Obama Spins Numbers In Improper-Spending Shell Game
-The article was originally published at National Review.
-News on improper payments is good, if you don’t count a third of the government.
The Obama administration is trying to spin more than $100 billion in improper payments into good news for taxpayers.
Each year, the Government Accountability Office (GAO) releases a report on the amount of federal outlays that qualify as “improper payments.” In this year’s report, which shows $105.8 billion in improper payments, the American taxpayer can find a little bit of good news, from a narrow point of view — and bad news from pretty much every other.
White House Deputy Budget Director Beth Cobert gave Congress the good news last week: a nearly 13-percent decline in the dollar figure for improper payments since Obama’s second year in office.
As reported by Fox News, Cobert testified that, “agencies recovered more than $22 billion in overpayments last year. The amount of improper payments has steadily dropped since 2010, when it peaked at $121 billion.” The White House’s PaymentAccuracy.gov website also tried to spin these results as praise-worthy improvements.
However, while the improvement in known improper payments is real (though even at the improved rate, Washington still spends more in wasted payments than it spends on law and order), the White House has ignored certain realities. The administration’s claims include questionable data while excluding 32 percent of the federal budget and ignoring high-risk programs such as most of the Department of Defense.
First, the questionable data. The report says that four percent of the budget went to improper payments. The White House’s Payment Accuracy website cites 3.5 percent — which is accurate only because the administration is choosing to ignore the GAO’s concerns that a Defense Department program’s self-audit may be unreliable.
In other words, the White House is using a best-case scenario number rather than a realistic one — and the realistic one is the one on which the GAO report focused.
Second, the GAO report shows that it only examined $2.645 trillion of the 2013 federal budget. However, the total budget was $3.9 trillion, which means GAO only examined 68 percent of the federal budget.
In other words, that $105.8 billion in improper payments could be significantly larger, especially given that large portions of the unexamined part of the federal budget are at high risk for improper payments. The reason for the exclusion? Simply that 32 percent of the federal budget cannot be reliably audited.
And the news continues to get worse, because not all departments are created equal in internal complexity and incompetence. The Department of Defense’s Inspector General was unable to audit the Pentagon’s budget in 2013. Defense makes up more than half of the spending that was not examined by GAO. This is doubly concerning because much of DoD’s budget is considered “high-risk” by GAO, meaning that the rate of improper payments is likely higher in DoD than in a number of other agencies that were included in GAO’s estimate.
Finally, one of the major data points in the report is the mismanagement of funds in Medicare’s budget, which total nearly half of the reported 2013 improper payments. National Review Online contacted the lead author of the GAO report, who reported that total improper payments made in Medicare in 2013 “totaled $50 billion.” The breakdown includes:
- $36 billion in Medicare fee-for-service
- $11.8 billion in Medicare Advantage, Part C
- $2.1 billion for Medicare’s Prescription Drug program
This means that Medicare — which is expected to break the federal bank in coming years and decades — lost 8.7 percent of all of its spending to improper payments,using 2012’s Medicare spending levels. (The 2013 numbers have not been released yet.)
So, the good news is that the Obama administration is improving on its ability to recover overpayments — but even the $22 billion cited by Cobert represents a mere fifth of 2012’s improper payments. And who knows how much money the government spent to accomplish that modest goal?
The other bit of good news is that payment accuracy is increasing, and the officially reported dollar amount lost is decreasing. But our federal government is so bloated that the low-end estimate of improper payments is nearly twice what the federal government spent in 2012 on public order and safety, including money used for immigration, law courts, police, and prisons. And the top-end estimate? Well, nobody knows.
Add in duplication, contractor overruns, and other inefficiencies, and it could be reasonable to estimate that an amount close to half a trillion dollars is simply disappearing into the vast wastelands of federal bureaucracy each year.