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.
The Government Accountability Office, Congress’ chief investigative arm, which stands to lose $42 million on the chopping block, said its return on investment in 2011 was $81 for every dollar spent.
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.
“There’s way more at the DOD than they can ever possibly inspect. They’re good, like anybody they can always be improved, but their budget is already limited,” said Ben Freeman, national security investigator at the Project on Government Oversight, which made a name in the 1980s by exposing the now-infamous $640 toilet seats at the Pentagon. “They’re going to be able to look at even less of the DOD, and that’s unfortunate. Our organization has found there’s plenty of waste there.”
Others facing big cuts include the inspector general for the Department of Homeland Security and the Treasury Inspector General for Tax Administration, which keeps watch on the Internal Revenue Service.
“The impact could potentially be significant on our operations,” TIGTA spokeswoman Karen Kraushaar said.
A spokeswoman for Homeland Security’s auditor said a preliminary report is done, but she couldn’t comment on it while awaiting more guidance from the White House’s Office of Management and Budget.
Several other offices referred questions to OMB, which didn’t return a request for comment Wednesday.
Last week, OMB released an analysis, required by Congress, of where it might have to make cuts. That list made estimates based on 2012 spending levels, and will have to be updated for 2013, but the early numbers showed $148 million in cuts to inspectors general, while regulators such as the Securities and Exchange Commission, the National Labor Relations Board and more than a dozen other agencies that regulate businesses, monitor discrimination complaints and protect investors stand to lose just shy of $500 million.
The stimulus oversight board would lose $2 million, and the GAO also stands to lose $42 million.
Chuck Young, GAO’s managing director for public affairs, said they are running “multiple scenarios” to try to figure out how to absorb the cuts without having to slash their staff.
“For GAO, the reductions would be sizable and impact our ability to execute our mission,” Mr. Young said, though he sounded a hopeful note that Congress and Mr. Obama might still find a way to head off the cuts.
All sides on Capitol Hill say they want to cancel the sequesters, but they can’t agree on how to do it. Republicans said they want more targeted spending cuts, while Democrats insist tax increases must be part of any replacement package.
The first round of cuts, totaling $109 billion, goes into effect in January.
Mr. Coburn said that’s one reason last year’s debt deal — which called for the automatic cuts — was a bad idea in the first place.
“Sequestration — across-the-board cuts — absolves both Congress and the administration of the responsibility of making hard choices,” he said. “The best way to cut spending is to go agency by agency and program by program and eliminate what isn’t working.”