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GAO Audit Describes Historic Debt

A short but informative article by the Washington Free Beacon describes how the Government Accountability Office (GAO) has calculated that within a few years, the federal government will owe more money that the sum of what is produced by the economy. That, my friends, is an egregious amount of debt.

“Gene Dodaro, the comptroller general for the Government Accountability Office, testified at the Senate Budget Committee to provide the results of its audit on the government’s financial books.

“We’re very heavily leveraged in debt,” Dodaro said. “The historical average post-World War II of how much debt we held as a percent of gross domestic product was 43 percent on average; right now we’re at 74 percent.”

Dodaro says that under current law, debt held by the public will hit a historic high.

“The highest in the United States government’s history of debt held by the public as a percent of gross domestic product was 1946, right after World War II,” he said. “We’re on mark to hit that in the next 15 to 25 years.”

Another economic projection which assumes that cost controls for Medicare don’t hold and that healthcare costs continue to increase, shows debt rising even further.

“These projections go to 200, 300 percent, and even higher of debt held by the public as a percent of gross domestic product,” said Dodaro. “We’re going to owe more than our entire economy is producing and by definition this is not sustainable.”

Additionally, the audit found fault with the number of improper payments that should not have been made or were the incorrect amount. The audit found that in fiscal year 2015 there were $136.7 billion improper payments, which was up by $12 billion from the year prior.

The audit also called into question the reliability of the government’s financial statements. According to the report, if a federal entity purchases a good or service, that cost should match the revenue recorded by the federal entity that sold the good or service. The report found that this was not always the case and found hundreds of billions of dollars in differences between transactions between federal entities.

“The government-wide financial statements that the GAO audits tell us what came into the government’s coffers and what went out, what the government owns and what it owes, and if the operations are financially sustainable,” said Sen. Mike Enzi (R., Wyo.). “But can we trust the information in the statements?”

“GAO’s audit calls into question the reliability of the underlying financial data,” he said. “The sketchiness is such that GAO remains unable to even issue an audit opinion on the government’s books.”

According to the audit, these weaknesses will eventually harm the government’s ability to reliably report their assets, liabilities, and costs, and this will prevent the government from having the information to operate in an efficient and effective manner.

GAO Report: Government Made Fraudulent Obamacare Payments

The Government Accountability Office (GAO) released a new study that monitored Obamacare subsidy payments. The results are sobering; billions in payments were made to individual Obamacare users which may have been the result of fraud.

The Centers for Medicare and Medicaid Services (CMS) uses information from three agencies in order to verify Obamacare eligibility; they are the IRS, DHS, and SSA. But if there are inconsistencies within the data, the system doesn’t necessarily catch them, resulting in the misallocations. From the report:

“About 431,000 applications from the 2014 enrollment period, with about $1.7 billion in associated subsidies for 2014, still had unresolved inconsistencies as of April 2015—several months after close of the coverage year.”

These findings correspond to other reports over the last couple of years which found similar problems. They were summarized by ATR, below:

  • “An auditor’s report examining Minnesota’s Obamacare exchange found the exchange enrolled more than 100,000 individuals who were ineligible for the program. In all, the audit estimated an error rate of close to 50 percent, and the state overpaid up to $271 million over the five-month period that was analyzed by auditors.
  • A December 2015 report by the Health and Human Services Inspector General (HHS OIG) found that CMS relied entirely on data from health insurers to verify whether enrollees had paid their premiums and were eligible. However, this data was completely insufficient – insurers provided payment information on an aggregate rather than enrollee-by-enrollee basis, making verification all but impossible.
  • A October 23, 2015 report by GAO found that Obamacare exchanges (both state and federal) were failing to verify key enrollment information of applicants including Social Security numbers, household income, and citizenship.
  • A September 1, 2015 report by the Treasury Inspector General for Tax Administration (TIGTA) found that Obamacare exchanges are failing to provide adequate enrollment information to the IRS for proper payment and verification of tax credits.
  • An August 2015 report by HHS OIG found that the federal exchange is failing to verify Social Security numbers, citizenship, and household income of Obamacare applicants. As a result, the exchange is unable to verify whether applicants are properly receiving tax credits.
  • A July 16, 2015 audit by GAO found that 11 of 12 fake ‘test’ applicants received coverage for the entire 2014 coverage period despite many using fraudulent documents, and others providing no documentation at all. From these 11 applicants alone, Healthcare.gov paid $30,000 in tax credits.
  • A June 16, 2015 report released by the HHS OIG found that $2.8 billion worth of Obamacare subsidies and payments had been made in 2014 without verification.
  • A June 10, 2015 TIGTA report found the IRS failed to properly administer nearly $11 billion in Obamacare tax credits.
  • A May 21, 2015 report by TIGTA found that the IRS failed to test Obamacare processing and verification IT until a week before the filing season began.”

How much more mismanagement can we take? This latest report is just one of many highlighting the string of Obamacare failures — unfortunately at the expense of the taxpayer once again.

Former GAO Chief Points Out Unfunded Liabilities Debt

David Walker was a former head of the Government Accountability Office under Presidents Clinton and Bush. He recently spoke out about the crippling US debt, pointing out that the national debt is far greater than what is understood — more than three times the amount.

Walker told radio host John Catsimatidis, “If you end up adding to that $18.5 trillion the unfunded civilian and military pensions and retiree healthcare, the additional underfunding for Social Security, the additional underfunding for Medicare, various commitments and contingencies that the federal government has, the real number is about $65 trillion rather than $18 trillion, and it’s growing automatically absent reforms,”

He further pointed out, “If you don’t keep your economy strong, and that means to be able to generate more jobs and opportunities, you’re not going to be strong internationally with regard to foreign policy, you’re not going to be able to invest what you need to invest in national defense and homeland security, and ultimately you’re not going to be able to provide the kind of social safety net that we need in this country.”

Walker also called for both sides to join together in order fix the problems and put aside partisan politics. Unfortunately, actions like proposed recent SSDI bailout only worsen the situation. It reallocates $150 billion over the next three years comes from the Social Security Trust Fund in order to rescue the nearly bankrupt SSDI Trust Fund. This obfuscates the reality of unfunded liabilities and kicks the can down the road.

Walker’s call to make hard choices and severely reform the burgeoning entitlement debt crisis is the only way to truly fix the future. It is refreshing to hear someone speak candidly about the problems everyone is afraid to face.

Government Transparency Site Now Even LESS Transparent

Last summer, I wrote an article about how an audit performed by the Government Accountability Office (GAO) on the government transparency site — USASpending.gov — revealed that more than 90% of the information found on the website was inaccurate.

The GAO audited spending data from 2012, the most recent year for which data is available, by comparing government agency records with those found on USASpending.gov. The GAO reported that only 2-7% of the numbers found on the website is ‘fully consistent with agencies’ records.” and that at least “$619 billion from 302 federal programs” was missing. (You can read the GAO report here).

Prior to the release of that report, Congress had recently passed the DATA Act, which was subsequently signed into law. This took USASpending.gov from the Office of Management and Budget and handed it over to the Department of the Treasury.

At the time, I noted:

“For those expecting the Department of the Treasury to fix the problem of transparency on how the government spends its tax dollars, think again. The Department of the Treasury is the parent agency of the IRS — and we all know how transparent the IRS has been with record-keeping.”

It seems that my prediction came true. The Treasury Department’s Bureau of the Fiscal Service was entrusted with overhauling the USASpending.gov website — and the new design, functionality, and transparency was unveiled yesterday. Unfortunately, the ability for citizens to find government spending information is now more difficult.

The Washington Free Beacon did a great analysis of the new design and found gems such as:


–Users can no longer search federal spending by keywords, sort contracts by date, or easily find detailed information on awards, which are delivered in bulk.

–Information, such as how much the Pentagon spends on Viagra, used to be available at the click of a button. Locating those same contracts on the new website is virtually impossible, akin to finding a needle in a haystack.

–In its previous form, the website provided easy access to how taxpayer dollars are spent, as it happens. A user now must have the federal grant identification number to see details of a contract.

–The list of agencies does not include smaller government bodies such as the National Endowment for the Arts (NEA), but does include the “Barry Goldwater Scholarship and Excellence in Education Foundation.” Results for the profile of “Other Small Agencies” returns zero grants or contracts, with the reply “no data found.””

The article provides a thorough analysis of how the site used to be searchable vs how searchable it is now, complete with graphics. You can read the list of examples here.

Equally distressing is the fact that “search results are also not indexed on Google, making the website’s search engine the only avenue for citizens and reporters to find information within the site. Microsoft Sharepoint operates the new website’s search, and the results are limited.”

This is yet another prime example of what constitutes “transparency” from the “most transparent administration ever”. Fittingly, the Bureau of Fiscal Service did not return requests for comment about the functionality of its new design. Kudos to the Washington Free Beacon for exposing the latest data shroud.

At least they didn’t hire the firm that built healthcare.gov.

Congressional Duplicity


Some years ago, Congresswoman Carolyn Maloney of New York came to me about a “saving for college credit” she wanted to sponsor to have implemented into the Internal Revenue Code. The concept was that if people put money into government bonds, and then used the bonds for college, they’d never have to pay interest or taxes on that money. I informed her that several years before, that provision had already been put into the code and was part of our current tax law. She then asked if I could help her think of a benefit that was a little different, so that she could call it her own.

I was reminded of this episode recently when the GAO report documenting the massive duplication of government programs was released. Although the report was helpful in uncovering billions of wasted taxpayer dollars, it made me think — why isn’t anyone talking about the failure of Congress implementing these programs in the first place? It has to be one of two scenarios: either a) due to their incompetence —  they didn’t realize it was duplicative at the time, or b) they knew it was wasteful but didn’t care as long as they gained political advantage.

The GAO report is not only a staggering denunciation of how our Congress really conducts business, but it also raises some difficult yet necessary questions: why is there is virtually no discussion about what Congress is going to do to ensure this kind of abuse of taxpayer money is not repeated? How are we going to now make sure that future legislation doesn’t result in a duplicative or redundant program?

But even more important– the GAO report should be viewed not only as a mechanism to reduce the budget going forward, but also as a major indictment of our legislators’ past actions. We should look at the repetitive programs, find out who sponsored them and pushed them through, and hold them accountable for all the billions of dollars wasted upon the backs of the taxpayers throughout the years. Only when those who have been responsible for the problems actually take responsibility for their actions can reform truly occur.