No more Mr. Nice Guy -- Uncle Sam duns his debtors
Uncle Sam's efforts to collect his overdue debts are meeting with mixed success.Skip to next paragraph
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The good news, says Joseph Wright, deputy director of the Office of Management and Budget, is that no-more-Mr.-Nice-Guy tactics, such as dragging away the cars of student-loan debtors, have garnered the government $2.1 billion it wouldn't otherwise have been paid.
The bad news, says Mr. Wright, is that bad debts are piling up faster than collectors can clear them away. The US delinquent debt increased 41 percent last year.
''For some strange reason, people who take out loans from the federal government don't feel obligated to pay back their debt,'' says Wright, though he admits the recession and still-antiquated collection systems are also partly to blame.
Every year, the US government lends out billions of dollars, financing college educations, business start-ups, and purchases of US wheat by foreign countries, among other things. This year, the amount owed Uncle Sam hit $260 billion, OMB estimates.
Some $38.4 billion of that debt is past due. Delinquent income taxes make up roughly 70 percent of overdue payments, with student, housing, crop, and Small Business Administration loans accounting for most of the rest.
Until 1981, Wright points out, the government didn't even keep such total figures. Most government collection efforts center around old-fashioned file-card and telephone techniques, he says.
''There aren't any automated collection systems in the federal government. The private sector has had that for 10 years,'' he says.
The IRS and the Justice Department are now installing debt-tracking equipment. Tightening up other procedures, Wright claims, has brought the government $2.1 billion it wouldn't otherwise have received. For example:
* Under new rules for the National Student Loan Program, schools with high default rates will have their loan funds reduced or eliminated.
* A recent computer matching program found 47,000 federal employees who are behind on paying back their student loans.
* The Departments of Interior, Housing and Urban Development, and Health and Human Services have all begun hiring private agencies to chase overdue loans.
* The Small Business Disaster Loan Program has hired 275 temporary employees to help collect overdue loans.
And the Debt Collection Act of 1982, passed on Oct. 1, will give the government new debt-collecting powers. But these efforts have so far been swamped by the 41 percent increase in delinquent debts during 1982, the first year the government has tracked such a figure. Though he says the soft economy is part of the reason, Wright claims that debtors' belief the government is a soft touch caused most of the increase.
''The real way to avoid these delinquencies is to stop making bad loans,'' Wright says.