Cutting federal spending is the politically fashionable thing of the moment, but as Congressional Republicans and Democrats sharpen their pencils, many will be surprised that cutting spending sometimes costs more money than it saves. I’m talking about spending on audits, or in softer-sounding bureaucrat-speak, “program integrity efforts.”
Program audits check to see if a person or entity meets the requirements to receive government benefits. If they don’t, the benefits are terminated, resulting in tangible savings. For example, the Senate Budget Committee says that for each dollar spent on Social Security benefit audits as much as $11 is saved.
Today’s Boston Globe has a great story on what happens when audits aren’t done. According to the Globe, it’s common knowledge in low-income neighborhoods that once little Tommy’s mom begins to get Supplemental Security Income (SSI) payments, the Social Security Administration isn’t going to do an audit later to see if Tommy is still SSI-eligible because his condition improved. The upshot is Tommy’s mom can count on a check of at least $600 a month and free medical care until he turns 18. For taxpayers, the sad news is that about 17,000 kids enter the SSI rolls every month; because SSI is funded by general revenues (not the Social Security Trust Fund), it seems the SSI spending curve will go skywards for decades.
I’ll leave it to others to debate the merits of changing entitlement rules to save money. To me, audits provide the low-hanging fruit of savings.
Perhaps you’re thinking, “Use audits to save money? That’s obvious!” To us mere mortals, audits are a great tool, but in the wacky world of government operations, it usually ranks last on the to-do list. The simple reason: no federal agency head ever got a call from a member of Congress complaining that the agency wasn’t doing enough to pay their constituents less. But agencies get lots of Congressional calls begging to put their constituents’ applications for things like SSI or farm subsidies at the top of the heap. And with Congress holding the purse strings, a federal manager’s decision to focus on claims processing versus doing audits becomes a no-brainer.
That’s why I cringe whenever I hear Congressional chatter in favor of across-the-board spending cuts. It’s a simplistic, short-term answer with long-term negative effects.
Federal bureaucrats are not fools; they know what Congress cares about. Say an agency is faced with a 10 percent overall funding cut; it’s a sure thing the agency’s auditors will take a bigger hit than the office that’s handing out checks. Congress never considers that indiscriminate spending cuts could result in the loss of millions or billions of dollars in taxpayer savings for years.
House Republicans say they want to break with the past (both their own and the Democrats’) and do things differently. I suggest they begin by avoiding shopworn, robotic “solutions” such as across-the-board spending cuts. Funding for “program integrity” work should be carved out of every agency’s budget and protected from cuts — at the very least.
As every dieter knows, there are things you can do to lose weight faster, like exercise. As Congress puts federal spending on a diet, they should keep in mind that fully funding effective audit programs will help make those wasteful dollars melt away.
Joanne Butler is a senior economics fellow at the Caesar Rodney Institute of Delaware. You can email her at firstname.lastname@example.org.