October 6, 2009 | WebMemo on Federal Budget
Soaring government spending and trillion-dollar budget deficits have brought fiscal responsibility -- and reducing government waste -- back onto the national agenda. President Obama recently identified 0.004 of 1 percent of the federal budget as wasteful and proposed eliminating this $140 million from his $3.6 trillion fiscal year 2010 budget request. Aiming higher, the President recently proposed partially offsetting a costly new government health entitlement by reducing $622 billion in Medicare and Medicaid "waste and inefficiencies" over the next decade. Taxpayers may wonder why reducing such waste is now merely a bargaining chip for new spending rather than an end in itself.
It is possible to reduce spending and balance the budget. In the 1980s and 1990s, Washington consistently spent $21,000 per household (adjusted for inflation). Simply returning to that level would balance the budget by 2012 without any tax hikes. Alternatively, merely returning to the 2008 (pre-recession) spending level of $25,000 per household (adjusted for inflation) would likely balance the budget by 2019 without any tax hikes.
Not Easy, but Necessary
Reducing wasteful spending is not easy. Even the most useless programs are passionately supported by the armies of recipients, administrators, and lobbyists that benefit from their existence. Identifying inefficiencies and abuses is much easier than devising a system to fix them. Many lawmakers focus more on bringing home earmarks than on performing the less exciting task of government oversight. Exasperated taxpayers see the cost of government rise with no end in sight.
Of course, eliminating waste cannot balance the budget. Lawmakers must also rein in spending by reforming Social Security and Medicare and by eliminating government activities that are no longer affordable. Yet government waste is the low-hanging fruit that lawmakers must clean up in order to build credibility with the public for larger reforms.
Congress has allowed government employees to spend tax dollars on iPods, jewelry, gambling, exotic dance clubs, and $13,500 steak dinners. If lawmakers cannot even reduce this kind of waste, fraud, and abuse, taxpayers will be less likely to trust them to reform Social Security and Medicare.
Six Categories of Waste
The six categories of wasteful and unnecessary spending are:
The first four categories are generally subjective, and reasonable people can disagree on whether a given federal program falls under their purview. Yet the final two categories -- duplication and inefficiency, mismanagement, and fraud -- are comparatively easy to identify and oppose. Thus, they are heavily represented in the examples of government waste below:
Pick the Low-Hanging Fruit
Because many of these examples of waste overlap, it is not possible to determine their exact total cost. Yet it is evident that Washington loses hundreds of billions of dollars annually on spending that most Americans would certainly consider wasteful. Lawmakers seeking to rein in spending and budget deficits should begin by eliminating this least justifiable spending while also addressing long-term entitlement costs.
Brian M. Riedl is Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.
Government Accountability Office, Improper Payments: Progress Made but Challenges Remain in Estimating and Reducing Improper Payments, GAO-09-628T, April 22, 2009, at /static/reportimages/848E2EF8FE88B7FD87B3621E2B5FC0EA.pdf (October 5, 2009).
The Cato Institute estimates that corporate welfare costs $92 billion annually (not even counting the $700 billion TARP legislation). SeeStephen Slivinski, "The Corporate Welfare State: How the Federal Government Subsidizes U.S. Businesses," Cato Institute, May 14, 2007, at http://www.cato.org/pub_display.php?pub_id=8230 (October 5, 2009). The White House has requested $71 billion for fiscal year 2010 homeland security spending. See Office of Management and Budget, Budget of the U.S. Government, FY 2010: Analytic Perspectives (Supplemental Materials), May 2009, at /static/reportimages/1FA58FAE61C1A1EBAB37BE76B88C824D.pdf (October 5, 2009).
Office of Senator Tom Coburn (R-OK), "Subcommittee Oversight Efforts Identify $1.1 Trillion in Waste or Questionable Spending," October 19, 2006, at http://coburn.senate.gov/oversight/?FuseAction=OversightAction
.Home&ContentRecord_id=611f1f4c-802a-23ad-475d-223d6490f308 (October 5, 2009).
Figures include all federal programs rated "ineffective" or "results not demonstrated" by the George W. Bush Administration's Program Assessment Rating Tool (PART) assessment of all federal programs. See http://www.whitehouse.gov/omb/expectmore/ and http://www.whitehouse
Congressional Budget Office, "Budget Options, Volume 1: Health Care," December 2008, athttp://www.cbo.gov/ftpdocs/99xx/doc9925/12-18-Health
Options (October 5, 2009); "Budget Options, Volume 2," August 2009, at /static/reportimages/B6358B2C50828DC2865F4C220C0720C5.pdf (October 5, 2009).
Examples are drawn from Committee on Governmental Affairs, U.S. Senate, "Government at the Brink," Vols. I and II, June 2001; U.S. General Accounting Office, "Managing for Results: Using the Results Act to Address Mission Fragmentation and Program Overlap," August 1997, at /static/reportimages/80B40B0A5C314F2221EE8FF7B22D39CB.pdf (October 5, 2009).
Edwin Mora, "U.S. Will Pay $2.6 Million to Train Chinese Prostitutes to Drink Responsibly on the Job," CNS News, May 12, 2009, at http://www.cnsnews.com/public/content/article.aspx?RsrcID=47976 (October 5, 2009).
Government Accountability Office, Government-wide Purchase Cards: Actions Needed to Strengthen Internal Controls to Reduce Fraudulent, Improper, and Abusive Purchases, GAO-08-333, March 2008, at http://www.gao.gov/new.items/d08333.pdf
new.items/d08333.pdf (October 5, 2009); Marc Stewart, "Federal Gov't Questions TVA Spending," WBIR.com, February 27, 2009, at http://www.wbir.com/news/local/story.aspx?storyid=79461 (October 5, 2009); Dan Eggen, "Federal Credit Cards Misused," TheWashington Post, April 9, 2008, at http://www.washingtonpost.com/wp-dyn/content/article/2008/04
/08/AR2008040802718.html (October 5, 2009).
Robert Brodsky, "Report Paints Agencies as Deadbeat Travel Card Holders," Government Executive, May 28, 2009, at http://www.govexec.com
/story_page.cfm?articleid=42837&dcn=todaysnews (October 5, 2009).
Laura Strickler, "SEC Spends Millions to Reorganize Desks," CBS News, April 8, 2009, at http://www.cbsnews.com/stories/2009/04/07/cbsnews
_investigates/main4927475.shtml (October 5, 2009).
Tony Capaccio, "Pentagon Paid $998,798 to Ship Two 19-Cent Washers," Bloomberg, August 16, 2009, at http://www.bloomberg.com/
apps/news?pid=20601070&sid=aY5OQ5xv9HR8 (October 5, 2009).
Ted Covey et al., "Agriculture Income and Finance Outlook," U.S. Department of Agriculture, Economic Research Service, November 2006, pp. 40 and 48.
Carrie Johnson, "Medical Fraud a Growing Problem," TheWashington Post, June 13, 2008, at http://www.washingtonpost.com/wp-dyn/content/article
/2008/06/12/AR2008061203915.html (October 5, 2009).
Dana Hedgpeth, "GAO Blasts Weapons Budget," TheWashington Post, April 1, 2008, at http://www.washingtonpost.com/wp-dyn/content/article
/2008/03/31/AR2008033102789.html (October 5, 2009).
Christopher Conkey, "Federal Workers Accused of Abusing Business Class," The Wall Street Journal, October 3, 2007, at http://online.wsj.com/
article/SB119136054325946827.html (October 5, 2009).
Steve LeBlanc, "Feds Spending Millions on Kennedy Legacy," Associated Press, May 11, 2009, at http://wbztv.com/politics/tedkennedy/ted.kennedy
.legacy.2.956809.html (October 5, 2009); Bryan Bender, "Kerry Asks $20m for Kennedy Institute," The Boston Globe, September 25, 2009, at http://www.boston.com/news/nation/washington/articles/2009/09/25/
watchdog_groups_rap_20m_earmark_for_kennedy_institute/ (October 5, 2009).
Ralph Vartabedian and Tom Hamburger, "Crimes Suspected in 20 Bailout Cases--for Starters," The Los Angeles Times, April 21, 2009, at http://www.latimes.com/news/nationworld/nation/la-na-tarp-fraud21-2009
apr21,0,2443377.story (October 5, 2009).
These and more examples of recent earmarks are at Brian Riedl, "Omnibus Spending Bill: Huge Spending and 9,000 Earmarks Represent Business as Usual," Heritage Foundation WebMemo No. 2318, March 2, 2009, at http://www.heritage.org/Research/Budget/wm2318.cfm.
 Brad Heath, "Gov't Losses Big in Home Market," USA Today, May 15, 2009, at http://www.usatoday.com/money/economy/housing/2009-05-14
-govtown_N.htm (October 5, 2009).
 Ira Teinowitz, "FCC Goes NASCAR Racing to Publicize DTV," TV Week, October 2008, at http://www.tvweek.com/news/2008/10/fcc_goes_nascar
_racing_to_publ.php (October 5, 2009).
 Louise Radnofsky and T. W. Farnam, "Lawmakers Bill Taxpayers for TVs, Cameras, Lexus," The Wall Street Journal, May 30, 2009, at http://online.wsj.com/article/SB124364352135868189.html (October 5, 2009); Jonathan E. Kaplan and Mandy Kozar, "Lawmakers Spend on Big Screens, Popcorn," The Hill, November 8, 2005.
Dana Hedgpeth, "$13 Billion in Iraq Aid Wasted or Stolen, Ex-Investigator Says," TheWashington Post, September 23, 2008, at http://www.washingtonpost.com/wp-dyn/content/article/2008/09/22/
AR2008092202053.html (October 5, 2009);Dan Friedman, "Report: Defense Department Cannot Fully Account for $7.8B Spent in Iraq," CongressDaily,May 22, 2008, at http://www.govexec.com/dailyfed/0508/052208cdpm2.htm (October 5, 2009).
Associated Press, "Katrina Fraud Could Top $2 Billion," December 25, 2006, at http://www.msnbc.msn.com/id/15587326/ (October 5, 2009); "FEMA Funds Spent on Divorce, Sex Change," June 14, 2006, at http://cbs4denver.com/national/FEMA.Divorce.Sex.2.268906.html (October 5, 2009).
Government Accountability Office, Expedited Assistance for Victims of Hurricanes Katrina and Rita: FEMA's Control Weaknesses Exposed the Government to Significant Fraud and Abuse, GAO-06-403T, February 13, 2006, p. 11, at /static/reportimages/AD70E579E2C93DD00C8963C3EB7761C3.pdf (October 5, 2009).
Wesley Loy, "Alaska Airlines Takes Flying Fish to a Whole New Level: $500,000 Grant from Federal Funding Pays for Custom Paint Job on Company's Passenger Jet," Anchorage Daily News, October 2, 2005.
Halimah Abdullah, "Who Might Fly Somerset to D.C. and Back?," McClatchey, May 24, 2009, at http://www.kentucky.com/latest_news
/story/806331.html (October 5, 2009).
CBS News, "Beach Restoration: Sending $$$ Out to Sea?," May 26, 2009, at http://www.cbsnews.com/stories/2009/05/26/eveningnews/
main5041144.shtml (October 5, 2009).
 Michael Grabell, "Rural Broadband Stimulus Program Slammed in Gov't Report," ProPublica, April 14, 2009, at http://www.propublica.org/ion/
-414/ (October 5, 2009).
Government Accountability Office, DOD Travel Cards: Control Weaknesses Led to Millions of Dollars in Unused Airline Tickets, GAO-03-398, March 2004, at /static/reportimages/4ACE73C0DAE4F7DF5A63A1682F144966.pdf (October 5, 2009).
CBS News, "FAA Memo: Feds Knew NYC Flyover Would Cause Panic," April 29, 2009, at http://wcbstv.com/topstories/air.force.one.2.996457.html (October 5, 2009); Committee on Government Reform, U.S. House of Representatives, "The Cost of Presidential and Vice Presidential Political Travel," March 2006, p. 3, at http://oversight.house.gov/documents/
20060316113550-47530.pdf (October 5, 2009).
Government Accountability Office, Travel Cards: Air Force Management Focus Has Reduced Delinquencies, but Improvements in Controls Are Needed, GAO-03-298, December 20, 2002, p. 4, at http://www.gao.gov/new.
items/d03298.pdf (October 6, 2009); Travel Cards: Control Weaknesses Leave Navy Vulnerable to Fraud and Abuse, GAO-03-148T, October 8, 2002, p. 8, at /static/reportimages/40C1D6AB36A6C16873C3BF78605117B8.pdf (October 6, 2009).
Department of Heath and Human Services, Office of the Inspector General, "Compendium of Unimplemented Office of Inspector General Recommendations," May 2009, at http://oig.hhs.gov/publications/docs/
compendium/compendium2009.pdf (October 6, 2009).
Christopher Lee, "Official Portraits Draw Skeptical Gaze," TheWashington Post, October 21, 2008, at http://www.washingtonpost.com/wp-dyn/content/
article/2008/10/20/AR2008102003627.html (October 6, 2009).
Associated Press, "Washington Sends $1 Food Stamp Checks to 250,000," February 23, 2009, at http://seattletimes.nwsource.com/html
/localnews/2008775541_apwafoodstampchecks.html (October 6, 2009).
Dan Morgan, Gilbert Gaul, and Sarah Cohen, "Farm Program Pays $1.3 Billion to People Who Don't Farm," TheWashingtonPost, July 2, 2006, at http://www.washingtonpost.com/wp-dyn/content/article/2006/07/01/
AR2006070100962.html (October 6, 2009).
Government Accountability Office, Purchase Cards: Control Weaknesses Leave DHS Highly Vulnerable to Fraudulent, Improper, and Abusive Activity, GAO-06-1117, September 2006, at /static/reportimages/59308EC86105AAE6C7692F05D53ECA46.pdf (October 6, 2009).
Jonathan Nicholson, "Congress Seems Unlikely to Correct Gaffes in Budget Bill Costing $2 Billion," BNA Daily Report for Executives, September 25, 2006.
Steve Fogarty, " Stimulus Grant Funds a Quieter North Ridgeville," Chronicle-Telegram, May 22, 2009, at http://www.chroniclet.com/2009/05/
stimulus-grant-funds-a-quieter-north-ridgeville/ (October 6, 2009).
Jonathan Rockoff, "NIH Paying $1.3 Million Monthly for Unused Lab," Baltimore Sun, December 2, 2007.
Bennett Roth and Eric Rosenberg, "The Pentagon Says It Doesn't Need Any More C-17 Jets, but It Is Getting Them--at a Cost of $2.4 Billion--Thanks to the Texas Congressional Delegation," Houston Chronicle, September 30, 2007, at http://www.chron.com/CDA/archives/archive.mpl?
id=2007_4433833 (October 6, 2009).
CNN, Anderson Cooper 360, December 6, 2005, at http://transcripts
.cnn.com/TRANSCRIPTS/0512/06/acd.01.html (October 6, 2009).
David Stout, "Medicare Error Sends $50 Million in Refunds to Recipients," The New York Times, August 24, 2006, at http://www.nytimes.com/2006/
08/24/washington/24medicare.html (October 6, 2009).
Griff Witte and Spencer S. Hsu, "Homeland Security Contracts Abused," TheWashington Post, July 27, 2006, at http://www.washingtonpost.com
/wp-dyn/content/article/2006/07/26/AR2006072601683.html (October 6, 2009).
Kevin Duffy, "Why Did the Federal Government Help This Golf Course?," Atlanta-Journal-Constitution, November 13, 2006.
See Brian Riedl, "Congress Should Follow the President and Eliminate the Advanced Technology Program," Heritage Foundation Backgrounder No. 1828, March 1, 2005, at http://www.heritage.org/Research/Budget/bg1828.cfm.
Government Accountability Office, Department of Education: Guaranteed Student Loan Program Vulnerabilities, GAO-03-268R, November 21, 2002, at /static/reportimages/9329EBC1096FB830E7A1C6AA436AD6E1.pdf (October 6, 2009).
The Department of Agriculture's Conservation Reserve Program pays farmers not to farm more than 40 million acres of farmland. See Brian Riedl, "How Farm Subsidies Harm Taxpayers, Consumers, and Farmers, Too," Heritage Foundation Backgrounder No. 2043, June 20, 2007, at http://www.heritage.org/Research/Agriculture/bg2043.cfm.
Associated Press, "Commerce Reports Losing 1,137 Laptops," September 21, 2006, athttp://washingtontimes.com/news/2006/sep/21/
20060921-115116-5387r/print (October 6, 2009).