wakeupamericareducegovtwastepartb

8/2/2019 WakeUpAmericaReduceGovtWastePartB

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e deficit the 11'Adeficit occurs when the governmentspends more than it takes in-much in thesame way that, ifwe're not careful, we 'might spend more money than we make.The


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.By 1983, federal revenues wereholding steady-18.6% of GNP -but .spending had ballooned_to almost 25% ofGNP. The 1983 deficit grew to $195.4 billion, or 28 times the 1962 deficit, becausethe governmeqt had grown bigger andspent more, not because it taxed less.If the goveimnent's current policiespersist, federal spending willhit $5.5

trillionin the year 2000, or about seventimes what the government spen~ in1983! (How to fathom 5.5 trilljon? In time,,5.5 trillion seconds add up to 175,000years; in inches, its almost 90 millionmiles. ) .By the year 2000, unbridled federal,state and local spending could consumeabout halfthis country's ,GN~ Consumeis the right word. Gov~rnffient spendingproduces little. It is big and getting bigger. And the deficit could reach $2 trillionin the year 2000.All this is.bad-ifwe want a f\tture forourselves, our children and our grandchildren..And ifwe want that future withouteven higher taxes, higher inflation, higher, interest rates and higher unemp~oyrnent.And ifwe want to preserve oursocial and econorruc systems.' ,

But that's not the future we'll ~et ifthe government does not restrain its ,growth and spending. Our politicallead-,'ers must act more responsibly. This willcorne about only iftaxpayers act'moreresponsibly, too, and demand a halt towasteful spending.

How Big Is BIG? 'The federal government Is the nation's biggeStborrower, lender, employer, Insurer, landowner,tenant and landlord, and the bIggest owner ofshIps, graIn, warehouses and trucks.DId you know that the government:'I, l,' ,'~ Accounts for 25% of all U.S. economIc activity? Owns 744 million acres of land, or one tli lrd theU.S.,landmass? " . Employs 4.9 million people, or 4.3% ottlre U.S.labor force? OccupIes 2.6 b,IIIon,square feet of o,fflce space,or four times the tOtal offIce space In the ten' "largest U.S. cltle~? Has anannual cash flow of $2 trillion? That's$8 billion collected and spent each workday, ,orabout $1bllllolfan hour. ' AdmInIsters more than 400,000 sIngle andmultifamIly housing units?

"'. Made available credit ofmore than threequarters of a trillion dollars In'1982, equal to thetotal credit provIded by the nation's 70 largestcommercial lenders?. Spent $3.5 billion on housekeepIng andgeneral maIntenance In 1983?, Runs 963 subsIdIzed programs at an annualcost ofmore tlian $400 billion? Lays out nearly $50 million a year to prInt,newfood stamps and destroy old ones? ,: . , Provides medical care for 47 million people, ormore than 200AJ of the p'opulatlon?.' Spends about $2..8 billion on mailings a year?, . '.'Owns almost 437,000 nonmIlitary vehicles?')).. ' , '. ~, Has a computerworlcforce totaling more th!Jn250,000 people, exceeding the population ofSt. Petersburg; Florida, to run some 17,000computers?';,! ' ',,' ""'-

~, '.. ~,,\.::. Provides 95 million meals a day? . Says It will have a n~tlonal debt of $2..3 trillionIn 1984, but, when calculated using generallyaccepted accounting standards, this figure willsoar to $4.4 trillion?

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The Information Gap The federal budget and accounting systems area Joke-a bad Joke on taxpayers. Informationthe govemment needs Is either unavailable, .lncomplete, wrong or out of date.For example: TheSocial Security Admln/stratJon has 138million partlclpant-Income reports, valued at $89billion, which cannot bematched to Individualaccounts to determine eventual benefits. Duplicate and erroneous payments are madeto recipients of Aid to Families With DependentChildren, Medicaid and food stamps becausethe government has no central data base todetermine eligibility. TheDepartment of the Army does not know howmuch It spends on automatic data processingand office automation, what kind or how manycomputers It has, where these computers are andwhether or not they sh9Uld be replaced .

. and the Computer GapDid you know: Most of the govemment's 17,000 computers areInco~patlble ? Half the govemment's computers are obsolete?Their average age Is twice that of computers Inthe private sector; they are so old that makers nolonger service them. Additional and unnecessaryemployee expenses total $1 billion over threeyears. Thegovernment needed 37,000 clerks and3112 years to 'process manually Its 1980census data at a cost of $1.1 billion?

much debt is current, how much is delinquent and how much is at subsidizedinterest rates.Let's look at two examples off~derallending.The Rural Electrification Administration lends money to utilities at a

.maximum interest rate of 5%. To makethese loans, REA borrows at about 12%.As a r~sult, it is going broke. (The Houseof Representatives recently approved a$21 billionbailout.) Next time you're in the .nation's capital, take a -lookat your taxdollars helping to light the lights in "rural"Washington, D.C.If you ask members of Congress 'how much the Fanners Home Administration is spending, chances are they'llget it wrong. Federal accounting almostguarantees it. For instance, the Agricultural Credit Insurance Fund spentabout $13.5 billionin 1984..However,Congress was asked' to ~pprove only $1.5billion, or a little more than one tenth ofactual spending./' Are you confused? Your representa-tives are, too. How can the goveminentspend nine times more than Congressauthorizes?Well, it's magic. If individuals tried it,they might end up injail. The government, though, pulls off this hocus-pocusby selling itself about $7 billionin loans.The government can spend in two ways:on-budget and off-budget. The on-budgetAgricu1ttiralCredit Insurance Fund makesa loan, sells it to the off-budget FederalFinancing Bank and, poof, the money 'isgone from the budget!Other novel accounting conventions,such as subtracting repayments from newloans before reporting new spending,guarantee that few taxpayers will everfigure out the federal loan game.

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the U.S. economy, (b) broadening thechoices of coverage"arid treatinent underhealth insurance plans and (c) stimulatipgcompetition arriong health-care providers ..3. Tqefederal g()vernment has con- '.centrated more on making loans than on

Federal Health'Care Needs Rx:.;.,1.Thegovemment spends much '!Io.retha.nthe prIvate sector to build haspltals and nursing hames,

care forpatients and pracess medical ~falms,To. wit: Building a Veterans''Admlnlstl'atian haspltalIn ttie Branx cost $153,000 a'bed. Thls.was1.6 times the'$97,40CJ..a-bedcost to build thecomparable Duke University Hasp~I.' The'VAspe"ds $61;256 a bed to build a nursing; .home, ar almost fall.r times the $16, OOO-a~bedcast far amaJarprIVate nurslng-hame aperatOr.~ '. Federal military haspltalshad an average occupancy rate af anly 46% In 1981;Just eight afthese hospitals reached the 85% accupancy ratethat Private haspltals/alm far.' Yet, In1983 thegavemment spent mare than $550 mllllo.n reimbursing private haspltals to care for militaryperso.nneleven thaugh these patients live nearmilitary hasp~'s. , . Military hospitals and clinics handle marethan 27 mllllanpatient-vlslts ayear. When theirpatients are also. cavered by private health Insu;ers, the Deparlment af Defens~ fills to recaverthe full casts af these visits frOmprivate healthInsurers. Why?DODcan't alwaysplnpalnt what Itspends an Individual patient tr~atlrient ar whichpatients have private sector coverage.

". The'average VAhaspltal stay Is 21 days, arthree times the private sector ave'rage, castingtaxpayers $1.6 bllllan a year.IITheVAspent an average $45 a day for eachpatle.nt an cantracted-aut nurslng':hame.care In1981; the cm for similar ca.rewithin VA'sfacilitles;an $109,"o.r2.4 tlm'es mare a day.

:\" TheVA'scost af processing medical claimstotals $100 to $140 a claim campared with priVateInsurers' cast af $3 to $6 .

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efficiently.managing them. Casual,loansupervision l:1a~.resultedin high defaultrates comPared' with private sector loans.The default rate for direct student loans,for instance, was 21.9% in 1983. Some$6.5 billion, or 16.7% of the government's current loans 'receivable aredelinquent. All told' the suryey estimatedthe government would,save' $12.9 billionover three years by (a}.changing its..emphisis from making loans t9 managingthem well, .(b) ,providing incentives for,, federalloarl officers to reduce defaults,. (c).increasing' the use of private collectionagencies and (d) converting as manydirect loans as possible. to guaranteedloans. (In a guaranteed' arrangement, apri~ate sector bank makes the loan, andthe government guarqntees a percentage,of that loanifthe borrower sho1.1ld'aefault)

In totaI,the survey-'made 443 recommendations to shrink or eliminateQrQgrarriwaste and.mefficiency. Theresultant t:hfee-y.earsaVing.Q[$l60. 9billionwould~ual the taxes Paid.by--

24.~mlllionm~ fumm~~.Making the GovemmentRun Better.The survey tiiiearthed three-year savingsof $151.3 billioniii systems management:pUrchasing, data proces~wg, fipanc~,services, and pricing'of commercial,. \activities.

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,The'survey reported: ..'1. In 1982 the government bought$159billionin goods and services. Morethan 130,000 federal employees workedon these purchases governed by millionsof contracts. More tha,n 80,000 pages ofinstructions control federal buying" with20,000 new and revised pages producedeach year. The survey projected,threeyear savings of $34.5 billionby centralizing control, and increasing contractorcompetition and efficiency.' .

2. The government has sO'me17,PODcomputers operated by more than250,000 employees at a cost of about$12 billiona year. Most of these computers are old and mcompatible. Currentreplacement plans threaten to'make a badsituation worse. By 'upgrading and'replacing allits computers, the survey'esti.,.mated the goveriunent would save $22.6billionover.thr~e years-after allowingfor

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the purchasing and installation costs ofthese computers.3. More than $30 billioncould besaved over three years by centralizingfinancialmanagement. Federal cash flowtotals about $8 billioneach workday, or$2 trilliona year. U the government simply paid its billswhen they came duerather than when they arrived, anddeposited checks when they arrived instead of after they are processed, itwould save more than $1.5 billionover

three years.4. The government would save another $6 billionover three years byimprovingmanagement of its facilities andequipment. The government owns -almost.437,000 nonmilitary ve~cles averaging9,000 miles of use each year. That userate is little more than one third ofwhat -.private sector firms consider effective. Uthe government reduced its civilianfleetby 100,000 vehicles and reconditioned the

- Is Washington in the Woods?Themilitary operates 238 commissaries Inthe continental United States, Including six"outposts" In Washington, D.C. Total1983 tab:$758 million.These commissaries staffed appearing In the, J800s when manyAmerican soldiers served In thewlldemess, far from food stores. Despite Department of Defense rules banning commissarieswhere reasonably priced commercial food storesare available, not one commissary has ever beenclosed for this reason. And the military Is notevenpermitted to contract out these operations.In large part, It's the lower- and middle-Incometaxpayers who pick up the tab.

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unwanted ones before sale, it would save$1.5 billionover three years.5. Travel and shipping are costly.The government spends $4.8 billionayear on employee travel and $4.6 billionon shipping. Despite these hefty outlays,the government doesn't negotiate volumediscounts. U it managed these and otherhousekeeping items better, it would save$lb.l billionover three years.6. The government runs more than1,500 "commercial" operations, which

brought in about $40 billionin user fees in1981. In most cases, the fees don't beginto cover federal costs. Taxpayers wind upsubsidizing select groups. For example,the Food_and-DrugAdministration spent'$4.5 millionin 1981on Freedom of Information Act requests, but collected only$231,000-in fees. More than 80% of therequests came from drug firms runningroutine market studies. A fairer system ofuser fees would save taxpayers $10.9 billion over three years.7. U;thegovernment would transfersome commercial activities to the privatesector, it would realize savings and revenues of about $37.1 billionover threeyears. These activities would include itsfive Power Marketing Administrations,which provide subsidized power to various sections of the country.The survey- came up-with 1,152-ideas to correct sy-stems failures. Consequent three-y-ear savings of $151.3billionwould equal the taxes of 22. 7 millionmedian-income families.


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Rewarding-Federal Workers-FairlyThe _PresiQent'~Private Sector Survey on Cost Control estimated a three-year,savings of $90.9 billionby improVinghow the-government manages and,compensatesits employees. - _; ,) ". The government paid $10~.8 billiQP;',in 1982 to its 4;9,millioncivilianand military employees.,Thesurveyfuund: (

1. ,About2.8 times r;noreprofessionaland supervisory government persoI1nelare in high-level positions truiIfcomparable'personnerin the private sector.2. For every federal blue-coll~worker receiving wages comp~ - ..,able to those in the private sectorW . 'in 1978, 5.7 feder~ employeescollected wages above those of 'their counterparts in the privatesector.

, 3. Postal workers on average receive wages that are 28%':' ,higher than those of their privatesector counterparts.Survey proposalswould save $7.2 billionover thr~e yearsby bringing federalsalaries and wagesmore in linewiththose of the privatesector~'It is,federalpolicy that 'government salaries be ~

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,, The WonderS ~fWorkingFor the GovernmentDld,youknow: . " ,f f Thecost fortutUre'clvll serillce and militaryretirement benefits, for.whlch no funds have beenset asIde, '/5 more titan $1 trillion? In the prIvatesector, companIes are legally requIred to setfunds asIde now to pay 'for futUre retirement bene-'fits. Taxpayerswould have to contribute $41billion In each of the next 40 years (In addition towhat they contrIbute for annual, benefits) to payotfthe $1 trillion shor:tfall. And thIs would notbegIn to address the $94 billion annual IncreaseIn the unfunded liability occurring each year. While private sector employees contrIbute onaverage 33% to the total costs of the/rpens/ons,civilian federal employees contrIbute only 19%,and the military only 13%? SInce 1968, cumulatlv~ cost-of-llvlng adJustments to federal pensIons have exceededIncreases In white-collar salarIes and the ConsumerPrlce Index? Because of llberalfederal pensIons,' only 10%ofgovernment employees eligIble to retire beforeage sq remaIn In active servIce?, When federal employees have worked,for threeto five years, they get 20 days' vacation a year, ortwIce the 10-day average In the prw,atesector?'

, At retirement, federal employees get cret!,1ttoward theIr years of eligIble servIce fo, unused,sIck leave? Private sector employees get none.

The survey suggested retirement, changes worth $60.9 billionbver three,. years. Even with these revisions, federalretirees would still receive benefits sut>e-'rior to those enjoyed by most,privatesedor workers.:Fringe benefits for the government's2.8 millionci~ employees totaled .. '$45.5 billion in 1982.The sUrvey fO\ll1d:, 1.Health benefits cost 'the govern-ment a&but $450 million a year more than.comparable benefits ,cost private,','. ' ",-':".:( i .msurers~2. Annual vacations .for'federal'employees"cost the government 1.4 times'\as much as private-sector worker vaca-, "t:,,' ',- .-tions,cost th~ir einployers.Liberal federalleave policies add $1.3 billion in annual.expenses.3. Federal employees Jake i.6 timesthe' ntimber of sick days taken by their. ~,pnvate sector counterparts, at an excess,cost ,of$1.2 billioneach year.,The survey's suggestio';:s would ",'

comparable to private sector salaries. But save$~.1. bilJionover three years byinmost cases, the studies and t'he sys~ eliminating fringe benefits that ~xceedterns used to deteimine salanes"build in" those in the private sector, conti-oIlingpay mcreases above those in the private health-plan costs, "apd trimming vacationsector. and sick-pay benefits. "Federal civilian~d, mi!itary retire-, The sUrveY_Rroposed422 wayliQ

ment systems are three times ana six . ,,',improve management of the federaltimesascostly",respedively,as the best 'work force. These changes would resultprivate plans. Federal plans allowearlier~'in three-year savings of $90. 9 billion,'retirement, offer more liberal benefits and . e.qualto the taxe's of 13.7 millionmedian-provide fullprotection against inflation. income families.. -

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~Getting It AllUnder ControlThe government lacks the central financialand administrative managementstructure and useful information systems. necessary to make the best possible decisions. It is also hampered by.high.turnover of key managers ..) Savings comprise:'1. $8.6 billionby consolidating programs, offices and functions., 2. $2.7 bilijonby closing and merg-ingmilitary bases. -3. $1.3 billionby improving l10wfederaldecisions ate made.In total, the survey: made 2llrecommendations to overcome organiza- ..tiona! defects. These changes wouldmean three-year savings of $12. 6 billion,equal to the taxes ofl.9 millionmerli:lnincome families.

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~Other Task Force. Findings

The survey also proposed 25Qother. idea~ based on task force findings. For exam- ,pIe, one group discovered theDepartment of Labor had more telephones than employees. By extendingthis finding across gQv~mment, the survey calcullited an $848 rhillionsavmgsover three years by reducmg the' number -of telephbnes. ,..The surveY_P-IDpomtedhree-y~government-wide 'savings of $8.6' billion,~ual to the taxes 'of1.3 millionmerli:lnincome fariillies.'


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.ecanblowthestle on waste! .

Almost 73% of the surveYB recorri-:mended savings will n~~d direct ~con~essiona! action. Much of the remaining 27%will be influeh~ed by Congress: Evenordinary operating chaI1ges are often subject to congressional attention. For exam-. pIe" Congress bars the military fromobtaining cOp1petitive bids to ship household goods between tpemainland andAlaska and Hawaii. This must benefitsomeone, but it's nbtthe 10~45 medianincome'"fatpilis'wfiq~e taxes are wastedbecause of thls:senseless restriction.~~' . -' :" ,",c,'Oyer and over,the-President's Pri-.vate Sector Survey on Cost Control foundit is congressional policy (unpublished, ofcourse) to keep opehUfiderused facilities,retain unneeded employees, pay duplicate-!

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subsidy benefits and force the needless. spending of tax dollars because of inefficient buying pnidices. The:roll call ofwaste goes on and on.'We still have a goyemmentof, by,

and for the pepple, ase,videhced by .." .recent actions taken to adopt some of thesurvey's recommendations. This has happened, because we have made' our voices.known to our elected and appointed officials. For example, at tl}iswriting, the .White House has' deliberated 1,153 of the2,478 recommend~tions' and has agreed'to implement 81.~% of them. Of these,680 totaling $103.5 billion in three-year. savings have either been included in'thebudget baseline for 1983, 1984;or 1985,or targeted for short -teim adoption. Theother 473 recommendations are nowbeing reevaIuate9 or are. being held for'further study. The balance of I;325 ..and $320.9 billion of savings recommen-'"dations are yet to be reViewed ..Althotighsigns are encouraging, westill have a long jOupiey ahead. We musf-:"blow the-whistle" to assUre oUr concerns

are being heard and that somet:PIDg isbeing done to restore .fisail sanity to thisgreat nation ....

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wakeupamericareducegovtwastepartb

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