Tracking Government Waste, Fraud, and Abuse

Government fraud, waste, and abuse account for around 7 percent of all government spending, according to a figure quoted by U.S. Rep. Darrell Issa.
Tracking Government Waste, Fraud, and Abuse
2/28/2011
Updated:
2/28/2011

Government fraud, waste, and abuse account for around 7 percent of all government spending, according to a figure quoted by U.S. Rep. Darrell Issa, R-Calif., chairman of the House Committee on Oversight and Government Reform, in a recent hearing introductory statement.

The above quoted figure is two years old and was presented by Earl Devaney, chairman of the Recovery Accountability and Transparency Board during testimony in 2008. No recent numbers are available.

“If that figure is true, then the federal government lost $228 billion last year alone,” Issa speculated.

Qualifying his statement, Issa said that the truth of these numbers can’t be ascertained, as “the Government Accountability Office (“GAO”) is still unable to reliably track the fiscal condition of many federal agencies or accurately consolidate the federal government’s financial statements.”

When tracking government spending, only one-third of federal contract awards and grants reported on the USAspending.gov website are on the mark. The rest have disappeared in cyberspace, according to Issa. This website is under the auspices of the Office of Management and Budget and was designed to report on all federal contract awards and grants in a transparent manner.

Wasteful government spending includes subsidies and guarantees, which are rarely awarded because of need, but more so because of lobbying activities and whom you know. Many of these activities are hidden and lack transparency and accountability.

“Opinion research indicates that public concerns are focused on waste, whether it is fought for and won by narrow special interests, programs that have outlived their usefulness, or blatant inefficiencies that have been allowed to continue for years,” testified Gary Kalman, representing the U.S. Public Interest Research Group before the House Committee on Oversight and Government Reform in mid-February.

Pork-Barrel Spending Tops the Waste List

“The federal budget, however, remains bloated with spending on projects that would hardly merit tax dollars in flush times,” said Sen. Tom Coburn, R-Okla., in his Wastebook, A Guide to Some of the Most Wasteful Government Spending of 2010, published two months ago.

Coburn highlighted 100 of the most brazen federally funded projects in his Wastebook. For example, in 2010, the Institute of Museum and Library Services handed $615,000 of federal funds to the University of California at Santa Cruz to digitize Grateful Dead memorabilia, including flyers, shirts, tickets, and photographs.

The most egregious waste by the government is through pork-barrel spending. Pork-barrel spending is a derogatory term for appropriations of government funds to benefit constituents of a given representative’s district.

In 1991, there were 546 pork-barrel projects with a $3.2 billion price tag, according to the first Congressional Pig Book by the Citizens Against Government Waste. In 2009, there were 10,160 such projects, which cost the taxpayer $19.6 billion. In 2010, pork-barrel projects declined to 9,129 projects, a 10.2 percent decline. The 2010 pork-barrel price tag decreased to $16.5 billion, a 15.5 percent decrease over 2009.

“After Republicans took over Congress in 1994, pork-barrel projects started to be used as a currency of re-election. Over the following decade, they became a currency of corruption, and the explosion in earmarks to their peak at $29 billion in 2006 helped erase the Republican majority,” according to the 2010 Congressional Pig Book Summary.

Congress as Steward of Nation’s Finances

“Congress must make sure that it fixes some of most prevalent budget gimmicks that U.S. government officials use to hide the size of deficits, debts, program costs, and revenue losses,” said Veronique de Rugy, senior research fellow at the Mercatus Center, in her mid-February testimony before the House Committee on Oversight and Government Reform.

De Rugy accused the federal government of hiding the true costs of the federal deficit, government debt, program price tags, and revenue losses through budgetary manipulation.

The U.S. government moves funds from one program to another to hide the true government spending. For example, the federal government owes trillions of dollars to the Social Security Trust Fund, which is not recorded on the books because these are intergovernmental allocations.

The U.S. government provides subsidies to private enterprises, another waste of scarce resources.

The U.S. government “should also not pick winners or losers in private business by giving subsidies to private operators. ... This ‘corporate welfare’ … is, in essence, picking winners and losers. And this introduces distortions and unfair competition into the private sector,” argues de Rugy.

Congress’s fiscal stimulus package, doled out in 2009, was among the most wasteful programs of our times, stated de Rugy, pointing out that unemployment still hovers around 9 percent, and there is no end to this tragedy in sight.

Instead of lending to the public, banks went on an acquisition spree, and companies hoarded their capital instead of investing it back into the economy.

The federal government is inefficient and ineffective. Last year, fraudulent and wasteful federal government payments amounted to $125.4 billion, that is, 5.5 percent of the $2.3 trillion in total expenditures.

“As representatives of the American taxpayer, it is your job [Congress and Senate] to be the stewards of the nation’s finances,” said de Rugy in the conclusion of her statement.

Government Agencies in Need of Major Reform

“GAO [Government Accountability Office] maintains a program to focus attention on government operations that it identifies as high risk due to their greater vulnerabilities to fraud, waste, abuse, and mismanagement,” according to a summary of the latest government High-Risk Series report, published mid-February.

The High-Risk List names 30 government areas that are vulnerable to waste, fraud, and abuse. Six areas, including Medicare, Department of Defense (DOD) Weapon System Acquisition, and Enforcement of Tax Laws have been designated high-risk areas since 1990.

The DOD Personnel Security Clearance Program and the 2010 Census graduated from the High-Risk List for improving significantly, and concerns of fraud and waste no longer merit inclusion on the list.

For the 2010 Census to achieve this feat was no easy task. It entailed the hiring of more than 3.8 million temporary workers and cost about $13 billion, around $1.7 billion more than earmarked.

The latest member of the high-risk group is the Department of Interior’s Management of Federal Oil and Gas Resources.

“Interior does not have reasonable assurance that it is collecting its share of billions of dollars of revenue from oil and gas produced on federal lands,” according to the High-Risk Series report.