How Your Government Wastes Your Money

COMMENTARY Monetary Policy

How Your Government Wastes Your Money

May 20th, 2005 3 min read

Senior Fellow, Manhattan Institute

This year, Washington will spend an eye-popping $22,039 per household. That is the highest inflation-adjusted total since World War II, and $5,000 per household more than Washington spent just four years ago. With difficult decisions ahead, government waste should be the easiest place to begin bringing spending under control.

Amazingly, Congress hasn't undertaken any serious look at government waste since the 1984 Grace Commission. Lack of information isn't the problem: Hundreds of recent government program audits are collecting dust on bookshelves across Capitol Hill. Instead, the problem is that reducing waste would distract lawmakers from shipping pork-barrel projects home and shoveling government spending to favored interests. So it is no surprise that the federal government costs 33 percent more than it did in 2001.

While lawmakers focus on expanding government, The Heritage Foundation uncovered the following ways in which Washington wastes tax dollars:

First, the federal government cannot account for $25 billion it spent in 2003. That's billion with a "b." Federal auditors know that $25 billion was spent by someone, somewhere, on something, but don't know who spent it, where it was spent or on what it was spent. That amount is more than the total federal taxes paid by all of the residents in each of 28 states. It's enough to fund the entire Department of Justice budget.

That's just the beginning. Another audit shows the Defense Department purchased and then left unused approximately 270,000 commercial airline tickets at a total cost of $100 million. Even worse, the Pentagon never bothered to file a refund for these fully refundable tickets.

And that's not counting the 27,000 times the Pentagon paid twice for the same airline ticket, at a total cost of $8 million. This wasted $108 million could have purchased seven Blackhawk helicopters, 17 M-1 Abrams tanks, or a large supply of additional body armor for U.S. troops in Afghanistan and Iraq.

Credit-card fraud is another problem. Federal employee credit-card programs were designed to streamline government procurement rules by allowing government employees to purchase job-related products with credit cards that would be paid by their agency. But this well-intentioned idea was quickly abused. Over one recent 18-month period, Air Force and Navy personnel used govern­ment-funded credit cards to charge at least $102,400 for admission to entertainment events, $48,250 for gambling, $69,300 for cruises and $73,950 for exotic dance clubs and prostitutes.

Not to be outdone, investigators randomly sampled 300 Department of Agriculture (USDA) employee credit cards. They found that, over six months, 15 percent of them charged a total $5.8 million in personal expenses that included Ozzy Osbourne concert tickets, tattoos, lingerie, bartender school tuition, car payments and cash advances.

The USDA has pledged a thorough investigation, but it will have a huge task: 55,000 USDA credit cards are in circulation, including 1,549 held by people no longer employed by the agency.

Waste also permeates the student loan program. In 2002, the Department of Education certified the Y'Hica Institute's participation in the federal student loan program and disbursed $55,000 in loans to three of the school's student loan applicants.

One problem: Neither the Y'Hica Institute nor the three students who received the $55,000 existed. Congressional investigators created them (on paper) to test the Department of Education's verification pro­cedures. All of the documents were faked, right down to naming one of the fictional loan student applicants "Susan M. Collins," after the senator requesting the investigation. Is it any wonder that $22 billion worth of student loans remain in default?

From the Redundancy Department of Redundancy: Washington runs 342 economic development programs, 130 programs serving the disabled, 130 programs serving at-risk youth, 90 early childhood development programs and 72 safe-water programs. This means not only additional bureaucracies to run these overlapping programs, but also an administrative nightmare for program beneficiaries who must navigate each program's distinct rules and requirements.

Among the many examples: The Army Corps of Engineers is alleged to have purposely rigged dozens of scientific studies in order to justify expensive (but unnecessary) water projects. The federal government loses $20 billion annually by accidentally overpaying the recipients of government programs.

Just a few examples to remember the next time lawmakers claim there is no room to restrain spending.

Brian Riedl is Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

Distributed Nationally on the Knight-Ridder Tribune wire