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Taxpayers Support the Improper Payments Elimination and Recovery Act

February 20, 2008

Dear Representatives Murphy and Bilbray:

On behalf of the members of the National Taxpayers Union and the Council for Citizens Against Government Waste, we write to endorse your legislation, the Improper Payments Elimination and Recovery Act (H.R. 5467). Our members are acutely aware of the demands that the federal government makes on their finances, and it is a basic expectation of taxpayers that extracted resources go toward their intended purposes and not to inappropriate uses. Your bipartisan legislation would help eliminate waste and fraud in federal government programs by lowering the improper payment threshold for agencies, requiring agencies to develop action plans to avoid future waste, and financially penalizing agencies that fail to meet accounting and recovery benchmarks.

In 2002, Congress passed the Improper Payments Information Act, which requires executive branch departments and agencies to review all programs and activities they administer, and identify any that may be susceptible to significant improper payments (i.e., funds going to the wrong recipient, a recipient obtaining an incorrect amount of funds, or a recipient using the funds in an improper manner). Agencies are also obligated to estimate the actual amount of improper payments for those programs. With respect to any program or activity of an agency with improper payments exceeding $10 million annually, the agency must report to Congress on the causes of the improper payments, the status of the actions taken to prevent them, whether the agency has the appropriate information systems in place to minimize future problems, and the steps being taken to hold agency managers accountable for reducing improper payments.

Thanks to the directives in the 2002 Improper Payments Information Act, we now know that $55 billion of taxpayer funds went toward improper payments in 78 programs in fiscal year 2007. Fraud and abuse in eight programs accounted for nearly 90 percent of the identified waste, and these programs include Medicaid, Medicare fee-for-service, the Earned Income Tax Credit, Supplemental Security Income, Old Age Survivors' Insurance/Unemployment Insurance, the Food Stamp Program, and the National School Lunch Program. Fourteen programs (with budgets totaling $170 billion) susceptible to improper payments have not developed methods for measuring funding gone awry, meaning the amounts of taxpayer money used in wasteful or fraudulent ways could actually be much higher.

Your bill would build on the reporting legacy of the 2002 law, but H.R. 5467's real value comes in its strong inducements for agency compliance with corrective requirements. If a program is out of compliance (as determined by the agency's Inspector General) with improper payment assessments, estimates, reformative action plans, reduction targets, and/or recovery audit obligations for a period of one year, this bill would allow the agency to shift existing funds to become compliant. If noncompliance goes on for two consecutive years, the agency must use 5 percent of existing appropriations to take remedial action. If noncompliance persists for three consecutive years, the legislation would require 5 percent of the delinquent program's funds to be transferred to the Treasury or be rescinded. Finally, if a program has an improper payment rate of more than 15 percent for three consecutive years, no more funds may be directed to that program until the appropriate Inspector General reports that sufficient changes have been implemented to warrant reauthorization. Despite a fiscal process that treats billions of tax dollars disdainfully on a daily basis, money does matter even in Washington, D.C., and financial penalties appear to be necessary if we really want agencies to staunch the hemorrhage of improper payments.

We urge all Members of Congress to cosponsor the Improper Payments Elimination and Recovery Act. A roll call vote in favor of H.R. 5467 would be considered the "pro-taxpayer" position in NTU's annual Rating of Congress.


Kristina Rasmussen
Director of Government Affairs
National Taxpayers Union

David Williams
Vice President, Policy
Council for Citizens Against Government Waste