Committee for a Responsible Federal Budget

Improper Payments Are a Start--But Cuts Must Go Deeper

In an OMBlog today, OMB director Peter Orszag applauded the House's passage of the Improper Payments Elimination and Recovery Act.  Improper payments refer to any transactions between the federal government and any recipients of government money (individuals, organizations, or contractors) in which those recipients were either overpaid or were not entitled to receive money in the first place; basically, waste, fraud, and abuse.  According to Orszag, the federal government wasted $98 billion in improper payments in 2009, with a majority of that coming from Medicare and Medicaid.

The bill would expand the requirements for federal agencies and programs to perform payment recapture audits, in which an independent private sector auditor reviews government transactions to look for mispayments, and put "sanctions" on programs that fail to comply.  Additionally, it would allow OMB to try out different accountability mechanisms to incentivize agencies and programs to reduce their payment errors.

Obviously, CRFB supports this effort to eliminate errors in payments.  Anything that can be done to make the government run more efficiently is certainly welcome.  But even if the whole $98 billion were eliminated, in the context of recent $1 trillion-plus annual deficits it is certainly not something to be relied on as a deficit reduction measure.  Solving our fiscal issues will require making difficult choices that will hit much harder than eliminating waste, fraud, and abuse, or closing the tax gap, for example.

This isn't to write off the whole effort though.  As we are thinking of which programs to cut or eliminate, we should also be thinking about how to make the existing programs function more efficiently.  Improper payments can be thought of as the proverbial low-hanging fruit -- something everyone can agree on, even if it is does not generate major savings.