Obama signs bill to curb payout waste

President Obama on Thursday called on federal agencies to crack down on improper payments made by the government, signing into law a measure he said would reduce waste and fraud by $50 billion by 2012.

Improper payments, ranging from wholesale fraud to government checks sent to the wrong person or in the wrong amount, totaled $110 billion in 2009 - the highest amount ever - the administration said.

“When government doesn’t work like it should, it has a real effect on people’s lives,” said Mr. Obama, noting that wasted money amounts to fewer resources for schools, tax relief and other priorities.

Mr. Obama billed the measure, which passed both houses of Congress unanimously, as the latest effort by his administration to cut spending as Americans become more concerned about soaring deficits and the staggering national debt. He touted his proposal for a three-year freeze on non-security-related discretionary federal spending, as well as a freeze on White House staff salaries.

The Improper Payments Elimination and Recovery Act requires federal agencies to conduct annual risk assessments of programs, expands the types of programs that are subjected to audits, and imposes penalties and other repercussions on agencies that don’t comply. The legislation doesn’t require agencies to return recovered funds to the Treasury, but allows them to use the money for other activities.

Under attack from congressional Republicans for record federal deficits since he took office in the depths of a recession, Mr. Obama has been eager to highlight his administration’s efforts to rein in spending or show budget discipline.

The president noted Thursday that the $110 billion figure in wasted money last year was more than the budgets of the Department of Education and the Small Business Administration combined. “That’s unacceptable,” he said.

Last month, Mr. Obama initiated a federal “do not pay list” - a database that federal agencies must consult before distributing checks to individuals and government contractors.

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