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95–798 PDF 2015

S. Hrg. 114–59 

WASTEFUL SPENDING IN THE FEDERAL 

GOVERNMENT: AN OUTSIDE PERSPECTIVE 

HEARING 

BEFORE THE

SUBCOMMITTEE ON FEDERAL SPENDING 

OVERSIGHT AND EMERGENCY MANAGEMENT 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JUNE 10, 2015 

Available via http://www.fdsys.gov 

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs 

( 
(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin, Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

KEITH B. ASHDOWN, Staff Director 

GABRIELLE A. BATKIN, Minority Staff Director 

JOHN P. KILVINGTON, Minority Deputy Staff Director 

LAURA W. KILBRIDE, Chief Clerk 

LAUREN CORCORAN, Hearing Clerk 

SUBCOMMITTEE ON FEDERAL SPENDING OVERSIGHT AND EMERGENCY 

MANAGEMENT 

RAND PAUL, Kentucky, Chairman 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

TAMMY BALDWIN, Wisconsin 

CLAIRE MCCASKILL, Missouri 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

BRANDON BOOKER, Staff Director 

DAHLIA MELENDREZ, Minority Staff Director 

RACHEL NITSCHE, Chief Clerk 
(III) 

C O N T E N T S 

Opening statement: Page 

Senator Paul ..................................................................................................... 1 

Senator Baldwin ............................................................................................... 2 

Senator Ernst .................................................................................................... 14 

WITNESSES 

WEDNESDAY, JUNE 10, 2015 

Romina Boccia, Grover M. Hermann Research Fellow in Federal Budgetary 

Affairs, and Research Manager, The Heritage Foundation .............................. 4 

Chris Edwards, Director of Tax Policy Studies, and Editor, 

www.DownsizingGovernment.org, Cato Institute ............................................. 8 

Steve Ellis, Vice President, Taxpayers for Common Sense .................................. 16 

Thomas A. Schatz, President, Citizens Against Government Waste .................. 18 

Donald F. Kettl, Ph.D., Professor, School of Public Policy, University of Maryland ........................................................................................................................ 22

ALPHABETICAL LIST OF WITNESSES

Boccia, Romina: 

Testimony .......................................................................................................... 4 

Prepared statement .......................................................................................... 31 

Edwards, Chris: 

Testimony .......................................................................................................... 8 

Prepared statement .......................................................................................... 47 

Ellis, Steve: 

Testimony .......................................................................................................... 16 

Prepared statement .......................................................................................... 56 

Kettl, Donald F.: 

Testimony .......................................................................................................... 22 

Prepared statement .......................................................................................... 87 

Schatz, Thomas A.: 

Testimony .......................................................................................................... 18 

Prepared statement .......................................................................................... 64 

APPENDIX 

Information submitted by Mr. Ellis ....................................................................... 95 

(1) 

WASTEFUL SPENDING IN THE FEDERAL 

GOVERNMENT: AN OUTSIDE PERSPECTIVE 

WEDNESDAY, JUNE 10, 2015 

U.S. SENATE, SUBCOMMITTEE ON FEDERAL SPENDING, OVERSIGHT AND EMERGENCY MANAGEMENT, OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:30 p.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Rand Paul, Chairman of the Subcommittee, presiding. 

Present: Senators Paul, Ayotte, Ernst, and Baldwin. 

OPENING STATEMENT OF SENATOR PAUL 

Senator PAUL. I call this hearing of the Federal Spending Oversight Subcommittee to order. 

The topic today is going to be government waste and how we can 

practically do something to curb waste, but also to ameliorate the 

problem we have with the growing deficit. We have a deficit this 

year that is expected to be about $583 billion, and some will say 

we are fixing the deficit because it is getting smaller. Yet the overall debt is growing enormously larger. 

We have about $1 million that we borrow every minute, and I 

think this is a threat to our economy, and some economists have 

said it is costing us millions of jobs, just the burden of this debt. 

So what we are going to do is talk about some of the waste, and 

some of this has been talked about in the past. But my hope from 

the discussion today is to actually itemize some of this, and as we 

itemize this, then give advice to some of the people who spend this, 

the committees that spend this. And too often we have reports, and 

they just never get acted upon. 

The new majority has said we are going to try to pass all of the 

appropriation bills. There is a great deal of power to the purse if 

we will actually use it. It is what the expression is supposed to 

mean, that we are supposed to express how we would like the 

money to be spent. But if you do not have appropriations bills, you 

are lumped all together in some omnibus or continuing resolution 

(CR). You lose your power as to direct how to spend it, and as a 

consequence, we never eliminate any of the waste. I have seen very 

little example that we eliminate any waste that we determine. 

But it is my hope to not just have a discussion of this today, but 

at the conclusion to actually have a blueprint for how we could get 

rid of government waste. 
2 

With that, I would like to turn it over to our Ranking Member, 

Senator Baldwin. 

OPENING STATEMENT OF SENATOR BALDWIN 

Senator BALDWIN. Great. Good afternoon, everyone. Good afternoon, Chairman Paul. It is great to join you for our inaugural Subcommittee hearing. I very much look forward to working with you 

on this issue and others under our Subcommittee’s jurisdiction as 

we move forward. 

I want to take a few moments to outline a couple of issues for 

today’s hearing, as well as moving forward. And I will go on, if you 

will indulge me for a few minutes here, because this is our inaugural meeting and I am very excited to kick things off. 

First of all, in my home State of Wisconsin people are working 

harder than ever and taking home less. And hardworking families 

and businesses in Wisconsin are struggling to get ahead. I know 

that is the case for many places in the United States. Congress has 

a choice to recognize this and work together to create a stronger 

economy and security for our people. 

Now, I am a Wisconsin progressive, and I know well the legacy 

of Senator Bill Proxmire. He took on wasteful government spending, and I know that he did not take on this fight and pass out 

Golden Fleece awards because he was opposed to government. He 

did it because our progressive values hold to the belief that every 

dollar of waste was a dollar that was not being invested in growing 

the hardworking middle class in the United States. 

And as I have traveled the State of Wisconsin, people ask nothing more than a fair shot at getting ahead. They expect us to cut 

wasteful government spending and tax expenditures that favor 

those at the top. They also expect smart investments that grow the 

economy and create shared prosperity. In short, they want us to reduce spending without shortchanging their future. 

In Wisconsin, we have a work ethic that is second to none. We 

pinch our pennies, and our people expect us to do the same with 

taxpayer dollars. And in my view, that is what today’s hearing is 

all about. 

Now, I want to just mention a couple of things that I know we 

are going to focus on today and I trust we will continue to focus 

on in the future. 

First of all, the Government Accountability Office (GAO) reports 

every 2 years on areas within the Federal Government that are 

vulnerable to waste, fraud, abuse and mismanagement. Since the 

1990s the GAO has identified more than 50 areas that are at high 

risk. However, steady progress has been made in these areas, and 

23 areas have been removed from the list altogether. 

For example, the Food and Drug Administration has significantly 

improved its oversight of medical device recalls; the Defense Department (DOD) has shown some strides and is making progress 

in the management and oversight of its contracting approaches; 

and NASA has significantly strengthened its acquisition management functions. 

Yet, in spite of this progress, many challenges remain. Earlier 

this year, the GAO added two new areas to its high-risk list, including the Veterans Affairs (VA) Health Administration. The GAO 
3 

determined that VA facilities have failed to provide timely health 

care and in some cases have harmed veterans. We need to do better for our Nation’s veterans. 

Another area that I know we will discuss today with this expert 

panel, one that is ripe for congressional review is improper payments. 

In fiscal year (FY) 2014, governmentwide improper payments 

reached approximately $124.7 billion, and that is an increase of 

$19 billion from the prior fiscal year. 

GAO has found that agencies continue to struggle with reducing 

the number of improper payments and lack the internal controls to 

determine the full extent of the improper payments. 

This is an area that I think we can all agree that more work 

needs to be done. 

I want to move on from areas where the GAO believes that we 

can achieve savings and on to an area that I personally feel passionately about and want to further explore. 

A critical part of improving economic security is guaranteeing 

that everyone has access to high-quality and affordable health care. 

The Affordable Care Act (ACA) has already made a strong investment in the health security of middle class families across this 

country. More than 10 million Americans have signed up for affordable health insurance provided by the new law. In Wisconsin, over 

180,000 people have quality health plans, and 90 percent of them 

are benefiting from premium tax credits to help pay for this coverage. 

The law is also strengthening our investments in Medicare and 

reducing costs for our Nation’s seniors. About 9.4 million seniors on 

Medicare have each saved an average of $1,598 on prescription 

drugs in the ‘‘donut hole.’’ 

I am committed to making sure that America’s new health law 

works in Wisconsin and across the country, and I am committed to 

fixing what does not work. That means putting partisanship aside 

to implement the law and finding common-sense areas in which to 

improve the law. 

To that end, I believe that there are significant savings that can 

be achieved within our health care system without compromising 

quality of care or slashing benefits that seniors have earned. There 

are a number of nonpartisan and bipartisan think tanks and other 

groups that have issued recommendations to Congress about delivery system reform in the health care arena, some arguing that we 

could realize up to $1 trillion dollars in savings without affecting 

health care outcomes by enacting smart and targeted health care 

delivery reforms. 

These are truly impressive savings that would strengthen our 

Nation’s health care system without shifting costs to seniors or to 

States. 

Chairman Paul, I would hope that as we begin a dialogue about 

finding solutions to Federal waste, fraud and abuse, we can also 

begin this dialogue about how to produce health care cost savings. 

I am confident that if both parties in Washington do what people 

in the State of Wisconsin and in all of our States do everyday— 

which is put progress ahead of politics—we can root out wasteful 
4 

1The prepared statement of Ms. Boccia appears in the Appendix on page 31. 

spending and improve the delivery of our Nation’s priorities for all 

Americans. 

So, again, thank you, Chairman Paul, for providing us with the 

opportunity to discuss these important issues and to our witnesses 

for being here today to take part in this discussion. 

And my hope is that when we leave here today, we will have 

areas we can address so that we can deliver our Nation’s priorities 

in the most efficient and effective way possible. 

Senator PAUL. Thank you, Senator Baldwin. 

With that, I think we will start with Ms. Romina Boccia. Ms. 

Boccia has a master’s degree in economics from George Mason University (GMU) and is currently the Grover M. Hermann Research 

Fellow in Federal Budgetary Affairs, and research manager for the 

Institute for Economic Freedom and Opportunity at the Heritage 

Foundation. Boy, that is a mouthful. Her work there focuses on a 

variety of spending and budgetary process issues. Delving into the 

Federal budget, she is keenly aware of government spending and, 

in particular, government waste. We look forward to hearing your 

insights. 

TESTIMONY OF ROMINA BOCCIA,1 GROVER M. HERMANN RESEARCH FELLOW IN FEDERAL BUDGETARY AFFAIRS, AND 

RESEARCH MANAGER, THE HERITAGE FOUNDATION 

Ms. BOCCIA. I thank you, Chairman Paul and Ranking Member 

Baldwin, for inviting me today to present my views on wasteful 

spending in the Federal Government. The views I express in this 

testimony are my own and should not be construed as representing 

any official position of The Heritage Foundation. 

A Gallup poll last year reported that Americans believe that the 

Federal Government wastes 51 cents of every dollar that they pay 

in taxes. Another Gallup poll in the same year reported that trust 

in the Congress is at an all-time low, with only 28 percent of Americans reporting that they had a great deal or even just a fair 

amount of trust in the House of Representatives and the Senate. 

Certainly these dismal polling results do not necessarily reflect 

how much or how little waste there actually is in government, nor 

how trustworthy law makers are, but I do think they show a disturbing trend. 

As trust in government has declined, Americans’ perception of 

government waste has increased at the same time that Federal 

spending has grown. High perceptions of government waste and 

low levels of trust are, I believe, in part a result that Americans 

recognize that the Federal Government is doing too many things 

that would be better done by individuals or the private sector or 

businesses or by State and local governments, or that should not 

be done at all. 

Moreover, recent bank and auto industry bailouts and massive 

government handouts to well-connected business as part of the socalled stimulus conveyed to Americans in no uncertain terms that 

cronyism and corporate welfare are rampant in Washington. 

Americans increasingly believe that the system is rigged against 

them. Corporate welfare and crony capitalism are reflected in back-
5 

room deals in which a small group of individuals is able to influence legislation or regulation to the benefit of a narrow interest at 

the expense of the public. They are also reflected in the establishment and continuation of government programs that purport to 

serve broader noble goals but that mostly divert resources away 

from the wants and needs of consumers and toward political purposes. 

The most comprehensive, lasting, and sustainable solution to address corporate welfare and cronyism in Washington is to return to 

limited government. To reduce the size of government, we must 

limit the scope of government. As part of my written record today, 

I am presenting to the Committee a list of 21 programs that I categorize as ‘‘corporate welfare spending’’ that wastes taxpayer and 

economic resources. Many of these very same programs have also 

been recommended for elimination by other organizations and for 

many years. Each program on this list takes taxpayer money and 

gives it to a business or uses it to promote business activities either 

for the purpose of supporting the business directly or to achieve 

some other goal that also lies outside the proper scope of the Federal Government. 

Moreover, several programs on my list are duplicative of other 

Federal, State, and private efforts, and several have come under 

scrutiny due to waste and abuse. Congress should eliminate these 

programs. They include the Export-Import Bank, which presents 

an immediate opportunity for the Congress to do nothing and allow 

the Bank to expire once and for all. They also include the Overseas 

Private Investment Corporation, which is the government agency 

that promotes investment in developing countries by, for example, 

financing Papa John’s Pizza franchises in Russia and a RitzCarlton in Turkey. Moreover, it includes costly FCC Universal 

Service Fund Programs that have long outlived their purpose and 

that today nickel-and-dime Americans on their telephone bills to 

provide overpriced telephone lines to, for example, resort towns in 

Colorado. 

Every dollar spent by the Federal Government for the benefit of 

a well-connected interest group is a dollar that is no longer available to American families and businesses to spend and invest to 

meet their own needs and desires. 

Corporate welfare spending is particularly morally reprehensible 

when government spends resources that belong to the next generation. With deficits of half a trillion dollars and growing, cutting corporate welfare and waste is long overdue. 

The Defense Department’s Base Closure and Realignment Commission (BRAC), provides a valuable mechanism for eliminating 

wasteful and unnecessary government spending. I believe that the 

idea that an independent commission guided by clear criteria can 

overcome special interest politics and congressional gridlock in pursuit of the national interest, I think it deserves serious consideration. 

Thank you. 

Senator PAUL. I think rather than go on to the next, I want to 

just do it a little bit differently. We get so much information by 

going through five. There are only two of us to ask questions, so 

we are going to ask a few questions, if that is OK with you. 
6 

Senator BALDWIN. Absolutely. 

Senator PAUL. On the Ex-Im bank, some people maintain, well, 

it makes a profit for the government—we will start with Ms. 

Boccia, but we will let the panel answer—one, that it makes money 

and, two, that everybody else does it, so why shouldn’t we do it? 

Ms. Boccia, would you care to respond? 

Ms. BOCCIA. Yes. With the Export-Import Bank, what many miss 

is that there are huge taxpayer liabilities that may not come due 

tomorrow or next year. But in an economic downturn like the one 

we recently experienced, it is possible that taxpayers could face 

large liabilities from the loan guarantees that the Bank makes. 

Moreover, the Bank only benefits a very narrow group of special 

interests, in particular Boeing. And just because other countries 

are doing the wrong thing does not mean the United States should 

be doing the same thing. I think we should be leading as a country 

with the right policies. 

Senator PAUL. Anybody else want to comment to that question? 

Mr. EDWARDS. I will give you an opinion on Ex-Im bank that is 

not based on data, but I believe it is the most important thing with 

corporate welfare, and that is, I believe corporate welfare makes 

U.S. businesses weaker. I cannot prove that, but I have read about 

many programs over the years and looked at how these companies, 

they spend their time in Washington lobbying rather than concentrating on making better products, which is what they should be 

doing. I think Solyndra was a great example of that. They were so 

focused on getting the government subsidies in Washington, they 

did not realize that China was creating inventions and innovations 

that went around them, and ultimately they went bankrupt because of that. 

So just like conservatives often complain that welfare programs 

have harmful effects on the individuals who receive them by sapping their interest and incentive to work, it is the same with business subsidies. Business subsidies weaken American business, I 

think. 

Senator PAUL. And I think one response to that also would be 

that one thing that Americans seem to hate about government is 

they think there is too much money involved in their government, 

that money buys influence. The Solyndra loan was from a very big 

campaign donor to one party. The corporation that gets a lot of 

money from Ex-Im bank is very active here in town, and the question is: If you are really for campaign finance reform, maybe we 

ought to start with not giving out specific items that seem to go 

to specific corporate entities. 

Mr. ELLIS. Mr. Chairman, I just wanted to add, we are certainly 

also opposed to Ex-Im bank, but also, on the other side of the ledger, some of the companies that are benefiting in other countries are 

actually State-owned companies that are also extremely well off, 

like Pemex in Mexico. And there is a good analysis done by the 

Mercatus Center over at George Mason University that has a lot 

of that there. 

Mr. SCHATZ. I do not want to take more time on that, but I agree 

with everything everybody has said, and I think it is something— 

again, Congress has to start somewhere, and in this case it is easy. 

Just do not reauthorize it. 
7 

Senator BALDWIN. I take a different view on the Export-Import 

Bank. 

Small firms in Wisconsin—and I would say largely it is smaller 

firms that utilize the export-import bank. Those firms export directly or supply to the larger Boeings. If you think about their business plan, they working with a lot of smaller businesses that supply parts, and they are really assemblers more than they actually 

produce the raw materials that go into the final products—planes, 

for example. 

A lot of the small businesses have not been able to find the type 

of support they need for starting to export their products from community banks, from banking institutions, but not only that, the insurance products that are and unique to the Export-Import Bank. 

And I wonder why you feel certain that products that are not currently being offered by the private sector are all of a sudden going 

to materialize across the United States to help our small businesses be able to compete in those export markets. 

Mr. SCHATZ. There are lots of other companies and businesses 

that export products that may not be related to a particular industry, and I think the point we are—I am not speaking for everybody, 

but I think we all agree that it is so focused on Boeing and a few 

other companies that it does distort other opportunities to export 

products that may be available through other sources. And, clearly, 

Boeing itself is capable of finding all kinds of money in the commercial sector, commercial banks to export their products and in 

turn help these other companies who may be making parts. 

Ms. BOCCIA. If the Export-Import Bank is, in fact, making a profit—and I would argue it is not, especially not in the long run—then 

this would be the greatest sign for a private sector bank to step in 

and take over those functions if Congress allowed the Bank to expire. 

Dr. KETTL. Senator, one thing that I want to emphasize is your 

point about the extended production chain, there are two points 

here that are worth making. The first is that Boeing is obviously 

a large company, and it clearly has access to capital. But it, as you 

pointed out, is often much more an assembler of products that are 

produced across the entire country as opposed to just being produced in Seattle, Washington. 

And the second point that is important is that while Boeing has 

ready access to capital, that may not always be the case for other 

companies down the production chain, and the cost of the product 

that Boeing makes is the product of the assemblage of all the 

pieces that go into planes along the way. And the ability of Boeing 

to be able to produce a quality product at a reasonable price depends on the ability of each of those individual elements of the 

chain to be able to obtain their own financing. And they are often 

at a very different situation than is the case with Boeing. 

So it is a complicated situation, to be sure, but it would be a mistake, I think, to look at the Export-Import Bank solely in terms of 

the ability of Boeing as a company to be able to obtain financing 

to be able to export, because, in fact, it is a much more complicated 

piece. 

Senator BALDWIN. I think about the Wisconsin economy, the 

small businesses and medium-sized businesses that I visit that use 
8 

1The prepared statement of Mr. Edwards appears in the Appendix on page 47. 

the Export-Import Bank services and financing. Businesses selling 

farm implements into countries in Eastern Europe, for example, 

where there are significantly different norms and customs in the financial system. If you do not have a local bank that has some 

knowledge of those customs and rules, it is really difficult. And yet 

there are these relationships between small communities in Wisconsin and markets abroad that are very important to our economy. I do not think there would be other solutions for them without the Bank. And again I do not know where you think that expertise would be developed across the country to help our small 

businesses make headway in those markets. 

Mr. EDWARDS. I mean, it does strike me, Senator, what you are 

talking about is extremely important. I want American businesses 

to be the most competitive in the world, and we should be. But 

Congress does a lot of stuff that makes American businesses less 

competitive: regulatory stuff, we have the highest corporate tax 

rate in the world. I would think it would be fantastic after ExportImport expired that Congress looked at some of these competitiveness issues with U.S. businesses. I mean, financial services is massively regulated today. That has not done anything good to provide 

a flow of capital to small and large businesses. Again, the Tax Code 

is a horrible mess. 

So, I guess I would try to look at positive things Congress can 

do to sort of get out of the way of American exporters. 

Senator PAUL. Good. That is where we are going now, back to 

Mr. Edwards. Our next witness is Chris Edwards, who is the Director of tax policy studies at Cato, editor of 

DownsizingGovernment.org, and author of a book by the same 

name. Prior to joining Cato, he served as the senior economist on 

the Joint Economic Committee and a manager with 

PricewaterhouseCoopers and an economist with the Tax Foundation. Needless to say, Mr. Edwards has extensively looked at what 

is not working in our government, and his testimony today should 

be very informative. 

Mr. Edwards. 

TESTIMONY OF CHRIS EDWARDS,1 DIRECTOR OF 

TAX POLICY STUDIES, AND EDITOR, 

WWW.DOWNSIZINGGOVERNMENT.ORG, CATO INSTITUTE 

Mr. EDWARDS. Thank you, Chairman Paul and Ranking Member 

Baldwin. Thanks for inviting me to testify. The government is still 

running huge deficits, so cutting wasteful spending should be a 

high priority. Wasteful spending includes not just the sort of mismanagement like improper payments we are all used to. I think 

more broadly waste includes spending that is low value and would 

be more efficiently handled by State governments. 

Wasteful spending has plagued the Federal Government since 

the very beginning. As just one example, even back in the 19th 

Century, the Army Corps of Engineers (ACE) was known for cost 

overruns and pork barrel spending. The government is far larger 

today, and so the waste has multiplied. 
9 

There are basic structural reasons for Federal waste. Unlike 

businesses, Federal agencies, of course, do not have to earn profits, 

so they have little incentive to restrain costs and improve quality. 

Unlike businesses, failed Federal programs do not go bankrupt. 

Ten percent of all U.S. companies go out of business each year. 

Failure gets punished in the private sector pretty severely, but 

failed Federal performance management system unfortunately last 

for decades often. 

Federal workers almost never get fired. The firing rate in the private sector in the United States is 6 times higher than the firing 

rate in the Federal Government. The firing rate for corporate Chief 

Executive Officers (CEOs) is 20 times higher than the firing rate 

for the Senior Executive Service (SES), who are the senior career 

people in the Federal Government. 

Bureaucratic layering is a problem. Research has found that corporate America has become a lot leaner in recent decades, with 

fewer layers of management. The Federal Government has gone in 

the reverse direction. Research by Paul Light of Brookings has 

found that the number of layers of management in the Federal 

Government has increased substantially in recent years, and he argues that those excessive management layers in the Federal Government have been the main cause of a number of the recent failures and scandals. 

The vast size of the Federal Government makes it impossible to 

oversee. There are 2,300 Federal subsidy programs; all of them are 

susceptible to waste, fraud, and abuse. And here is a remarkable 

statistic I came across recently. The Federal budget of $4 trillion 

a year is 100 times the average State government budget in the 

United States. So the Virginia State budget is $40 billion. The Federal budget is 100 times greater. So Federal spending is far too 

large for auditors and oversight committees to properly monitor. 

The best solution to the waste problem is to cut the Federal Government’s size, and I think a prime target for cuts ought to be Federal aid to State and local government, which costs over $600 billion a year. Aid to States is particularly susceptible to waste for 

reasons I go into in my written testimony. I am just going to mention a few aid to State programs that I think Congress ought to 

cut. 

Urban transit, $13 billion a year. Federal aid encourages cities 

to buy expensive light-rail systems rather than more efficient bus 

systems. Without Federal aid, cities would make more efficient investment choices, and they would have much more incentive to control costs. 

Disaster aid. The Federal Emergency Management Agency 

(FEMA) provides billions a year in preparedness grants and disaster aid to States. In the last couple decades, the Federal Government has intervened in many more localized disaster events that 

ought to be handled instead by State and local governments. I 

think this is a big mistake. Federal intervention, in my view, will 

ultimately weaken America’s ability to respond to natural disasters. I think FEMA ought to be cut, and I think we would have a 

stronger response system to natural disasters because of it. 

The Economic Development Agency (EDA) in the Department of 

Commerce, $450 million a year. That was actually one of Senator 
10 

Proxmire’s—it won many Golden Fleece awards from Senator Proxmire decades ago, and the problems are the same today actually. 

The EDA sends out money to local governments and businesses. 

The money used to go to high poverty areas. Now it is sprinkled 

across the country, often to high-income areas. There is no reason 

for the EDA to exist. I looked on the EDA’s website yesterday, and 

just yesterday they handed out a $1.2 million grant to a poultry 

company in Arkansas to build an access road from its facility to the 

highway. Now, that sounds like a useful project, but why should 

the Federal Government be involved? I think local projects ought 

to be handled and funded locally. I think Federal involvement in 

such local projects just creates bureaucracy. So I think the EDA 

ought to be ended. The School Lunch and Breakfast Program, $16 billion a year. Because the funding comes from Washington, local school administrators have very little incentive to reduce waste and abuse. The improper payment rate in the School Lunch Program is 16 percent. 

The improper payment rate for the Breakfast Program is 25 percent. Those are enormous improper and fraud rates in those programs. The reason is local governments have an incentive to maximize the number of students on those programs to draw more 

funds from their State and the Federal Government. If local governments had to rely on their own funding, they would have 

stronger incentives to reduce waste. 

So, in sum, I think a great place to start cutting spending would be the $600 billion a year we spend on aid to State and local governments. The cuts I mentioned today and many others are proposed on Cato’s website, DownsizingGovernment.org, and thank 

you very much for holding these hearings. I think it is a very important subject. 

Senator PAUL. Well, thank you for your testimony. I think one 

of the interesting things about it is if we want to define how ineffectual government is, Senator Proxmire talked about something, 

what, 25 years ago, 30 years ago, and we still have not gotten rid 

of it. We have gotten great reports. Senator Coburn was good at 

getting reports from GAO on waste and duplicative programs, and 

yet we still have them. I think that is why the people are frustrated with us, that we actually have the answers to a lot. It may 

not balance the budget, but it would make our government a lot 

less unwieldy and wasteful if we were to get rid of some of the 

things we all know about and yet cannot seem to get bipartisan 

support for doing it. 

But I think you also pointed out a bigger problem that I think 

is important to point out. I will often ask the question rhetorically 

when I speak with folks, and I will say, well, it is not that government is inherently stupid, although that is a debatable question. It 

is that they do not get the right incentives. So government employees do not really—in a business you are trying to maximize—it is 

the beauty of capitalism that people sort of take for granted. It is 

how would we do things without the Ex-Im bank, without that 

knowledge. Well, that knowledge is out there in the capitalist 

world, and iTunes does not need it, iPads do not need it. Good 

products do not need any help from government. They sell. And it 

is an amazingly intricate process figuring out where you get all the 
11 

components even for a pencil. Leonard Read wrote the little pamphlet, ‘‘I, Pencil,’’ many years ago, and just how complicated it is 

to make something as simple as a pencil, requiring ingredients 

from different continents, putting them together and selling them 

for pennies. A pencil would cost, $1,000 if government made pencils 

because they do not have the proper incentives to do anything efficiently, so, therefore, we ought to minimize what government does, 

send it back closer to the people, to the State level is a little bit 

better, and then ultimately back to the people, if we can. 

I think that when we look at this, you see this also in the firing 

rate that you mentioned. We cannot even fire people in government 

who have committed malfeasance sometimes. The VA employees, 

we had to pass a law to fire them. I am still not sure if we have 

actually fired anybody over the falsification of the waiting lines. 

We talk about how we get good people. The post office I think loses $1 billion a quarter, and I remember questioning that they 

wanted to pay them more, and the answer was, well, to keep good 

people you need to pay them. And I said, well, how good do you 

have to be to lose $1 billion a quarter? 

But I think you are right, what we have to do. The problem is 

when we get to this—and this is the danger, and this is why people 

do not want to talk about the specifics of waste, because, my goodness, you are talking about school lunches, and so people are like, 

oh, no, not the children, we are not going to do this to the children. 

Well, the way I look at it is a little differently. With disability 

or with children, I look at it that if you have a 20-percent improper 

payment rate, you are stealing that from what we have—the limited resources we have to help people. So I am not against the 

School Lunch Program, but I am against giving my kids a free 

lunch. And I think all the kids at my kid’s school can get it because 

we are beyond a certain amount. I think everybody can get the free 

lunch if they want to. 

And so, we do have to do these things. The earned income tax credit, there can be a place for that, but we have there $20 billion 

worth of overpayments, false payments. 

Social Security, the report came out recently, $17 million going 

to dead people. You would think we could agree bipartisanly not to 

pay dead people anymore. But it goes on year after year after year. 

Social Security thinks currently there are 6.5 million people over 

the age of 112. That is where their computer resources are at this 

point. 

So, yes, we have to do more, and the question I have in general 

is, I guess: How do we finally do what we have identified for years 

and decades and decades? How do we finally get it done? And how 

do we talk about emotional subjects like school lunches without 

being portrayed as the Grinch? Chris. 

Mr. EDWARDS. Well, Romina talked about a BRAC commission 

which worked very successfully, I guess four rounds or more, with 

the Pentagon, a great program and a great design of that. I am not 

sure that would work for most of the rest of the budget. I think 

Members of Congress have to believe in reducing spending for it to 

actually happen. You can have all the rules you want, and we can 

change the procedural rules, but ultimately, people have to believe 

that State and local governments can do these things better. 
12 

I am in favor of a balanced budget amendment to the Constitution. If you support it, Senator Paul, I think that is a way that we 

can force discipline. Forty-nine of the 50 States have legal, constitutional, or statutory requirements to balance their budget, and 

it works extremely well. Liberal States, conservative States, ultimately they have to take responsibility. They have to make tough 

decisions. You folks up here, with due respect, you do not make the 

tough decisions. So I think that is one solution to the problem. 

Senator PAUL. And I think what it does is it forces you to 

prioritize. Because we have a printing press and we do not seem 

to care about the debt, people come up and everybody has a program. Everybody has something that tugs at the heart, and so we 

give them all money. And you are right. If there was an overall 

rule that you only spent what came in, then we would have to 

prioritize, and we would have to say, you know what? Maybe 

healthy people should not get disability. Or maybe this person has 

a disability that is worse that needs it, but that we cannot give everybody in the country disability. So, anyway, thanks for your response. 

Senator Baldwin. 

Senator BALDWIN. Because not everyone has testified, I am trying to recall what each of you addressed in your written testimony. 

Mr. Edwards I want to follow something that I believe you put in 

your written testimony and did not necessarily elaborate on just 

now. 

The metrics available in the private sector are somewhat different than the metrics available in the public sector to be able to 

measure outputs and to measure efficiency and effectiveness. But 

where they are available, certainly we want to seize those and use 

that. I think, Dr. Kettl, you had some similar observations about 

the inherently different role of private enterprise and public enterprise. 

We had a hearing in the full Homeland Security Committee yesterday about the Transportation Security Administration (TSA). 

One of the whistleblowers who was at the table testified that the 

metrics they have if there are undue delays in getting through a 

security line are very precise. They have to report to the airlines 

if somebody spent more than 5 minutes in a PreCheck line and 

more than 20 minutes in a non-PreCheck line. But the measurements and the metrics and the yardsticks for catching any dangerous item that might be in luggage are far less clear and far 

more difficult to pin down. 

What I am getting around to is this: Can you envision better performance metrics for the critically important enterprises that we 

oversee in the Congress working as well in government as they do 

in the private sector? And are there any improvements that you 

can suggest would reduce our inefficiencies? I am thinking of the 

Government Performance and Modernization Act for example. 

Mr. EDWARDS. The government goals are very amorphous often, 

so it is difficult to pin down heads of agencies whether or not their 

agencies are succeeding or failing. 

An additional problem is that most government activities are monopolies. The TSA has an aviation security monopoly. It is hard to 

judge monopolies because there is nothing to compare it to. 
13 

And so what I have written about with the TSA, for example, is 

to move to a system like they have in Canada and Europe where 

the screening at airports is decentralized to the airports. In Canada, all the airports use private security. They have private security companies competing for the contracts. They give them contracts. They say, ‘‘You have to meet these levels of performance. If 

you fail, you are fired.’’ In Europe, it is generally the airport’s responsibility. They can keep their own in-house security. They can 

use private security. 

So I think when you have a decentralized solution like that, the 

government, the overseer of aviation security could compare airports, could publish metrics comparison. We could have the GAO 

do their undercover investigations at the airports. We could compare results. If companies are not doing a good job, they could be 

fired. 

Senator BALDWIN. I think what they are struggling with is what 

those metrics should be. And it is easy to say, ‘‘Did somebody pass 

through PreCheck in 5 minutes,’’ and did somebody check through 

the non-PreCheck security screening within 20 minutes, and what 

factors led to that not happening? But the essence of TSA is making sure that we are safe in our travel. It is great if that can happen expeditiously, but safety is the bottom line. And those metrics 

are much harder. Dr. Kettl. 

Dr. KETTL. And, Senator, that is an incredibly important point, 

and it is important to remember that, regardless of whether the security function is being performed by a government agency or by 

a private company, the central goal is the same. Should, heaven 

forbid, a problem happen, it will not matter in a sense whether it 

was a private or a public security screener who was responsible for 

it. And it is worth remembering that the problems of 9/11 came 

through for the most part private security screeners there as well. 

So it is not privateness or publicness that really defines the problem of measuring government performance. It has to do with first 

trying to understand what it is we want to try to accomplish, how 

we can explain to taxpayers what value they are getting; second, 

to recognize that we have made tremendous progress under both 

the current and the previous administration. Republicans and 

Democrats have been together in trying to improve government 

performance. The Bush Administration deserves enormous credit 

for its efforts. The Obama Administration has as well. And one of 

the most important things that Congress can do is to ensure that 

that progress continues to the next administration after that, to 

turn up the heat, to keep it on, to force at every occasion when 

members of the administration come to testify, regardless of party, 

to come and explain to taxpayers what value they are producing for 

the dollars that they are getting, and then use the measures and 

the metrics that have been developed to try to do that. 

Senator Ayotte has been very active in the moneyball movement, 

which is another way to try to provide better metrics. We have 

proven that this has been, can be, must be a bipartisan effort. And 

if it has to do with the public interest, we can debate separately 

who best can perform it. But we should not debate whether or not 

performance metrics have to be at the core about what it is that 

government does. 
14 

Senator PAUL. I see that Senator Ernst is here. You can either 

ask questions now if you want—we are kind of going one person 

at a time. If you are ready and have a question, go ahead. If not, 

we will go to the next person, and then you can ask questions. 

OPENING STATEMENT OF SENATOR ERNST 

Senator ERNST. Certainly. Thank you, Chairman Paul. I appreciate that opportunity. 

This is an important hearing, so I am glad we are here today and 

able to visit with you. Thank you. I apologize for my tardiness. 

I do want to start off with just a brief comment that is fitting 

for today’s hearing topic before I move into my question. Today I 

am introducing the Program Management and Improvement Accountability Act with Senator Heitkamp, and the bill targets wasteful spending in Government that is a direct result of poor program 

and project management in agencies. 

Shortcomings and failures in program management have plagued 

our Federal Government for decades. This is an ongoing issue. And 

we have read about these failures in the media; we have read 

about them through Inspector General (IG) reports, through the 

GAO high-risk list. Many of you are intimately familiar with that. 

And poor program management leads to projects that are grossly 

over budget, delayed, or do not meet the intended goal of the 

project. And I have just a few examples that we have compiled of 

that. One is the VA Scheduling Replacement Project which was terminated in September 2009 after spending an estimated $127 million in 9 years. So it was terminated. 

The Homeland Security new headquarters, the project is 11 years behind schedule and more than $1.5 billion over budget. The 

project is the D.C. area’s largest planned construction project since 

the Pentagon, and it was to be finished in 2014, but is still almost 

entirely undeveloped, though it has cost $4.5 billion so far. The 

new completion date is now 2026. Great example. 

Department of Defense’s Expeditionary Combat Support System, 

it was canceled in December 2012 after spending more than $1 billion and failing to deploy within 5 years of initially obligating the 

funds. 

These are just a few examples of where we have seen program 

management failures, and I really could go on and on. We have 

found so many examples of this through all different types of agencies. 

The Federal Government is literally wasting billions and billions 

of dollars because they are not working smartly on these projects. 

So, Dr. Kettl, thank you for being here today, but you mentioned 

managing boundaries and human capital as one of the root causes 

to the government’s ongoing problems of wasteful spending. And 

these issues are really at the heart of why I am focusing on this 

bill and trying to improve this situation. Can you elaborate on both 

of these issues a little bit more? 

Dr. KETTL. Senator, there is nobody alive who could possibly justify long delays, waste of money, and nonperformance of governmental programs. Everybody agrees that is a bad idea. The question is what we do about it. And we could either decide we are just 

not going to do it, but if we decide it is something we must do, then 
15 

the challenge is figuring out how. And as I will talk a bit more 

when I testify shortly, if you look at the high-risk list, and, on the 

one hand, it could be read as a string of horror stories. On the 

other hand, it can be seen as a set of opportunities to learn about 

what it is that the most difficult problems in government have in 

common. 

And if you look down over those issues, there are problems of 

contract management, of the fact that nothing that really matters 

any longer is any one problem that any one agency or any one sector can possibly control. And so we need to get managers who are 

better at building boundaries and make the coordination work better. 

But in the end, ultimately, this comes down to making sure we 

have the government’s talent management problem under control, 

getting the right people with the right skills in the right places to 

be able to do the things that have to be done. And in a lot of ways, 

the issues of trying to manage the VA comes down to things like 

that. One of the government’s biggest problems is acquisition management. It is having enough smart acquisition managers to do the 

things that we decide that government must do, and we have to 

find a way to close the acquisition talent gap that is there. 

Not long ago, I was privileged to be at a meeting of some of the 

smartest people in town talking about the issues confronting the 

next administration, regardless of party. And, surprisingly, the one 

issue that came boiling out of everything was the issue of talent, 

that we can talk separately about how many government employees we ought to have, but it is clear that we face a significant gap 

between the kind of workforce that we need with the right incentives and the kind of jobs that we expect government to do. And 

too often we separate out the question of government’s function, 

which is something we need to debate, and the question of how 

best to try to fulfill it. And assuming that we can simply cut government employees and produce a better government, that is not 

always the case. 

One of the things that I discovered in preparation for the hearing 

today is this: I was curious about the Centers for Medicare & Medicaid Services (CMS), which have enormous amounts of problems of 

wasteful spending, enormous amounts of improper payments. On 

average, each employee who works for the Centers for Medicare & 

Medicaid Services is responsible for $144 million per employee, and 

we have to ask: How is it that we are likely to get better performance and reduce improper payments if we do not at least figure out 

what we need to make sure that the agency is managed well? 

We ought to, we need to, we must have a debate about the basic 

ideological principles and the basic goals for achieving government, 

but once we set those governmental goals, we have an obligation 

to taxpayers to make sure that we have the capacity to deliver. 

And if we do not, if we do not invest in that, there is no single 

waste that is bigger in government than that. 

Senator ERNST. Thank you, Dr. Kettl. I appreciate it. 

Senator PAUL. Thank you, Senator Ernst. 

I just wanted to mention, since Senator Ernst and Senator 

Ayotte are here, if you have specific ideas like the legislation you 

are doing, my goal at the end of this hearing is to collect them. We 
16 

1The prepared statement of Mr. Ellis appears in the Appendix on page 56. 

2 Information submitted by Mr. Ellis appears in the Appendix on page 95. 

may not all agree on them, but if 8 or 10 of us agree on some reforms, we sign it, send it to the Subcommittee on Appropriations 

and say these are changes that we can do, if it legislation we can 

push out of here, yes, but let us try to have—when we finish this, 

we will ask the experts—we will try to have some specific ideas on 

how we could actually save money and send it in a written form 

to the Appropriation Committees. 

I am going to change the rules one more time. This is my first 

time to be in charge so I get to change the rules. [Laughter.] 

I think we need to get through the testimony, so let us go 

through Mr. Ellis, Mr. Schatz, and Dr. Kettl, and then Senator 

Ayotte will go. Is that OK with you? All right. 

I am going to give the introduction here. Mr. Steve Ellis is the 

vice president of Taxpayers for Common Sense, where he has been 

for nearly two decades now. Over this time, Mr. Ellis has written 

and spoken on a wide array of topics related to government spending. He is a graduate of the Coast Guard Academy and served 

there with distinction, and this Committee welcomes Mr. Steve 

Ellis. 

TESTIMONY OF STEVE ELLIS,1 VICE PRESIDENT, TAXPAYERS 

FOR COMMON SENSE 

Mr. ELLIS. Thank you. Good afternoon, Chairman Paul, Ranking 

Member Baldwin, Senator Ernst, Senator Ayotte. Thank you for inviting me to testify here today about government spending, waste, 

and what can be done about it. I am Steve Ellis, vice president of 

Taxpayers for Common Sense, a national nonpartisan budget 

watchdog. 

Senator Proxmire has come up a few times. I just wanted to note 

that the late Senator was our honorary advisory board chair, and 

he bequeathed the Golden Fleece to us in 2000. And, in fact, we 

gave Golden Fleece just last week to the House and Senate Appropriations Committees for continuing a program that ships Pennsylvania coal to Germany to power some of our U.S. bases there. 

I was asked to address nondefense discretionary spending outside of agriculture. My written testimony includes wasteful policy 

that leads to failed resource management and future taxpayer liabilities. I want to assure each and every one of you that Taxpayers for Common Sense is willing, ready, and able to work with 

you to eliminate waste and inefficiency in all areas of government—including defense and tax expenditures—to give taxpayers a 

government that works. I brought our ‘‘Common Sense Cuts for the 

114th Congress: Silencing Sequester Scaremongers with $2 Trillion 

in Deficit Reduction’’2 that I would like to enter into the record. 

There are a variety of spending programs that are either wasteful, corporate welfare, or simply not a Federal responsibility. Here 

are a few highlights. 

There are many subsidy programs at the Department of Energy 

(DOE) for sources new and old. Spending, tax credits, and mandates such as the Renewable Fuel Standard create a crazy quilt of 

government support that often works at cross purposes. It would 
17 

be better to simply eliminate all energy subsidies and start with a 

blank slate. Then policymakers can determine what basic research 

the United States should support. For example, just three of the 

energy subsidy programs—Fossil Energy Research and Development, Mixed Oxide-Fissile Materials Dispositions, and Fusion Energy Sciences—received more than $1.3 billion in fiscal year 2015. 

All told, the energy subsidy programs from renewables to nuclear 

to fossils received many billions more. A subset of energy, more than $200 million in bioenergy subsidies are scattered throughout the Department of Energy—Departments of Agriculture (USDA), Treasury, and EPA. From research 

and development to harvesting and storing them, taxpayers subsidize every step of the biofuels/biomass process. We even pay to 

convert heat and power sources at biofuels facilities to run on biomass, then subsidize production and retail. Over the last decade, Congress has transferred more than $50 

billion from the Treasury to backfill the Highway Trust Fund. The 

Congressional Budget Office (CBO) estimates the gas tax shortfall 

could require as much as $167 billion over the next 10 years at the 

current rate of spending. Leaving aside debates about revenue 

sources, the spending beyond the trust fund’s means must stop. 

Furthermore, there is a bias for new construction over maintenance. This preference for funding ribbon cutting over repairs will 

add additional pressure on the bankrupt Federal funding system. 

The Essential Air Service (EAS) is a relic of the 1970s and airline deregulation. EAS subsidizes air carriers to maintain flights 

between rural communities and regional hub airports. These trips 

cost taxpayers as much as $1,000 per flight, and often the small 

planes that service the routes run nearly empty. Taxpayers for 

Common Sense (TCS) has uncovered numerous examples of communities that could link to nearby hubs with intercity bus service 

that could be run with little or no subsidy at all. Annually, this 

program costs taxpayers roughly $250 million. 

The U.S. Army Corps of Engineers Civil Works Program suffers 

from a lack of prioritization, which inevitably leads to waste as 

lower-priority projects are funded over more critical ones. There is 

also the duplicative and wasteful environmental infrastructure program and beach replenishment subsidies. The inland waterway industry contributes nothing to maintaining inland waterways. They 

should pay at least 50 percent, and low-use or no-use waterways 

should be removed from the Federal system. The Inland Waterway 

Users Board can be eliminated entirely. These reforms would save 

more than $500 million annually, eliminating wasteful projects, 

and taming the more than $60 billion project backlog could push 

annual savings to $1 billion. 

Other areas I highlighted include eliminating the Maritime Administration, the Coast Guard Bridge Program, and reforming 

international food aid. I would also add the regional development 

authorities. 

While not part of regular discretionary spending, Federal disaster spending should be considered. The number and cost of disasters are increasing, and the Federal share of those costs have also 

dramatically increased, rising from less than 30 percent after Hurricane Hugo in 1989, to more than 75 percent after Superstorm 
18 

1The prepared statement of Mr. Schatz appears in the Appendix on page 64. 

Sandy in 2012. Between 1980 and 1999, we averaged $4 billion disasters; since then, seven. The median disaster cost between 2000 

and 2006, $6.2 billion; 2007 to 2013, $9.1 billion. 

The Nation’s disaster programs need to be reformed to provide 

incentives for communities and States to plan for the inevitable 

disasters and ensure every dime spent responds to the next inevitable disaster. We also know that every dollar spent on mitigation 

saves $4 in recovery. We should be helping people, communities, 

and States prepare for disaster and respond in a way that protects 

taxpayers by reducing future risks and costs. 

I appreciate the opportunity to testify before you. As I said at the 

beginning, Taxpayers for Common Sense is ready to work with you 

to root out waste and ensure that our precious tax dollars are being 

spent wisely and effectively. Thank you, and I would be happy to 

answer questions you have on the testimony or any other area of 

discretionary spending. 

Senator PAUL. Thank you. 

We are going to next move to Mr. Thomas Schatz, who is president of Citizens Against Government Waste (CAGW). Mr. Schatz 

represents an organization wholly focused on working to root out 

and eliminate government waste. Mr. Schatz himself has played a 

big part in those efforts in the almost three decades he has been 

working with CAGW. Mr. Schatz has a law degree from George 

Washington and a bachelor’s degree from the State University of 

New York at Binghamton. 

Mr. Schatz. 

TESTIMONY OF THOMAS A. SCHATZ,1 PRESIDENT, CITIZENS 

AGAINST GOVERNMENT WASTE 

Mr. SCHATZ. Thank you very much, Mr. Chairman, Ranking 

Member Baldwin, Senators Ayotte and Ernst. I very much appreciate the opportunity to be here today, especially with my colleagues who have contributed a great deal to this effort, and we are 

always happy to work together with both you and them to achieve 

our mutual goals. 

I am Tom Schatz, president of Citizens Against Government 

Waste, an organization that was founded in 1984 by J. Peter Grace 

and Jack Anderson to followup on the implementation of recommendations made by President Ronald Reagan’s President’s Private Sector Survey on Cost Control, which is why it became known 

as the Grace Commission. 

It is no secret that wasteful spending is pervasive throughout the 

Federal Government and every agency could perform its functions 

more effectively and efficiently. Recommendations to eliminate 

waste, fraud, abuse, and mismanagement are provided regularly by 

government agencies and the private sector. For example, since 

1993, Citizens Against Government Waste has released ‘‘Prime 

Cuts,’’ the latest version of which identifies 601 recommendations 

that would save taxpayers $639 billion in one year and $2.6 trillion 

over 5 years. And to your point, Chairman Paul, about making recommendations for wasteful spending, we send recommendations 

from ‘‘Prime Cuts’’ on a regular basis when appropriations bills are 
19 

heading to the floor, suggesting amendments that could be considered by the House. We have not done it for the Senate because they 

have not really done appropriations, so we look forward to being 

able to do that this year. 

While my written statement covers numerous systematic and legislative efforts to eliminate wasteful spending, today I am going to 

focus on agriculture. Proponents of the 2014 farm bill claimed that 

it reformed many programs, but that certainly was not true about 

the sugar program. Nothing was done whatsoever. This is an outdated and wasteful program that provides price supports, tariffs, 

quotas, loans, and domestic marketing allotments that have artificially inflated the price of sugar to about 40 percent higher than 

the world price, costing consumers about $3.5 billion annually between 2009 and 2012 for sugar-containing products, and thousands 

of jobs have been lost in industries that use sugar, particularly 

candy manufacturers. Sugar products forfeited $152 million worth of sugar to the 

USDA in September and October 2013. In March 2015, CBO forecast that the U.S. sugar program will cost taxpayers an additional 

$115 million over the next 10 years, and as my friend Steve Ellis 

has pointed out, in most cases farm bill ‘‘savings’’ have been vastly 

underestimated, and I think Taxpayers for Common Sense said 

$450 billion for the 2004–08 bill. So we know these numbers are 

not going to be achieved. 

Despite efforts in both the House and the Senate, and even in 

President Obama’s budget, to eliminate or reduce spending for the 

Market Access Program (MAP), this program survives. It is a poster child for corporate welfare. MAP has delivered advertising subsidies to companies such as Blue Diamond, Butterball, Dole, 

McDonald’s, Pillsbury, Sunkist, Tyson, and Welch that clearly can 

afford their own advertising overseas. One of the most absurd examples under MAP was the $20 million provided to the Cotton Council International in 2011, some of 

which was used to create an Indian reality TV show in which designers created clothing made from cotton in order to promote the 

general use of cotton, but not necessarily cotton from the United 

States. And, remember, this is U.S. taxpayer dollars. In fact, India 

produces twice the amount as U.S. cotton growers and is a net exporter. 

Perhaps the most outrageous waste of money under MAP was in 

the early 1990s $3 million provided to the California Raisin Board 

to air in Japan those well-known ads featuring dancing raisins 

singing ‘‘I Heard It Through the Grapevine.’’ It could not be translated into Japanese, so it ran in English and was, therefore, incomprehensible. Children thought the figures were potatoes or chocolate, and there was something about cutting off fingers by some 

criminal syndicates in Japan. In any event, it ended up costing $2 

for every $1 worth of raisins that even reached the store shelves, 

let alone sold there. 

So if those two examples are not embarrassing enough to really 

get rid of MAP, maybe there will be more. But it is something that 

really should be terminated. Taxpayers should not be doing any of 

this. It costs $200 million a year. Eliminating it would save $1 billion over 5 years. 
20 

Another area we have looked at is stimulus broadband grants and loans to the Rural Utility Service (RUS), $2.5 billion to RUS. 

A March 2013 USDA Inspector General report noted that numerous projects overbuild next to existing private sector competitors 

and providers, and they approved 10 projects worth more than $91 

million that could not even be completed within the 3-year timeframe. Steve mentioned the regional authorities, in particular the 

Delta Regional Authority established in 2000. It is supposed to improve conditions in the economy for 10 million people residing in 

252 counties and parishes in 10 Mississippi Delta States, duplicates other programs, and really should not be funded. It has had 

earmarks worth $17.8 million, and it is something else that should 

be done. 

But in terms of what Congress should do, better stewardship of 

the taxpayers’ money should be what every Member of the House 

and Senate considers every day, thinking first and foremost how to 

better manage the taxpayers’ money and solve problems effectively 

with the resources that are already allocated rather than doing 

what, unfortunately, members of both parties have done, which is 

to create a new program to solve a problem. Let us determine how 

to solve the problem first, look at what is out there. With $4 trillion, there has to be enough money to do what needs to be done. 

Thank you. I appreciate it and am happy to work with the Committee on additional recommendations. 

Senator PAUL. Thank you. 

Before we get to Dr. Kettl, Senator Ayotte has another Committee hearing, and I am going to recognize her. 

Senator AYOTTE. Thank you so much, Chairman Paul, and I appreciate this hearing. I just want to thank all of you for the work 

that you do. It is obviously very important. 

I just had a followup. I know that the Chair and Ranking Member are going to be gathering legislative proposals, so I think that 

is a great way to approach this and figure out what we could send 

from this Committee that is more direct and specific. 

Mr. Schatz, I noticed in your testimony that you said Congress 

would be well served to act on its own watchdogs’ voluminous reports. I agree with you, because GAO has done a lot of work on 

this, and so I have a bill, the Duplication Elimination Act, that perhaps we could take up, but basically it forces expedited action on 

those recommendations instead of having them sit on the shelf to 

make the President bring forward a proposal, whether within a certain time as to when—once the GAO issues the duplication report, 

as to which recommendations he or she will adopt or not and then 

has us vote yes or no on them, and I think that would be good to 

at least get us acting on the work that has already been done. So 

I hope we can take that up. 

But I wanted to just touch briefly on the tax side of it, because 

one particular tax provision that has really bothered me is the refundable tax provisions. One is the additional child tax credit, and 

there have been investigations done of that tax credit that have 

shown when you file as a taxpayer, you do not have to put a Social 

Security number for even the child. First of all, the filer does not, 

but the child—to identify the child that you are seeking the refund 

on, you do not have to. And what we have learned is just by requir-
21 

ing a Social Security number for the child, just to seek that refund, 

you would save $20 billion over 10 years. So there is real money 

there. 

What other thoughts do you have in terms of—I agree with you 

on the government spending side, there is a lot of work we should 

do, and you have identified a whole host of areas and GAO has as 

well. What thoughts do you have on the tax expenditure side as 

using the ACTC as one example that I have certainly been trying 

to make us change that, but other low-hanging fruit, and I think 

there is a lot of it that we could look at on both sides of this equation. 

Mr. ELLIS. Certainly in the Common Sense cuts, we include a lot 

of tax expenditures in there that could be eliminated, and certainly 

in the biofuels round there were a lot of tax expenditures that are 

included in there as well. And then we have looked at reforming 

even some of the scary ones to make sure that they actually perform better, even to go into something like the mortgage interest 

deduction and making it so that it is more useful to more people 

but also less costly, following on a recommendation from the CBO, 

actually. 

And so I think that that is a very ripe opportunity, and we would 

certainly be willing to work with you and identify—and like I said, 

there are many tax expenditures in our report that we would like 

to introduce into the record. 

Senator AYOTTE. Great. Yes? 

Dr. KETTL. Senator, if I might, to put this in a broader context 

to underline how important the question is, we are now at the 

point where tax expenditures are as large as the discretionary 

spending in the entire Federal budget. That is a staggering fact, 

but it turns out to be true. Tax expenditures are as large as discretionary spending. 

We pay fairly careful attention to discretionary spending. We pay 

very little attention to the question of how tax expenditures work, 

who benefits from them, whether there are better ways of being 

able to do it, and whether or not we might be able to even apply 

the lessons from the book you co-authored, ‘‘Moneyball,’’ which by 

the way my students have as required reading in the fall to make 

sure that they get the message on this, that we need to find ways 

of being able to provide better analytical support for the kind of decisions—— 

Senator AYOTTE. Well, actually measuring whether something 

works, shocking. 

Dr. KETTL. Exactly. And trying to combine the moneyball approach with the tax expenditure piece, we know we do not pay 

nearly enough attention to discretionary spending, but we pay almost no attention to tax expenditures. And if we used that 

moneyball approach to understand what we are getting for the 

money that we are spending and apply that to the tax expenditure 

side, that in itself would be an enormous breakthrough. 

Senator AYOTTE. Thank you. 

Mr. SCHATZ. Senator, it seems to me one of the ways to address 

tax expenditures is to simplify the Tax Code. 

Senator AYOTTE. Amen. I agree. Yes. Thank you all. I appreciate 

it. 
22 

1The prepared statement of Dr. Kettl appears in the Appendix on page 87. 

Senator BALDWIN. I will take the privilege of introducing Don 

Kettl for his testimony. Dr. Kettl I am glad you have had a great 

opportunity to speak to some of the questions already. 

I want to add my personal thanks to you for being here. Dr. Kettl 

is a professor of public administration at the University of Maryland and has been associated with many fine academic institutions, 

but I remember getting to know Dr. Kettl back in 1992 when he 

was at the University of Wisconsin-Madison. While I was beginning 

my career in public service and first elected to the State Assembly, 

Dr. Kettl led several very important efforts in Wisconsin. He 

chaired the Governor’s Blue Ribbon Commission on Campaign Finance Reform and later the Wisconsin Governor’s Blue Ribbon 

Commission on State and Local Partnerships for the 21st Century. 

That later became known Statewide as the ‘‘Kettl Commission.’’ We 

still refer to it. I am tremendously pleased, Dr. Kettl that you are 

joining us today to provide us with your insight on how we can address the issues of wasteful spending. 

Dr. Kettl comes at it from a perspective of someone who has 

worked in public management and in budgeting for almost his entire adult life. So thank you for being here, and we await your testimony. 

TESTIMONY OF DONALD F. KETTL, PH.D.,1 PROFESSOR, 

SCHOOL OF PUBLIC POLICY, UNIVERSITY OF MARYLAND 

Dr. KETTL. Mr. Chairman, Senator, it is a great privilege for me 

to be here today. And while I am no longer living in Wisconsin, I 

still am a proud shareholder of the Green Bay Packers as well. So 

I have my roots still firmly rooted back in Wisconsin as well. 

As I mentioned earlier today, the foremost, the most important 

question that we have to try to focus on is simply this: How can 

we best deliver value to taxpayers? And that is the question that 

we need to get up every morning and be prepared to look at, ask, 

and to be able to answer, and to be able to get—the question of 

government waste, there is nothing that is more important than 

trying to get a handle on that, and I want to suggest two ways. 

The first is trying to understand what it is that government 

ought to do and whether or not government ought to be doing it 

at all. That is the movement that Senator Ayotte has been so influential in, and moneyball, bringing better data analytics to governmental programs, is something that could provide a terribly fundamentally important way to be able to resolve those questions. 

I want to spend most of my time today looking at a second question, which is: Once we decide that government needs to do something, how can we best deliver quality services? Because there is 

nothing ultimately more wasteful to the public than for the government to commit to doing something and then not to do it well. And 

so what I want to do is to try to examine the question about how 

best to try to do those things that we all agree that government 

must do. 

There is Medicare and Medicaid, and while we can think about 

reformulating it, we are not likely to walk away from that. 
23 

There is food safety, which is increasingly not just a domestic 

issue but a global issue. One of the assignments I give my students 

is to go to the canned goods aisles and read the labels and find out 

where the food that they are eating actually comes from. 

We have critical infrastructure, airport security, and a whole 

host of other things that we all agree that one way or another must 

be done and must be done well, and there is nothing that is more 

fundamentally wasteful and there is nothing that fundamentally is 

more damaging to the social contract between government and its 

citizens than the failure to deliver. So I want to try to examine that 

question and try to figure out how we can get to the bottom of 

things. 

I want to try to focus on four basic issues, which begin first with 

the GAO high-risk list. And I think that one of the things that we 

can admit is that the list is far too long and it costs far too much 

money. But most importantly, a careful look at it—and this is very 

important for the Committee’s work—we can identify those things 

which we can do to help agencies get off the list. There are root 

causes that lie at the core of the problems in the high-risk list. 

They include, first, the boundary management question. It is important to recognize that, for example, in terms of food safety is a 

close partnership between government’s inspectors on the one hand 

and government’s food producers, its packagers, its retailers, all 

along the line. And food safety is only as good as that chain is. And 

so in this, as in so many other cases, government’s effectiveness depends on being able to manage those boundaries. 

The second is performance metrics. Not only is there the Government Performance and Results Modernization Act, but we have 

seen already in this hearing today through both the Bush and the 

Obama Administrations that substantial progress has been made 

in trying to improve performance metrics in government, and more 

work on that front would have enormous payoffs. 

There are information systems. A key part of the problem of delivering quality services to veterans is to get the information systems in the Pentagon, which document injuries that members of 

the armed services have been exposed to, to talk to the data systems that are in the VA. That turns out to be an extraordinarily 

difficult problem, and we will never serve the veterans well until 

we solve the problem of integrating those information systems. 

This technology management, which gets down to the $22 billion 

effort to develop the next generation of air traffic control system, 

and then human capital, which is fundamentally important to everything. 

If you look at the issues of human capital and talent management that run through GAO’s high-risk list, not only are two-thirds 

of the programs in GAO’s analysis directly attributable to problems 

in human capital management, but at the end every single issue 

to be solved requires the right people with the right skills and in 

the right place at the right time to ensure that what government 

must do gets done and gets done well. 

I mentioned one figure earlier, which is that $144 million of 

spending by the Centers for Medicare & Medicaid Services is counted for each individual employee, which is a staggering number. 
24 

My other favorite statistic, maybe my single favorite statistic 

about the entire Federal Government, is that Medicare and Medicaid combined account for 20 percent of all Federal spending but 

0.2 percent of all Federal employees. So we can debate separately 

about how many Federal employees we need, but I think we have 

to recognize the fact that that is the place where we need good Federal employees because, otherwise, what we must do will not get 

done. 

But the most important thing is that we know that if we solve 

these problems—and this is my second major point—we can save 

substantial amounts of money. My own guess is that something 

like $150 billion a year of savings could be achieved by simply tackling and solving the problems in the high-risk list—at least $150 

billion a year, of which $125 billion simply are coming through the 

improper payments. 

The third thing is that—and this is maybe the most reassuring 

piece—these problems are solvable. In the course of the last 25 

years or so, GAO has actually removed 23 programs from the highrisk list, as Senator Baldwin pointed out earlier. There are those 

who referred to it as the Hotel California: Once you check in you 

cannot check out. But it turns out that, in fact, agencies have been 

able, with strong leadership and effective management, to get off 

the high-risk list and by doing so save taxpayers money, and that 

is a good thing. It requires strong leadership, strong backup, and 

the ability to be able to put into practices the analysis of the root 

causes that we have talked about. But that can save substantial 

amounts of money. 

The last thing is to reduce wasteful duplication and overlap. It 

is clear that we have way too much of this, that going back and 

asking how we can better do the things that could be done, including, for example, simply coordinating the transport of patients to 

government and private medical facilities, could have enormous impact. The Partnership for Public Service has found that shared 

public services could also go a long way toward trying to accomplish some of the same objectives. If we can find ways of achieving 

better coordination, we can save a substantial amount of money. 

But most importantly, it gets down to, first, understanding what 

it is that government should and should not do and having a serious conversation with ourselves about that. But, second, once we 

commit as a government to doing things on behalf of citizens, nothing is more fundamentally important than doing that well. And 

there is nothing more wasteful of governmental money, there is 

nothing more destructive of trust of citizens in their government 

than having government programs in which the government does 

not deliver. 

I very much appreciate the chance to appear before you today. 

I would be happy to try to explore any questions that might be of 

use to the Subcommittee. 

Senator BALDWIN. Great. I want to ask you to drill down a little 

bit more deeply in some of the issues that you outlined. In particular, let us start with information technology (IT). As I hear the 

30,000-foot discussion among my colleagues, there is tension between the increasing need for interoperability—the ability for agencies to communicate, share data, share information to be most effi-
25 

cient. Against that, we see news of cyber attacks that allow hackers 

to access millions of people’s identifiable information. 

Do you think a more interconnected network increases 

vulnerabilities in this regard, compared with lots of smaller systems? Or do you think it is possible that we can improve the capacity and coordination, as you outline, protect privacy, as well as protect from identity theft? 

Dr. KETTL. That is an important question, Senator, and it is 

worth underlining the fact that this is not just a public sector problem. If we go back and look at what happened to Sony, you could 

have taken everything that you just said and scratch off ‘‘the government,’’ insert ‘‘Sony,’’ and be making exactly the same points. 

This is a larger society-wide question that we all are trying to deal 

with right now. 

On the one hand, having more data systems that are interconnected is simply an inevitability. It is not something we can 

avoid. It is not really a policy choice any longer if we are going to 

have any kind of connection whatsoever to quality of service. We 

just cannot imagine being able to make payments in Medicare 

without having an interconnection of information between patients, 

providers, financial intermediaries, Medicare and Medicaid, State 

governments, the Federal Government, and those who are responsible for dealing with all that. There is just no way to be able to 

deal with it. 

The question of centralization then becomes the important question, and the technological reality is that the more dispersed the 

information systems are, in some ways the more potentially vulnerable the entire system is, because all it takes is one individual, one 

16-year-old in some basement somewhere, burrowing into some 

system anywhere, getting access to that, and being able then 

through the network to be able to get access to everything. And, 

in fact, there are lots of 16-year-olds and lots of very sophisticated 

government employees working for other governments trying to do 

exactly that at this very moment. The VA right now gets 1 billion 

probes a month into its information systems. 

So the question is: How best can we protect ourselves? The more 

we distribute the information, on the one hand, it may seem like 

we are protecting it, but we are actually increasing vulnerability 

because we are increasing the points of penetration. The best way 

to try to protect is to at least make sure that we have central coordination of those efforts to try to protect and provide security, 

and it is one of the things that we have found through the data 

breaches that occurred most recently. The greatest points of vulnerability have come through the systems that are most distributed. 

So this is not an argument, and it raises important concerns 

about privacy and about government’s power, and it is the kind of 

thing that really is increasingly a fundamental puzzle and problem. 

But the basic technological facts are the more distributed we make 

the system, the more points of vulnerability we create. 

Senator BALDWIN. Do you want to go back and forth? 

Senator PAUL. Go ahead, because I think I will just finish up 

when you are done. 
26 

Senator BALDWIN. If there are others who would like to focus on 

the information technology piece of this, please add your comments. 

Mr. Edwards, please go ahead. 

Mr. EDWARDS. On the technology issue, I agree with a lot of what 

Don says, but I do not agree with one of his comments that, we can 

always improve the management and make government work better. The Federal Government, the civilian outside of the Pentagon 

in particular, has always had a problem with technology. It has 

never done technology very well. He mentioned the FAA, air traffic 

control, is having a giant problem currently with a big next-gen 

project. I have looked in history. If you go back decades, the GAO 

has done reports in the 1990s, the 1980s, the FAA has always had 

problems implementing new technology. And, air traffic control, it 

is a high-tech business. I do not think the government does hightech very well. 

And, so here is an example where I think this is something that 

should be moved outside of government. We have examples now in 

Britain in Canada. They privatized their air traffic control over a 

decade ago, and it has worked extremely well. We no longer have 

the best air traffic control system in the world. The experts are 

generally pointing to Canada, which has a stand-alone nonprofit. 

And some of the advantages they have by having this stand-alone 

system, they can hire the best tech experts. They can pay them 

flexibly. They can make decisions quickly. They can innovate and 

create new technology. The Canadians now with air traffic control, 

they are creating new ATC technology; then they are exporting it 

to the world. We cannot do that with our system because it is government, it has civil service rules. 

So I think when industries and activities of the government get 

very technologically advanced, we ought to think about moving 

them outside of government. 

Senator BALDWIN. Let me followup with perhaps both of you on 

this. I want to get to the intersection of, Dr. Kettl, your comments 

about needing the right people at the right time in the right place, 

this management of human capital and talent to address whether 

it is the GAO high-risk list or other issues, and also this idea that 

we should be learning from those efforts that have removed agencies or enterprises from the GAO high-risk list, what are the lessons to be learned that could be exported to other entities or within 

an entity that has seen repeated problems one right after the 

other, the intersection of those two issues? And I do not know if 

you could explore that further for us, Dr. Kettl, and then take any 

response. 

Mr. KETTL. Sure. Let me just use one example. I had a long conversation not too long ago about two kinds of things in a session 

that we organized at the National Academy of Public Administration. I was looking at the high-risk list not as a spotlight on government mismanagement but a spotlight on government learning, 

because it turns out that, if you look carefully at it, there are important things that one can learn if you look at the overall systems 

and tease out of that those things that actually work. 

There are lots of things that government surely does not do right, 

but the fact that almost two dozen programs have been removed 

from the high-risk list for doing things well is evidence that those 
27 

things that we expect government to do actually can be done better 

if certain things are done effectively. And one important point is it 

is fascinating to watch the story of the census over the last couple 

times. They have been on the high-risk list twice, and twice have 

been removed. They are now gearing up for the next round of the 

census in 2020. So we can debate lots of things, but unless we 

amend the Constitution, the one thing that the government has to 

do is to conduct a census because the other body needs it for apportioning seats. And so the Constitution requires that. 

They have already started the process of figuring out how to 

manage the technology to be able to make that happen. They had 

technological problems the last time around that they have worked 

to study and learn from. They are doing alpha testing and beta 

testing of the new technological systems. My guess is that they will 

do the next round very well, and here is an example of technology 

in government that is likely to work pretty effectively. And there 

are other things government clearly is not struggling as well with. 

What is the difference? And the answer is they are looking at 

this as a strategic problem. They are getting high-level leadership 

to focus on it. They are getting highly skilled people to work on it. 

They are interacting with citizens right now to figure out how to 

deal with the testing of it. They are working with other countries 

as well to export and to share some of the learning processes that 

are possible. So it is a possible problem to solve. 

Government often tends to do very hard things, often tends to do 

things with not enough in the way of resources, under very high 

levels of expectation. There are lots of cases where, in the private 

sector, problems are buried in dumpsters out back that end up on 

the front page of newspapers just because the process is different. 

It is not to be apologetic, but to recognize the fact that when you 

try to do hard things, you are going to make mistakes. The way 

to learn is to learn from those mistakes and to build those in. 

There is no better example of that in government, especially in 

technology, than to watch what is now happening with the census. 

It is 2020 we are talking about. They are hip deep already in the 

process of beta testing the technology they are going to be rolling 

out. 

Senator PAUL. Well, I want to thank the panel for coming today, 

and I wanted to conclude by—we will see if anybody has any final 

remarks to make, but I think there are ways we can look at government waste. There could be process reforms, there could be program elimination, or there could be program modification. 

With the process reforms, I think there are a lot of good ideas. 

One of the ideas that we have put forward and are trying to get 

a vote on this week on NDAA is to give civilians bonuses based on 

finding savings. Spending apparently speeds up to about 5 times 

faster than normal in the last month; a lot of conventions seem to 

be in Las Vegas in the last month of the fiscal year. I would love 

to give somebody who is in charge of $12 million and saves the taxpayers $1 million, I would love to give them $10,000 and put it 

back into the Treasury. Give them a $10,000 bonus and put the 

money back in the Treasury. If you ask any American in the country should we do this, it is an overwhelming—it is probably a 99 

percent issue. But up here it is difficult because people are, like, 
28 

‘‘Oh, no, we have appropriated it; we have to spend it.’’ But this 

is something that has a great deal of popular support. That would 

be a process reform. 

We have the same for the Department of Defense contractors. If you have a $1 billion contract and you will save $100 million, give 

them a little more profit to save the taxpayer. Give them a percentage of the savings they can find. This is after it has already been 

competitively bid, if they will come in under. We are going the opposite way; we are always going over bid. If you will come under 

bid, give them more profit. Build incentives into a system that is 

not a marketplace and does not have all the incentives that make 

capitalism work efficiently. 

I do not think any Committee has tried to do this before, but 

what I would really like is a continuing process to see if you will 

give us a list of things that can be process reforms, program elimination, or program reforms. Now, we may not get everybody to 

agree to have a lot of program elimination, so bear that in mind. 

But let us say we had 100 ideas from all of you, from us, from the 

minority, and we all went through, all of us, and we checked off 

and we agreed on 20, we could have a consensus report of being 

for 20 reforms. I do not know if it is possible or not, but I think 

it is worth a try. Nothing else seems to have worked around here 

since Senator Proxmire left. And we will see. 

But bear in mind, I do not mind if we get ideas for eliminating 

things that we may not agree on. Let us just see. Maybe there are 

some programs we would agree on eliminating. Maybe there would 

be some reforms. Like I do not think there is a going to be a consensus or anybody saying let us get rid of the School Lunch Program, but would there be a way to better police it so we are not 

giving it to everybody, where we are giving it to those in need? 

I think that is true of so many of our things, and people go crazy 

anytime you want to talk about disability, but the thing is healthy 

people should not get disability? And somebody who has quadriplegia or paraplegia and cannot take care of themselves, we have 

enough money for stuff like that, but we do not have enough money 

for everybody who is currently on disability, and I think there are 

some problems where we could make it better, all kinds of things 

throughout government, but we never try to get to consensus. My 

hope is that we will try and you will continue to help us with lists 

on this. My staff will communicate with you and your staff. You all 

are part of bigger organizations that can help. If you will continue 

to work with us, we will see what kind of list we can come up with, 

and then if Senator Baldwin will work with us, we will see if we 

can get any kind of consensus. 

Does anybody have any kind of remark they would like to make 

as we close? 

Mr. SCHATZ. If I might, Romina brought up corporate welfare. 

When John Kasich was a Member of Congress, he brought together 

people from the left and the right. I remember sitting in a room 

with Ralph Nader and many others talking about corporate welfare, something that neither side really likes, but yet it always 

seems difficult to eliminate, the Market Access Program being a 

prime example. That might be a place to start. You may draw on 

some other members that may look at this in a different way. 
29 

And then in terms of process, just in terms of doing things, Senator Ayotte has a good idea about the GAO reports. There also 

should be a rule for Senate committees that while you probably 

cannot stop them from creating a new program, perhaps the existing programs for that particular area can be listed in the Committee reports. That is now true in the House. Senator Lankford, 

when he was a Member of Congress, helped lead the House rules 

to be amended to require the committees to include that information, so there should be more transparency about whether a program duplicates another program. That is at least a place to start. 

Maybe there is a good argument to have another program, but usually there is not. 

Mr. KETTL. And, Senator, one thing I would add—and, Mr. 

Chairman, I think it is terribly important—is the potential role 

that this Committee can play in ensuring continuity of action on 

some of these things that we think really could be effective. By putting this list together, it is an agenda not just for legislative action 

in the relatively near term, but as we debate the ongoing management and decisionmaking about policy decisions in this country, we 

can set some markers down that could help shape the debate as we 

go forward. And the Committee would be playing an enormous public service in doing that if nothing else. 

Ms. BOCCIA. I agree with Dr. Kettl that there are many ways 

that government could operate better, but I think one of the challenges that we face is that government is trying to do too much, 

and so it is not doing very many things well. 

There are lots of low-hanging fruit, programs that if we could finally eliminate, the Congress could focus its oversight efforts on 

those things that the government must do and then could do those 

things better. We should be more selective about what the government should do. And I think budget process matters there. We are 

currently having a debate whether to increase discretionary spending. There is a cap on it. I think we should leverage this as an opportunity to prioritize within the budget. And we also should be 

careful not to shift spending from the discretionary budget to the 

mandatory side of the budget. There is a bill right now in the 

House, the Cures bill, that proposes to do exactly that. We should 

not be looking for ways to get around spending caps. We should be 

good stewards of taxpayer dollars and prioritize better within those 

dollars that are available. 

Mr. EDWARDS. One thing that I wish Congress would do more of, 

and Washington in general, frankly, is look at some of the goodgovernment reform ideas that have been implemented abroad that 

we could do in the United States as well. Big changes are risky, 

but I think when we have other high-income, advanced countries 

making major reforms and they work, we should look at that and 

learn from it. I mentioned air traffic control, but there is also the 

post office, which you mentioned, Chairman Paul. Germany and 

the Netherlands have privatized their post offices, and Cameron 

privatized the 500-year-old Royal Mail last year. These have been 

successful reforms. 

California has been having a big water drought the last few 

years. Some countries have gone to privatized water markets. 
30 

Farm subsidies have come up at the hearing today. New Zealand 

completely abolished all their farm subsidies a couple decades ago. 

The farmers initially resisted, but after a while they realized they 

could actually do a lot better in free markets than with the subsidies. 

So there are good ideas out there. Often we can get them from 

our trading partners abroad. 

Mr. ELLIS. Thank you, Mr. Chairman. Just wrapping up a few 

things that have come up in the hearing, I have been thinking 

about it. We started out talking about the Export-Import Bank, 

and we talked about duplication, and so you have trade assistance 

programs at Commerce, the Small Business Administration, USDA, 

and the U.S. Trade Representative. So we talked about duplication, 

and that is certainly one area where we should figure out what 

works, what does not, and consolidate and come up with a solution 

there. 

Certainly, Mr. Chairman, we support your bonus for cost cutters 

legislation and will be interested to see about Senator Ayotte and 

Senator Ernst’s legislation as well. And Senator Ernst talked about 

the projects way behind schedule and way over budget, and I have 

some classmates from the Coast Guard Academy that are over at 

St. Elizabeths where the DHS is going to go, because the Coast 

Guard headquarters has already moved there. 

But, one of the programs I talked about, in the program the 

MOX, the mixed oxide fuels, that project was supposed to be done 

in 2013. The estimated date has been pushed back to 2033. So 

there are issues there. 

And then, also, we talked about IT and communications, and I 

think about some of the issues we had seen, like, for instance, in 

farm payments, there are means-testing rules there, and part of 

the limitation and why there have been overpayments to certain 

farmers is because they cannot communicate and get the information from the IRS. The same thing happened with Medicare in 

some of the overpayments as well. 

And so, we are really excited about this opportunity to really 

raise a lot of these programs, the process and the program elimination, and it started—one of the questions was about how you actually tackle these, and we think this type of hearing is exactly the 

right thing, to bring up specific ideas, to talk about them, to talk 

about the underlying problems and what we are trying to solve 

with these government programs. And then we either improve 

them or we decide that it should not be something that we do at 

all. And so we are very excited about it. 

Thank you. 

Senator PAUL. Thank you all for coming. The record is open for 

2 weeks if anybody wants to add to it. Those who have requested 

that their written remarks be made part of the record, it will be. 

Thank you very much for your testimony. 

[Whereupon, at 4:01 p.m., the Subcommittee was adjourned.] 
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