The automatic spending cuts looming at the first of next year might end up eliminating some waste, but they also will take a giant bite out of the waste-watchers themselves — the auditors whom taxpayers count on to weed out fraud and keep tabs on government money.
The cuts also will slash through the agencies that watch Wall Street, protect workers’ rights, combat discrimination and otherwise patrol American businesses. These watchdog agencies stand to lose nearly half a billion dollars from staff and operations budgets, eating into their ability to do the work Congress has asked them to do.
Nearly every federal department or agency has an inspector general tasked with rooting out waste, and collectively, those auditors would lose $148 million under the cuts scheduled to take effect on Jan. 2, according to a preliminary estimate last week from the White House budget office.
Some watchdogs said the cuts could mean “significant” changes to their operations, while others said it was still too early to say how their missions will suffer.
But waste-watchers said whatever the specific impact, it’s a bad idea to put watchdogs such as inspector general agencies on the same chopping block as the rest of government, since the watchdogs are the ones who help keep the bureaucracy from wasting even more money.
“Cutting IG budgets by the same amount as wasteful spending identified by IGs makes no sense. No family or individual American would manage their finances that way,” said Sen. Tom Coburn, Oklahoma Republican, who culls federal spending trying to identify waste.
Indeed, auditors end up paying for their work many times over.
And in a broad report last year, GAO looked at federal IGs and found they had a return on investment of $18 for every dollar spent in 2009 — $43.3 billion in possible savings on combined budgets of $2.3 billion.
Inspectors general also have policing powers, and their work led to 6,100 indictments in 2009, GAO said.
The cuts, known as “sequesters” in budget-speak, total $109 billion in 2013 and are split between defense and domestic spending.
There are some exemptions, including military personnel and Social Security and Medicare benefits, but for the rest of government, the cuts are applied across the board, which is why the watchdogs stand to lose as much as others.
The Defense Department’s inspector general would take the biggest hit, both in dollar amount and percentage: It will lose 9.4 percent of its budget, or $34 million.
That’s a major blow to a watchdog that already has said it is understaffed and cannot complete a full audit of the Pentagon.
The Defense IG’s office didn’t respond to a request for comment Wednesday, but those who keep track of the auditor said cuts will be a blow to an agency that already is feeling overwhelmed.