Rand Paul's "Bonuses For Cost-Cutters" Act Could Save Taxpayers Billions

Rand Paul’s “Bonuses for Cost-Cutters” Act Would Incentivize Spending Controls

Last week, Senator Rand Paul (R-Ky) introduced a bill that would give bonuses to federal employees that identify surplus funds in their agencies’ budgets.

Called the Bonuses for Cost-Cutters Act (s. 1830), the bill would allow agency inspectors general to authorize bonuses where workers identified surplus (unnecessary) funds.

The bonuses could be substantial (probably a good thing), as a maximum of 10 percent of savings could go to the federal employee responsible—the remainder would go towards deficit reduction. Furthermore, the bill is aimed at getting ordinary people to find savings: agency heads, executives, or voting members of independent boards are ineligible.

Senator Paul says the bill should help incentivize savings, rather than the binge-spending that currently takes place. He says:

Reining in and controlling end-of-the-year spending binges should be a bipartisan priority. Hopefully our hearing today will renew interest on both sides of the aisle to address accelerated, wasteful spending at the end of the fiscal year.

Basically, Paul recognizes that government departments currently operate on a “use it or lose it” mentality—failure to spend their full budget (and therefore request more), shrinks the department-head’s personal empire. It is, in essence, a Dilbert comic come to life:

While government spending is clearly a waste, the bill does have some problems, and could be more effective.

On the one hand, the logic of denying those at the top access to the bonus structure is designed as both a safeguard against corruption, and an effort to empower the ordinary employee, those at the top are in the best position to save the most money.

A useful addition to this bill would be to have a separate incentive structure for those at the top—in addition to picking competent people who are not inherently corrupt. In other words, draining the swamp would be a more effective way of saving money than any fiscal rewards.

Likewise, the biggest problem isn’t necessary wasteful spending. Although the federal government spent an estimated $144 billion in improper payments last year, the bulk of federal spending is on above-market wages.

In fact, a recent report from the Cato Institute found that federal employees eared 80 percent more on average than private sector workers in 2016—cutting wages, or at least freezing raises, would do far more to help the deficit than any number of savings could.

Either way, this bill would help reduce the deficit. Hopefully Congress moves on it.