Saturday, May 21, 2005

This year, Washington will spend an eye-popping $22,039 per household. That is the inflation-adjusted highest since World War II, and $5,000 per household more than spent just four years ago. With difficult decisions ahead, government waste should be the easiest place to start controlling spending.

Amazingly, Congress hasn’t looked seriously at government waste since the 1984 Grace Commission. Lack of information isn’t the problem: Hundreds of recent government program audits collect dust on bookshelves across Capitol Hill.

Instead, cutting waste would distract lawmakers from shipping pork-barrel projects home and shoveling money to favored interests. So it isn’t surprising the federal government costs 33 percent more than in 2001.

While lawmakers focus on expanding government, the Heritage Foundation uncovered the following ways in which Washington wastes tax dollars:

First, the federal government cannot account for $25 billion it spent in 2003. That’s billion with a “b.” Federal auditors know someone spent $25 billion, somewhere on something, but don’t know who, where or on what. That is more than total federal taxes paid by all residents in each of 28 states. It’s enough for the entire Justice Department budget.

Another audit shows the Defense Department purchased and then left unused approximately 270,000 commercial airline tickets at a total cost of $100 million. Even worse, the Pentagon never bothered to file to get the money back on these fully refundable tickets.

And that’s not counting the 27,000 times the Pentagon paid twice for the same airline ticket, at a total cost of $8 million. This wasted $108 million could have paid for seven Blackhawk helicopters, 17 M-1 Abrams tanks, or a large supply of additional body armor for U.S. troops in Afghanistan and Iraq.

Credit-card fraud is another problem. Federal employee credit-card programs were designed to streamline government procurement rules by allowing government employees to buy job-related products with agency-paid credit cards.

But this well-intentioned idea was quickly abused. In a recent 18-month period, Air Force and Navy personnel used government-funded credit cards to charge at least $102,400 on entertainment events, $48,250 on gambling, $69,300 on cruises and $73,950 on exotic dance clubs and prostitutes.

Not to be outdone, investigators randomly sampled 300 Department of Agriculture (USDA) employee credit cards. They found, over six months, 15 percent charged a total $5.8 million in personal expenses that included Ozzy Osbourne concert tickets, tattoos, lingerie, bartender school tuition, car payments and cash advances.

The USDA has pledged a thorough investigation, but it will have a huge task: 55,000 USDA credit cards are in circulation, including 1,549 held by people no longer USDA employees.

Waste also permeates the student loan program. In 2002, the Education Department certified the Y’Hica Institute’s participation in the loan program and disbursed $55,000 in loans to three of the school’s student loan applicants.

One problem: Neither the Y’Hica Institute nor the three students who received the $55,000 are real. Congressional investigators created them (on paper) to test the Education Department’s verification procedures. All documents were faked, down to naming one fictional student applicant “Susan M. Collins,” after the senator requesting the investigation. Is it any wonder $22 billion in student loans remain in default?

From the Redundancy Department: Washington runs 342 economic development programs, 130 programs serving the disabled, 130 programs serving at-risk youth, 90 early childhood development programs and 72 safe-water programs. This means not only additional bureaucracies to run these overlapping programs, but an administrative nightmare for program beneficiaries who must navigate each program’s distinct rules and requirements.

Among the many examples: The Army Corps of Engineers is said to have purposely rigged dozens of scientific studies to justify expensive (but unnecessary) water projects. The federal government loses $20 billion annually by accidentally overpaying recipients of government programs.

Just a few examples to remember the next time lawmakers claim there is no room for spending restraint.

Brian M. Riedl is Grover M. Hermann fellow in federal budgetary affairs in the Heritage Foundation’s Roe Institute for Economic Policy Studies.

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