There is a lot of waste in the federal government: It is documented, Congress holds hearings about it, and each year the GAO issues a list of programs that are the most at risk for it. But very little changes — in fact, the waste might be getting worse. Take a look at the trend in improper payments in the funding of federal programs and activities. As this chart shows, since the implementation of the Improper Payments Information Act of 2002 (the main objective of which was to enhance the accuracy and integrity of federal payments), reported wasteful payments have increased, which could mean that the amount of waste in the federal government has exploded or simply that federal reviewers have become more adept at documenting it. Either way, overt waste in the federal government represents a significant problem.
As we see, in FY 2010, according to the Financial Statement of the United States, $ 2.3 billion in outlays were reviewed by federal-executive-branch entities for improper payments; 5.5 percent of these payments, or $125.4 billion, were found to be improper. That’s a significant increase over the FY 2002 level.
Of course, that waste pales in comparison to the waste that exists in current congressional spending patterns, and in the economic damage caused by the misallocation of capital and the creation of perverse incentives. Federal spending on functions that should be left to the states (e.g., education), federal spending on functions that should be left to the private sector (e.g., Amtrak, air-traffic control), and federal spending on things that government has no business doing in the first place (e.g., the stimulus bill’s shovel-ready projects) — all of that is waste, too. That’s the case I made to Congress last Thursday during my testimony before the House Committee on Oversight and Government Reform.
What does the question of the proper role of the federal government have to do with oversight? A lot, actually. When lawmakers are busy running state, local, and private affairs, they have less time to focus on critical national issues. Also, they have less time to conduct proper oversight of federal programs.
The bottom line is that the federal government cannot and should not be the solution to every one of our problems. There are things that only the federal government can do, but when the federal government gets involved where it shouldn’t be, it wastes capital, time, and taxpayers’ money. Shrinking the size of the federal government would reduce wasteful spending dramatically, and shrinking the federal government will make oversight easier and more effective.
The whole hearing is here.
"Shrinking the size of the federal government would reduce wasteful spending dramatically"
2/3 of federal spending is either Medicare, Social Security, or Defense. Unless you're willing to touch those (one of which - social security - doesn't have much wasteful spending at all, since it's a simple wealth transfer), you're not going to do much to dramatically reduce government waste. When Republicans get serious about cutting those programs, I'll believe that they're serious about cutting the deficit.
Reply to this commentLinkReport AbuseVeronique,
Kudos for your good work. And I do not doubt that "waste, fraud, and abuse" constitute a stunningly large portion of federal outlays. Nor do I question your thesis that the federal government should focus its efforts on federal issues (the corporate analogy might be to big corporations that become so diversified that their ability to control costs, increase efficiencies, and focus on growing sectors is impeded; the solution is usually to sell off or close up non-performing units and focus on core business again).
However, your presentation above (and in the press release) was a little confusing. If I am not mistaken, the $125 billion figure is derived as a percentage (5.5%) of total outlays, and that percentage reflects the fraction of improper payments found in the $2.3 billion sample. If I am correct, there is a reasonable question as to whether the sample is sufficiently representative to allow for a valid statistical derivation (i.e. the "real" percentage of wasteful payments probably varies quite dramatically across different funding programs - and from year to year at that - and so the actual level of improper payments could be higher or lower than $125 billion). The related question is whether the sampling is such that the figures can be usefully compared from year to year.
Reply to this commentLinkReport AbuseAs stated 57% is the big three entitlements, and I am sick of hearing about waste, fraud and abuse as the answer to our problems, it isn't. Yes we should attack waste, fraud and abuse, but the biggest abuse is simply the willingness to grow government and spend taxpayer money constantly and forever in larger annual amounts.
The Fed needs to just stop growing, and try shrinking for a very long time, cuts across the board no matter what department, agency, or purpose. That is the ONLY way to get back to fiscal responsibility. In every recession government continued to grow, the private sector ebbs and flows through recessions and booms, but the government is on constant boom mode. They have simply become too big to fail, until they fail that is, and we are there.
So the government at every level will voluntarily shrink, or we will all go the way of Lehman Brothers by 2017 as it will be too late to turn the boat around, as by 2020 interest alone will be $1 trillion a year, and there is no way we can pay that and reduce the debt and grow an economy. It will be like living in the 1800's real quick.
Reply to this commentLinkReport AbuseA persuasive argument. Before I read this, I thought that the federal government was in fact the solution to every one of our problems. Now that I know that the number of payments self-reported as improper by the executive branch has increased since 2002, I no longer believe that. Keep up the good work.
Reply to this commentLinkReport AbuseVeronique: Left unexplored in this discomforting piece is the root cause. Fundamantally, I believe, the cause is unconstitutional blending of executive and legislative powers in the "administrative state." The oft remarked upon mixture of judiciary and executive powers since Schecter (sp?) Poultry is bad. More pernicious, perhaps, is the vitiation of executive enforcement caused by the simple fact that the executive branch would be tattling upon and damaging itself. Consider, what on Earth would be the incentive for bureau-climbing subordinates of Sebelius, Napalitano, or Bolden to report misspent funds in their own tents? Zero. On the contrary, their incentive is to hide such findings from other executive policing organizations such as DCAA and DCMA. We are corrupt to core because we have blown separation of powers all to hell.
Reply to this commentLinkReport Abuse"$ 2.3 billion in outlays were reviewed by federal-executive-branch entities for improper payments; 5.5 percent of these payments, or $125.4 billion, were found to be improper"
Can't help but think the math is wrong somewhere.
Reply to this commentLinkReport AbuseI want to know why the number went down in 2005. What, were the crooks too tired to steal that year? Can I blame Bush for it?
Reply to this commentLinkReport AbuseHow about the real budget bloat--$860,000 for bottled water?!
Reply to this commentLinkReport AbuseNew stats about last year's spending: External Link
"As we see, in FY 2010, according to the Financial Statement of the United States, $ 2.3 billion in outlays were reviewed by federal-executive-branch entities for improper payments; 5.5 percent of these payments, or $125.4 billion [if extrapolated to the entire amount of outlays], were found to be improper"
I think you should add the bracketed portion for clarity.
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Reply to this commentLinkReport Abusemore wasteful spending
Not a math problem -- a typo. Maybe shd be $2.3 trillion?
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