How Much of Your Money Does the Government Waste?

As a taxpayer, you can get in trouble with the Internal Revenue Service if you can't account for your receipts and expenses. But the IRS itself is having trouble with accounting. It doesn't know exactly how much it owes contractors - and it doesn't know exactly how much taxpayers owe it.

That's just one example of how poor management and bad accounting are costing the federal government tens of billions of dollars each year and drawing increased scrutiny from fiscal-minded members of Congress.

The good news, according to the General Accounting Office, Congress's investigating arm, is that new laws passed in the last few years mean Congress and the administration have a better chance of solving these problems than ever before. But while progress is in sight, much work remains ahead.

"While the magnitude of these problems is shocking, I am optimistic that we have in place the tools to change government for the better," said Sen. Fred Thompson (R) of Tennessee, chairman of the Senate Government Affairs Committee, at congressional hearings Tuesday.

The costs to taxpayers of government mismanagement are enormous. Some other examples from GAO include:

* The Federal Aviation Administration's $34 billion, 15-year effort to modernize the air-traffic-control system is costing more than planned, is late, and isn't doing the job.

The Defense Department has spent $20 billion over eight years to streamline hundreds of different computer systems used for administration. Still, the Pentagon has yet to meet its savings goals, while continuing "to spend billions of dollars on [computer] projects with little sound analytical justification."

* The National Weather Service still can't get its new $4.5 billion radar system to work reliably.

* During 1995, Pentagon computers were attacked by hackers an estimated 250,000 times, with the hackers gaining access to military computers 60 percent of the time. Yet "only a small percentage of these attacks were detected."

To combat and head off mismanagement, GAO and the White House Office of Management and Budget in 1990 began compiling lists of "high-risk" agencies and programs and recommending fixes.

Some programs, such as the Pentagon's inventory management, NASA, and Medicare, have been on the list since the beginning. Others, such as the "year 2000 problem" (computers that can't deal with year dates of more than two digits for which "00" would be the year 1900) and the 2000 census, were added this year. In all, GAO now rates 26 agencies and programs as high-risk.

Armed with this information, Congress has pushed through a series of reforms to address the most serious management problems found across the government. A new law requires federal agencies to hire chief financial officers and create financial statements and controls that can pass an independent audit. Another directs departments "to better measure performance and focus on results," while a third requires them to hire qualified chief information officers to manage and update their computer systems.

The computer and accounting issues are crucial, said Gene Dodaro, the GAO's assistant comptroller-general. "The effective use of information technology is integral in some way to solving problems in all the high-risk areas mentioned in our 1997 series," Mr. Dodaro told the senators. The government's investment in computers is immense: Over the past six years, it has committed $145 billion to computer systems other than weaponry.

In addition, "Better financial management is central to providing much-needed accountability and addressing high-risk problems," Dodaro said. "The government's financial systems are all too often unable to effectively perform the most rudimentary bookkeeping for organizations...." While for the first time ever all 24 government departments and agencies will have fiscal 1996 financial statements, many - including the Defense Department, with a $250 billion budget - still can't pass an outside audit. The Department of Housing and Urban Development's 1995 bookkeeping is such a mess that the department's own inspector general won't vouch for it.

Senators expressed frustration over the slow pace of reform. "It is a scandal that programs put on the 'high-risk' list remain there year after year," Senator Thompson said.

Dodaro said agency officials often underestimate the depth of their problems and need to understand that Congress is serious about reform. John Koskinen, OMB's deputy director for management, counseled patience: "It was easier to reorganize General Motors ... because General Motors is so much smaller."

Mr. Koskinen and Dodaro both stressed that Congress and the administration will have to keep departments' feet to the fire. "We need to be relentless in getting these problems solved," said Sen. John Glenn (D) of Ohio.