Tracking Government Spending

Here’s an experiment to try: Grab a glass of water. For good measure, pour some red food coloring in it— enough to make it really red. Visit your local swimming pool. Now, take an eye dropper, and drop every bit of red water in your glass making sure to count every drop you put into the pool.

After you’re done with your eyedropper and you’ve dropped and counted every drop of your red water into the pool, take a rest. You’ve done diligent work. Wait 10 minutes, and go back to your chosen water source, and try and count up all the red water drops you put in.

Now that you’ve conducted this experiment, you understand a bit of the difficulties in tracking government spending.

Theoretically, you could measure the volume of the pool before and after you put the red drops in. But there’s a variety of other factors doing all kinds of things to the water in the pool: evaporation, wind, rain, and cannonball dives all take or add to the pool in real time. Precise data on each of those factors has to be known if you’re to do a volume analysis, and even then, you only know whether or not your red drops are in the pool— you certainly don’t know whether they’re in the deep or shallow end, or near the top or at the bottom.

This is the problem with trying to track government contract and grant spending. Except it’s even more futile. In comparison to a swimming pool we’re talking about drops in an ocean, scattered across a continental shoreline by millions of people— an ocean that flows into rivers and lakes and supports an ecosystem.

Most people, upon reading the simple swimming pool analogy would realize that it’s satirical, and not actually run out to their local swimming pool with a glass of red water and an eye-dropper. But to an extent, that’s what sites like USASpending.gov and Recovery.gov try to do.

Accountability, and accounting, is a good thing— obviously you have to have some kind of accountability for where money is being spent. But bolting a system like USASpending.gov — one whose requirements were written by Congress — onto a procurement system that isn’t trackable gets you 1.3 trillion dollars of erroneous reporting.

Let’s say government spends a billion dollars on a (pardon the cliche) Apollo project for usaspending.gov. We get our brightest minds behind the project and inspire a generation of Americans to become accountants rather than astronauts. We pass laws such that typos, misreporting, underreporting and over-reporting spending data are considered treason, and attach the death penalty to it. And somehow, we get legions of highly-educated americans to become “citizen watchdogs” to keep track of all of the spending, auditing every dime the government is spending.

Unfortunately you can’t get an accurate or precise number in my (highly uneducated) opinion. The problem is the impossibility: thorough reporting of spending by humans who probably think it’s a pain in the ass to report their spending. It just won’t happen. The carrots and sticks don’t line up. You will still end up with just marginally more useful data.

One problem is— the process through which government spends money— through awards, grants, etc. — they’re not designed to be transparent or open. They’re designed to get government the most value (both monetary and social policy-wise) for its money (whether or not it accomplishes these things is up for a different debate).

The other problem is that money flows into the Treasury, through various income streams (like taxes, interest, etc) and flows out of the treasury to agencies, to states, to prime contractors, to subcontractors, to employees, to grocery stores. Part of the problem is where you draw the line between how far down that chain you go to report back up. The further down you go, the more people you’ve got involved (which’ll increase errors) and the more you skirt the edges of privacy. Furthermore, as money flows out, it becomes diluted in a sea of other money from other sources along the way.

Back to swimming pools: if you took each water drop— put it in a small container, permanently labeled it and permanently sealed it, and then dropped it into the pool, you’d easily be able to track the data. In an ocean, it’d be a little more difficult, but certainly within the realm of physics.

I’d worry less about how to track government contracts, grants, loans and other awards and worry more about how government spends money. The solution to accountability in government spending can only be as good as the platform of technologies government uses to spend it. That platform: paper checks, a heinousprocurement process, and human reporting systems are the broken parts. USASpending.gov is just a lens that shows us that the platform is broken. The part that’s truly terrifying is that government’s leadership has just as poor of a lens on how its money is being spent as we do.

I’m not nearly as well versed at this as the folks over at OMBWatch but it seems to me that a cent is just a bit, and finding a digital cent in a sea of a trillion other digital cents seems achievable as long as the appropriate metadata was attached (and appropriately indexed) to that penny. It’s a lot simpler than convincing 2.1 million government employees (or any group of 2 million people— say, Houston, Texas) to be perfect and perfectly honest about reporting.

Bolting on a “transparency website” to a system that isn’t built from the ground up to be transparent doesn’t work. While the concept is obnoxiously abstract, it seems to me that if you actually want accountability in government spending, the easiest, cheapest and most future-proof path might be to get government to use a more sophisticated form of digital currency.

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