Where Do People Think American Government Wastes The Most Money

President George Westward. Bush has proposed terminating or strongly reducing the budgets of over 150 inefficient or ineffective programs. This is a step in the correct direction to pare back the delinquent spending that has pushed the budget deficit over $400 billion. In less than three years, the first infant boomers will begin to collect Social Security: Lawmakers must therefore brainstorm to reduce spending at present to make room for the massive Social Security and Medicare costs that volition follow.

The commencement place to trim runaway federal spending is in waste, fraud, and abuse. Congress, all the same, has largely abandoned its constitutional duty of overseeing the executive branch and has steadfastly refused to address the waste littered across government programs. In 2003, an endeavor past House Budget Committee Chairman Jim Nussle (R-IA) to accost wasteful spending was rejected by the House of Representatives, and like calls in 2004 by and so-Senate Upkeep Commission Chairman Don Nickles (R-OK) were rejected by the Senate. A pocket-sized group of House lawmakers has formed the Washington Waste Watchers, simply their agenda has not been embraced by the whole House.

Lack of information is not the problem. Today, regime waste material investigations and recommendations can be found in hundreds of reports, such as:

Studies published past the U.S. Government Accountability Function (GAO),[1]
The Congressional Budget Function's Budget Options book,
Inspector general reports of each bureau,
Government Performance and Results Act reports of each agency,
The White Business firm's Plan Assessment Rating Tool (PART) program reviews, and
The Senate Governmental Affairs Committee's 2001 Government at the Brink reports.

For those seeking by recommendations that went unheeded, the 1984 Grace Commission report on authorities waste and the 1993-1995 publications of Vice President Al Gore's National Operation Review tin nevertheless be found.

With all of this available data and in an era of tight budgets, why are lawmakers so resistant to reducing waste? One reason is that they see information technology every bit a thankless job that would get unnoticed back home. With Congress in session just 80 days annually, reducing waste would have precious time away from most lawmakers' college priorities of increasing spending on popular programs and bringing pork-barrel projects home.

A 2nd reason is that some of the most wasteful programs are also the almost popular (e.g., Medicare), and lawmakers fright that opponents would portray them as "attacking" pop programs. Consequently, waste and inefficiencies continue to build upward, costing taxpayers more while providing beneficiaries with less.

A real war on government waste could easily salvage over $100 billion annually without harming the legitimate operations and benefits of regime programs. As a first step, lawmakers should accost the ten following examples of egregious waste matter.

1. The Missing $25 Billion

Cached in the Department of the Treasury's 2003 Financial Study of the United States Government is a short department titled "Unreconciled Transactions Affecting the Change in Net Position," which explains that these unreconciled transactions totaled $24.5 billion in 2003.[2]

The unreconciled transactions are funds for which auditors cannot account: The authorities knows that $25 billion was spent by someone, somewhere, on something, but auditors do not know who spent it, where it was spent, or on what it was spent. Blaming these unreconciled transactions on the failure of federal agencies to report their expenditures fairly, the Treasury written report concludes that locating the money is "a priority."

The unreconciled $25 billion could have funded the entire Department of Justice for an entire year.

2. Unused Flight Tickets Totaling $100 1000000

A recent audit revealed that between 1997 and 2003, the Defense Department purchased and then left unused approximately 270,000 commercial airline tickets at a full toll of $100 one thousand thousand. Even worse, the Pentagon never bothered to get a refund for these fully refundable tickets. The GAO blamed a system that relied on department personnel to notify the travel role when purchased tickets went unused.[3]

Auditors also found 27,000 transactions betwixt 2001 and 2002 in which the Pentagon paid twice for the aforementioned ticket. The department would purchase the ticket directly and so inexplicably reimburse the employee for the cost of the ticket. (In one case, an employee who allegedly made seven false claims for airline tickets professed non to accept noticed that $9,700 was deposited into his/her account). These additional transactions cost taxpayers $viii meg.

This $108 million could have purchased 7 Blackhawk helicopters, 17 M1 Abrams tanks, or a large supply of boosted body armor for U.S. troops in Afghanistan and Iraq.

iii. Embezzled Funds at the Department of Agriculture

Federal employee credit card programs were designed to save money. Rather than weaving through a lengthy procurement process to acquire bones supplies, federal employees could purchase job-related products with credit cards that would be paid by their agency. What began as a smart way to streamline government has since been corrupted by some federal employees who have abused the public trust.

A recent inspect revealed that employees of the Department of Agriculture (USDA) diverted millions of dollars to personal purchases through their regime-issued credit cards. Sampling 300 employees' purchases over six months, investigators estimated that fifteen per centum abused their regime credit cards at a cost of $five.8 million. Taxpayer-funded purchases 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 apportionment, including i,549 that are however held by people who no longer work at the USDA.[4]

4. Credit Card Abuse at the Department of Defense

The Defense Department has uncovered its own credit carte du jour scandal. Over one recent 18-calendar month flow, Air Strength and Navy personnel used government-funded credit cards to charge at to the lowest degree $102,400 for admission to entertainment events, $48,250 for gambling, $69,300 for cruises, and $73,950 for exotic dance clubs and prostitutes.[5]

v. Medicare Overspending

Medicare wastes more money than whatsoever other federal program, nonetheless its strong public back up leaves lawmakers hesitant to address program efficiencies, which cost taxpayers and Medicare recipients billions of dollars annually.

For example, Medicare pays equally much every bit 8 times what other federal agencies pay for the same drugs and medical supplies.[6] The Department of Wellness and Human being Services (HHS) recently compared the prices paid by Medicare and the Department of Veterans Affairs (VA) wellness care program for 16 types of medical equipment and supplies, which account for i-quarter of Medicare's equipment and supplies purchases. The evidence showed that Medicare paid an boilerplate of more than double what the VA paid for the same items. The largest difference was for saline solution, with Medicare paying $8.26 per liter compared to the $1.02 paid by the VA.[7] (See Tabular array 1.)

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These higher prices not only price the program more money, but also accept more than money out of the pockets of Medicare beneficiaries. In 2002, senior citizens' co-payments accounted for 20 percent of the $ix.4 billion in allowed claims for medical equipment and supplies.[viii] Higher prices hateful higher co-payments.

Medicare as well overpays for drugs. In 2000, Medicare's payments for 24 leading drugs were $1.ix billion higher than they would have been under the prices paid by the VA or other federal agencies. Although Medicare is supposed to pay wholesale prices for drugs, it relies on drug manufacturers to define the prices, and manufacturers have strong incentives to inflate their prices.[9]

Nor are inflated prices for drugs and supplies the most expensive examples of Medicare's inefficiencies. Basic payment errors-the results of deliberate fraud and administrative errors-cost $12.3 billion annually. Every bit much equally $7 billion owed to the program has gone uncollected or has been written off.[10] Finally, while Medicare contracts claims processing and administration to several private companies, 19 cases of contractor fraud have been settled in recent years, with a maximum settlement of $76 one thousand thousand.[11]

Putting it all together, Medicare reform could relieve taxpayers and program beneficiaries $twenty billion to $thirty billion annually without reducing benefits. That would be plenty to fund a $three,000 refundable health care tax credit for nearly 10 one thousand thousand uninsured low-income households.

vi. Funding Fictitious Colleges and Students

In 2002, the Department of Instruction received an application to certify the educatee loan participation of the Y'Hica Institute in London, England. Later blessing the certification, the department received and canonical educatee loan applications from three Y'Hica students and disbursed $55,000.

The pedagogy Department administrators overlooked 1 problem: Neither the Y'Hica Institute nor the three students who received the $55,000 existed. The fictitious college and students were created (on paper) past congressional investigators to examination the Department of Teaching'south verification procedures. All of the documents were faked, right down to naming i of the fictional loan pupil applicants "Susan M. Collins," afterwards the Senator requesting the investigation.[12]

Such carelessness helps to explain why federal pupil loan programs routinely receive poor direction reviews from government auditors. At final count, $21.viii billion worth of educatee loans are in default, and too many cases of fraud are left undetected.[13] Tracking students across federal programs, verifying loan application data with IRS income data, and implementing controls to foreclose the disbursement of loans to fraudulent applicants could salve taxpayers billions of dollars.

7. Manipulating Data to Encourage Spending

The Regular army Corps of Engineers spends $5 billion annually constructing dams and other h2o projects. Yet, in a massive conflict of involvement, information technology is likewise charged with evaluating the scientific discipline and economics of each proposed water project. The Corps' "strategic vision" calls on managers to increment their budgets every bit speedily as possible, which requires approving every bit many proposed projects as possible.[14] Consequently, the Corps has repeatedly been accused of deliberately manipulating its economic studies to justify unworthy projects.

Investigations by the GAO, The Washington Post, and several private organizations take found that Corps studies routinely contain dozens of basic arithmetic errors, computer errors, and ridiculous economic assumptions that artificially inflate the benefits of water projects by as much every bit 300 percent.[15] In one example, a study's authors inflated a project's benefits by using a 2.v per centum interest rate that dated back to 1954. In many cases in which the Corps calculated that a project would be a cyberspace do good, arithmetic corrections revealed that the costs would be many times greater than the benefits.[16] Past that point, of course, the unnecessary and wasteful project is oft underway and cannot exist stopped.

These errors appear to reflect more deception than sloppiness. A Washington Mail service investigation uncovered managers ordering analysts to "get creative," to "look for ways to get to yes every bit fast every bit possible," and "not to accept no for an answer." After a public outcry, in 2002, the Corps suspended piece of work on 150 projects to review the economics used to justify them.[17] However, given the combination of Congress's thirst for pork-barrel projects and the Corps' built-in incentives to approve projects that will increment its budget, existent reforms seem unlikely.

8. Country Abuse of Medicaid Funding Formulas

Significant waste product, fraud, and abuse pervade Medicaid, which provides health services to 44 million low-income Americans. While states run their own Medicaid programs, the federal government reimburses an average of 57 percent of each state'due south costs.

This system gives states an incentive to overreport their Medicaid expenditures in social club to receive larger federal reimbursements. Not surprisingly, the GAO has identified state schemes that shift coin between land accounts to create an illusion of higher Medicaid expenditures. Similarly, some states have spent their federal Medicaid dollars on non-Medicaid purposes. Tight state budgets like those experienced by nearly states today have increased the pressure to apply such deceptive tactics.

The GAO and the HHS Inspector General have also uncovered some states' do of recovering improper payments, retaining the funds, and then spending them on unrelated programs-a practice that costs the federal regime well over $2 billion per twelvemonth. Congress could enact legislation to prohibit these actions more finer.

Modest reforms enacted by HHS in 2001 and 2002 are expected to relieve Medicaid $seventy billion over the next decade. A small sample of financing schemes uncovered in a few states suggests that, if Congress acts, fifty-fifty larger savings are bachelor.[18]

9. Earned Income Taxation Credit Overpayments

The earned income tax credit (EITC) provides $31 billion in refundable tax credits to xix 1000000 low-income families. The IRS estimates that $8.5 billion to $9.ix billion of this corporeality-nearly one-third-is wasted in overpayments.

The complexity of the EITC constabulary leads to many of these mistakes. Calculating the credits is more complex than calculating regular income taxes. While the credit corporeality depends on the number of children in a household, the revenue enhancement code does not conspicuously define how a child qualifies for the credit. In add-on, fraud and underreporting of income are mutual, and the IRS lacks the resource to verify the qualifications of all EITC claimants.

Efforts are being made to address this problem, just Congress tin do more past requiring better verification of incomes and past clearly defining the standards by which a kid qualifies for the EITC.[19]

10. Redundancy Piled on Redundancy

Regime'southward layering of new programs on top of quondam ones inherently creates duplication. Having several agencies perform similar duties is wasteful and confuses program beneficiaries who must navigate each programme's distinct rules and requirements.

Some overlap is inevitable because some agencies are defined by whom they serve (e.yard., veterans, Native Americans, urbanites, and rural families), while others are defined by what they provide (eastward.g., housing, education, wellness intendance, and economic development). When these agencies' constituencies overlap, each relevant agency will often take its own program. With 342 divide economic evolution programs, the federal government needs to make consolidation a priority.

Consolidating duplicative programs will save money and improve government service. In addition to those programs that should be eliminated completely, Congress should consolidate the following sets of programs:

342 economic evolution programs;
130 programs serving the disabled;
130 programs serving at-risk youth;
90 early childhood development programs;
75 programs funding international education, cultural, and preparation exchange activities;
72 federal programs defended to assuring rubber water;
50 homeless assistance programs;
45 federal agencies conducting federal criminal investigations;
xl separate employment and training programs;
28 rural development programs;
27 teen pregnancy programs;
26 small, inapplicable K-12 school grant programs;
23 agencies providing aid to the former Soviet republics;
19 programs fighting substance abuse;
17 rural h2o and waste matter-h2o programs in viii agencies;
17 trade agencies monitoring 400 international trade agreements;
12 nutrient prophylactic agencies;
eleven principal statistics agencies; and
Iv overlapping state management agencies.[20]

Determination

Lawmakers take an opportunity to take a potent stand for efficient regime and spending restraint. Reforming wasteful programs volition build essential momentum for the larger reforms that are needed to bring the upkeep under control.

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

Source: https://www.heritage.org/budget-and-spending/report/top-10-examples-government-waste

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