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Across-the-Board Cut Doubted As a Way to Pare Waste, Fraud

The Budget
By Stephen Barr
Washington Post Staff Writer
Thursday, October 28, 1999; Page A31

When Republican lawmakers offer their plan for an across-the-board cut in federal spending during today's House appropriations debate, they will defend the budget reduction as a way to force federal agencies to root out waste, fraud and abuse.

GOP budget aides expect to recommend a cut in the range of 1 to 1.4 percent, aimed at producing about $4.5 billion in budget savings during fiscal 2000. Republicans described the proposal as fair and simple and as a way to avoid tapping the Social Security surplus.

But the plan remains a far from ideal way to tackle the government's legendary problems of waste and fraud and overlooks initiatives that already save substantially larger sums every year or identify places where the government can pare back, budget analysts said yesterday.

Larger savings have been achieved on a regular basis in recent years through the work of the General Accounting Office, the congressional watchdog agency, which has made numerous efficiency recommendations that have been adopted by the executive branch and Congress.

For fiscal 1999, the GAO expects its recommendations to produce budget savings and financial benefits worth more than $20 billion. That follows several years in which the GAO's auditing and investigative work has led to annual savings of between $16 billion and $21 billion.

The government's inspectors general, charged with ferreting out fraud and waste, identified nearly $16 billion that could be put to better use by government managers in fiscal 1998, according to the inspectors' latest annual report.

Frustrated by long-standing problems of fraud and waste, Senate Governmental Affairs Committee Chairman Fred D. Thompson (R-Tenn.) sent out letters to Cabinet officials this summer outlining specific management problems in their departments. His staff, working with the GAO, identified about $210 billion of federal overpayments, erroneous payments and wasteful practices.

But no congressional committee or watchdog group knows how much the government loses annually or cumulatively to waste, fraud and abuse. Many agencies do not keep adequate records to track where all of their money goes, according to the GAO.

The GOP budget proposal would leave it up to agencies to decide where to save money, allowing many to turn to such traditional methods as bans on employee travel and training and freezes on hiring, rather than attacking waste or fraud.

One of the last major attempts by Congress to impose across-the-board cuts came in 1990, under the Gramm-Rudman-Hollings deficit-reduction law of 1985. The GAO studied five agencies and found that the "sequester" was largely meaningless, because congressional appropriators provided the agencies with funds exempt from the law.

In a 1991 report, the GAO said the Gramm-Rudman cut of 1.4 percent for non-defense agencies had "minimal impact" on their operations but, in some cases, did make it more difficult to finance approved employee pay raises, fill vacant jobs and buy equipment.

President Clinton has tried to impose across-the-board cuts, also with limited success. Shortly after taking office, he ordered agencies to cut their administrative costs by 25 percent over five years to produce savings of $11.25 billion.

But a 1993 GAO study found that the White House did not define what should be counted as an administrative expense and said that across-the-board cuts amounted to "blunt instruments, indiscriminately affecting both efficiently managed programs and wasteful activities."

"Successful reform is more likely to occur through approaches that focus on specific programs and policies and emphasize re-engineering and redesign of key processes used to implement federal programs," the GAO study said.

Jim Horney, a senior fellow at the liberal Center on Budget and Policy Priorities, called the current GOP proposal "terribly misleading," because it comes after Congress has already approved some spending bills that Republicans touted as good for defense, medical research and other popular programs.

"If they thought there was waste out there, that's what the earlier appropriations bills should have done. They should have identified the waste," Horney said.

But Tom Schatz, president of Citizens Against Government Waste, an advocacy group, said, "Any organization should be able to find a 1.4 percent reduction in its spending without even thinking about it."

Marshall Wittmann, director of congressional relations at the conservative Heritage Foundation, faulted Congress for being "far too modest." Said Wittmann: "The problem here is giving bureaucrats the discretion to find 1 percent, not that the 1 percent exists."

© 1999 The Washington Post Company

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