November 15th, 2011
04:38 PM ET
Following up on an executive order signed by the president in 2009, Obama administration officials held a conference call today to announce their progress in reducing “improper payments” made by the federal government. Totaling $116 billion in fiscal year 2011, improper payments are defined as payments made by the federal government either in the wrong amount, to the wrong person, or for the wrong reason.
“At a time when our most critical programs – economic programs, social safety net programs – are experiencing tighter and tighter budgets, it's particularly imperative that we not tolerate such errors,” Office of Management and Budget Director Jack Lew said on the call.
Today Lew announced that in FY 2011 the federal government cut improper payments by $18 billion and recaptured $1.2 billion in erroneous payments. When combined with the numbers from FY 2010, the government has prevented nearly $21 billion in improper payments and recaptured over $1.9 billion, Lew said.
Secretaries Kathleen Sebelius and Arne Duncan as well as Deputy Agriculture Secretary Kathleen Merrigan also participated in the call, outlining efforts underway at their respective agencies to reduce payments made in error.
But OMB officials urged caution in how these numbers are interpreted. The government does deem a payment improper if it has paid too much, but also if it has paid too little or even if it has simply made an error in documenting what the payment was for. Meaning that ultimately not all of the money saved or recaptured goes to paying down the deficit, or even returns to the program to which it was originally allocated.
Across the entire government, just one-third of the reduction in payment errors goes to deficit reduction, while the remainder is directed to the intended parties and activities as required by law, according to OMB. But all of the nearly $2 billion in recaptured payments from the past two fiscal years has gone back to the Treasury for deficit reduction
It’s for these reasons that Lew resisted framing this news as part of deficit reduction efforts, instead calling it “good stewardship.” Just as families across the country tighten their belts and reduce spending, Lew said the government also needs to “reduce what we spend on things like travel, cell phones, printing and nonessential items.”
“[Improper payment] is not a new phenomenon, what's new is that we're doing something about it,” Lew said.
“Congress first enacted legislation requiring the government to measure improper payments in 2002, our first error measurement government wide occurred in 2004,” said Danny Werfel, Federal Controller at OMB. “If you look at the data, particularly if you look at 2007, 2008 and 2009, you'll see the error rates increasing and apexing in 2009 at 5.4%. It's around that time that the president issued his executive order, and issued a series of directives targeted at this effort, and what we're reporting today is not only did the error rate decline in fiscal year 2010, we saw an even steeper decline in fiscal year 2011, which we believe demonstrates that these efforts are starting to take hold and have results.”