve him, by organizing his finances and supply
ing standards of expenditure and performance
by which he could measure the degree of effi
ciency and economy attained in his department
Under one act, for example, department heads
are required to report to congress the number
of employes and the salaries of each who are
below a "fair standard" of efficiency. The law
goes unheeded because a "fair standard" has
not been establish 1. and a careful study of the
elements of efficiency would first be necessary.
Other statutes, "more honored in the breach
than the observance" call for reports on the
condition of business In each department; on
the number of buildings rented and the uses
made of them; on tho detailing of employes
from bureau to bureau and on similar depar
tures from the routine of administration.
The first and most important function of the
budget, however, would be to set forth the finan
cial and the work programs of the government.
The idea of the commission is that this presen
tation and interpretation should be done by the
president's accompanying message, which would
call attention to the important projects, changes
or continuing policies and needs, and the more
vital summaries of fact contained in the budget.
The message would also report on the manner
in which the public business had been carried
on, and would recommend such changes in the
law as would promote additional efficiency and
economy. While addressed to congress, the
message would he aimed as well at the people--at
once an accounting for the past or current
year and an explanation of the program for tue
coming one.
Besides the president's interpreting message,
the proposed budget would have four divisions.
(A) A summary financial statement, con
taining four detail statements: (1) A-tmT!
balance sheet, showing assets, liabilities ami
reserves; (2) a fund balance sheet (general,
sinking, trust and special funds); (3) an opera
tion account; (4) the present and estimate"
condition of current surplus or excess resource
available to meet general-fund liabilities.
(B) A summary of governmental contract
and purchasing relations; with a summary
estimates, current allotments and expenditure
classified by objects, or services and things v
chased and paid for. ,.. nann
(C) A summary of estimates: (1eJniTi
and borrowings of current and ensiling y
compared with actual revenues of three y
past'; (2) estimates and expenditures ior
ensuing year and, allotments for current y
compared with actual expenditures tfon;
three years, grouped by units of organs
(3) comparative statement ot estim' m
propriations and expenditures by or6ai" teS
units and bills; (4) recapitulations of es"
and expenditures by organization mm .
bills; (5) by functions, bills and comnnue
porting hills; (6) by functions and ore flf
tion units; (7) by functions and JJdltures
expenditures; (8) by character of cpeu
(D) Summaries of proposed change Jn
classified by governmental actlvl"e,,' 0f tb
organic law covering the orgasiizoxeS
government and covering the powers, u Jq lg
limitations of the various officers, J'j M
pertaining to revenues and loans, v
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