Senator Tom Coburn's activity on the Subcommittee on Federal Financial Management, Government Information, and International Security

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October 19, 2006

Subcommittee Oversight Efforts Identify $1.1 TRILLION in Waste or Questionable Spending

Hearings and other oversight efforts during 109th Congress expose Uncle Sam's disconnect

An estimated $1.1 TRILLION expended on programs the FFM Subcommittee has found to be wasteful, frivolous, or of questionable – or immeasurable – value which include:

$200.9 BILLION in WASTE
$33 BILLION in FRAUD
$518 BILLION in QUESTIONABLE SPENDING that deserves more attention
$345 BILLION Tax Gap

Earmarks:
• $64 billion in FY 2006 for programs and projects that were hidden from sunshine and kept from a public debate.
o Of which, $567 million for museum earmarks, handed out since 2001 (total of 863 earmarks). These earmarks were given outside of the Congressionally created competitive grant process.

Malaria:
• $82.8 million wasted on bureaucracy and overhead (only 8% of USAID’s FY2004 $90 million malaria prevention budget actually went to spraying, bed nets and medicine in Africa)

Advanced Technology Program:
• $216.5 million since 2005 wasted on corporate welfare to pay for research the private sector is already initiating and funding.

Program Assessment Rating Tool (PART):
• $18 billion wasted on failing, redundant, or ineffective programs. If Congress were to enact the President’s Management Agenda which has rated and identified programs that are not performing, it would save $18 billion in the first year alone.

Defense Travel System:
• $474 million wasted. The system was initiated in 1998 and it was supposed to be fully operational by 2002. Despite being four years overdue and $200 million over budget, DTS is behind schedule, is deployed in barely half of the 11,000 DoD travel sites, cannot be relied upon to provide Department of Defense travelers with the lowest available airfare, and is plagued with contracting problems.

Securities and Exchange Commission new construction cost overruns:
• $47 million wasted. Three new SEC buildings cost estimates tripled from $22 million to $69 million as construction commenced, which is $47 million more than the Congress agreed to fund.

Meetings and travel for government employees:
• Over $1.9 billion spent on meetings and travel related to meetings since 2001 by the federal government. We could save $176 million/year just by reverting back to FY2001 levels.

Improper Payments:
• $45 billion wasted by the government in 2005 in wrong payments (could be overpayments, payments to ineligible parties, etc.). Though required by law to monitor and report improper payments, not all government agencies report, so it is impossible to know what the true loss of money is here.
• $38 billion wasted in 2006 at the very least in wrong payments government wide.
• Of this, the Earned Income Tax Credit improperly made $11.4 billion in payments (which is 25% of their payments).
• At least $377 million in overpayments by the Department of Housing and Urban Development (HUD) to ineligible parties in 2003, which means that 56,000 eligible families did not receive housing vouchers that year.
• $12.1 billion, or 5.2 percent overpayment rate, in Medicare.
• $27.3 million lost because Centers for Medicaid paid benefits to deceased beneficiaries.

Leasing buildings instead of owning them:
• Unknown billions of dollars wasted in hidden costs because the government enters into “operating leases” instead of “lease to buy” or new construction. Agencies rely on these types of leases because it looks cheaper on an agency’s annual appropriation and the nation’s annual budget. In the long term, though, it costs taxpayers a lot more money.
• The Federal Real Property Council reports that in fiscal year 2005, space leased by the federal government cost the taxpayers almost $4 billion in rent.

Tax gap
• $345 billion foregone in uncollected taxes, by modest estimates. Tax reporting is based on the honor system so there is no way to get a true picture. This figure does not even include illegal activities, so the estimate is likely much greater.

Unused Federal Property:
• $25 billion wasted per year in unused federal property. (At $21 per square foot occupancy cost, 1.186 billion square feet of excess space)
• Federal buildings worth tens of billions of dollars sit empty around the country. The Office of Management and Budget (OMB) has set a goal of reducing the inventory of all real property by 5%, or $15 billion, by 2009. Based on this goal, it appears that OMB considers this amount-- at the very least—to be excess.
• DoD spends $3-4Billion on maintenance of unused buildings each year.

Information Technology:
The federal government will spend $64 billion in FY2007 on IT projects, of which $12 billion is at risk of being wasted. Of this figure, the Office of Management and Budget has termed $9.9 billion worth of projects as “not well planned.”

Medicaid Fraud:
• $33 billion lost to fraud.
• If we apply the CBO’s current baseline estimates for the federal share of Medicaid for FY2005, and we assume what is probably a low estimate of error – 10% – that totals $33 billion taxpayers’ dollars diverted from care for those who need it. In 2005, New York was defrauded by possibly as much as $18 billion (a fraud rate of 42% for that year in New York alone).
• Medicaid is not yet compliant with the Improper Payments Act. (They do not report their payment errors.)

2010 Census:
• $4.9 billion wasted – the inexplicable increase in “cost” to the taxpayer to fund the 2010 Census which is estimated to cost over $11 billion. This estimate is an increase of 80% from the 2000 budget, and 350% over the 1990 census budget.
• The Census Bureau is threatening that costs may increase by an additional $1 billion if the Congress does not restore $53 million to its FY2007 budget, cut out by the House of Representatives.
• GAO is considering putting it on its “High Risk” list due to its inability to contain costs
• The Census Bureau has invested $600 million to purchase 500,000 wireless handheld devices for census-takers to use in going door-to-door. Although these are intended to achieve cost savings, GAO is concerned that the devices may not work properly, if at all.

Small Business Administration:
• Taxpayers unnecessarily exposed to $70 billion in risk because the SBA’s loan portfolio is guaranteed by the Federal Government. If the loans default the government picks up the tab. In effect, taxpayers are providing loan guarantees to businesses that would otherwise fail in the competitive private market.

Unspent Funds:
• At least $420 billion sitting in government carryover accounts, money that could offset the government budget, pay down the national debt or be returned to taxpayers.
• Despite money going unspent, Congress and the administration continue to request budget increases for agencies and federal programs.
• The food stamp program carried over $2 billion at the end of last year and will carry over $3 billion this year and next. Could its 2007 budget be offset by using its unspent money?

United Nations:
• U.S. taxpayers provide over $5.3 billion to the UN each year no guarantee that the money is not being wasted due to rampant fraud, corruption and mismanagement at the UN This is an investment of questionable value and there are no clear benefits or measures of its effectiveness.
• Internal auditors recently found that a third of the UN peacekeeping contracts they reviewed was lost to waste, fraud, and abuse—an amount equal to the entire US donation to these contracts.
• Financial aid “recipient nations” rejected even the most modest reforms to the UN earlier this year.
• On top of the yearly dues, taxpayers will provide an additional $374 million for the renovation of UN headquarters in New York City. Still in the planning stages, this project has been plagued by allegations of waste, fraud and abuse and there is no assurance of transparency or accountability.

Community Development Block Grant (CDBG) program:
• $4 billion/year for a program with no transparency or measures of community development. Grants are issued to communities based on obsolete eligibility criteria that awards communities with higher per capita income instead of poorer communities the program was intended to assist with development.
o Temple, TX has an average $20,000 per capita income and receives $15 per capita in CDBG funds.
o Oak Park, IL averages $36,000 per capita income and receives $39 per capita from the program.
• During the past 2.5 years, the Inspector General has audited a small number of grantees (only 35 audits for 1,180 grantees) and yet found more than $100 million in waste, fraud and abuse of CDBG funds. If the Inspector General had the resources to comprehensively audit the entire program, the total waste and abuse of funds could be many times greater.

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Senator Tom Coburn's activity on the Subcommittee on Federal Financial Management, Government Information, and International Security

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