The Heritage Foundation

Backgrounder Update #185

August 3, 1992

August 3, 1992 | Backgrounder Update on

Time to End The Senate Slush Fund

(Archived document, may contain errors)

8/3/92 185


(Updating Backgrounder No. 898, "Congress's Billion Dollar Slush Fund@'May 19,1992.) The Senate soon will consider the fiscal year 1993 Legislative Branch Appropriations bill, H.R. 5427, which provides funding for CongreWs activities. The House of Representatives passed its version of the spending bill in June with minor cuts in House spending. The House also eliminated "no-year" funding, --which aHows money intended for one purpose to be used for different pin:poses altogether. The Senate should -go further than the House in trimming its own expenses and eliminating the Senate slush fund cmated when its annual appropriations stay available for an indefinite time. In addition, the Sen- ate should add to the bill requirements for regular, independent audits of Senate and joint House/Senate ac- counts. Some House accounts already are subject to regular, though incomplete, audits under laws which do not apply to the Senate. Finally, the Senate should mandate that audits be conducted by independent, pri- vate sector firms, and should cut funding for its in-house auditors, the General Accounting Office, corre- spondingly. An effort to cut GAO funding in the House was narrowly defeated. . Repmsentative Christopher Cox, the California Republican, has been marshalling support for a presiden- tial veto of H.R. 5427. Unless Congress demonstrates in the bill's final version that it truly will reform its spending habits, the President should veto the bill. CUT FUNDING Senate funding has skyrocketed in recent years. In the last four years, -the cost to taxpayers for rynning the Senate has risen nearly 40 percent, fium $337 million in 1988 to almost $470 million in 1992," or an 8.5 percent annual increase. 7X American family's median income, by contrast, rose only three pa=nt an- nually between 1988 and 1990," actually losing inflation. Much of this fundin'' increase has gone 9 to new staff and increased salaries.. (The Senators' own salaries are provided-by a "permanent entitlemene" not subject to annual funding.) Some 88 Senate staffers now enjoy annual salaries of over $100,000. One of the fastest growing offices is that of President Pro Tempore Robert C. Byrd, the West Virginia Democrat, - who has increased his budget ftom $156,000 when he took office in 1989, to $419,000 this year. For 1993,' Byrd has requested $536,000. This would represent a 343 percent incmase in just five years, and a 28 per- cent increase this you alone. Other requests for large increases in the bill include Senate mail appropria- dons, which will go up by $3.7 million.. And the largest account for Senate expenses, le "Senatow official Personnel and Office Expense Account," will grow 15 percent, a $27 million increase.

1 Nonnsn L Onuteinjhomas E. Msen, and Michad J. Malbin, Vital Statistics on Congrm, 1991-1992 (Washing= D.C.- The American Enterprise Irstime, 1992).Table 5-10, p. 138; wid Roll Call, Jum 25.199Z p..26. (current dollars). 2 - U.S. Census B-cau.FaNdlyIncome Statistics. Based on a fway of four.. 1990 is die Is= yearkr-which figures aie available.

RR. 5427 was brought to the floor of the House under restrictive rules to limit amendments, and the House cut only a symbolic 1.3 percent of its own budget. The much-touted $104 million cut represents less that one-twentieth of one percent of the overall congressional budget. Considering the rapidly increasing costs of Congress, the Senate should be ready to make more substantial cuts in its own spending and in spending for other congressional agencies. Given the recent spending explosion, even a 20 percent cut would leave Congress in the same position as the American family over the last five years. DUMOP 61NO-YEAR91 FUNDING Like the House@ the Senate recently increased the number of accounts in which unspent funds remain "available until expendWrather than being returned to the Treasury. These no-year accounts create a slush fund available to Senate leaders. Senatorfilank Brown, the Colorado Republican, estimated Senate commit- tee accounts alone at $7 million in 199V when he attempted to cut the slush funds out of the Senate's com- mittee funding resolutions. Senate Sergeant-at-Arms accounts that contained no-3n funding went from $6 million in fiscal year 1990, to $119.7 million in 1991 and $120.5 million in 1992. There were no open- ended accounts under the Secretary of the Senate in 1990; in 1991, honver, there was $10.3 million in no- year accounts under the Secretary, and in 1992 there was $13.2 million. The House eliminated the no-year accounting hum their portion of this year's Legislative Branch Appro- priations bill. Them is no reason to have annually appropriated accounts roll over indefinitely. The Senate should dump no-year funding. CALLED TO AN ACCOUNTING

As important as the size of Congress's budget, however, is the fact that there is no public accountability for its use. Most House and Senate accounts are not regularly audited. When they am, audits often reveal pervasive i anagement and sometimes serious scandal. The check-idting scandal that had festered for years at the House Bank was revealed finally only by a statutorily required audiL Following the House Bank and Post Office scandals, the House created a new, non-partisan officer with the authority to audit a number of additional amounts, though spending by committees and individual House Members still is not scrutinized. In the Senate, by contrast, there ate no requirements for audits of any accounts. In practice, there have been no regular audits of any Senate accounts, and many accounts have never been audited, in- clufng the two largest accounts, belonging to the Senate Sergeant-at-Arms and the Secretary of the Sen- ate.

3 Tederal hagramis by Funcum Agency, and AccotW Appendix One, Budget of the Unked Sma Governinent, Fiscal Year 1993, pp. 1-161.1-162. 4 Set Steven ScInvalm, "CougroWs Billion Dollar Slwh FuW Ilentage Foundation BackgroWer No. M. May 19.1992. 5 Congresdonal Record. Fabnmy 28,1991, p. S-2479. 6 "Accounts with No-Yaw Foods in the Pqpdw lAgislative Branch Appropriadous Acts for Nwal Yom 1990-IM.' Congressional Research Service memo to the Han. Richud Sankrum. Febnuwy 5. 1992.Table 1, pp. CRS 4-& 1991 and IM figures derived by adding the -Sergew at Arms and DoorkeqW of the SenaW and -0flice of the Sergeant at Arms and DoorkeeW accounts. 7 1buL Figures derived from sift the accounts mOffm of the Secretary (Sense)" and "Secretary of dw Senate.0 8 Accmftg to officials at the GAO Documents Distribution Center, die Senate resumrant and badmr dwp, both sub-acoomm of die Office of the Seqpant-K-Anns. soethe only two accounts of ft $131.1 million doll Serpeant-at-Armsbudgettliat undergo regular audits. No comprehumve audit has eveir been done. In additim a=odiqg to GAO officials at the public Wormadon otfice, die Seam Post OW= (under dw SergBant-&-Arms) ad the Senate Disbursing Offide (Under dw Se=tary of do Senaw) are curready undergoing "cash counts" in response to the Ham mmdals.7bese va* only diat the correct aniount of cash-on-band is present in the offices at the time; of the counL Simple -cash counte would not have revealed. die impropiedes discovered at the Houw Pto Offics. Computerized GAO reomft extend back only to 1971 but it appears unlikely that audits wow caWbacd prior to diat time. Even with otherwise honest management, problems occur when large budgets go unaudited for long peri- ods. Recent audits of legislative accounts reveal chaotic mismanagement of huge deposits of taxpayers' money. Last year, for instance, the first-ever audit of the Library of Congress, a $6.8 billion per year opera- tion which is the joint responsibility of both the House and Senate, uncovered widespread negligence and probably large-scale theft The GAO concluded that "We found the Library's financial and acgounting re- cords to be in such poor condition that we were unable to audit significant account balances." The GAO audit found that the Library was unable to control its inventory of books,'other assets "could have been lost. . .99, 44 material errors or irregularities could have occurred in the processing of the Library's financial transac- tions..." and that "appropriated funds could have been used for purposes other than those intended by the Congress ...... In short, records were so poor that auditors could tell very little. Such audit results in the ex- ecutive branch or private sector organizations would be major scandals, and likely would trigger dismissals and criminal investigations. Most of the money appropriated by Congress for its operations is not audited. 17he GAO performs only audits that are requested or statutorily authorized by Congress. No audits of members' personal accounts or committee accounts (also under members' direct control) has ever been performed. That scandals similar to the House Bank and Post Office have not spread to the Senate may be due to the fact that the Senate will not allow thorough audits of its accounts that would uncover problems. The legislative accounts which GAO is permitted to audit, however, are subject to only financial audits, whicb am fark-ss rigorous than the thorough "performance' audits that GAO does on the executive branch, and which are required of businesses. Financial audits review fimcial statements (prepared by the audited office), internal controls, and regulatory compliance, while performance audits also include physical obser- vation of inventory, acquisition processes, and security. INDEPENDENT AUDITS Even if the GAO were authorized to perform many of the audits needed for a full accounting of legisla- tive branch expenditures, the agency would be operating under the disadvantage of auditing its own em- ployer. The GAO found irregularities in the operations of the House Bank as early as 1952, and pointedly observed the fact that members were overdrafting their accounts in increasing amounts. However, once the GAO audits began to be mlopublic in 1977, detailed information concerning the questionable legality of these practices was dropped. I In addition to the inherent unreliability of audits of Congress by a congressional agency, the GAO is an inefficient, expensive monopoly. According to Congressman Cox,'Mie GAO doesn't give us anything a good accounting firm in the private sector couldn't give us for less."I I The GAO itself recognized the inher- ent limitations of a monopoly when an audit of the Government Printing Office found that

GPO's monopoly-like role in providing goverment printing services was created to assure efficiency. But with the passage of time that role has been transformed; it now perpetuates efficien in ir because centralized control permits GPO to be insulated ftom market forces. 1

9 "Fnzt An& of ft 11bray of Congress Discloses Significant Roblerns," GAO Financial Audit Repott to dw Librarian of C=gress, August 1991, GAO/AFMD-91-13 p. 1. 10 Edward McFadden, "7bere's No Accounting for CongrM" The American Spectator, July IM, p. 24. 11 Ibid. 12 "Monopoly-Like Status Contributes to Inefficiency and Ineffectivam." GAO Rqxnt to do Joint Corrunittee on Printing. GAOIUGD-90-107, September 1990.GAO goes on to estimate that the services provided by the GPO in 1989 costing $150 million could have been provided from commercial printers for as little as $75 million. An independent audit of GAO likely would reveal the same. Since GAO audits of Congress cannot enjoy the full confidence of the public, independent private ac- counting firms should be hind for the job. In addition to increased accountability, independent audits by private accounting firras likely could be done. with great savings to the taxpayer. The only reason for Con- gress to retain the GAO as auditors is to maintain congressional control over audits of congressional ac- counts.

RESTORE PUBLIC CONFIDENCE When the Senate takes up FLR. 5427, it must take bold steps to tighten its belt and restore public confi- dence in congressional operations. Like the House, the Senate should X Eliminate "no yeae" accounts (with the possible exception of those few that existed before M) and

Cut spending by 20 percent, not V20th of one percent.

However, additional reforms are necessary, particularly -in Congressional accounting for its use of tax dol- Ins. Those should include: X Regular audits of legislative branch accounts by independent firms; X 9 the Senate is unwilling to order audits In its major accounts then, at a minimum individual Senators should be pwmitted to obtain independent audits of their own office accounts; X Significant cuts In GAO funding.

Only with these changes can the American people be assumd that the Senate has eliminated profligacy and waste in its tax-fimded budget. In the absence of these improvements, the President should veto the Legislative Branch Appropriations bill. Stem Schwalm st U.S. 99 Assessment Project

About the Author