SCHATZ AND LAZOF: Raising taxes won’t fix bloated government

Federal agency overlap costs $400 billion a year

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A lot of numbers have been thrown around regarding the “fiscal cliff,” including the amount of money various people would have to pay should the tax cuts expire, and how many jobs in both the public and private sectors would be threatened should sequestration go into effect on Jan. 1. These numbers make for compelling headlines, as they should, but they are not the only important numbers if the goal of avoiding the fiscal cliff starts with having a government that is worth its cost to taxpayers.

This leads to a rarely mentioned and hardly known number: $400 billion, the estimated annual cost of duplicative and overlapping programs in the federal government. The $400 billion equals 10.5 percent of the $3.8 trillion budget for fiscal 2013, and over 10 years, it exceeds the $4 trillion in deficit reduction being sought by the White House and Congress.

The $400 billion estimate was put together by Republican Sens. Tom Coburn of Oklahoma and Jeff Sessions of Alabama based on a careful analysis of two annual reports on overlap and duplication, issued last year and this by the Government Accountability Office (GAO).

Negotiators over the fiscal cliff should follow the senators’ lead. There should be no discussion of any tax increases or additional revenue before all the waste is eliminated. Otherwise, the current size and scope of government is locked in. In particular, no one really believes that any increased revenue will be “set aside” for deficit reduction.

In the private sector, companies regularly bring in outside auditors and consultants to help them uncover inefficiency and recommend improvements for their financial and management practices. When companies are in financial distress, the proposals usually are adopted quickly to avoid more problems or even bankruptcy.

Members of Congress take the opposite approach. The GAO issues report after report — at the request of members of Congress — on the same problems, many of which have existed for years. Hearings are held, hands are wrung, and nothing is done. In fact, rather than eliminating the waste, the identified problem usually is addressed by creating a new program.

One of the best examples of this phenomenon is science, technology, engineering and math (STEM) programs.

In March, the GAO’s annual report cited 209 STEM programs costing $3.1 billion spread across 13 agencies in fiscal 2010. More than one-third of those programs were first funded between fiscal 2005 and 2010, yet U.S. students are still lagging behind math and science achievement by students in other nations. The GAO stated that 173, or 83 percent, of the 209 programs overlapped with at least one other program and that the addition of so many new programs in a short period of time has been a direct cause of inefficiency and ineffectiveness.

The GAO reports cite many similar examples of wasteful spending. There are 82 teacher-quality programs in 10 agencies that cost $10 billion in fiscal 2009. The fragmentation has both increased overall costs and made it difficult to determine which programs are most effective.

There are 47 job-training programs in nine agencies that cost $18 billion in fiscal 2009. Program analysis is virtually nonexistent. Since 2004, just five have had an impact study, and about half have not had a single performance review, so not much is known about program effectiveness.

Finally, the most absurd example of all: There are 56 programs across 20 agencies to promote financial literacy to help improve the fiscal acumen of the American people. While it would be funny if it weren’t so sad, financial data on the cost of the financial literacy programs are insufficient, and a government that is going broke is trying to teach others how to balance their checkbooks.

For argument’s sake, let’s suppose all current programs should be funded by the government. The GAO has made it clear that the duplication and overlap are impeding the delivery of services and, therefore, the intended goals of those programs are not being met. In other words, more people could be helped with fewer, more effective programs, which is the polar opposite of the usual response in Washington.

The ongoing debate over whose taxes should or should not be raised is the wrong conversation. Congress and the White House must conduct a comprehensive effort to consolidate and eliminate waste, inefficiency, overlap and duplication in federal programs. Only then can they determine how much is required to finance essential government services and where and how sufficient funds should be obtained.

Indeed, until a majority of the House and Senate, as well as President Obama, can overcome the inherent proclivity to create a program to solve a problem, $400 billion in overlap and duplication and other wasteful spending will continue to plague the nation.

Tom Schatz is president of Citizens Against Government Waste. Ron Lazof is managing director of Prism Advisors LLC and a Job Creators Alliance member.

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