June 10, 2015
U.S. Senate 
Washington, D.C. 20510

Dear Senator,   

Senators Rand Paul (R-Ky.) and Mark Warner (D-Va.) recently introduced S. 1378, the Bonuses for Cost Cutters Act.  On behalf of the more than one million members and supporters of the Council for Citizens Against Government Waste (CCAGW), I urge you to support this legislation.  

Current law permits agency inspectors general to pay a bonus of 1 percent (up to $10,000) of savings realized when a federal employee identifies waste, fraud, or mismanagement of funds.  H.R. 1378 would expand those opportunities for bonuses to include the identification of unneeded or surplus funds.  The legislation also stipulates that remaining savings would be used to reduce the deficit, and the agency’s chief financial officer must certify that effectiveness would not be compromised by the cuts.

These incentives would be particularly useful during the last few months of a fiscal year.  The common phrase “use it or lose it” is used to describe this costly practice.  Federal agency budget managers insist on spending every penny of their annual budgets before the end of the fiscal year fearing that if they don’t, Congress will determine that they could survive with less money and accordingly cut their budget for the next year.  They also become concerned about the calculation of the baseline budget for their programs for the next fiscal year.  According to the Mercatus Center, between 2003 and 2013 all federal agencies except one spent more than 8.33 percent (one-twelfth) of annual expenditures during September, the final month of the fiscal year, and nine departments spent more than twice that amount, or 16.6 percent.  The State Department annually spent an average of 37.8 percent of its yearly budget in September.

The last-minute overspending that occurs during the last month of the fiscal year is a prime example of why H.R. 1378 is necessary.  Rather than encouraging the continued poor planning, mismanagement, and misplaced motivation that leads to “use it or lose it,” the legislation would create strong incentives for federal workers to instill responsible budget practices throughout the year and potentially save billions of dollars.  I urge you to support the Bonuses for Cost Cutters Act.  All votes on S. 1378 will be among those considered in CCAGW’s 2015 Congressional Ratings.

Sincerely, 

Tom Schatz

President, CCAGW