Oral Testimony of

Thomas A. Schatz

President, Citizens Against Government Waste

Before the Senate Committee on Homeland Security and Government Affairs

Subcommittee on Federal Spending Oversight and Emergency Management

June 10, 2015

Thank you, Mr. Chairman.  I am Tom Schatz, the president of Citizens Against Government Waste.  The organization was founded in 1984 by J. Peter Grace and Jack Anderson to build support for the implementation of President Ronald Reagan’s Grace Commission recommendations and other waste-cutting proposals.  CAGW has more than one million members and supporters nationwide, and, over the past 31 years, the organization has helped save taxpayers $1.4 trillion through the enactment of Grace Commission findings and other recommendations. 

It is no secret that wasteful spending is pervasive throughout the federal government and that every agency could perform its functions more effectively and efficiently.  Recommendations to eliminate waste, fraud, abuse, and mismanagement are regularly provided by government agencies and the private sector.  For example, since 1993, CAGW has released Prime Cuts, the latest version of which identifies 601 recommendations that would save taxpayers $639 billion in the first year and $2.6 trillion over five years. 

While my written statement covers numerous systematic and legislative efforts to eliminate wasteful spending in more detail, this afternoon I will be discussing expenditures on several programs related to agriculture. 

While proponents of the 2014 Farm Bill claimed that it reformed many agriculture programs that certainly was not true about the sugar program.  The outdated and wasteful program uses price supports, prohibitive tariffs, import quotas, guaranteed loans, and domestic marketing allotments that have artificially inflated the price of sugar to about 40 percent higher than the world price.  Consumer paid an additional $3.5 billion annually between 2009 and 2012 for sugar-containing products, while thousands of jobs in sugar-using industries, particularly candy manufacturers, have been lost. 

Sugar producers forfeited $152 million worth of sugar to the USDA in September and October 2013.  In March 2015, CBO forecast that the U.S. sugar program will cost taxpayers an additional $115 million over the next 10 years.

Despite efforts in both the House and Senate to eliminate or reduce spending on the Market Access Program, which is a poster child for corporate welfare, the program survives.  MAP has delivered advertising subsidies to successful companies such as Blue Diamond, Butterball, Dole, McDonald’s, Pillsbury, Sunkist, Tyson, and Welch Foods, as well as agriculture trade associations and farmer cooperatives.

One of the most absurd expenditures under MAP provided $20 million to the Cotton Council International (CCI) in 2011, some of which was used to create an Indian reality TV show in which designers created clothing made from cotton in order to promote its general use; but not necessarily cotton from the U.S.  Indeed, India produces twice the amount of U.S. cotton growers and is a net exporter.  

Another outrageous waste of money under MAP was the $3 million provided to the California Raisin Board in the 1990s to air in Japan the well-known ad featuring animated dancing raisins that sang, “I Heard It Through the Grapevine.”  The song could not be translated into Japanese, so it ran in English and was therefore incomprehensible to most viewers.  The promotion effort cost taxpayers $2 for every dollar’s worth of raisins that reached Japanese store shelves.

 Taxpayers should not subsidize any advertisements for private entities.  According to Prime Cuts 2015, the elimination of MAP would save taxpayers $200 million in the first year and $1 billion over five years.

In the 2009 American Recovery and Reinvestment Act (stimulus), Congress allocated $7 billion for broadband grants and loans.  The Rural Utilities Service (RUS) received $2.5 billion for its Broadband Initiatives Program for 320 projects in 44 states and territories.  

A March 2013 USDA inspector general report noted that numerous projects produced overbuild and led to direct competition with incumbent private sector broadband providers.
In addition, 10 projects worth more than $91 million were approved by RUS, even though they would not be completed within the required three-year timeframe. 

There should be increased accountability for where and how tax dollars are being spent in order to avoid wasteful spending and overbuild of existing infrastructure.  CAGW’s 2015 Prime Cuts highlighted wasteful spending at RUS and called for the elimination of the entire agency, which would save $9.6 billion in one year and $48.1 billion over five years.

The Delta Regional Authority, established in 2000, is supposed to provide economic development assistance to support the creation of jobs and improve local conditions for 10 million people who reside in 252 counties and parishes throughout 10 Mississippi Delta states.  However, these efforts are duplicative of other federal programs and support mostly local projects, which is also true of other federal “regional” commissions, authorities, and programs.  Since fiscal year 2003, the authority has received six earmarks totaling $17.8 million, including $3 million in fiscal year 2015, as noted in CAGW’s 2015 Congressional Pig Book.  Eliminating the Delta Regional Authority would save $15 million in one year and $75 million over five years.

Better stewardship of the taxpayers’ money should be the mantra for every member of Congress.  Every American would be well-served if every day representatives and senators came to work thinking first and foremost about how they could better manage the taxpayers’ money and solve problems effectively with the resources that are already allocated to the federal treasury and through the use of existing programs, and only after doing all that can be done to answer that question affirmatively then seek another way to solve the problem.  In other words, rather than thinking that his or her committee or subcommittee has the best or the only answer to solve a perceived problem, each representative and senator should first think about how to solve the problem and then determine if a new program is needed. 

I appreciate the opportunity to testify before the committee today, and would be glad to answer any questions.