Center for American Progress

RELEASE: CAP Brief: Short-Sighted Spending Cuts Deepen Budget Deficit by Nearly $21 Billion by Worsening Waste, Fraud, and Abuse
Press Release

Washington, D.C. — As fiscal year 2015 begins, a new brief from the Center for American Progress illustrates how federal spending cuts are actually deepening budget deficits—to the tune of $20.9 billion—by increasing waste, fraud, and abuse. These cuts hinder competent program administration, which depends on adequate staff and resources, as well as strong oversight.

“We should not allow misguided short-term deficit concerns to justify continuing austerity instead of acting decisively to support our struggling economy,” said Harry Stein, CAP’s Associate Director of Fiscal Policy and the author of the brief. “Even austerity supporters should agree that Congress must immediately reverse spending cuts that are increasing budget deficits.”

CAP’s brief identifies four sectors of the budget where spending cuts have increased deficits: the Internal Revenue Service; inspectors general throughout the federal government; program integrity for major health care and disability programs; and funding to help Congress make better budget decisions, with a focus on the Government Accountability Office. These agencies are almost all funded by discretionary spending, the portion of the federal budget subject to the harsh spending caps imposed by the Budget Control Act of 2011 and its sequestration rules. CAP’s brief applies return on investment ratios as calculated by official federal government sources to estimate the consequences of budget cuts.

Relative to inflation-adjusted FY 2010 levels, cumulative budget cuts for the Internal Revenue Service, inspectors general, program integrity initiatives, and the Government Accountability Office totaled approximately $6.3 billion from FY 2011 to FY 2014. CAP’s brief finds that these cuts increased waste, fraud, and abuse by around $27.2 billion over the same time period. Combining the fiscal savings from the cuts with the resulting increases in waste, fraud, and abuse yields an estimated $20.9 billion in higher budget deficits as a consequence of these misguided austerity measures.

Click here to read the brief.

To speak with an expert, contact Allison Preiss at 202.478.6331 or [email protected].