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Everything Old is New Again: Trump’s Bipartisan Proposals to Curb Improper Payments

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In September 2016, then-Republican presidential frontrunner Donald Trump delivered a speech to the Union League of Philadelphia. Among other promises, Trump pledged to “eliminate government waste and budget gimmicks” through “common sense reforms.” As an example of waste, he mentioned improper payments—federal payments made in the wrong amount, to the wrong recipient, or for the wrong reason. The Project On Government Oversight has previously reported on the history and scope of improper payments, as well as solutions.

The Trump administration’s fiscal year 2018 budget for the federal government reflects President Trump’s interest in curtailing improper payments. The budget proposes to slash “Government-wide improper payments by half” by 2027 through “actions to improve payment accuracy and tighten administrative controls.” In order to meet this goal—for a projected savings of $139.21 billion over ten years—the budget proposes a set of specific policies involving a multi-agency approach, such as using more database checks to verify payment eligibility and to facilitate the recovery of overpayments.

All of these ideas were also proposed by the Obama administration, representing bipartisan agreement on policy reforms.  

Of the twelve policies aimed at curbing improper payments in the FY 2018 budget, four use the same language found in President Obama’s FY 2017 budget. The other eight have only small differences. The amount of projected savings also mirrors the FY 2017 budget, although with some differences. For example, the FY 2017 budget estimated that authorizing the Social Security Administration (SSA) to use “all collection tools to recover funds” would save $35 million, while the FY 2018 budget estimates $41 million. The savings projected under the FY 2018 budget are also much higher for Unemployment Insurance, as well as Medicare and Medicaid. However, the reasons for the higher projected savings are not clear.

See the following table for more comparisons:

Projected Savings by Curbing Improper Payment Budget Proposals Made by Both the Trump and Obama Administrations

Initiative

Allow government-wide used of Customs and Border Protection entry/exit data to prevent improper payments
Use Death Master Files to prevent improper payments2
Authorize Social Security Administrations to use all collection tools to recover funds
Hold fraud facilitators liable for overpayments
Increase overpayment collection threshold for Old Age, Survivor and Disability Insurance
Exclude Social Security Administrations debts from discharge in bankruptcy
Allow Social Security Administration to use commercial database to verify real property
Increase oversight of paid tax return preparers
Provide more flexible authority for the Internal Revenue Service to address correctable errors
Cut Waste and Fraud in Medicare and Medicaid
Unemployment Insurance Program Integrity Package
Data analytics to improve payment accuracy2

FY 2017 Budget Projected Savings 2017-2026 (in millions)1

$177
N/A
$35
$8
$848
$315
$559
$424
$633
$3,414
$1,381
N/A

FY 2018 Budget Projected Savings 2017-2026 (in millions)1

$177
N/A
$41
$8
$848
$315
$559
$439
$655
$6,432
$2,234
N/A

1 The savings shown represent the total of PAYGO and Non-PAYGO. PAYGO is usually considered as scoreable according to the Congressional Budget Office rules, though non-PAYGO also represents savings to the Treasury.

2 Neither the FY 2017 nor FY 2018 budgets included a savings projection. However, both indicated that the proposal would result in substantial decreases in improper payments

Overall, the budgets proposals are extremely similar, but Obama’s FY 2017 budget includes a few more details. For example, the Obama administration proposed increasing the minimum monthly Old Age, Survivor and Disability Insurance (OASDI) overpayment collection “from $10 a month to 10 percent,” while the Trump administration has not proposed a specific overpayment collection threshold. Moreover, while both administrations sought to authorize the SSA to “use all collection tools to recover funds in certain scenarios,” Obama’s FY 2017 budget includes specific examples of these “certain scenarios” to better guide the SSA, such as “when someone improperly cashes a beneficiary’s check or removes a benefit from a joint account.”

The proposals have not yet been implemented, however.

For example, both budgets estimated that allowing the SSA to use commercial databases to verify real property would prevent about $559 million in overpayments. In fact, the Government Accountability Office (GAO) corroborated the utility of this idea, reporting in 2016 that accessing commercial databases will help verify taxpayers’ identities. However, SSA has yet to take the necessary steps to implement this proposal. The proposals to cut Medicare and Medicaid waste and fraud, as well as the use of data analytics to improve payment accuracy, are each for existing programs that have yet to see the major improvements outlined by both administrations.

Some measures will require legislative action. Both administrations have advocated using the SSA’s Death Master File to curb improper payments by preventing identity fraud. The Death Master File comes in to two forms: a publicly available dataset used by many government agencies, and a more complete list which is accessible only to a handful of government agencies. According to the GAO, the publicly available dataset is less complete because it does not include state-reported death information, and SSA officials expect this to worsen over time, leading to “increasingly less complete” information. However, the SSA will not act to correct this without a specific statutory instruction.

Of course, these proposals will require a careful implementation process to ensure success. Interagency agreements need to be ironed out, guidance must be issued, and all stakeholders should be allowed to weigh in to avoid unintended consequences.

Having similar proposals to curb improper payments in both the Obama and Trump budgets means that Congress and the Executive Branch have the opportunity to pursue policies endorsed by both Republicans and Democrats. This greatly increases the chance that the appropriate initiatives become reality.

By: Holly Carabbio
Intern, POGO

Holly Carabbio Holly Carabbio is an intern at the Project On Government Oversight.

Topics: Government Accountability

Related Content: Budget, Financial Oversight, Effective Government, Waste, Improper Payments

Authors: Holly Carabbio

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