For all the negative press about the federal government’s assorted failings, Washington is enormously successful in one endeavor. Our government has great websites. Government sites provide information about every facet of the federal bureaucracy, good and bad. Reports, investigations, and audits are all out there for taxpayers to read. Pejorative remarks about transparency aside, it is amazing just how much damning information our government reports about itself. For instance, when you want to find out which programs waste lots of tax dollars by sending payments to the wrong place, you visit PaymentAccuracy.gov.
Payment Accuracy defines an improper payment as:
. . . when funds go to the wrong recipient, the recipient receives the incorrect amount of funds (including overpayments and underpayments), documentation is not available to support a payment, or the recipient uses funds in an improper manner.
On November 23, 2009, President Obama signed Executive Order 13520, “Reducing Improper Payments and Eliminating Waste in Federal Programs.” Within six months agencies, officers, secretaries, and directors of Washington’s monolithic bureaucracy were required to consult, issue plans, make recommendations, and issue reports about tax dollars paid out in error.
In 2010 we had either a 95% accuracy rate, or 5.49% inaccuracy rate. The numbers do not add up, but perhaps that is why the government decided to put up a payment accuracy site in the first place. 95%, or even 94.51%, sounds pretty reasonable, considering we are resigned to performance only being good enough for government.
Things get a little dicey when it comes to our more popular entitlement programs, many of which are considered “high-error.” For example, the following programs accounted for $91.60 billion in improper payments in 2010:
SNAP (Food Stamp Program): $2.2 billion improper payments (4.4% error rate)
Medicare Fee-for-Service: $34.3 billion improper payments (8.5% error rate)
Medicaid: $22.5 billion improper payments (9.4% error rate)
Unemployment Insurance: $17.5 billion improper payments (11.2% error rate)
Medicare Advantage: $13.6 billion improper payments (14.1% error rate)
National School Lunch Program: $1.5 billion improper payments (16.3% error rate)
The improper payment goals for 2011 do not inspire much confidence, either:
SNAP (Food Stamp Program): 4.4% (unchanged from 2010)
Medicare Fee-for-Service: 8.5%
Unemployment Insurance: 9.8%
Medicare Advantage: 13.7%
National School Lunch Program: 15.8%
Many high-error programs have been in the news recently. Congress agreed to a child nutrition bill, so we tossed more tax dollars to the school lunch program. The Medicaid black hole is always an issue, and the lack of government funds for transplant recipients is still in the headlines (see: States Refusing Transplants? Get Used To It.). 2010 concluded with a decision to extend unemployment benefits after weeks of finger-pointing over the lack of tax dollars to pay for the extension.
Taxpayers must stomach congressional grandstanding over budget cuts and funding deficits while billions are wasted by entitlement programs that continually demand more. April 2010’s $18 billion unemployment insurance extension could have been paid for with the program’s $17.5 billion in improper payments.
In July 2010 the president signed the “Improper Payments Elimination and Recovery Act of 2010” with the minimal goal of retrieving $50 billion in improper payments by the end of 2012, an election year. The bill is a bureaucratic nightmare of reports, audits, assessments, and compliance procedures. Worse, a portion of recovered funds can be used for agency “Financial Management Improvement Programs.” This approach seems counter-intuitive. Red tape and sprawling bureaucracy all but mandate financial mismanagement, and handing agencies more money because they failed to do their jobs correctly would seem to encourage incompetence.
Republicans in Congress, and Democrats serious about making a change, should pass a very short, earmark-free bill that ensures funding deficits in entitlements are paid for with recovered improper payments. Data collected from agencies under the Improper Payments Act, if reported accurately, will inform Congress at year’s end how much money was wasted. The amount each program wastes will be removed from that program’s budget for the coming year. If federal agencies cannot do their jobs, and Congress fails to require them to perform in a manner consistent with the competence demanded of the private sector, then legislators can take the heat from constituents when the benefits stop coming. A handout is a handout, whether it goes to entitlement recipients, or legislators and agency heads who whine about lack of tax dollars while they permit billions to vanish.