Obama to Sign 'Improper Payments' Legislation
July 22, 2010 - 11:32 AMFederal agencies would have to redouble their efforts to identify and recover billions of dollars lost annually to wasteful spending under a bill President Barack Obama was signing into law Thursday.
He also was expected to announce a goal of reducing improper payments by $50 billion by 2012.
With the federal debt and people's worries about government red ink mounting, the bill marked the latest effort by the Obama administration to get a tighter handle on Washington spending.
Improper payments - from outright fraud to checks issued to the wrong person or for the wrong amount because of a typo - reached a high of nearly $110 billion last year, according to the White House. Federal auditors found that millions of dollars in benefits went to dead people, fugitives or others not eligible for them.
Key elements of the bill will require more agencies to report waste and to produce audited, corrective action plans with targets to reduce the errors that lead to such improper payments. The bill also requires all agencies that spend more than $1 million to conduct recovery audits on their programs.
The measure, sponsored by Sen. Thomas Carper, D-Del., and Rep. Patrick Murphy, D-Pa., also gives agency heads authority to use any recovered money for purposes not currently allowed, including improving their financial management, supporting the agency's inspector general or for the original intent of the funding.
Agencies would face penalties for failing to comply with the law.
Since taking office, Obama has taken steps to cut wasteful spending in part by reducing improper payments. Last month, he ordered creation of a federal "Do Not Pay List" - a database that agencies ultimately must search before cutting checks to individuals and contractors.
Toward the broader goal of trimming federal spending overall, Obama has proposed a three-year freeze in spending not tied to national security. He also has instituted changes in how government contracts are awarded to save billions in such costs, and has directed agencies to sell excess or underused real estate.
Obama also has established a special commission that is due to report after the November midterm elections on what spending cuts, higher taxes or combination of the two are needed to control future budget deficits.
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