Unintended Consequences of Use-It-or-Lose-It Budgeting

A caller to a radio talk show shared a story from when he was in the U.S. Air Force. The unit had a fuel budget that they had underspent for the year. They had a use-it-or-lose-it budgeting system. It's a reasonable idea that the budget for next year should be related to the actual spending from the current year.

As frequently happens, fear of scarcity overrides common sense. Instead of losing their fuel budget for the next year, the caller shared, the jets fueled up, flew over the ocean and returned fifteen minutes later to refuel for additional trips.

Although I hope this is an apocryphal story, its plausibility reminds us that even decent ideas can have unintended consequences. We need to keep normal human reactions in mind as an important part of the evaluation of otherwise good ideas.

Organizing Papers as a Sign of Checking Out of a Meeting

One sure sign that someone has given up hope on the success of a meeting is the paper-organizing move. Let me describe it. It starts with the participant making a final, impassioned plea on some position. This plea doesn't get the response hoped for.

Now our meeting participant does the paper-organizing move:

• He turns his body away from the speaker to his pile of papers and notebooks.
• He slowly and deliberately organizes them into a neat pile.
• Then sets the pile on the table, positioned ever so slightly toward the door.
• Clasping his hands together he sits back in his chair, nearly at attention, as if his full focus were on the current speaker.

The paper-organizing move happens too frequently in meetings. It's meaning is clear: it shows that our meeting participant has lost hope in getting what he wants out of the meeting, and he has checked out. Not that all meeting have to end with everyone happy, but I'd call this an unsatisfactory ending. When a meeting has reached this point, it is frequently too late for the leader to do anything to fix it on the spot. Hopefully, though, recognizing the paper-organizing move gives you an opportunity to deal with the issues that caused it.

Senators Show Poor Leadership in Bailout Bill

US Senators showed the poorest of leadership today by taking advantage of a national crisis. Senators have amended the text of the senate bailout bill, officially titled the "Emergency Economic Stabilization Act of 2008," with unrelated acts and special tax incentives.

This is the worst kind of abuse of the leadership we have invested them with, and they should be ashamed. As their constituents worry anxiously about the value of their 401K retirement plans, homes, and talk of depression, their Senators took time to augment the bill with administrative housecleaning and pet projects that might otherwise be difficult to pass. Knowing the importance of the bill at hand, they hide in the shadows of urgency and depths of 451 pages of text to sneak their special interests into law. Notably, the main part of the Act, Division A, ends on page 113, leaving 338 pages of additions including Division B, the ‘‘Energy Improvement and Extension Act of 2008’’ and Division C, the ‘‘Tax Extenders and Alternative Minimum Tax Relief Act of 2008’’ starting on page 261.

Division A, Section 2 of the Act reads:

The purposes of this Act are— (1) to immediately provide authority and facilities that the Secretary of the Treasury can use to restore liquidity and stability to the financial system of the United States; and (2) to ensure that such authority and such facilities are used in a manner that— (A) protects home values, college funds, retirement accounts, and life savings; (B) preserves home ownership and promotes jobs and economic growth; (C) maximizes overall returns to the tax payers of the United States; and (D) provides public accountability for the exercise of such authority.

Given the last line of the act's purpose, the Senators understand the need for accountability in the exercise of authority. They simply can't show personal leadership in their own use of authority. Here are some items from Division C that they should be publicly accountable for:

• Section 308 (Page 279) is a two year extension to an excise tax "cover over" for rum from Puerto Rico and the Virgin Islands.
• Section 317 (Page 290) is a two year extension to support "Motorsports Racing Tracks" having a seven year cost recovery period.
• Section 325 (Page 295) is a five year extension to special tax incentives for the wool industry.
• Section 503 (Page 300) gives excise tax exemption to kid's toy wooden arrows. You could put an eye out with them, but the Senate wants to give them a special tax exemption.
• Section 511 and 512 (Page 310) has the distinction of being the only bill that has names associated with it, the ‘‘Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008’’. Apparently their pride overcame their shame.

From a leadership perspective, I look at it like this: In the middle of a raging fire, the fire chief calls his team together to talk about whether they will serve steak or lobster at the station's summer family picnic. Some might argue that it is a reasonable discussion to have, but this is neither the time nor is it respectful of the seriousness of the situation. Someone in the Senate should show leadership and call this out as wrong. We should all expect better of our Senators.