What does Springtime mean in Washington?

Well, there’s the cherry blossoms at the Tidal Basin. The Easter Egg Roll at the White House. The red, red, robin comes bob, bob, bobbin’ along. And, then, there’s something to make a budget watchdog’s heart beat a little faster. Is it love, or is it…the Government Accountability Office (GAO) “High Risk List”? We think ardent readers of our Weekly Wastebasket know which it is.

Back in 1990, the GAO, then known as the General Accounting Office, compiled a list of programs it characterized as, well, “high risk.” Meaning, these are programs where the government is at greater risk of fraud, abuse, and mismanagement. It was and still is a thankless task, but it is one we support. Government watchdogs like the GAO and the Inspectors General provide a valuable service to taxpayers by bringing more transparency and accountability to government spending. Here are just a few of the entries in this year’s Hall of Shame.

First up? Pentagon Processes

It’s no surprise the Department of Defense, the nation’s highest volume buyer of “stuff” from nuclear submarines to yellow sticky notes, comes under the GAO’s microscope for needed improvements to its business practices. DOD accounts for five of the 37 high risk areas GAO flags across the entire federal government, and some have been on the list for years.

The nation’s largest bureaucracy doesn’t turn on a dime, but GAO notes marginal progress from last year on all its concerns: “Business Transformation,” “Business Systems Modernization,” “Contract Management,” “Financial Management,” and – the Big Lebowski – “Weapon Systems Acquisition,” all take their turns in the box for continued GAO criticism. These concerns aren’t new and seem intractable. As we’ve written and the GAO points out, the whole of DOD still hasn’t received a “clean” audit opinion, although some agencies within the department have. Time for Pentagon leadership to take ownership of these problems and push harder for conclusions.

What’s next? “Enforcement of Tax Laws.” Yikes.

This is aimed at the IRS, specifically – the tax gap and IDT refund fraud. The tax gap is the difference between taxes owed and taxes paid on time. From 2014–2016, this gap averaged $428 billion per year. IDT refund fraud refers to identity theft – when someone files a fraudulent tax return using a legitimate taxpayer’s identifying information and claims a refund. We can all agree these are bad, right? Deliberately underfunding an agency that enforces laws you don’t like, to score political points, costs taxpayers money. What’s worse, it’s a money-loser because it allows certain (i.e. high-income) taxpayers to game the system.

Next up: “Funding the Nation’s Surface Transportation System”

No surprise here. We’ve been banging on about the Highway Trust Fund for as long as we can remember. Here’s GAO: “The nation’s surface transportation system—including highways, transit, maritime ports, and rail systems that move both people and freight—is aging and faces increasing demands on its use. At the same time, revenues from motor fuel and truck-related taxes supporting the Highway Trust Fund—the major source of federal surface transportation funding—are currently insufficient to repair and upgrade this system. Because projected spending will exceed these tax revenues, it is also important that federal funding for surface transportation provided to states and other grantees through Department of Transportation (DOT) programs be spent wisely and effectively.” Amen, sister.

“Limiting the Federal Government’s Fiscal Exposure by Better Managing Climate Change Risks”

We will soon release a report detailing some of the many ways taxpayers are paying for climate change and how these costs are already large and growing. Taxpayers spend in excess of $120 billion every year to recover from disasters like hurricanes, droughts, wildfires, etc., but we don’t budget for most of these costs. The majority of disaster spending, year after year, is done through emergency supplemental appropriations bills, which are technically “off-budget.”

“Management of Federal Oil and Gas Resources” is one of our old favorites.

This has been on GAO’s High Risk list since 2011. Like TCS, GAO has identified shortcomings in the federal oil and gas program costing taxpayers valuable revenue. Yep. Specifically, GAO has honed in on how we are not accurately valuing offshore oil and gas tracts or finished updating policies that govern lost gas from federal wells and oil and gas measurement.

“National Flood Insurance Program” (NFIP)

This is also related to the government’s fiscal exposure to climate change. The NFIP provides subsidized federal flood insurance for property owners, but it loses money every year because flood claims far outstrip revenue from premiums. As flooding worsens, the program goes deeper into the red. In 2005, after Hurricanes Katrina, Rita, and Wilma, the NFIP had to “borrow” nearly $18 billion from taxpayers to pay out claims. Superstorm Sandy in 2012 led to $6 billion in additional borrowing, and Hurricane Michael and several large rain events in 2016 added another $3.7 billion. This was eclipsed after the 2017 storm events of Harvey, Irma, and Maria, which forced NFIP to borrow another $10.5 billion. At that point the program was poised to be $36 billion in hock to the US Treasury, but instead of reforming the program, Congress simply “forgives” the debt.

Let’s hope by the time next report rolls around  the government will have made progress toward reining in the risk and costs these programs pose to taxpayers.