This budget makes a renewed effort to reduce waste, fraud, and abuse throughout the federal government. It calls upon the President and Congress to work together to enhance oversight and increase transparency. And with any additional savings, Congress can reinvest in essential federal services and help pay down the national debt.
Addressing improper payments. According to U.S. Comptroller General Gene L. Dodaro, there were approximately $106 billion in government-wide improper payments in fiscal year 2013. Over the last decade, refundable tax credits have been particularly susceptible to abuse, costing American taxpayers an estimated $140 billion. The highest rates of abuse have occurred among the Earned Income Tax Credit, the First Time Homebuyer Credit, the Additional Child Tax Credit, the American Opportunity Tax Credit, and the Adoption Tax Credit.
Reining in tax fraud. One of the primary drivers of improper payments is the alarming epidemic of tax-related identity theft and tax-return fraud. Tax-related identity theft occurs when someone files a false tax return under the name and Social Security Number (SSN) of an innocent victim to obtain a tax refund from the IRS. Since 83 percent of all tax returns result in a refund, at an average of over $3,000 per refund, tax-related identity theft has proven especially lucrative. The Treasury Inspector General for Tax Administration’s 2013 review of TY 2011 identified around 1.1 million tax returns using SSNs linked to identity theft that went undetected by the IRS. The amount of potentially fraudulent refunds amounted to approximately $3.6 billion.
Wasteful Obamacare implementation. Congressional oversight of the implementation of the Patient Protection and Affordable Care Act has identified numerous ways in which the Department of Health and Human Services has wasted taxpayer money. HHS spent at least $400 million on the construction of HealthCare.gov and yet it failed to work properly weeks after its launch. Even today, it still has problems. The administration also spent $67 million—$13 million more than originally planned—on “Navigator” grants to community organizations to help people sign up for Obamacare. Congressional investigators reviewed the applications for many Navigator organizations and found the administration had awarded funds with few standards. One recipient received $80,000 to enroll 300 people. In addition, HHS failed to prepare Navigators and Assisters for the website crash, and they were rendered useless for weeks, further wasting taxpayer dollars. Some untrained Navigators and Assisters gave incorrect advice and even encouraged enrollees to lie on their applications.
Abuse in LIHEAP and SNAP. Congressional investigators have identified the “heat and eat” loophole as an area of significant abuse within the Supplemental Nutrition Assistance Program. Through this loophole, states have been abusing the intent of both the Low Income Home Energy Assistance Program and SNAP. Some states have been sending $0.10 and $1 LIHEAP payments to low-income households without actual utility expenses, triggering a SNAP income deduction that results in higher SNAP benefits for those households. The recently enacted farm bill sought to deter this abuse by raising the minimum threshold for this practice to $20. But numerous states have indicated that they intend to evade congressional intent and continue to provide token LIHEAP payments designed solely to increase food-stamp spending. The Congressional Budget Office estimates this abuse costs taxpayers over $1 billion per year. Despite being addressed in the Agricultural Act of 2014, more oversight is needed as certain states continue to seek out ways to abuse the interaction between LIHEAP and SNAP.
Excessive Federal Agency Conference Spending. In August 2010, the IRS flew employees to Anaheim for a conference that cost taxpayers over $4 million, according to an audit by Treasury Inspector General for Tax Administration. The Inspector General also found that between 2010 and 2012, the IRS held 225 conferences for a total cost of about $50 million. In July and August of 2011, the Department of Veterans Affairs Office of Human Resources held week-long conferences at the Marriott World Center in Orlando. The conference series, known as the “Human Resources Conference 2011: Innovative Solutions for Strategic Workforce,” cost taxpayers at least $6.1 million.
Poor Financial Management. The Comptroller General has consistently identified the Department of Defense’s financial management as a high-risk area since 1995. The Department’s inability to track and account for billions of dollars in funding and tangible assets continues to undermine its management approach. It also creates a lack of transparency that significantly limits congressional oversight. The Department’s inability to produce auditable financial statements undermines its efforts to reform defense acquisition processes and to realize efficiencies. Without these objective tools, neither the Department nor Congress can verify whether the department is spending taxpayer dollars wisely. As a result, Congress continues to monitor the Department’s efforts to implement the Financial Improvement and Audit Readiness plan to correct the weaknesses in its financial statements, including its efforts to meet the Secretary of Defense’s goal of achieving audit readiness on the Statement of Budgetary Resources by 2014.