- As members of Congress make political hay with corporate
America's accounting scandals, their own financial mismanagement continues
to dwarf those companies they excoriate.
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- While securities regulation and criminal justice bring
corporate culprits to justice (raising the question of whether more laws
are really necessary), Congress violates its own management rules and standards
on a daily basis.
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- Congress annually passes supplemental spending bills
to circumvent budget caps, calls them "emergency" spending bills
and says the expenditures do not count against the budget totals for the
year. Over the past five years, lawmakers have spent a total of $142 billion
above the levels in the corresponding budgets. That's more than 12 times
the misstated figures from Enron, Xerox, and WorldCom combined.
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- While states prohibit private sector firms from siphoning
off pension trust funds for non-pension spending, there is no such restriction
at the federal level. In fiscal 2000 and 2001, the federal government increased
total debt to another record high while claiming a surplus. They took Social
Security and other trust fund money worth $189 billion in 1998 and $228
billion in 1999 to cover general government operational deficit spending.
For 2000 and 2001, they stole another $463 billion from the various trust
funds, of which $272 billion came from Social Security.
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- Just a small sampling of accounting "errors"
in the federal government reveals more than $20 billion in improper payments
made annually, about $12.1 billion through Medicare alone. That money,
which officials make little effort to reclaim, will not provide prescription
drugs or other services for senior citizens.
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- There are laws requiring financial accountability that
Congress routinely ignores, such as the Chief Financial Officers Act and
the Government Performance and Results Act. For the past five years, the
General Accounting Office has been unable to issue an opinion on the government's
consolidated financial statements because of certain material weaknesses
in internal control and accounting and reporting issues. "These conditions
prevented us from being able to provide the Congress and American citizens
an opinion as to whether the consolidated financial statements are fairly
stated in conformity with U.S. generally accepted accounting principles,"
the report stated.
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- Meanwhile, senators and representatives circumvented
the fiscal budget and authorizing process to earmark $20.1 billion in hometown
pork projects, including $2 million to restore the Vulcan Statue in Birmingham,
Ala., and $50,000 for a tattoo removal program in San Luis Obispo, Calif.
These raids on our money go unpunished.
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- Even worse, failing programs don't disappear. They get
more money. A recent example is the Youth Offenders Eligibility Awards.
Originally intended for offenders 25 and under, at a rate of $1,500 per
individual, the program was duplicative, underutilized, and slated for
termination in the president's 2003 budget. Rather than get the hint, Sen.
Arlen Specter, R-Pa., decided to increase the award amount to $2,500 and
increase the eligibility age to 35, adding another 481,000 prisoners. All
this was part of a supplemental appropriations bill intended to increase
funds for the war on terrorism.
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- The government's exposure to additional costs and potential
losses spreads beyond the obvious programs to government-sponsored enterprises
and quasi-governmental entities.
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- For example, the U.S. Postal Service is $13.5 billion
in debt and raised stamp prices to 37 cents on June 30; it provides a priority
mail service that is often slower than first class mail. Amtrak has cost
taxpayers $39 billion in 2001 dollars since its inception and has increased
its debt from $1.7 billion to $4.4 billion over the past five years. Unlike
WorldCom or Enron, Amtrak need not fear bankruptcy; the railroad will just
drain more money from taxpayers and avoid reform. Government-backed mortgage
giants Fannie Mae and Freddie Mac are two of the largest companies in America,
yet they are exempt from the Securities and Exchange Commission's disclosure
rules.
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- The bad players in the private sector usually get their
due - they get fired, go out of business, or go to jail. But Congress has
an ace in the hole that allows them to vote themselves largess, violate
their own rules, use taxpayer money as legalized bribery to get themselves
re-elected and never face the bottom line.
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- Complaints about losses in companies ring hollow when
the real accounting deception affects every American as a shareholder in
the U.S. government. While the losses in the private sector are real, at
least investors and workers were able to divest or quit when the malpractice
became apparent.
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- Tom Schatz is president of Citizens Against Government
Waste.
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