Wasteful Spending Tackled With ‘Improper Payments’ Law

Wasteful Spending Tackled With ‘Improper Payments’ Law


The federal government has made a small, but important step to practice more fiscal discipline today in the face of massive government spending.

President Barack Obama signed a bill into law on Thursday that forces federal agencies to take a hard look at wasteful spending, such as payments to criminals, the dead, or simply the wrong person.  The White House reported that, as of last year, these kinds of errors totaled $110 billion. The President is expected to set a target of a $50 billion reduction in improper payments within the next two years, as reported by ABC News.

The legislation was sponsored by Sen. Thomas Carper (D-Del.) and Rep. Patrick Murphy (D-Pa.).

The bill requires more federal agencies to be transparent about their spending, waste, and how they will fix any errors.  Agencies that find themselves making improper payments are now forced to develop a correction plan so that mistakes are not ongoing.  More auditing of spending and programs will play a greater role in setting the tone for financial accountability.  Non-compliance will result in penalties for any agencies breaking the new law.

The excess funds recovered from the stricter guidelines will be allocated in a number of ways.  Other than spending for its original purpose, agency directors may also use money for more intra-departmental financial regulation.  Inspectors general may also get some of the funding to continue their financial watchdog and reporting efforts for their respective agencies.

The new law builds on the earlier momentum of Obama’s three-year freeze on government spending not related to national security.  He proposed the measure in his State of the Union address in January to tackle public and Congressional unrest about federal deficits.  The spending freeze proposal is not set to begin until 2011 due to ongoing worries about the economic recovery.


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