The prevailing wisdom inside the Beltway and especially among big-government politicians and bureaucrats is one that was espoused by House Minority Leader Nancy Pelosi (D-Calif.) in 2013.  Flummoxed by a reporter’s question on budget cuts, she literally threw up her hands and exclaimed, “The cupboard is bare! There’s no more cuts to make!”

The mission of the Government Accountability Office (GAO) is to “ensure the accountability of the federal government for the benefit of the American people.”  During the course of that often Sisyphean endeavor, GAO submits hundreds of reports on overall “government efficiency and effectiveness,” which can include in-depth analysis of individual federal program integrity, as well as more comprehensive, annual reviews of improper payments and the degree to which government program functionalities overlap and duplicate one another. Based on a 2011 law requiring comprehensive annual reports on duplicative and overlapping programs, GAO has issued four such reports to date.

On March 4, 2015, Comptroller General Gene L. Dodaro testified before the Senate Budget Committee regarding GAO’s report, “Opportunities to Reduce Fragmentation, Overlap, Duplication, and Improper Payments and Achieve Other Financial Benefits,” updating the public on the progress (or lack thereof) of executive and legislative bodies in addressing the more than 440 recommendations identified in the four annual reports since 2011. The top-line numbers were disappointing.  While GAO estimated that executive branch and congressional actions have resulted in roughly $20 billion in “financial benefits” from fiscal years (FY) 2011 through 2014, only 29 percent of GAO’s recommendations were classified as “fully addressed” as of November 2014.  GAO auditors cited an additional $80 billion left on the table.  Furthermore, GAO pointed out that several agencies running very large programs, such the Health and Human Services (HHS), which manages the $16.3 billion Temporary Assistance to Needy Families program, have not reported estimates on improper payment rates.

In particular, the report noted that “For the first time in recent years, the government-wide improper payment estimate significantly increased—to $124.7 billion in fiscal year 2014, up from $105.8 billion in fiscal year 2013. This increase of almost $19 billion was primarily due to estimates for Medicare, Medicaid, and the Earned Income Tax Credit, which account for over 76 percent of the government-wide estimate.”  The $19 billion increase in improper payments essentially wipes out the $20 billion in “financial benefits” from implemented recommendations.  And based on the lack of information for several programs, $124 billion is clearly a conservative estimate of the amount of improper payments across the government.

The sheer size and scope of the duplication and fragmentation that GAO has found in its four annual reports is stunning.  GAO identified 160 programs spanning 20 federal entities tasked with housing assistance through the Departments of Housing and Urban Development (HUD) and Agriculture (USDA).  Forty-five fragmented and duplicative programs are tasked with finding employment for Americans with disabilities.  There are 12 federal agencies administering 13 programs for financial literacy.  There are 82 programs across 10 agencies that aim to boost teacher quality.  The number of federal data centers has grown from 432 in 1998 to 9,658 in 2014.  The crucial job of preventing the smuggling of nuclear materials falls to 21 different programs and offices, which operate under five separate agencies. These examples are only the tip of a monstrous government waste iceberg.

The updated report also highlights “revenue-enhancement opportunities” that have yet to be fully addressed.  For example, $500 billion could be added to federal coffers just by collecting unpaid federal taxes. 

GAO pointed out that the Centers for Medicare and Medicaid Services have not aggressively used the cost-saving tools it already has on hand. 

One of the best tools that CMS has been using is the Recovery Auditing Contractor program (RAC).  Before the program was suspended, it had returned $9.7 billion to the Medicare Trust Fund.  RACS are paid on a contingency basis after recovering overpayments to providers and are limited by law to reviewing only 2 percent of providers’ claims at one time.  RACs are under CMS’ direct supervision and can only review claims after the agency has identified specific areas vulnerable to improper payments and given them a green light. 

Reducing crop subsidies to wealthy farmers could save $1.2 billion.  Eliminating the remaining subsidies for the Energy Department’s low-demand Advanced Technology Vehicle Manufacturing program would net an extra $4.2 billion.  By simply preventing individuals from receiving disability insurance and unemployment insurance at the same time, the federal government could save $1.2 billion over the next 10 years, according to a Congressional Budget Office (CBO) estimate.  Finally, the GAO estimates cost savings in the billions if the Office of Management and Budget (OMB) and other agencies more effectively implement the IT management software, PortfolioStat.  This recommendation comes after the Department of Defense (DOD) and the Veterans Affairs Administration (VA) wasted more than $1 billion on an abandoned plan to modernize and create interoperability between the agency’s electronic health records. 

These examples illustrate the broader challenge facing taxpayers.  GAO provides a straightforward roadmap on actions that could be taken, either by the executive branch or the Congress, to free up hundreds of billions of taxpayer dollars to reduce deficits and the national debt. 

The report describes 10 programs where improper payments reached more than $1 billion. Chief among these programs is Medicare, improperly paying out nearly $60 billion in 2014. That accounts for 48 percent of the total amount of improper payments. GAO cites estimates that show spending on Medicare is slated to rise dramatically in the next several years, which means curtailing the amount of bogus payouts should become a primary goal.

In terms of error rate, the IRS’s Earned Income Tax Credit (EITC) takes first place; 27.2 percent of the EITC’s payments were made in error.

Amid declarations from Rep. Pelosi and many others, warning of a bare fiscal cupboard, reports like this from the GAO prove that statement to be ludicrous.  The federal government can find many more areas to consolidate, streamline, cut improper payments, and slash the national debt.  The GAO has provided a comprehensive how-to guide.  It’s time for Congress to act so that the next GAO update will show far more progress in implementing these recommendations.