September 10, 2003

September 10, 2003 | Commentary on Federal Budget

Wasting a Good Opportunity

"Senseless, irresponsible" is how Rep. Steny Hoyer, D-Md., described the request. Sen. Tom Harkin, D-Iowa, asserted that "our job is not to react to requests that have no basis in reality." What in the world was this odd request?

To search the federal budget for waste, fraud and abuse.

As part of the 2004 federal budget, the House and Senate Budget Committees asked each congressional committee to examine the entitlement programs under its discretion. The modest goal was to identify 1 percent of entitlement spending as waste, fraud or abuse. Committees were asked to report their findings to Congress by Sept. 2, 2003.

Less than half of the congressional committees bothered to submit their findings by the deadline. The contempt both parties displayed toward this request exemplifies Congress institutional bias against saving taxpayer dollars.

The Democrats' approach has been to deny the existence of government waste. A high-ranking appropriations official recently claimed that cutting waste is impossible because every entitlement dollar goes to a legitimate recipient. In other words, not a dollar is lost to administrative waste or efficiencies, and no one is cheating federal programs. Such nonsense is the product of political spin: Deny the existence of government waste, then tell seniors and veterans that mean-spirited budget cutters are gunning for their Medicare and veteran's benefits. That message is as powerful as it is misleading.

Yet Republicans deserve even more blame. As the majority party, they chair every congressional committee. Republican committee chairmen could have directed their staffs to identify instances of waste, fraud and abuse for the committee's Republican majority to approve.

The stubborn refusal of most committees to do so is not much of a surprise, though. The Republican Party may have once stood for fiscal responsibility, but it has since succumbed to the temptation of playing Santa Claus to whatever voter blocks (farmers, seniors, soccer moms) it thinks will swing the next election. To those who see government spending mainly as a means to buy re-election, reducing waste is a thankless and potentially dangerous distraction.

Such profligacy comes at a high price for taxpayers. In 2003, federal spending will reach $21,000 per household, up from $16,000 just four years ago. Taxpayers have been temporarily shielded from these costs because of budget deficits that now top $400 billion and could reach $600 billion within a few years. But all spending must eventually be funded through taxes, and budget deficits only delay the inevitable choices Congress must make. Reducing federal spending is the only way to reduce the long-run tax burden.

If Congress lacks the will to even identify waste, fraud and abuse -- at a mere penny on the dollar -- there is little hope that they will actually reform wasteful programs. And if they won't reform wasteful programs, they clearly aren't ready to undertake the larger reforms necessary to get the budget under control.

On the positive side, substantial groundwork has been laid. The General Accounting Office, Congress's own auditors, has published hundreds of reports identifying waste, fraud and abuse in entitlement programs. After only a cursory review of those documents, The Heritage Foundation identified $300 billion in waste that could be trimmed over the next decade - at a savings of over $2,700 per household.

For example, Medicare overpayments top $12 billion annually. Medicare also pays up to eight times the price that other agencies pay for the same drugs and medical supplies (which also raises co-payments for Medicare beneficiaries). The Earned Income Tax Credit loses $9 billion to payment errors per year. Gas tax fraud costs taxpayers $1 billion per year.

If Congress expanded the search to include discretionary programs, they would find that the federal government simply cannot locate $17 billion it spent in 2002. They would learn that the Justice Department has lost 400 laptop computers and 775 weapons as a result of poor inventory controls. They would discover how the Department of Education recently gave $55,000 in student aid to a fictitious college.

But take heart: An ambitious group of House freshmen -- Mario Diaz-Balart and Tom Feeney of Florida and Jeb Hensarling of Texas -- have formed the "Washington Waste Watchers" to root out waste, fraud and abuse. Fellow freshman Chris Chocola of Indiana has written legislation to cut waste from the Federal Aviation Administration. As the taxpayer cost of government drifts upward, the rest of Congress would be wise to follow the freshmen's lead.

Brian Riedl is Grover M. Hermann fellow in federal budgetary affairs in the Roe Institute for Economic Policy Studies at The Heritage Foundation.

About the Author

Brian M. Riedl Grover Hermann Fellow in Federal Budgetary Affairs
Thomas A. Roe Institute for Economic Policy Studies

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