Budgeting Alternatives for the Department of Defense

The United States careens from one budget crisis to another while the national debt, now $20 trillion, continues to rise. This trend is a stark reminder that the federal budget process needs a complete overhaul. And, with one of the largest budgets in government, the Department of Defense (DOD) could be the first place to test a sensible process reform called zero-based budgeting. Given the DOD’s $530 billion budget for fiscal year 2016, the savings could range from $31.8 billion to $53 billion, based on the experience of corporations and national governments that have adopted zero-based budgeting.

The current budget system encourages spending. Under the current system, known as “baseline budgeting,” the government sets the previous year’s spending as the starting point for the future. Budget prepare resume all of the same programs and operating procedures, and only adjust the next year’s fiscal outlook upward to the account for actual spending, inflation and population growth.

Zero-based budgeting requires departments and budget officials to start with the assumption that their unit will receive zero funds. Budgets are then constructed with every dollar requiring justification. Precise analysis like this might avoid the kind of broad, unspecified budget reductions that resulted in 40,000 troops being cut from the U.S. Army, while very expensive civilian and headquarters staffs actually grew.

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