A New Approach to Wasteful Spending

A New Approach to Wasteful Spending

Handouts, duplication, and overlap are among the problems that lead to wasteful federal spending, says Heritage Foundation policy analyst Romina Boccia in a new paper.

Is it possible to curb such practices with a special bipartisan commission that could recommend many fixes at once? We recently spoke with Boccia about her analysis. The conversation has been edited for length and clarity.

You mention that the budget process has few incentives for Congress to eliminate wasteful spending. Can you explain the root causes of why taxpayer dollars get wasted in the first place by policymakers?

There are a number of reasons for this.

One big one is that members of Congress get elected if they say yes to people. They have lots of special-interest groups coming to their offices and asking for handouts and goodies. Unfortunately, we have very well-established programs today the sole purpose of which is to subsidize what would otherwise be private investment decisions -- so you have this crony-capitalist system set up where Congress gets to hand out benefits and subsidies to corporations and small business. It doesn’t really matter big or small. The problem is that Congress is in the business of giving out special favors and picking winners and losers.

It is a very lucrative business for these companies and individuals who benefit from the handouts, whereas the taxpayer might only pay a few dollars here or there for certain government programs, so they have much less incentive to learn about the program and actively oppose it. People have more important things to do than learn about all of the handouts the federal government is giving out and stage an effective protest.

Another one is that if you look at how budgeting is done, it is assumed in the budget baseline that the budget always grows. When the Congressional Budget Office scores whether there has been a spending increase or decrease, it is based on a baseline that always goes up to adjust for population growth and inflation. But it is not clear that it makes sense for government spending to always go up. I think we are at a point now where we ought to look at reducing government spending.

The sequester tried to do some of that, but unfortunately lawmakers have already gone back on that and increased spending above those caps. One way of getting around caps is through emergency spending, -- like the Hurricane Sandy bill. While some of the spending in there was intended for disaster relief, lawmakers stuck in other goodies for things that had nothing to do with Hurricane Sandy. So, Congress will try to find ways to get around spending caps, instead of looking to find programs where you can cut spending.

GAO has provided recommendations to curb these wasteful spending practices. What has it recommended, and how have the recommendations been followed?

GAO has released a report every year since 2011. This was an effort that was spearheaded by Senator Tom Coburn, who has been a champion of identifying waste in his annual waste book and promoting efforts to reduce waste and duplication in the federal government.

GAO has identified a number of programs as performing activities that have mission overlap and are duplicative. It also identifies other savings, for example programs that are supposed to be paid for with user fees but where program costs now exceed the user fees. It will then make suggestions to increase those user fees. So there is a broad range of proposals GAO includes in that report.

But there are other considerations the GAO report does not include, such as programs that are outside the scope of the federal government. In particular I refer to crony handouts like loan-guarantee programs. GAO will identify programs that don’t work as well, and maybe suggest recommendations to improve them. But the fundamental question of "Should the government even be doing this?" doesn’t get asked.

A government-waste commission that looks at this issue more broadly can identify many more government programs that we should no longer continue to fund.

As for how well the recommendations are being followed, the Obama administration actually has a better record there than Congress. Congress has addressed about 27 percent of the actions that were recommended specifically to it. The executive branch has addressed 33 percent, so it is slightly higher.

Of course, much more can be done. To some degree it is political inertia. There is very little interest in eliminating programs. When lawmakers do step forward and recommend eliminations, they are often bombarded by special-interest groups, who of course hate to see their goodies go away.

An independent, bipartisan waste commission promises to have more success by bundling a number of these different programs together and then allowing Congress an up-or-down vote on the entire package. With an up-or-down vote, lawmakers aren’t able to pick and choose certain programs that benefit special-interest groups in their constituencies, but instead must look at the broader national interest and ask whether these programs make sense, whether they're something the government should be doing, and, given our deficits and debt, how much money are we able to save so taxpayers get good value for their tax dollars.

The Base Closure and Realignment Act of 1988 established a process for closing or realigning obsolete military bases through the Base Closure and Realignment Commission. What lessons can we learn from this?

The Base Closure and Realignment Commission introduced a mechanism by which members of Congress were able to publicly fight for the bases in their district, while still allowing the commission recommendations to go through on an up-or-down vote. So what it did really was it bought cover for lawmakers who otherwise would have refused to make decisions that turned out in the end to be good for these communities, good for defense, and good for the budget. You had obsolete bases that were continuing to provide some economic benefits for these communities, but once the bases were closed, many of these communities actually flourished to a greater degree than when they had the base, because they had property that was available for businesses to come in and hire workers. Many of these communities actually saw their living standards increase after base closures. But political considerations made it difficult to close or realign military bases before the BRAC commission was put together.

BRAC enabled the political process to work in the national interest, to work in the defense interest, and to close those obsolete bases. So I am looking at the mechanism that BRAC set up, and I think we can apply those lessons to cover for lawmakers, to bundle a number of programs together all at once and present them on the floor of Congress in such a way that it becomes a vote to eliminate inappropriate and ineffective government programs and reduce waste of a specific program that has a strong special-interest group.

What does such a commission need to succeed?

There has to be bipartisan support for eliminating waste in the federal government, for realigning and reprioritizing taxpayer dollars. So that is why it is so important that the commission is bipartisan. But it is also important that the commission is independent, because members of Congress and employees of federal agencies -- while they should provide input -- have a conflict of interest when it comes to the commission's recommendations.

It is also important that there are no sacred cows that the commission isn’t allowed to review -- it should cover the entire government to the extent possible. You might want to set up a mechanism that allows them to do it over time, for example Rep. Doug Collins in the House recently introduced a bill where a commission would address two appropriations bills each year. You can use other guidelines as well, but it is important to review the federal government for areas where taxpayer dollars can be saved and spent more wisely.

In terms of criteria, you want them to be clear, but you ought to have both qualitative and quantitative measures. That way you are looking at attainment of performance goals, but you also consider questions of appropriateness. Is this a program that the federal government should be engaged in to begin with? Criteria the commission could consider include the relevance of program goals and randomized control trial experiments that could give great insights as to whether a program that seeks to accomplish a certain behavioral goal is actually accomplishing that goal. And to the extent that there are private, state, and local alternatives, or programs that practically do the same thing as the federal program, we should reduce this duplication.

Michael Cipriano is a RealClearPolitics editorial intern.

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