America's independent, non-partisan advocate for overburdened taxpayers.
Printer Friendly



Taxpayers Support the Improper Payments Elimination and Recovery Act

November 30, 2009

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. 3393). 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.

The Office of Management and Budget recently reported that the federal government disbursed $98 billion in improper payments last year -- more than half of which came from Medicare and Medicaid. Fraud and abuse in the two main federal health programs alone cost taxpayers tens of billions of dollars each year. Other federal entities cited in an April 2009 Government Accountability Office report on improper payments include Food Stamps, school lunches, Supplemental Security Income, the State Children's Health Insurance Program, child care programs, Temporary Assistance for Needy Families, Unemployment Insurance, the Universal Service Fund, the Earned Income Tax Credit, Veterans Affairs, emergency response, and procurement. While many of these endeavors may be worthwhile, it is imperative that we do everything we can to prevent further waste in order to ensure that funds are being distributed to those who need them the most. Your bipartisan legislation would help to facilitate this process 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 directs 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 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.

Your bill would build on the reporting legacy of the 2002 law in numerous ways. First, H.R. 3393 would set minimum standards for risk assessments to ensure sufficient rigor. The bill further encourages transparency by changing the threshold for reporting improper payments from $10 million or 2.5 percent to $10 million or 1.5 percent.

The real value of H.R. 3393, however, comes in its strong inducements for agency compliance with corrective requirements. Agencies that are found non-compliant in any given year would be required to submit a remediation proposal to Congress, including the designation of an officer who will be held accountable for his or her agency's compliance. If non-compliance were to continue for a fourth year, the agency would be required to submit a reauthorization proposal to Congress that addresses the problems causing non-compliance. If, after two fiscal years, Congress fails to act on this proposal and the agency has yet to comply, authorized funding for any of the agency's programs -- excluding entitlements -- would be frozen at their authorized level in the second fiscal year. 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 stanch 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. 3393 would be considered a pro-taxpayer position in NTU's annual Rating of Congress.


Jordan Forbes
Federal Government Affairs Manager
National Taxpayers Union

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