GAO sounds warning on federal spending

  • 17 April 2019
  • NormanL

The Government Accountability Office has released its annual report to Congress on the nation's fiscal health. What's the outlook? The GAO says there are very big problems ahead:

Congress and the administration face serious economic, security, and social challenges that will require difficult policy choices in the near term in setting national priorities and chartering a path forward for economic growth. This will influence the level of federal spending and how the government obtains needed resources. At the same time, the federal government is highly leveraged in debt by historical norms.

A broad plan is needed to put the federal government on a sustainable long-term fiscal path.

That's been obvious for many years. But the GAO adds to the urgency some of us have been pointing out all along:

The 2018 Financial Report, the Congressional Budget Office (CBO), and GAO projections all show that, absent policy changes, the federal government’s fiscal path is unsustainable and that the debt-to-GDP ratio would surpass its historical high of 106 percent within 13 to 20 years...

What are some of the GAO's suggestions for avoiding a fiscal collapse?

Actions needed to address improper payments: Reducing payments that should not have been made or that were made in an incorrect amount could yield significant savings. Reported improper payment estimates totaled about $151 billion for fiscal year 2018. Since fiscal year 2003, cumulative estimates have totaled about $1.5 trillion.

Multiple strategies needed to address persistent tax gap: Reducing the gap between taxes owed and those paid could increase tax collections by billions annually. The average annual net tax gap is estimated to be $406 billion (for tax years 2008-2010).

Continue to address duplication, overlap, and fragmentation: GAO has identified numerous areas to reduce, eliminate, or better manage fragmentation, overlap, or duplication; achieve cost savings; or enhance revenue. Actions taken so far by Congress and the executive branch have resulted in achieved and projected financial benefits of roughly $178 billion since fiscal year 2010. 

Action needed to improve information on programs and fiscal operations: Decision-making could be improved by ensuring the government’s financial statements are fully auditable and by increasing attention to tax expenditures—tax provisions that reduce tax liabilities. Estimated to collectively reduce tax revenue by over $1 trillion in fiscal year 2018, tax expenditures are not regularly reviewed and their outcomes are not measured as closely as spending programs’ outcomes.

Regardless of whether partisans agree with the GAO's list, the problems it identifies are real and getting worse. Change will not come from the political class. Rather, it must, as all fundamental changes do, come from an educated, motivated, mass of voters.

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