[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
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and Governmental Affairs
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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
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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.
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\1\ The prepared statement of Mr. Ellis appears in the Appendix on
page 56.
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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.
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\2\ Information submitted by Mr. Ellis appears in the Appendix on
page 95.
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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.
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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.]
A P P E N D I X
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