GAO: Improper payments hurting fiscal situation

The nation's comptroller general said Thursday that the federal government could substantially improve its fiscal situation by cleaning up improper payments in three key areas.

Gene Dodaro, the head of the Government Accountability Office, told the Senate Finance Committee on Thursday that overpayments in Medicare, Medicaid and the Earned Income Tax Credit are costing the Treasury billions of dollars a year.

Those three programs alone account for three-quarters of the $124 billion worth of improper payments the government made in 2014. Those overpayments equal almost one-third of the annual tax gap — the difference between what the Treasury is owed and what it collects.

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"There are significant ongoing management challenges that if successfully addressed, can contribute to improving the government’s fiscal position," Dodaro said.

The amount of improper federal payments grew some $19 billion between 2013 and 2014.

The three programs singled out by the GAO are somewhat sensitive politically. Republicans and Democrats have sparred for years over how, when and whether to revamp entitlement programs like Medicare and Medicaid.

Lawmakers on both sides of the aisle have expressed support for the EITC, which was enacted to help the working poor, and have floated the idea of expanding the credit. But GOP lawmakers have consistently expressed concern about the fraud rate for the tax incentive.

Both Senate Finance Committee Chairman Orrin HatchOrrin Grant HatchOn The Money — Sponsored by Prudential — Senators hammers Ross on Trump tariffs | EU levies tariffs on US goods | Senate rejects Trump plan to claw back spending Senators hammer Ross over Trump tariffs Top Finance Dem wants panel to investigate Trump Foundation MORE (R-Utah) and Sen. Ron WydenRonald (Ron) Lee WydenOn The Money — Sponsored by Prudential — Supreme Court allows states to collect sales taxes from online retailers | Judge finds consumer bureau structure unconstitutional | Banks clear Fed stress tests States brace for dramatic overhaul to federal foster care funding Supreme Court rules states can require online sellers to collect sales tax MORE (D-Ore.), the committee's ranking member, said the government could make improvements in the area.

"There is, of course, plenty of questionable spending that the government does on purpose on a more or less daily basis — but that’s a whole other hearing," Hatch said. "Today’s hearing is about the spending the federal government does by accident."

Wyden added that "nobody on this side of the aisle backs down from the challenge of fixing improper payments and fighting fraud." 

"That’s because every taxpayer dollar lost to mistakes — no matter the cause — is a dollar that’s not available to help seniors cover medical costs, put a student through college, or rebuild our aging infrastructure," he said.