[Senate Hearing 114-59]
[From the U.S. Government Publishing Office]


                                                         S. Hrg. 114-59
 
                    WASTEFUL SPENDING IN THE FEDERAL 
                    GOVERNMENT: AN OUTSIDE PERSPECTIVE

=======================================================================

                                HEARING

                               BEFORE THE

                    SUBCOMMITTEE ON FEDERAL SPENDING
                   OVERSIGHT AND EMERGENCY MANAGEMENT

                                 OF THE

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 10, 2015

                               __________

                   Available via http://www.fdsys.gov

       Printed for the use of the Committee on Homeland Security
                        and Governmental Affairs
                        
                        
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                      U.S. GOVERNMENT PUBLISHING OFFICE
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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                    RON JOHNSON, Wisconsin, Chairman
JOHN McCAIN, Arizona                 THOMAS R. CARPER, Delaware
ROB PORTMAN, Ohio                    CLAIRE McCASKILL, Missouri
RAND PAUL, Kentucky                  JON TESTER, Montana
JAMES LANKFORD, Oklahoma             TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming             HEIDI HEITKAMP, North Dakota
KELLY AYOTTE, New Hampshire          CORY A. BOOKER, New Jersey
JONI ERNST, Iowa                     GARY C. PETERS, Michigan
BEN SASSE, Nebraska

                    Keith B. Ashdown, Staff Director
              Gabrielle A. Batkin, Minority Staff Director
           John P. Kilvington, Minority Deputy Staff Director
                     Laura W. Kilbride, Chief Clerk
                     Lauren Corcoran, Hearing Clerk


  SUBCOMMITTEE ON FEDERAL SPENDING OVERSIGHT AND EMERGENCY MANAGEMENT

                     RAND PAUL, Kentucky, Chairman
JAMES LANKFORD, Oklahoma             TAMMY BALDWIN, Wisconsin
MICHAEL B. ENZI, Wyoming             CLAIRE McCASKILL, Missouri
KELLY AYOTTE, New Hampshire          CORY A. BOOKER, New Jersey
JONI ERNST, Iowa                     GARY C. PETERS, Michigan
BEN SASSE, Nebraska
                     Brandon Booker, Staff Director
               Dahlia Melendrez, Minority Staff Director
                      Rachel Nitsche, Chief Clerk
                            
                            C O N T E N T S

                                 ------                                
Opening statement:
                                                                   Page
    Senator Paul.................................................     1
    Senator Baldwin..............................................     2
    Senator Ernst................................................    14

                               WITNESSES
                        Wednesday, June 10, 2015

Romina Boccia, Grover M. Hermann Research Fellow in Federal 
  Budgetary Affairs, and Research Manager, The Heritage 
  Foundation.....................................................     4
Chris Edwards, Director of Tax Policy Studies, and Editor, 
  www.DownsizingGovernment.org, Cato Institute...................     8
Steve Ellis, Vice President, Taxpayers for Common Sense..........    16
Thomas A. Schatz, President, Citizens Against Government Waste...    18
Donald F. Kettl, Ph.D., Professor, School of Public Policy, 
  University of Maryland.........................................    22

                     Alphabetical List of Witnesses

Boccia, Romina:
    Testimony....................................................     4
    Prepared statement...........................................    31
Edwards, Chris:
    Testimony....................................................     8
    Prepared statement...........................................    47
Ellis, Steve:
    Testimony....................................................    16
    Prepared statement...........................................    56
Kettl, Donald F.:
    Testimony....................................................    22
    Prepared statement...........................................    87
Schatz, Thomas A.:
    Testimony....................................................    18
    Prepared statement...........................................    64

                                APPENDIX

Information submitted by Mr. Ellis...............................    95


  WASTEFUL SPENDING IN THE FEDERAL GOVERNMENT: AN OUTSIDE PERSPECTIVE

                              ----------                              


                        WEDNESDAY, JUNE 10, 2015

                                 U.S. Senate,      
                        Subcommittee on Federal Spending,  
                    Oversight and Emergency Management,    
                    of the Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:30 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Rand Paul, 
Chairman of the Subcommittee, presiding.
    Present: Senators Paul, Ayotte, Ernst, and Baldwin.

               OPENING STATEMENT OF SENATOR PAUL

    Senator Paul. I call this hearing of the Federal Spending 
Oversight Subcommittee to order.
    The topic today is going to be government waste and how we 
can practically do something to curb waste, but also to 
ameliorate the problem we have with the growing deficit. We 
have a deficit this year that is expected to be about $583 
billion, and some will say we are fixing the deficit because it 
is getting smaller. Yet the overall debt is growing enormously 
larger.
    We have about $1 million that we borrow every minute, and I 
think this is a threat to our economy, and some economists have 
said it is costing us millions of jobs, just the burden of this 
debt.
    So what we are going to do is talk about some of the waste, 
and some of this has been talked about in the past. But my hope 
from the discussion today is to actually itemize some of this, 
and as we itemize this, then give advice to some of the people 
who spend this, the committees that spend this. And too often 
we have reports, and they just never get acted upon.
    The new majority has said we are going to try to pass all 
of the appropriation bills. There is a great deal of power to 
the purse if we will actually use it. It is what the expression 
is supposed to mean, that we are supposed to express how we 
would like the money to be spent. But if you do not have 
appropriations bills, you are lumped all together in some 
omnibus or continuing resolution (CR). You lose your power as 
to direct how to spend it, and as a consequence, we never 
eliminate any of the waste. I have seen very little example 
that we eliminate any waste that we determine.
    But it is my hope to not just have a discussion of this 
today, but at the conclusion to actually have a blueprint for 
how we could get rid of government waste.
    With that, I would like to turn it over to our Ranking 
Member, Senator Baldwin.

              OPENING STATEMENT OF SENATOR BALDWIN

    Senator Baldwin. Great. Good afternoon, everyone. Good 
afternoon, Chairman Paul. It is great to join you for our 
inaugural Subcommittee hearing. I very much look forward to 
working with you on this issue and others under our 
Subcommittee's jurisdiction as we move forward.
    I want to take a few moments to outline a couple of issues 
for today's hearing, as well as moving forward. And I will go 
on, if you will indulge me for a few minutes here, because this 
is our inaugural meeting and I am very excited to kick things 
off.
    First of all, in my home State of Wisconsin people are 
working harder than ever and taking home less. And hardworking 
families and businesses in Wisconsin are struggling to get 
ahead. I know that is the case for many places in the United 
States. Congress has a choice to recognize this and work 
together to create a stronger economy and security for our 
people.
    Now, I am a Wisconsin progressive, and I know well the 
legacy of Senator Bill Proxmire. He took on wasteful government 
spending, and I know that he did not take on this fight and 
pass out Golden Fleece awards because he was opposed to 
government. He did it because our progressive values hold to 
the belief that every dollar of waste was a dollar that was not 
being invested in growing the hardworking middle class in the 
United States.
    And as I have traveled the State of Wisconsin, people ask 
nothing more than a fair shot at getting ahead. They expect us 
to cut wasteful government spending and tax expenditures that 
favor those at the top. They also expect smart investments that 
grow the economy and create shared prosperity. In short, they 
want us to reduce spending without shortchanging their future.
    In Wisconsin, we have a work ethic that is second to none. 
We pinch our pennies, and our people expect us to do the same 
with taxpayer dollars. And in my view, that is what today's 
hearing is all about.
    Now, I want to just mention a couple of things that I know 
we are going to focus on today and I trust we will continue to 
focus on in the future.
    First of all, the Government Accountability Office (GAO) 
reports every 2 years on areas within the Federal Government 
that are vulnerable to waste, fraud, abuse and mismanagement. 
Since the 1990s the GAO has identified more than 50 areas that 
are at high risk. However, steady progress has been made in 
these areas, and 23 areas have been removed from the list 
altogether.
    For example, the Food and Drug Administration has 
significantly improved its oversight of medical device recalls; 
the Defense Department (DOD) has shown some strides and is 
making progress in the management and oversight of its 
contracting approaches; and NASA has significantly strengthened 
its acquisition management functions.
    Yet, in spite of this progress, many challenges remain. 
Earlier this year, the GAO added two new areas to its high-risk 
list, including the Veterans Affairs (VA) Health 
Administration. The GAO determined that VA facilities have 
failed to provide timely health care and in some cases have 
harmed veterans. We need to do better for our Nation's 
veterans.
    Another area that I know we will discuss today with this 
expert panel, one that is ripe for congressional review is 
improper payments.
    In fiscal year (FY) 2014, governmentwide improper payments 
reached approximately $124.7 billion, and that is an increase 
of $19 billion from the prior fiscal year.
    GAO has found that agencies continue to struggle with 
reducing the number of improper payments and lack the internal 
controls to determine the full extent of the improper payments.
    This is an area that I think we can all agree that more 
work needs to be done.
    I want to move on from areas where the GAO believes that we 
can achieve savings and on to an area that I personally feel 
passionately about and want to further explore.
    A critical part of improving economic security is 
guaranteeing that everyone has access to high-quality and 
affordable health care. The Affordable Care Act (ACA) has 
already made a strong investment in the health security of 
middle class families across this country. More than 10 million 
Americans have signed up for affordable health insurance 
provided by the new law. In Wisconsin, over 180,000 people have 
quality health plans, and 90 percent of them are benefiting 
from premium tax credits to help pay for this coverage.
    The law is also strengthening our investments in Medicare 
and reducing costs for our Nation's seniors. About 9.4 million 
seniors on Medicare have each saved an average of $1,598 on 
prescription drugs in the ``donut hole.''
    I am committed to making sure that America's new health law 
works in Wisconsin and across the country, and I am committed 
to fixing what does not work. That means putting partisanship 
aside to implement the law and finding common-sense areas in 
which to improve the law.
    To that end, I believe that there are significant savings 
that can be achieved within our health care system without 
compromising quality of care or slashing benefits that seniors 
have earned. There are a number of nonpartisan and bipartisan 
think tanks and other groups that have issued recommendations 
to Congress about delivery system reform in the health care 
arena, some arguing that we could realize up to $1 trillion 
dollars in savings without affecting health care outcomes by 
enacting smart and targeted health care delivery reforms.
    These are truly impressive savings that would strengthen 
our Nation's health care system without shifting costs to 
seniors or to States.
    Chairman Paul, I would hope that as we begin a dialogue 
about finding solutions to Federal waste, fraud and abuse, we 
can also begin this dialogue about how to produce health care 
cost savings.
    I am confident that if both parties in Washington do what 
people in the State of Wisconsin and in all of our States do 
everyday--which is put progress ahead of politics--we can root 
out wasteful spending and improve the delivery of our Nation's 
priorities for all Americans.
    So, again, thank you, Chairman Paul, for providing us with 
the opportunity to discuss these important issues and to our 
witnesses for being here today to take part in this discussion.
    And my hope is that when we leave here today, we will have 
areas we can address so that we can deliver our Nation's 
priorities in the most efficient and effective way possible.
    Senator Paul. Thank you, Senator Baldwin.
    With that, I think we will start with Ms. Romina Boccia. 
Ms. Boccia has a master's degree in economics from George Mason 
University (GMU) and is currently the Grover M. Hermann 
Research Fellow in Federal Budgetary Affairs, and research 
manager for the Institute for Economic Freedom and Opportunity 
at the Heritage Foundation. Boy, that is a mouthful. Her work 
there focuses on a variety of spending and budgetary process 
issues. Delving into the Federal budget, she is keenly aware of 
government spending and, in particular, government waste. We 
look forward to hearing your insights.

   TESTIMONY OF ROMINA BOCCIA,\1\ GROVER M. HERMANN RESEARCH 
FELLOW IN FEDERAL BUDGETARY AFFAIRS, AND RESEARCH MANAGER, THE 
                      HERITAGE FOUNDATION

    Ms. Boccia. I thank you, Chairman Paul and Ranking Member 
Baldwin, for inviting me today to present my views on wasteful 
spending in the Federal Government. The views I express in this 
testimony are my own and should not be construed as 
representing any official position of The Heritage Foundation.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Boccia appears in the Appendix on 
page 31.
---------------------------------------------------------------------------
    A Gallup poll last year reported that Americans believe 
that the Federal Government wastes 51 cents of every dollar 
that they pay in taxes. Another Gallup poll in the same year 
reported that trust in the Congress is at an all-time low, with 
only 28 percent of Americans reporting that they had a great 
deal or even just a fair amount of trust in the House of 
Representatives and the Senate.
    Certainly these dismal polling results do not necessarily 
reflect how much or how little waste there actually is in 
government, nor how trustworthy law makers are, but I do think 
they show a disturbing trend.
    As trust in government has declined, Americans' perception 
of government waste has increased at the same time that Federal 
spending has grown. High perceptions of government waste and 
low levels of trust are, I believe, in part a result that 
Americans recognize that the Federal Government is doing too 
many things that would be better done by individuals or the 
private sector or businesses or by State and local governments, 
or that should not be done at all.
    Moreover, recent bank and auto industry bailouts and 
massive government handouts to well-connected business as part 
of the so-called stimulus conveyed to Americans in no uncertain 
terms that cronyism and corporate welfare are rampant in 
Washington.
    Americans increasingly believe that the system is rigged 
against them. Corporate welfare and crony capitalism are 
reflected in backroom deals in which a small group of 
individuals is able to influence legislation or regulation to 
the benefit of a narrow interest at the expense of the public. 
They are also reflected in the establishment and continuation 
of government programs that purport to serve broader noble 
goals but that mostly divert resources away from the wants and 
needs of consumers and toward political purposes.
    The most comprehensive, lasting, and sustainable solution 
to address corporate welfare and cronyism in Washington is to 
return to limited government. To reduce the size of government, 
we must limit the scope of government. As part of my written 
record today, I am presenting to the Committee a list of 21 
programs that I categorize as ``corporate welfare spending'' 
that wastes taxpayer and economic resources. Many of these very 
same programs have also been recommended for elimination by 
other organizations and for many years. Each program on this 
list takes taxpayer money and gives it to a business or uses it 
to promote business activities either for the purpose of 
supporting the business directly or to achieve some other goal 
that also lies outside the proper scope of the Federal 
Government.
    Moreover, several programs on my list are duplicative of 
other Federal, State, and private efforts, and several have 
come under scrutiny due to waste and abuse. Congress should 
eliminate these programs. They include the Export-Import Bank, 
which presents an immediate opportunity for the Congress to do 
nothing and allow the Bank to expire once and for all. They 
also include the Overseas Private Investment Corporation, which 
is the government agency that promotes investment in developing 
countries by, for example, financing Papa John's Pizza 
franchises in Russia and a Ritz-Carlton in Turkey. Moreover, it 
includes costly FCC Universal Service Fund Programs that have 
long outlived their purpose and that today nickel-and-dime 
Americans on their telephone bills to provide overpriced 
telephone lines to, for example, resort towns in Colorado.
    Every dollar spent by the Federal Government for the 
benefit of a well-connected interest group is a dollar that is 
no longer available to American families and businesses to 
spend and invest to meet their own needs and desires.
    Corporate welfare spending is particularly morally 
reprehensible when government spends resources that belong to 
the next generation. With deficits of half a trillion dollars 
and growing, cutting corporate welfare and waste is long 
overdue.
    The Defense Department's Base Closure and Realignment 
Commission (BRAC), provides a valuable mechanism for 
eliminating wasteful and unnecessary government spending. I 
believe that the idea that an independent commission guided by 
clear criteria can overcome special interest politics and 
congressional gridlock in pursuit of the national interest, I 
think it deserves serious consideration.
    Thank you.
    Senator Paul. I think rather than go on to the next, I want 
to just do it a little bit differently. We get so much 
information by going through five. There are only two of us to 
ask questions, so we are going to ask a few questions, if that 
is OK with you.
    Senator Baldwin. Absolutely.
    Senator Paul. On the Ex-Im bank, some people maintain, 
well, it makes a profit for the government--we will start with 
Ms. Boccia, but we will let the panel answer--one, that it 
makes money and, two, that everybody else does it, so why 
shouldn't we do it? Ms. Boccia, would you care to respond?
    Ms. Boccia. Yes. With the Export-Import Bank, what many 
miss is that there are huge taxpayer liabilities that may not 
come due tomorrow or next year. But in an economic downturn 
like the one we recently experienced, it is possible that 
taxpayers could face large liabilities from the loan guarantees 
that the Bank makes.
    Moreover, the Bank only benefits a very narrow group of 
special interests, in particular Boeing. And just because other 
countries are doing the wrong thing does not mean the United 
States should be doing the same thing. I think we should be 
leading as a country with the right policies.
    Senator Paul. Anybody else want to comment to that 
question?
    Mr. Edwards. I will give you an opinion on Ex-Im bank that 
is not based on data, but I believe it is the most important 
thing with corporate welfare, and that is, I believe corporate 
welfare makes U.S. businesses weaker. I cannot prove that, but 
I have read about many programs over the years and looked at 
how these companies, they spend their time in Washington 
lobbying rather than concentrating on making better products, 
which is what they should be doing. I think Solyndra was a 
great example of that. They were so focused on getting the 
government subsidies in Washington, they did not realize that 
China was creating inventions and innovations that went around 
them, and ultimately they went bankrupt because of that.
    So just like conservatives often complain that welfare 
programs have harmful effects on the individuals who receive 
them by sapping their interest and incentive to work, it is the 
same with business subsidies. Business subsidies weaken 
American business, I think.
    Senator Paul. And I think one response to that also would 
be that one thing that Americans seem to hate about government 
is they think there is too much money involved in their 
government, that money buys influence. The Solyndra loan was 
from a very big campaign donor to one party. The corporation 
that gets a lot of money from Ex-Im bank is very active here in 
town, and the question is: If you are really for campaign 
finance reform, maybe we ought to start with not giving out 
specific items that seem to go to specific corporate entities.
    Mr. Ellis. Mr. Chairman, I just wanted to add, we are 
certainly also opposed to Ex-Im bank, but also, on the other 
side of the ledger, some of the companies that are benefiting 
in other countries are actually State-owned companies that are 
also extremely well off, like Pemex in Mexico. And there is a 
good analysis done by the Mercatus Center over at George Mason 
University that has a lot of that there.
    Mr. Schatz. I do not want to take more time on that, but I 
agree with everything everybody has said, and I think it is 
something--again, Congress has to start somewhere, and in this 
case it is easy. Just do not reauthorize it.
    Senator Baldwin. I take a different view on the Export-
Import Bank.
    Small firms in Wisconsin--and I would say largely it is 
smaller firms that utilize the export-import bank. Those firms 
export directly or supply to the larger Boeings. If you think 
about their business plan, they working with a lot of smaller 
businesses that supply parts, and they are really assemblers 
more than they actually produce the raw materials that go into 
the final products--planes, for example.
    A lot of the small businesses have not been able to find 
the type of support they need for starting to export their 
products from community banks, from banking institutions, but 
not only that, the insurance products that are and unique to 
the Export-Import Bank. And I wonder why you feel certain that 
products that are not currently being offered by the private 
sector are all of a sudden going to materialize across the 
United States to help our small businesses be able to compete 
in those export markets.
    Mr. Schatz. There are lots of other companies and 
businesses that export products that may not be related to a 
particular industry, and I think the point we are--I am not 
speaking for everybody, but I think we all agree that it is so 
focused on Boeing and a few other companies that it does 
distort other opportunities to export products that may be 
available through other sources. And, clearly, Boeing itself is 
capable of finding all kinds of money in the commercial sector, 
commercial banks to export their products and in turn help 
these other companies who may be making parts.
    Ms. Boccia. If the Export-Import Bank is, in fact, making a 
profit--and I would argue it is not, especially not in the long 
run--then this would be the greatest sign for a private sector 
bank to step in and take over those functions if Congress 
allowed the Bank to expire.
    Dr. Kettl. Senator, one thing that I want to emphasize is 
your point about the extended production chain, there are two 
points here that are worth making. The first is that Boeing is 
obviously a large company, and it clearly has access to 
capital. But it, as you pointed out, is often much more an 
assembler of products that are produced across the entire 
country as opposed to just being produced in Seattle, 
Washington.
    And the second point that is important is that while Boeing 
has ready access to capital, that may not always be the case 
for other companies down the production chain, and the cost of 
the product that Boeing makes is the product of the assemblage 
of all the pieces that go into planes along the way. And the 
ability of Boeing to be able to produce a quality product at a 
reasonable price depends on the ability of each of those 
individual elements of the chain to be able to obtain their own 
financing. And they are often at a very different situation 
than is the case with Boeing.
    So it is a complicated situation, to be sure, but it would 
be a mistake, I think, to look at the Export-Import Bank solely 
in terms of the ability of Boeing as a company to be able to 
obtain financing to be able to export, because, in fact, it is 
a much more complicated piece.
    Senator Baldwin. I think about the Wisconsin economy, the 
small businesses and medium-sized businesses that I visit that 
use the Export-Import Bank services and financing. Businesses 
selling farm implements into countries in Eastern Europe, for 
example, where there are significantly different norms and 
customs in the financial system. If you do not have a local 
bank that has some knowledge of those customs and rules, it is 
really difficult. And yet there are these relationships between 
small communities in Wisconsin and markets abroad that are very 
important to our economy. I do not think there would be other 
solutions for them without the Bank. And again I do not know 
where you think that expertise would be developed across the 
country to help our small businesses make headway in those 
markets.
    Mr. Edwards. I mean, it does strike me, Senator, what you 
are talking about is extremely important. I want American 
businesses to be the most competitive in the world, and we 
should be. But Congress does a lot of stuff that makes American 
businesses less competitive: regulatory stuff, we have the 
highest corporate tax rate in the world. I would think it would 
be fantastic after Export-Import expired that Congress looked 
at some of these competitiveness issues with U.S. businesses. I 
mean, financial services is massively regulated today. That has 
not done anything good to provide a flow of capital to small 
and large businesses. Again, the Tax Code is a horrible mess.
    So, I guess I would try to look at positive things Congress 
can do to sort of get out of the way of American exporters.
    Senator Paul. Good. That is where we are going now, back to 
Mr. Edwards. Our next witness is Chris Edwards, who is the 
Director of tax policy studies at Cato, editor of 
DownsizingGovernment.org, and author of a book by the same 
name. Prior to joining Cato, he served as the senior economist 
on the Joint Economic Committee and a manager with 
PricewaterhouseCoopers and an economist with the Tax 
Foundation. Needless to say, Mr. Edwards has extensively looked 
at what is not working in our government, and his testimony 
today should be very informative.
    Mr. Edwards.

          TESTIMONY OF CHRIS EDWARDS,\1\ DIRECTOR OF 
 TAX POLICY STUDIES, AND EDITOR, WWW.DOWNSIZINGGOVERNMENT.ORG, 
                         CATO INSTITUTE

    Mr. Edwards. Thank you, Chairman Paul and Ranking Member 
Baldwin. Thanks for inviting me to testify. The government is 
still running huge deficits, so cutting wasteful spending 
should be a high priority. Wasteful spending includes not just 
the sort of mismanagement like improper payments we are all 
used to. I think more broadly waste includes spending that is 
low value and would be more efficiently handled by State 
governments.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Edwards appears in the Appendix 
on page 47.
---------------------------------------------------------------------------
    Wasteful spending has plagued the Federal Government since 
the very beginning. As just one example, even back in the 19th 
Century, the Army Corps of Engineers (ACE) was known for cost 
overruns and pork barrel spending. The government is far larger 
today, and so the waste has multiplied.
    There are basic structural reasons for Federal waste. 
Unlike businesses, Federal agencies, of course, do not have to 
earn profits, so they have little incentive to restrain costs 
and improve quality. Unlike businesses, failed Federal programs 
do not go bankrupt. Ten percent of all U.S. companies go out of 
business each year. Failure gets punished in the private sector 
pretty severely, but failed Federal performance management 
system unfortunately last for decades often.
    Federal workers almost never get fired. The firing rate in 
the private sector in the United States is 6 times higher than 
the firing rate in the Federal Government. The firing rate for 
corporate Chief Executive Officers (CEOs) is 20 times higher 
than the firing rate for the Senior Executive Service (SES), 
who are the senior career people in the Federal Government.
    Bureaucratic layering is a problem. Research has found that 
corporate America has become a lot leaner in recent decades, 
with fewer layers of management. The Federal Government has 
gone in the reverse direction. Research by Paul Light of 
Brookings has found that the number of layers of management in 
the Federal Government has increased substantially in recent 
years, and he argues that those excessive management layers in 
the Federal Government have been the main cause of a number of 
the recent failures and scandals.
    The vast size of the Federal Government makes it impossible 
to oversee. There are 2,300 Federal subsidy programs; all of 
them are susceptible to waste, fraud, and abuse. And here is a 
remarkable statistic I came across recently. The Federal budget 
of $4 trillion a year is 100 times the average State government 
budget in the United States. So the Virginia State budget is 
$40 billion. The Federal budget is 100 times greater. So 
Federal spending is far too large for auditors and oversight 
committees to properly monitor.
    The best solution to the waste problem is to cut the 
Federal Government's size, and I think a prime target for cuts 
ought to be Federal aid to State and local government, which 
costs over $600 billion a year. Aid to States is particularly 
susceptible to waste for reasons I go into in my written 
testimony. I am just going to mention a few aid to State 
programs that I think Congress ought to cut.
    Urban transit, $13 billion a year. Federal aid encourages 
cities to buy expensive light-rail systems rather than more 
efficient bus systems. Without Federal aid, cities would make 
more efficient investment choices, and they would have much 
more incentive to control costs.
    Disaster aid. The Federal Emergency Management Agency 
(FEMA) provides billions a year in preparedness grants and 
disaster aid to States. In the last couple decades, the Federal 
Government has intervened in many more localized disaster 
events that ought to be handled instead by State and local 
governments. I think this is a big mistake. Federal 
intervention, in my view, will ultimately weaken America's 
ability to respond to natural disasters. I think FEMA ought to 
be cut, and I think we would have a stronger response system to 
natural disasters because of it.
    The Economic Development Agency (EDA) in the Department of 
Commerce, $450 million a year. That was actually one of Senator 
Proxmire's--it won many Golden Fleece awards from Senator 
Proxmire decades ago, and the problems are the same today 
actually. The EDA sends out money to local governments and 
businesses. The money used to go to high poverty areas. Now it 
is sprinkled across the country, often to high-income areas. 
There is no reason for the EDA to exist. I looked on the EDA's 
website yesterday, and just yesterday they handed out a $1.2 
million grant to a poultry company in Arkansas to build an 
access road from its facility to the highway. Now, that sounds 
like a useful project, but why should the Federal Government be 
involved? I think local projects ought to be handled and funded 
locally. I think Federal involvement in such local projects 
just creates bureaucracy. So I think the EDA ought to be ended.
    The School Lunch and Breakfast Program, $16 billion a year. 
Because the funding comes from Washington, local school 
administrators have very little incentive to reduce waste and 
abuse. The improper payment rate in the School Lunch Program is 
16 percent. The improper payment rate for the Breakfast Program 
is 25 percent. Those are enormous improper and fraud rates in 
those programs. The reason is local governments have an 
incentive to maximize the number of students on those programs 
to draw more funds from their State and the Federal Government. 
If local governments had to rely on their own funding, they 
would have stronger incentives to reduce waste.
    So, in sum, I think a great place to start cutting spending 
would be the $600 billion a year we spend on aid to State and 
local governments. The cuts I mentioned today and many others 
are proposed on Cato's website, DownsizingGovernment.org, and 
thank you very much for holding these hearings. I think it is a 
very important subject.
    Senator Paul. Well, thank you for your testimony. I think 
one of the interesting things about it is if we want to define 
how ineffectual government is, Senator Proxmire talked about 
something, what, 25 years ago, 30 years ago, and we still have 
not gotten rid of it. We have gotten great reports. Senator 
Coburn was good at getting reports from GAO on waste and 
duplicative programs, and yet we still have them. I think that 
is why the people are frustrated with us, that we actually have 
the answers to a lot. It may not balance the budget, but it 
would make our government a lot less unwieldy and wasteful if 
we were to get rid of some of the things we all know about and 
yet cannot seem to get bipartisan support for doing it.
    But I think you also pointed out a bigger problem that I 
think is important to point out. I will often ask the question 
rhetorically when I speak with folks, and I will say, well, it 
is not that government is inherently stupid, although that is a 
debatable question. It is that they do not get the right 
incentives. So government employees do not really--in a 
business you are trying to maximize--it is the beauty of 
capitalism that people sort of take for granted. It is how 
would we do things without the Ex-Im bank, without that 
knowledge. Well, that knowledge is out there in the capitalist 
world, and iTunes does not need it, iPads do not need it. Good 
products do not need any help from government. They sell. And 
it is an amazingly intricate process figuring out where you get 
all the components even for a pencil. Leonard Read wrote the 
little pamphlet, ``I, Pencil,'' many years ago, and just how 
complicated it is to make something as simple as a pencil, 
requiring ingredients from different continents, putting them 
together and selling them for pennies. A pencil would cost, 
$1,000 if government made pencils because they do not have the 
proper incentives to do anything efficiently, so, therefore, we 
ought to minimize what government does, send it back closer to 
the people, to the State level is a little bit better, and then 
ultimately back to the people, if we can.
    I think that when we look at this, you see this also in the 
firing rate that you mentioned. We cannot even fire people in 
government who have committed malfeasance sometimes. The VA 
employees, we had to pass a law to fire them. I am still not 
sure if we have actually fired anybody over the falsification 
of the waiting lines.
    We talk about how we get good people. The post office I 
think loses $1 billion a quarter, and I remember questioning 
that they wanted to pay them more, and the answer was, well, to 
keep good people you need to pay them. And I said, well, how 
good do you have to be to lose $1 billion a quarter?
    But I think you are right, what we have to do. The problem 
is when we get to this--and this is the danger, and this is why 
people do not want to talk about the specifics of waste, 
because, my goodness, you are talking about school lunches, and 
so people are like, oh, no, not the children, we are not going 
to do this to the children.
    Well, the way I look at it is a little differently. With 
disability or with children, I look at it that if you have a 
20-percent improper payment rate, you are stealing that from 
what we have--the limited resources we have to help people. So 
I am not against the School Lunch Program, but I am against 
giving my kids a free lunch. And I think all the kids at my 
kid's school can get it because we are beyond a certain amount. 
I think everybody can get the free lunch if they want to.
    And so, we do have to do these things. The earned income 
tax credit, there can be a place for that, but we have there 
$20 billion worth of overpayments, false payments.
    Social Security, the report came out recently, $17 million 
going to dead people. You would think we could agree 
bipartisanly not to pay dead people anymore. But it goes on 
year after year after year. Social Security thinks currently 
there are 6.5 million people over the age of 112. That is where 
their computer resources are at this point.
    So, yes, we have to do more, and the question I have in 
general is, I guess: How do we finally do what we have 
identified for years and decades and decades? How do we finally 
get it done? And how do we talk about emotional subjects like 
school lunches without being portrayed as the Grinch? Chris.
    Mr. Edwards. Well, Romina talked about a BRAC commission 
which worked very successfully, I guess four rounds or more, 
with the Pentagon, a great program and a great design of that. 
I am not sure that would work for most of the rest of the 
budget. I think Members of Congress have to believe in reducing 
spending for it to actually happen. You can have all the rules 
you want, and we can change the procedural rules, but 
ultimately, people have to believe that State and local 
governments can do these things better.
    I am in favor of a balanced budget amendment to the 
Constitution. If you support it, Senator Paul, I think that is 
a way that we can force discipline. Forty-nine of the 50 States 
have legal, constitutional, or statutory requirements to 
balance their budget, and it works extremely well. Liberal 
States, conservative States, ultimately they have to take 
responsibility. They have to make tough decisions. You folks up 
here, with due respect, you do not make the tough decisions. So 
I think that is one solution to the problem.
    Senator Paul. And I think what it does is it forces you to 
prioritize. Because we have a printing press and we do not seem 
to care about the debt, people come up and everybody has a 
program. Everybody has something that tugs at the heart, and so 
we give them all money. And you are right. If there was an 
overall rule that you only spent what came in, then we would 
have to prioritize, and we would have to say, you know what? 
Maybe healthy people should not get disability. Or maybe this 
person has a disability that is worse that needs it, but that 
we cannot give everybody in the country disability. So, anyway, 
thanks for your response.
    Senator Baldwin.
    Senator Baldwin. Because not everyone has testified, I am 
trying to recall what each of you addressed in your written 
testimony. Mr. Edwards I want to follow something that I 
believe you put in your written testimony and did not 
necessarily elaborate on just now.
    The metrics available in the private sector are somewhat 
different than the metrics available in the public sector to be 
able to measure outputs and to measure efficiency and 
effectiveness. But where they are available, certainly we want 
to seize those and use that. I think, Dr. Kettl, you had some 
similar observations about the inherently different role of 
private enterprise and public enterprise.
    We had a hearing in the full Homeland Security Committee 
yesterday about the Transportation Security Administration 
(TSA). One of the whistleblowers who was at the table testified 
that the metrics they have if there are undue delays in getting 
through a security line are very precise. They have to report 
to the airlines if somebody spent more than 5 minutes in a 
PreCheck line and more than 20 minutes in a non-PreCheck line. 
But the measurements and the metrics and the yardsticks for 
catching any dangerous item that might be in luggage are far 
less clear and far more difficult to pin down.
    What I am getting around to is this: Can you envision 
better performance metrics for the critically important 
enterprises that we oversee in the Congress working as well in 
government as they do in the private sector? And are there any 
improvements that you can suggest would reduce our 
inefficiencies? I am thinking of the Government Performance and 
Modernization Act for example.
    Mr. Edwards. The government goals are very amorphous often, 
so it is difficult to pin down heads of agencies whether or not 
their agencies are succeeding or failing.
    An additional problem is that most government activities 
are monopolies. The TSA has an aviation security monopoly. It 
is hard to judge monopolies because there is nothing to compare 
it to.
    And so what I have written about with the TSA, for example, 
is to move to a system like they have in Canada and Europe 
where the screening at airports is decentralized to the 
airports. In Canada, all the airports use private security. 
They have private security companies competing for the 
contracts. They give them contracts. They say, ``You have to 
meet these levels of performance. If you fail, you are fired.'' 
In Europe, it is generally the airport's responsibility. They 
can keep their own in-house security. They can use private 
security.
    So I think when you have a decentralized solution like 
that, the government, the overseer of aviation security could 
compare airports, could publish metrics comparison. We could 
have the GAO do their undercover investigations at the 
airports. We could compare results. If companies are not doing 
a good job, they could be fired.
    Senator Baldwin. I think what they are struggling with is 
what those metrics should be. And it is easy to say, ``Did 
somebody pass through PreCheck in 5 minutes,'' and did somebody 
check through the non-PreCheck security screening within 20 
minutes, and what factors led to that not happening? But the 
essence of TSA is making sure that we are safe in our travel. 
It is great if that can happen expeditiously, but safety is the 
bottom line. And those metrics are much harder. Dr. Kettl.
    Dr. Kettl. And, Senator, that is an incredibly important 
point, and it is important to remember that, regardless of 
whether the security function is being performed by a 
government agency or by a private company, the central goal is 
the same. Should, heaven forbid, a problem happen, it will not 
matter in a sense whether it was a private or a public security 
screener who was responsible for it. And it is worth 
remembering that the problems of 9/11 came through for the most 
part private security screeners there as well. So it is not 
privateness or publicness that really defines the problem of 
measuring government performance. It has to do with first 
trying to understand what it is we want to try to accomplish, 
how we can explain to taxpayers what value they are getting; 
second, to recognize that we have made tremendous progress 
under both the current and the previous administration. 
Republicans and Democrats have been together in trying to 
improve government performance. The Bush Administration 
deserves enormous credit for its efforts. The Obama 
Administration has as well. And one of the most important 
things that Congress can do is to ensure that that progress 
continues to the next administration after that, to turn up the 
heat, to keep it on, to force at every occasion when members of 
the administration come to testify, regardless of party, to 
come and explain to taxpayers what value they are producing for 
the dollars that they are getting, and then use the measures 
and the metrics that have been developed to try to do that.
    Senator Ayotte has been very active in the moneyball 
movement, which is another way to try to provide better 
metrics. We have proven that this has been, can be, must be a 
bipartisan effort. And if it has to do with the public 
interest, we can debate separately who best can perform it. But 
we should not debate whether or not performance metrics have to 
be at the core about what it is that government does.
    Senator Paul. I see that Senator Ernst is here. You can 
either ask questions now if you want--we are kind of going one 
person at a time. If you are ready and have a question, go 
ahead. If not, we will go to the next person, and then you can 
ask questions.

               OPENING STATEMENT OF SENATOR ERNST

    Senator Ernst. Certainly. Thank you, Chairman Paul. I 
appreciate that opportunity.
    This is an important hearing, so I am glad we are here 
today and able to visit with you. Thank you. I apologize for my 
tardiness.
    I do want to start off with just a brief comment that is 
fitting for today's hearing topic before I move into my 
question. Today I am introducing the Program Management and 
Improvement Accountability Act with Senator Heitkamp, and the 
bill targets wasteful spending in Government that is a direct 
result of poor program and project management in agencies.
    Shortcomings and failures in program management have 
plagued our Federal Government for decades. This is an ongoing 
issue. And we have read about these failures in the media; we 
have read about them through Inspector General (IG) reports, 
through the GAO high-risk list. Many of you are intimately 
familiar with that. And poor program management leads to 
projects that are grossly over budget, delayed, or do not meet 
the intended goal of the project. And I have just a few 
examples that we have compiled of that. One is the VA 
Scheduling Replacement Project which was terminated in 
September 2009 after spending an estimated $127 million in 9 
years. So it was terminated.
    The Homeland Security new headquarters, the project is 11 
years behind schedule and more than $1.5 billion over budget. 
The project is the D.C. area's largest planned construction 
project since the Pentagon, and it was to be finished in 2014, 
but is still almost entirely undeveloped, though it has cost 
$4.5 billion so far. The new completion date is now 2026. Great 
example.
    Department of Defense's Expeditionary Combat Support 
System, it was canceled in December 2012 after spending more 
than $1 billion and failing to deploy within 5 years of 
initially obligating the funds.
    These are just a few examples of where we have seen program 
management failures, and I really could go on and on. We have 
found so many examples of this through all different types of 
agencies.
    The Federal Government is literally wasting billions and 
billions of dollars because they are not working smartly on 
these projects.
    So, Dr. Kettl, thank you for being here today, but you 
mentioned managing boundaries and human capital as one of the 
root causes to the government's ongoing problems of wasteful 
spending. And these issues are really at the heart of why I am 
focusing on this bill and trying to improve this situation. Can 
you elaborate on both of these issues a little bit more?
    Dr. Kettl. Senator, there is nobody alive who could 
possibly justify long delays, waste of money, and 
nonperformance of governmental programs. Everybody agrees that 
is a bad idea. The question is what we do about it. And we 
could either decide we are just not going to do it, but if we 
decide it is something we must do, then the challenge is 
figuring out how. And as I will talk a bit more when I testify 
shortly, if you look at the high-risk list, and, on the one 
hand, it could be read as a string of horror stories. On the 
other hand, it can be seen as a set of opportunities to learn 
about what it is that the most difficult problems in government 
have in common.
    And if you look down over those issues, there are problems 
of contract management, of the fact that nothing that really 
matters any longer is any one problem that any one agency or 
any one sector can possibly control. And so we need to get 
managers who are better at building boundaries and make the 
coordination work better.
    But in the end, ultimately, this comes down to making sure 
we have the government's talent management problem under 
control, getting the right people with the right skills in the 
right places to be able to do the things that have to be done. 
And in a lot of ways, the issues of trying to manage the VA 
comes down to things like that. One of the government's biggest 
problems is acquisition management. It is having enough smart 
acquisition managers to do the things that we decide that 
government must do, and we have to find a way to close the 
acquisition talent gap that is there.
    Not long ago, I was privileged to be at a meeting of some 
of the smartest people in town talking about the issues 
confronting the next administration, regardless of party. And, 
surprisingly, the one issue that came boiling out of everything 
was the issue of talent, that we can talk separately about how 
many government employees we ought to have, but it is clear 
that we face a significant gap between the kind of workforce 
that we need with the right incentives and the kind of jobs 
that we expect government to do. And too often we separate out 
the question of government's function, which is something we 
need to debate, and the question of how best to try to fulfill 
it. And assuming that we can simply cut government employees 
and produce a better government, that is not always the case.
    One of the things that I discovered in preparation for the 
hearing today is this: I was curious about the Centers for 
Medicare & Medicaid Services (CMS), which have enormous amounts 
of problems of wasteful spending, enormous amounts of improper 
payments. On average, each employee who works for the Centers 
for Medicare & Medicaid Services is responsible for $144 
million per employee, and we have to ask: How is it that we are 
likely to get better performance and reduce improper payments 
if we do not at least figure out what we need to make sure that 
the agency is managed well?
    We ought to, we need to, we must have a debate about the 
basic ideological principles and the basic goals for achieving 
government, but once we set those governmental goals, we have 
an obligation to taxpayers to make sure that we have the 
capacity to deliver. And if we do not, if we do not invest in 
that, there is no single waste that is bigger in government 
than that.
    Senator Ernst. Thank you, Dr. Kettl. I appreciate it.
    Senator Paul. Thank you, Senator Ernst.
    I just wanted to mention, since Senator Ernst and Senator 
Ayotte are here, if you have specific ideas like the 
legislation you are doing, my goal at the end of this hearing 
is to collect them. We may not all agree on them, but if 8 or 
10 of us agree on some reforms, we sign it, send it to the 
Subcommittee on Appropriations and say these are changes that 
we can do, if it legislation we can push out of here, yes, but 
let us try to have--when we finish this, we will ask the 
experts--we will try to have some specific ideas on how we 
could actually save money and send it in a written form to the 
Appropriation Committees.
    I am going to change the rules one more time. This is my 
first time to be in charge so I get to change the rules. 
[Laughter.]
    I think we need to get through the testimony, so let us go 
through Mr. Ellis, Mr. Schatz, and Dr. Kettl, and then Senator 
Ayotte will go. Is that OK with you? All right.
    I am going to give the introduction here. Mr. Steve Ellis 
is the vice president of Taxpayers for Common Sense, where he 
has been for nearly two decades now. Over this time, Mr. Ellis 
has written and spoken on a wide array of topics related to 
government spending. He is a graduate of the Coast Guard 
Academy and served there with distinction, and this Committee 
welcomes Mr. Steve Ellis.

  TESTIMONY OF STEVE ELLIS,\1\ VICE PRESIDENT, TAXPAYERS FOR 
                          COMMON SENSE

    Mr. Ellis. Thank you. Good afternoon, Chairman Paul, 
Ranking Member Baldwin, Senator Ernst, Senator Ayotte. Thank 
you for inviting me to testify here today about government 
spending, waste, and what can be done about it. I am Steve 
Ellis, vice president of Taxpayers for Common Sense, a national 
nonpartisan budget watchdog.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Ellis appears in the Appendix on 
page 56.
---------------------------------------------------------------------------
    Senator Proxmire has come up a few times. I just wanted to 
note that the late Senator was our honorary advisory board 
chair, and he bequeathed the Golden Fleece to us in 2000. And, 
in fact, we gave Golden Fleece just last week to the House and 
Senate Appropriations Committees for continuing a program that 
ships Pennsylvania coal to Germany to power some of our U.S. 
bases there.
    I was asked to address nondefense discretionary spending 
outside of agriculture. My written testimony includes wasteful 
policy that leads to failed resource management and future 
taxpayer liabilities. I want to assure each and every one of 
you that Taxpayers for Common Sense is willing, ready, and able 
to work with you to eliminate waste and inefficiency in all 
areas of government--including defense and tax expenditures--to 
give taxpayers a government that works. I brought our ``Common 
Sense Cuts for the 114th Congress: Silencing Sequester 
Scaremongers with $2 Trillion in Deficit Reduction''\2\ that I 
would like to enter into the record.
---------------------------------------------------------------------------
    \2\ Information submitted by Mr. Ellis appears in the Appendix on 
page 95.
---------------------------------------------------------------------------
    There are a variety of spending programs that are either 
wasteful, corporate welfare, or simply not a Federal 
responsibility. Here are a few highlights.
    There are many subsidy programs at the Department of Energy 
(DOE) for sources new and old. Spending, tax credits, and 
mandates such as the Renewable Fuel Standard create a crazy 
quilt of government support that often works at cross purposes. 
It would be better to simply eliminate all energy subsidies and 
start with a blank slate. Then policymakers can determine what 
basic research the United States should support. For example, 
just three of the energy subsidy programs--Fossil Energy 
Research and Development, Mixed Oxide-Fissile Materials 
Dispositions, and Fusion Energy Sciences--received more than 
$1.3 billion in fiscal year 2015. All told, the energy subsidy 
programs from renewables to nuclear to fossils received many 
billions more.
    A subset of energy, more than $200 million in bioenergy 
subsidies are scattered throughout the Department of Energy--
Departments of Agriculture (USDA), Treasury, and EPA. From 
research and development to harvesting and storing them, 
taxpayers subsidize every step of the biofuels/biomass process. 
We even pay to convert heat and power sources at biofuels 
facilities to run on biomass, then subsidize production and 
retail.
    Over the last decade, Congress has transferred more than 
$50 billion from the Treasury to backfill the Highway Trust 
Fund. The Congressional Budget Office (CBO) estimates the gas 
tax shortfall could require as much as $167 billion over the 
next 10 years at the current rate of spending. Leaving aside 
debates about revenue sources, the spending beyond the trust 
fund's means must stop. Furthermore, there is a bias for new 
construction over maintenance. This preference for funding 
ribbon cutting over repairs will add additional pressure on the 
bankrupt Federal funding system.
    The Essential Air Service (EAS) is a relic of the 1970s and 
airline deregulation. EAS subsidizes air carriers to maintain 
flights between rural communities and regional hub airports. 
These trips cost taxpayers as much as $1,000 per flight, and 
often the small planes that service the routes run nearly 
empty. Taxpayers for Common Sense (TCS) has uncovered numerous 
examples of communities that could link to nearby hubs with 
intercity bus service that could be run with little or no 
subsidy at all. Annually, this program costs taxpayers roughly 
$250 million.
    The U.S. Army Corps of Engineers Civil Works Program 
suffers from a lack of prioritization, which inevitably leads 
to waste as lower-priority projects are funded over more 
critical ones. There is also the duplicative and wasteful 
environmental infrastructure program and beach replenishment 
subsidies. The inland waterway industry contributes nothing to 
maintaining inland waterways. They should pay at least 50 
percent, and low-use or no-use waterways should be removed from 
the Federal system. The Inland Waterway Users Board can be 
eliminated entirely. These reforms would save more than $500 
million annually, eliminating wasteful projects, and taming the 
more than $60 billion project backlog could push annual savings 
to $1 billion.
    Other areas I highlighted include eliminating the Maritime 
Administration, the Coast Guard Bridge Program, and reforming 
international food aid. I would also add the regional 
development authorities.
    While not part of regular discretionary spending, Federal 
disaster spending should be considered. The number and cost of 
disasters are increasing, and the Federal share of those costs 
have also dramatically increased, rising from less than 30 
percent after Hurricane Hugo in 1989, to more than 75 percent 
after Superstorm Sandy in 2012. Between 1980 and 1999, we 
averaged $4 billion disasters; since then, seven. The median 
disaster cost between 2000 and 2006, $6.2 billion; 2007 to 
2013, $9.1 billion.
    The Nation's disaster programs need to be reformed to 
provide incentives for communities and States to plan for the 
inevitable disasters and ensure every dime spent responds to 
the next inevitable disaster. We also know that every dollar 
spent on mitigation saves $4 in recovery. We should be helping 
people, communities, and States prepare for disaster and 
respond in a way that protects taxpayers by reducing future 
risks and costs.
    I appreciate the opportunity to testify before you. As I 
said at the beginning, Taxpayers for Common Sense is ready to 
work with you to root out waste and ensure that our precious 
tax dollars are being spent wisely and effectively. Thank you, 
and I would be happy to answer questions you have on the 
testimony or any other area of discretionary spending.
    Senator Paul. Thank you.
    We are going to next move to Mr. Thomas Schatz, who is 
president of Citizens Against Government Waste (CAGW). Mr. 
Schatz represents an organization wholly focused on working to 
root out and eliminate government waste. Mr. Schatz himself has 
played a big part in those efforts in the almost three decades 
he has been working with CAGW. Mr. Schatz has a law degree from 
George Washington and a bachelor's degree from the State 
University of New York at Binghamton.
    Mr. Schatz.

 TESTIMONY OF THOMAS A. SCHATZ,\1\ PRESIDENT, CITIZENS AGAINST 
                        GOVERNMENT WASTE

    Mr. Schatz. Thank you very much, Mr. Chairman, Ranking 
Member Baldwin, Senators Ayotte and Ernst. I very much 
appreciate the opportunity to be here today, especially with my 
colleagues who have contributed a great deal to this effort, 
and we are always happy to work together with both you and them 
to achieve our mutual goals.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Schatz appears in the Appendix on 
page 64.
---------------------------------------------------------------------------
    I am Tom Schatz, president of Citizens Against Government 
Waste, an organization that was founded in 1984 by J. Peter 
Grace and Jack Anderson to followup on the implementation of 
recommendations made by President Ronald Reagan's President's 
Private Sector Survey on Cost Control, which is why it became 
known as the Grace Commission.
    It is no secret that wasteful spending is pervasive 
throughout the Federal Government and every agency could 
perform its functions more effectively and efficiently. 
Recommendations to eliminate waste, fraud, abuse, and 
mismanagement are provided regularly by government agencies and 
the private sector. For example, since 1993, Citizens Against 
Government Waste has released ``Prime Cuts,'' the latest 
version of which identifies 601 recommendations that would save 
taxpayers $639 billion in one year and $2.6 trillion over 5 
years. And to your point, Chairman Paul, about making 
recommendations for wasteful spending, we send recommendations 
from ``Prime Cuts'' on a regular basis when appropriations 
bills are heading to the floor, suggesting amendments that 
could be considered by the House. We have not done it for the 
Senate because they have not really done appropriations, so we 
look forward to being able to do that this year.
    While my written statement covers numerous systematic and 
legislative efforts to eliminate wasteful spending, today I am 
going to focus on agriculture. Proponents of the 2014 farm bill 
claimed that it reformed many programs, but that certainly was 
not true about the sugar program. Nothing was done whatsoever. 
This is an outdated and wasteful program that provides price 
supports, tariffs, quotas, loans, and domestic marketing 
allotments that have artificially inflated the price of sugar 
to about 40 percent higher than the world price, costing 
consumers about $3.5 billion annually between 2009 and 2012 for 
sugar-containing products, and thousands of jobs have been lost 
in industries that use sugar, particularly candy manufacturers.
    Sugar products forfeited $152 million worth of sugar to the 
USDA in September and October 2013. In March 2015, CBO forecast 
that the U.S. sugar program will cost taxpayers an additional 
$115 million over the next 10 years, and as my friend Steve 
Ellis has pointed out, in most cases farm bill ``savings'' have 
been vastly underestimated, and I think Taxpayers for Common 
Sense said $450 billion for the 2004-08 bill. So we know these 
numbers are not going to be achieved.
    Despite efforts in both the House and the Senate, and even 
in President Obama's budget, to eliminate or reduce spending 
for the Market Access Program (MAP), this program survives. It 
is a poster child for corporate welfare. MAP has delivered 
advertising subsidies to companies such as Blue Diamond, 
Butterball, Dole, McDonald's, Pillsbury, Sunkist, Tyson, and 
Welch that clearly can afford their own advertising overseas.
    One of the most absurd examples under MAP was the $20 
million provided to the Cotton Council International in 2011, 
some of which was used to create an Indian reality TV show in 
which designers created clothing made from cotton in order to 
promote the general use of cotton, but not necessarily cotton 
from the United States. And, remember, this is U.S. taxpayer 
dollars. In fact, India produces twice the amount as U.S. 
cotton growers and is a net exporter.
    Perhaps the most outrageous waste of money under MAP was in 
the early 1990s $3 million provided to the California Raisin 
Board to air in Japan those well-known ads featuring dancing 
raisins singing ``I Heard It Through the Grapevine.'' It could 
not be translated into Japanese, so it ran in English and was, 
therefore, incomprehensible. Children thought the figures were 
potatoes or chocolate, and there was something about cutting 
off fingers by some criminal syndicates in Japan. In any event, 
it ended up costing $2 for every $1 worth of raisins that even 
reached the store shelves, let alone sold there.
    So if those two examples are not embarrassing enough to 
really get rid of MAP, maybe there will be more. But it is 
something that really should be terminated. Taxpayers should 
not be doing any of this. It costs $200 million a year. 
Eliminating it would save $1 billion over 5 years.
    Another area we have looked at is stimulus broadband grants 
and loans to the Rural Utility Service (RUS), $2.5 billion to 
RUS. A March 2013 USDA Inspector General report noted that 
numerous projects overbuild next to existing private sector 
competitors and providers, and they approved 10 projects worth 
more than $91 million that could not even be completed within 
the 3-year timeframe. Steve mentioned the regional authorities, 
in particular the Delta Regional Authority established in 2000. 
It is supposed to improve conditions in the economy for 10 
million people residing in 252 counties and parishes in 10 
Mississippi Delta States, duplicates other programs, and really 
should not be funded. It has had earmarks worth $17.8 million, 
and it is something else that should be done.
    But in terms of what Congress should do, better stewardship 
of the taxpayers' money should be what every Member of the 
House and Senate considers every day, thinking first and 
foremost how to better manage the taxpayers' money and solve 
problems effectively with the resources that are already 
allocated rather than doing what, unfortunately, members of 
both parties have done, which is to create a new program to 
solve a problem. Let us determine how to solve the problem 
first, look at what is out there. With $4 trillion, there has 
to be enough money to do what needs to be done.
    Thank you. I appreciate it and am happy to work with the 
Committee on additional recommendations.
    Senator Paul. Thank you.
    Before we get to Dr. Kettl, Senator Ayotte has another 
Committee hearing, and I am going to recognize her.
    Senator Ayotte. Thank you so much, Chairman Paul, and I 
appreciate this hearing. I just want to thank all of you for 
the work that you do. It is obviously very important.
    I just had a followup. I know that the Chair and Ranking 
Member are going to be gathering legislative proposals, so I 
think that is a great way to approach this and figure out what 
we could send from this Committee that is more direct and 
specific.
    Mr. Schatz, I noticed in your testimony that you said 
Congress would be well served to act on its own watchdogs' 
voluminous reports. I agree with you, because GAO has done a 
lot of work on this, and so I have a bill, the Duplication 
Elimination Act, that perhaps we could take up, but basically 
it forces expedited action on those recommendations instead of 
having them sit on the shelf to make the President bring 
forward a proposal, whether within a certain time as to when--
once the GAO issues the duplication report, as to which 
recommendations he or she will adopt or not and then has us 
vote yes or no on them, and I think that would be good to at 
least get us acting on the work that has already been done. So 
I hope we can take that up.
    But I wanted to just touch briefly on the tax side of it, 
because one particular tax provision that has really bothered 
me is the refundable tax provisions. One is the additional 
child tax credit, and there have been investigations done of 
that tax credit that have shown when you file as a taxpayer, 
you do not have to put a Social Security number for even the 
child. First of all, the filer does not, but the child--to 
identify the child that you are seeking the refund on, you do 
not have to. And what we have learned is just by requiring a 
Social Security number for the child, just to seek that refund, 
you would save $20 billion over 10 years. So there is real 
money there.
    What other thoughts do you have in terms of--I agree with 
you on the government spending side, there is a lot of work we 
should do, and you have identified a whole host of areas and 
GAO has as well. What thoughts do you have on the tax 
expenditure side as using the ACTC as one example that I have 
certainly been trying to make us change that, but other low-
hanging fruit, and I think there is a lot of it that we could 
look at on both sides of this equation.
    Mr. Ellis. Certainly in the Common Sense cuts, we include a 
lot of tax expenditures in there that could be eliminated, and 
certainly in the biofuels round there were a lot of tax 
expenditures that are included in there as well. And then we 
have looked at reforming even some of the scary ones to make 
sure that they actually perform better, even to go into 
something like the mortgage interest deduction and making it so 
that it is more useful to more people but also less costly, 
following on a recommendation from the CBO, actually.
    And so I think that that is a very ripe opportunity, and we 
would certainly be willing to work with you and identify--and 
like I said, there are many tax expenditures in our report that 
we would like to introduce into the record.
    Senator Ayotte. Great. Yes?
    Dr. Kettl. Senator, if I might, to put this in a broader 
context to underline how important the question is, we are now 
at the point where tax expenditures are as large as the 
discretionary spending in the entire Federal budget. That is a 
staggering fact, but it turns out to be true. Tax expenditures 
are as large as discretionary spending.
    We pay fairly careful attention to discretionary spending. 
We pay very little attention to the question of how tax 
expenditures work, who benefits from them, whether there are 
better ways of being able to do it, and whether or not we might 
be able to even apply the lessons from the book you co-
authored, ``Moneyball,'' which by the way my students have as 
required reading in the fall to make sure that they get the 
message on this, that we need to find ways of being able to 
provide better analytical support for the kind of decisions----
    Senator Ayotte. Well, actually measuring whether something 
works, shocking.
    Dr. Kettl. Exactly. And trying to combine the moneyball 
approach with the tax expenditure piece, we know we do not pay 
nearly enough attention to discretionary spending, but we pay 
almost no attention to tax expenditures. And if we used that 
moneyball approach to understand what we are getting for the 
money that we are spending and apply that to the tax 
expenditure side, that in itself would be an enormous 
breakthrough.
    Senator Ayotte. Thank you.
    Mr. Schatz. Senator, it seems to me one of the ways to 
address tax expenditures is to simplify the Tax Code.
    Senator Ayotte. Amen. I agree. Yes. Thank you all. I 
appreciate it.
    Senator Baldwin. I will take the privilege of introducing 
Don Kettl for his testimony. Dr. Kettl I am glad you have had a 
great opportunity to speak to some of the questions already.
    I want to add my personal thanks to you for being here. Dr. 
Kettl is a professor of public administration at the University 
of Maryland and has been associated with many fine academic 
institutions, but I remember getting to know Dr. Kettl back in 
1992 when he was at the University of Wisconsin-Madison. While 
I was beginning my career in public service and first elected 
to the State Assembly, Dr. Kettl led several very important 
efforts in Wisconsin. He chaired the Governor's Blue Ribbon 
Commission on Campaign Finance Reform and later the Wisconsin 
Governor's Blue Ribbon Commission on State and Local 
Partnerships for the 21st Century. That later became known 
Statewide as the ``Kettl Commission.'' We still refer to it. I 
am tremendously pleased, Dr. Kettl that you are joining us 
today to provide us with your insight on how we can address the 
issues of wasteful spending.
    Dr. Kettl comes at it from a perspective of someone who has 
worked in public management and in budgeting for almost his 
entire adult life. So thank you for being here, and we await 
your testimony.

 TESTIMONY OF DONALD F. KETTL, PH.D.,\1\ PROFESSOR, SCHOOL OF 
             PUBLIC POLICY, UNIVERSITY OF MARYLAND

    Dr. Kettl. Mr. Chairman, Senator, it is a great privilege 
for me to be here today. And while I am no longer living in 
Wisconsin, I still am a proud shareholder of the Green Bay 
Packers as well. So I have my roots still firmly rooted back in 
Wisconsin as well.
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    \1\ The prepared statement of Dr. Kettl appears in the Appendix on 
page 87.
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    As I mentioned earlier today, the foremost, the most 
important question that we have to try to focus on is simply 
this: How can we best deliver value to taxpayers? And that is 
the question that we need to get up every morning and be 
prepared to look at, ask, and to be able to answer, and to be 
able to get--the question of government waste, there is nothing 
that is more important than trying to get a handle on that, and 
I want to suggest two ways.
    The first is trying to understand what it is that 
government ought to do and whether or not government ought to 
be doing it at all. That is the movement that Senator Ayotte 
has been so influential in, and moneyball, bringing better data 
analytics to governmental programs, is something that could 
provide a terribly fundamentally important way to be able to 
resolve those questions.
    I want to spend most of my time today looking at a second 
question, which is: Once we decide that government needs to do 
something, how can we best deliver quality services? Because 
there is nothing ultimately more wasteful to the public than 
for the government to commit to doing something and then not to 
do it well. And so what I want to do is to try to examine the 
question about how best to try to do those things that we all 
agree that government must do.
    There is Medicare and Medicaid, and while we can think 
about reformulating it, we are not likely to walk away from 
that.
    There is food safety, which is increasingly not just a 
domestic issue but a global issue. One of the assignments I 
give my students is to go to the canned goods aisles and read 
the labels and find out where the food that they are eating 
actually comes from.
    We have critical infrastructure, airport security, and a 
whole host of other things that we all agree that one way or 
another must be done and must be done well, and there is 
nothing that is more fundamentally wasteful and there is 
nothing that fundamentally is more damaging to the social 
contract between government and its citizens than the failure 
to deliver. So I want to try to examine that question and try 
to figure out how we can get to the bottom of things.
    I want to try to focus on four basic issues, which begin 
first with the GAO high-risk list. And I think that one of the 
things that we can admit is that the list is far too long and 
it costs far too much money. But most importantly, a careful 
look at it--and this is very important for the Committee's 
work--we can identify those things which we can do to help 
agencies get off the list. There are root causes that lie at 
the core of the problems in the high-risk list. They include, 
first, the boundary management question. It is important to 
recognize that, for example, in terms of food safety is a close 
partnership between government's inspectors on the one hand and 
government's food producers, its packagers, its retailers, all 
along the line. And food safety is only as good as that chain 
is. And so in this, as in so many other cases, government's 
effectiveness depends on being able to manage those boundaries.
    The second is performance metrics. Not only is there the 
Government Performance and Results Modernization Act, but we 
have seen already in this hearing today through both the Bush 
and the Obama Administrations that substantial progress has 
been made in trying to improve performance metrics in 
government, and more work on that front would have enormous 
payoffs.
    There are information systems. A key part of the problem of 
delivering quality services to veterans is to get the 
information systems in the Pentagon, which document injuries 
that members of the armed services have been exposed to, to 
talk to the data systems that are in the VA. That turns out to 
be an extraordinarily difficult problem, and we will never 
serve the veterans well until we solve the problem of 
integrating those information systems.
    This technology management, which gets down to the $22 
billion effort to develop the next generation of air traffic 
control system, and then human capital, which is fundamentally 
important to everything.
    If you look at the issues of human capital and talent 
management that run through GAO's high-risk list, not only are 
two-thirds of the programs in GAO's analysis directly 
attributable to problems in human capital management, but at 
the end every single issue to be solved requires the right 
people with the right skills and in the right place at the 
right time to ensure that what government must do gets done and 
gets done well.
    I mentioned one figure earlier, which is that $144 million 
of spending by the Centers for Medicare & Medicaid Services is 
counted for each individual employee, which is a staggering 
number.
    My other favorite statistic, maybe my single favorite 
statistic about the entire Federal Government, is that Medicare 
and Medicaid combined account for 20 percent of all Federal 
spending but 0.2 percent of all Federal employees. So we can 
debate separately about how many Federal employees we need, but 
I think we have to recognize the fact that that is the place 
where we need good Federal employees because, otherwise, what 
we must do will not get done.
    But the most important thing is that we know that if we 
solve these problems--and this is my second major point--we can 
save substantial amounts of money. My own guess is that 
something like $150 billion a year of savings could be achieved 
by simply tackling and solving the problems in the high-risk 
list--at least $150 billion a year, of which $125 billion 
simply are coming through the improper payments.
    The third thing is that--and this is maybe the most 
reassuring piece--these problems are solvable. In the course of 
the last 25 years or so, GAO has actually removed 23 programs 
from the high-risk list, as Senator Baldwin pointed out 
earlier. There are those who referred to it as the Hotel 
California: Once you check in you cannot check out. But it 
turns out that, in fact, agencies have been able, with strong 
leadership and effective management, to get off the high-risk 
list and by doing so save taxpayers money, and that is a good 
thing. It requires strong leadership, strong backup, and the 
ability to be able to put into practices the analysis of the 
root causes that we have talked about. But that can save 
substantial amounts of money.
    The last thing is to reduce wasteful duplication and 
overlap. It is clear that we have way too much of this, that 
going back and asking how we can better do the things that 
could be done, including, for example, simply coordinating the 
transport of patients to government and private medical 
facilities, could have enormous impact. The Partnership for 
Public Service has found that shared public services could also 
go a long way toward trying to accomplish some of the same 
objectives. If we can find ways of achieving better 
coordination, we can save a substantial amount of money.
    But most importantly, it gets down to, first, understanding 
what it is that government should and should not do and having 
a serious conversation with ourselves about that. But, second, 
once we commit as a government to doing things on behalf of 
citizens, nothing is more fundamentally important than doing 
that well. And there is nothing more wasteful of governmental 
money, there is nothing more destructive of trust of citizens 
in their government than having government programs in which 
the government does not deliver.
    I very much appreciate the chance to appear before you 
today. I would be happy to try to explore any questions that 
might be of use to the Subcommittee.
    Senator Baldwin. Great. I want to ask you to drill down a 
little bit more deeply in some of the issues that you outlined. 
In particular, let us start with information technology (IT). 
As I hear the 30,000-foot discussion among my colleagues, there 
is tension between the increasing need for interoperability--
the ability for agencies to communicate, share data, share 
information to be most efficient. Against that, we see news of 
cyber attacks that allow hackers to access millions of people's 
identifiable information.
    Do you think a more interconnected network increases 
vulnerabilities in this regard, compared with lots of smaller 
systems? Or do you think it is possible that we can improve the 
capacity and coordination, as you outline, protect privacy, as 
well as protect from identity theft?
    Dr. Kettl. That is an important question, Senator, and it 
is worth underlining the fact that this is not just a public 
sector problem. If we go back and look at what happened to 
Sony, you could have taken everything that you just said and 
scratch off ``the government,'' insert ``Sony,'' and be making 
exactly the same points. This is a larger society-wide question 
that we all are trying to deal with right now.
    On the one hand, having more data systems that are 
interconnected is simply an inevitability. It is not something 
we can avoid. It is not really a policy choice any longer if we 
are going to have any kind of connection whatsoever to quality 
of service. We just cannot imagine being able to make payments 
in Medicare without having an interconnection of information 
between patients, providers, financial intermediaries, Medicare 
and Medicaid, State governments, the Federal Government, and 
those who are responsible for dealing with all that. There is 
just no way to be able to deal with it.
    The question of centralization then becomes the important 
question, and the technological reality is that the more 
dispersed the information systems are, in some ways the more 
potentially vulnerable the entire system is, because all it 
takes is one individual, one 16-year-old in some basement 
somewhere, burrowing into some system anywhere, getting access 
to that, and being able then through the network to be able to 
get access to everything. And, in fact, there are lots of 16-
year-olds and lots of very sophisticated government employees 
working for other governments trying to do exactly that at this 
very moment. The VA right now gets 1 billion probes a month 
into its information systems.
    So the question is: How best can we protect ourselves? The 
more we distribute the information, on the one hand, it may 
seem like we are protecting it, but we are actually increasing 
vulnerability because we are increasing the points of 
penetration. The best way to try to protect is to at least make 
sure that we have central coordination of those efforts to try 
to protect and provide security, and it is one of the things 
that we have found through the data breaches that occurred most 
recently. The greatest points of vulnerability have come 
through the systems that are most distributed.
    So this is not an argument, and it raises important 
concerns about privacy and about government's power, and it is 
the kind of thing that really is increasingly a fundamental 
puzzle and problem. But the basic technological facts are the 
more distributed we make the system, the more points of 
vulnerability we create.
    Senator Baldwin. Do you want to go back and forth?
    Senator Paul. Go ahead, because I think I will just finish 
up when you are done.
    Senator Baldwin. If there are others who would like to 
focus on the information technology piece of this, please add 
your comments. Mr. Edwards, please go ahead.
    Mr. Edwards. On the technology issue, I agree with a lot of 
what Don says, but I do not agree with one of his comments 
that, we can always improve the management and make government 
work better. The Federal Government, the civilian outside of 
the Pentagon in particular, has always had a problem with 
technology. It has never done technology very well. He 
mentioned the FAA, air traffic control, is having a giant 
problem currently with a big next-gen project. I have looked in 
history. If you go back decades, the GAO has done reports in 
the 1990s, the 1980s, the FAA has always had problems 
implementing new technology. And, air traffic control, it is a 
high-tech business. I do not think the government does high-
tech very well.
    And, so here is an example where I think this is something 
that should be moved outside of government. We have examples 
now in Britain in Canada. They privatized their air traffic 
control over a decade ago, and it has worked extremely well. We 
no longer have the best air traffic control system in the 
world. The experts are generally pointing to Canada, which has 
a stand-alone nonprofit. And some of the advantages they have 
by having this stand-alone system, they can hire the best tech 
experts. They can pay them flexibly. They can make decisions 
quickly. They can innovate and create new technology. The 
Canadians now with air traffic control, they are creating new 
ATC technology; then they are exporting it to the world. We 
cannot do that with our system because it is government, it has 
civil service rules.
    So I think when industries and activities of the government 
get very technologically advanced, we ought to think about 
moving them outside of government.
    Senator Baldwin. Let me followup with perhaps both of you 
on this. I want to get to the intersection of, Dr. Kettl, your 
comments about needing the right people at the right time in 
the right place, this management of human capital and talent to 
address whether it is the GAO high-risk list or other issues, 
and also this idea that we should be learning from those 
efforts that have removed agencies or enterprises from the GAO 
high-risk list, what are the lessons to be learned that could 
be exported to other entities or within an entity that has seen 
repeated problems one right after the other, the intersection 
of those two issues? And I do not know if you could explore 
that further for us, Dr. Kettl, and then take any response.
    Mr. Kettl. Sure. Let me just use one example. I had a long 
conversation not too long ago about two kinds of things in a 
session that we organized at the National Academy of Public 
Administration. I was looking at the high-risk list not as a 
spotlight on government mismanagement but a spotlight on 
government learning, because it turns out that, if you look 
carefully at it, there are important things that one can learn 
if you look at the overall systems and tease out of that those 
things that actually work.
    There are lots of things that government surely does not do 
right, but the fact that almost two dozen programs have been 
removed from the high-risk list for doing things well is 
evidence that those things that we expect government to do 
actually can be done better if certain things are done 
effectively. And one important point is it is fascinating to 
watch the story of the census over the last couple times. They 
have been on the high-risk list twice, and twice have been 
removed. They are now gearing up for the next round of the 
census in 2020. So we can debate lots of things, but unless we 
amend the Constitution, the one thing that the government has 
to do is to conduct a census because the other body needs it 
for apportioning seats. And so the Constitution requires that.
    They have already started the process of figuring out how 
to manage the technology to be able to make that happen. They 
had technological problems the last time around that they have 
worked to study and learn from. They are doing alpha testing 
and beta testing of the new technological systems. My guess is 
that they will do the next round very well, and here is an 
example of technology in government that is likely to work 
pretty effectively. And there are other things government 
clearly is not struggling as well with.
    What is the difference? And the answer is they are looking 
at this as a strategic problem. They are getting high-level 
leadership to focus on it. They are getting highly skilled 
people to work on it. They are interacting with citizens right 
now to figure out how to deal with the testing of it. They are 
working with other countries as well to export and to share 
some of the learning processes that are possible. So it is a 
possible problem to solve.
    Government often tends to do very hard things, often tends 
to do things with not enough in the way of resources, under 
very high levels of expectation. There are lots of cases where, 
in the private sector, problems are buried in dumpsters out 
back that end up on the front page of newspapers just because 
the process is different. It is not to be apologetic, but to 
recognize the fact that when you try to do hard things, you are 
going to make mistakes. The way to learn is to learn from those 
mistakes and to build those in. There is no better example of 
that in government, especially in technology, than to watch 
what is now happening with the census.
    It is 2020 we are talking about. They are hip deep already 
in the process of beta testing the technology they are going to 
be rolling out.
    Senator Paul. Well, I want to thank the panel for coming 
today, and I wanted to conclude by--we will see if anybody has 
any final remarks to make, but I think there are ways we can 
look at government waste. There could be process reforms, there 
could be program elimination, or there could be program 
modification.
    With the process reforms, I think there are a lot of good 
ideas. One of the ideas that we have put forward and are trying 
to get a vote on this week on NDAA is to give civilians bonuses 
based on finding savings. Spending apparently speeds up to 
about 5 times faster than normal in the last month; a lot of 
conventions seem to be in Las Vegas in the last month of the 
fiscal year. I would love to give somebody who is in charge of 
$12 million and saves the taxpayers $1 million, I would love to 
give them $10,000 and put it back into the Treasury. Give them 
a $10,000 bonus and put the money back in the Treasury. If you 
ask any American in the country should we do this, it is an 
overwhelming--it is probably a 99 percent issue. But up here it 
is difficult because people are, like, ``Oh, no, we have 
appropriated it; we have to spend it.'' But this is something 
that has a great deal of popular support. That would be a 
process reform.
    We have the same for the Department of Defense contractors. 
If you have a $1 billion contract and you will save $100 
million, give them a little more profit to save the taxpayer. 
Give them a percentage of the savings they can find. This is 
after it has already been competitively bid, if they will come 
in under. We are going the opposite way; we are always going 
over bid. If you will come under bid, give them more profit. 
Build incentives into a system that is not a marketplace and 
does not have all the incentives that make capitalism work 
efficiently.
    I do not think any Committee has tried to do this before, 
but what I would really like is a continuing process to see if 
you will give us a list of things that can be process reforms, 
program elimination, or program reforms. Now, we may not get 
everybody to agree to have a lot of program elimination, so 
bear that in mind. But let us say we had 100 ideas from all of 
you, from us, from the minority, and we all went through, all 
of us, and we checked off and we agreed on 20, we could have a 
consensus report of being for 20 reforms. I do not know if it 
is possible or not, but I think it is worth a try. Nothing else 
seems to have worked around here since Senator Proxmire left. 
And we will see.
    But bear in mind, I do not mind if we get ideas for 
eliminating things that we may not agree on. Let us just see. 
Maybe there are some programs we would agree on eliminating. 
Maybe there would be some reforms. Like I do not think there is 
a going to be a consensus or anybody saying let us get rid of 
the School Lunch Program, but would there be a way to better 
police it so we are not giving it to everybody, where we are 
giving it to those in need?
    I think that is true of so many of our things, and people 
go crazy anytime you want to talk about disability, but the 
thing is healthy people should not get disability? And somebody 
who has quadriplegia or paraplegia and cannot take care of 
themselves, we have enough money for stuff like that, but we do 
not have enough money for everybody who is currently on 
disability, and I think there are some problems where we could 
make it better, all kinds of things throughout government, but 
we never try to get to consensus. My hope is that we will try 
and you will continue to help us with lists on this. My staff 
will communicate with you and your staff. You all are part of 
bigger organizations that can help. If you will continue to 
work with us, we will see what kind of list we can come up 
with, and then if Senator Baldwin will work with us, we will 
see if we can get any kind of consensus.
    Does anybody have any kind of remark they would like to 
make as we close?
    Mr. Schatz. If I might, Romina brought up corporate 
welfare. When John Kasich was a Member of Congress, he brought 
together people from the left and the right. I remember sitting 
in a room with Ralph Nader and many others talking about 
corporate welfare, something that neither side really likes, 
but yet it always seems difficult to eliminate, the Market 
Access Program being a prime example. That might be a place to 
start. You may draw on some other members that may look at this 
in a different way.
    And then in terms of process, just in terms of doing 
things, Senator Ayotte has a good idea about the GAO reports. 
There also should be a rule for Senate committees that while 
you probably cannot stop them from creating a new program, 
perhaps the existing programs for that particular area can be 
listed in the Committee reports. That is now true in the House. 
Senator Lankford, when he was a Member of Congress, helped lead 
the House rules to be amended to require the committees to 
include that information, so there should be more transparency 
about whether a program duplicates another program. That is at 
least a place to start. Maybe there is a good argument to have 
another program, but usually there is not.
    Mr. Kettl. And, Senator, one thing I would add--and, Mr. 
Chairman, I think it is terribly important--is the potential 
role that this Committee can play in ensuring continuity of 
action on some of these things that we think really could be 
effective. By putting this list together, it is an agenda not 
just for legislative action in the relatively near term, but as 
we debate the ongoing management and decisionmaking about 
policy decisions in this country, we can set some markers down 
that could help shape the debate as we go forward. And the 
Committee would be playing an enormous public service in doing 
that if nothing else.
    Ms. Boccia. I agree with Dr. Kettl that there are many ways 
that government could operate better, but I think one of the 
challenges that we face is that government is trying to do too 
much, and so it is not doing very many things well.
    There are lots of low-hanging fruit, programs that if we 
could finally eliminate, the Congress could focus its oversight 
efforts on those things that the government must do and then 
could do those things better. We should be more selective about 
what the government should do. And I think budget process 
matters there. We are currently having a debate whether to 
increase discretionary spending. There is a cap on it. I think 
we should leverage this as an opportunity to prioritize within 
the budget. And we also should be careful not to shift spending 
from the discretionary budget to the mandatory side of the 
budget. There is a bill right now in the House, the Cures bill, 
that proposes to do exactly that. We should not be looking for 
ways to get around spending caps. We should be good stewards of 
taxpayer dollars and prioritize better within those dollars 
that are available.
    Mr. Edwards. One thing that I wish Congress would do more 
of, and Washington in general, frankly, is look at some of the 
good-government reform ideas that have been implemented abroad 
that we could do in the United States as well. Big changes are 
risky, but I think when we have other high-income, advanced 
countries making major reforms and they work, we should look at 
that and learn from it. I mentioned air traffic control, but 
there is also the post office, which you mentioned, Chairman 
Paul. Germany and the Netherlands have privatized their post 
offices, and Cameron privatized the 500-year-old Royal Mail 
last year. These have been successful reforms.
    California has been having a big water drought the last few 
years. Some countries have gone to privatized water markets.
    Farm subsidies have come up at the hearing today. New 
Zealand completely abolished all their farm subsidies a couple 
decades ago. The farmers initially resisted, but after a while 
they realized they could actually do a lot better in free 
markets than with the subsidies.
    So there are good ideas out there. Often we can get them 
from our trading partners abroad.
    Mr. Ellis. Thank you, Mr. Chairman. Just wrapping up a few 
things that have come up in the hearing, I have been thinking 
about it. We started out talking about the Export-Import Bank, 
and we talked about duplication, and so you have trade 
assistance programs at Commerce, the Small Business 
Administration, USDA, and the U.S. Trade Representative. So we 
talked about duplication, and that is certainly one area where 
we should figure out what works, what does not, and consolidate 
and come up with a solution there.
    Certainly, Mr. Chairman, we support your bonus for cost 
cutters legislation and will be interested to see about Senator 
Ayotte and Senator Ernst's legislation as well. And Senator 
Ernst talked about the projects way behind schedule and way 
over budget, and I have some classmates from the Coast Guard 
Academy that are over at St. Elizabeths where the DHS is going 
to go, because the Coast Guard headquarters has already moved 
there.
    But, one of the programs I talked about, in the program the 
MOX, the mixed oxide fuels, that project was supposed to be 
done in 2013. The estimated date has been pushed back to 2033. 
So there are issues there.
    And then, also, we talked about IT and communications, and 
I think about some of the issues we had seen, like, for 
instance, in farm payments, there are means-testing rules 
there, and part of the limitation and why there have been 
overpayments to certain farmers is because they cannot 
communicate and get the information from the IRS. The same 
thing happened with Medicare in some of the overpayments as 
well.
    And so, we are really excited about this opportunity to 
really raise a lot of these programs, the process and the 
program elimination, and it started--one of the questions was 
about how you actually tackle these, and we think this type of 
hearing is exactly the right thing, to bring up specific ideas, 
to talk about them, to talk about the underlying problems and 
what we are trying to solve with these government programs. And 
then we either improve them or we decide that it should not be 
something that we do at all. And so we are very excited about 
it.
    Thank you.
    Senator Paul. Thank you all for coming. The record is open 
for 2 weeks if anybody wants to add to it. Those who have 
requested that their written remarks be made part of the 
record, it will be.
    Thank you very much for your testimony.
    [Whereupon, at 4:01 p.m., the Subcommittee was adjourned.]
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