system
Given the following post, respond as if you're commenting on Reddit:
human
Can we cut wasteful spending by giving government agencies incentives for having a budget surplus?

I'm not sure if this is the correct place to post this, if it isn't, I'll take it down. Bare in mind I'm not an economist, it's just a random thought. So here goes:

I've worked for a private company that is a supplier to different agencies of my local government. It's no surprise that prices of the products are way higher than the market since government contracts are essentially money printers for private companies.

Besides that, an agency/ministry will deliberately blow through their budget at the end of the year. The reason for doing so is avoid budget cuts for the next year.

The way funding is allocated to these government agencies incentives over spending and would increase government debt.

My idea for this goes someting like this:

At the end of the year, budget surplus will be tallied and the agency with the highest surplus will receive priority funding for the next year as well as a budget increase. Those that don't have a surplus will undergo an audit for overspending.

Half the surplus funds will be collected to put back into the treasury and will be given back on the next budget allocation.

Will someting like this work?
gpt
Public choice theory is the study of incentives by government agencies, politicians and bureaucrats. The general idea is that the incentives of those in positions of government don’t align directly with the hypothetical benevolent dictator, and choices are guided by self enrichment or other objectives. 

In one model by Niskanden, government agencies seek to maximize budgets, not the social welfare of those affected. It sounds like you are implicitly taking this incentive on through a budget surplus incentive. 

Sounds like the obvious perversion of incentives here are to maximize surplus by reducing expenditures as much as possible without the agency being penalized for that. So what is to stop a department like housing or education from cutting as much discretionary funding as possible in order to maximize next year’s budget?  In general, if an agency had the ability to cut services in such a way that was socially desirable, why would we then want to increase those budgets in subsequent years?

At the same time, why not audit all agencies?  Oh, yeah because those auditors are also rational actors in the game. So we then need to audit the auditors. But who audits them?  It’s auditors all the way down. Until we reach the turtle shell.