Use It or Lose It

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“Use it or lose it” causes a flurry of federal spending in September, as highlighted in an article by the Washington Post. Government agencies rush to spend the rest of the money in their budget before they lose it with the turn of the calendar. An extra incentive is that any money they don’t spend may be cut from their budget in future years because it looks like they don’t need it. While not all last-minute purchases are frivolous, the system inevitably causes some wasteful spending.

“Use it or lose it” causes a flurry of federal spending in September, as highlighted in an article by the Washington Post. Government agencies rush to spend the rest of the money in their budgets before they lose it with the turn of the calendar. An extra incentive is that any money they don’t spend may be cut from their budget in future years. While not all last-minute purchases are frivolous, the system inevitably causes some wasteful spending.

One example given is when the IRS came up with millions of surplus budget money in 2010. To make use of the money, they held an extravagant conference complete with a Star Trek parody video filmed on a specially built set.

However, wasteful end of year spending is nothing new, according to the story’s recollection of the Johnson presidency:

“‘We cannot expect our employees to believe that cost reduction efforts are serious if they see evidence of opportunistic spending in the last days of the Fiscal Year,’ President Lyndon B. Johnson wrote to underlings in May 1965. Even then, Johnson said an end-of-year binge was ‘an ancient practice — but that does not justify it or excuse it.'”

While it’s easy to criticize foolish purchases, it would be easy to fall into the same trap if we were in the same position. If you have money to spend, why not make use of it, and why risk losing the money allotted for the next year?

It’s a built-in, hard-to-escape incentive, so is there any way to change it?

The article mentions a couple of ideas:

“‘After President Obama set up an online suggestion box for federal workers, many asked to get rid of the ‘use it or lose it’ system. They suggested ‘rolling over’ money for use in the next year. And they listed dumb things they had seen bought: three years’ worth of staples. Portable generators that never got used. One said the National Guard bought so much ammunition that firing it all became a chore.”

Also, a former State Department employee suggested giving bonuses to those who return leftover budget money at the end of the year.

Might these solutions work? Or is Congress too much tuned into the “use it or lose it” mentality itself to effect any change? Could such a mindset actually make us lose what we do have by spending money we do not really have?

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