April 26, 2018

The President
The White House
Washington, D.C. 20500

Dear Mr. President,

Since 1993, Citizens Against Government Waste (CAGW) has annually published Prime Cuts, a comprehensive account of options the federal government possesses to reduce waste, fraud, abuse, and mismanagement. In the 2017 edition, CAGW had 607 recommendations that would save $336.2 billion in the first year and $2.3 trillion over five years. Since CAGW was established in 1984 following the release of the Grace Commission report under President Reagan, the implementation of recommendations similar to those in Prime Cuts has helped save taxpayers $1.8 trillion.

On behalf of the more than one million members and supporters of CAGW, I urge you to consider the following recommendations for your rescissions package that are included in Prime Cuts, as well as proposed in whole or in part in your Major Savings and Reforms for fiscal year (FY) 2019.

Eliminate the Rural Utilities Service

1-Year Savings: $8.2 billion    5-Year Savings: $41 billion

The Rural Electrification Administration (REA) was established in 1935 to bring electricity to America’s rural communities.  By 1981, 98.7 percent electrification and 95 percent telephone service coverage was achieved.  Rather than declaring victory and shutting down the REA, the agency was transformed into the Rural Utilities Service (RUS) in 1994 and then expanded to provide loans and grants for other utilities including telephone service to underserved areas of the country. That mission was further expanded under the 2002 Farm Bill to provide broadband services to unserved or underserved rural areas, which are generally defined as communities with populations of less than 20,000. These services are provided in part through the Rural Broadband Access Loan and Loan Guarantee Program (BAP).

Some of the BAP’s wasteful projects include the $667,120 given to Buford Communications of LaGrange, Arkansas, (population 122) in 2009 to build a hybrid fiber coaxial network and a new community center. This equates to $5,468 per resident of LaGrange.

Another RUS program rife with waste is the Water and Waste Disposal System Loans and Grants Program (WWD), which was intended to improve quality of life and create jobs in rural communities. According to a July 2012 Department of Agriculture (USDA) Inspector General (IG) report, “as of September 30, 2011, RUS had obligated $3.3 billion in grants and loans to fund 854 WWD projects throughout the United States.”  Only three of the 22 projects examined by the IG were completed on time, and the majority of the projects were started five to 30 months after the funds were obligated.  The RUS created only 415 new jobs through the WWD, which is “less than 20 percent of the actual jobs identified in planning estimates.”

CAGW’s 2017 Congressional Pig Book identified a $10 million earmark for high energy cost grants within the RUS. Since FY 2002, members of Congress have added seven earmarks for high energy cost grants totaling $123.5 million.

Eliminate Community Development Block Grants (CDBGs)

1-Year Savings: $3.3 billion      5-Year Savings: $16.5 billion

In the 1970s, many American cities suffered from destitution and blight. It was in that era when Congress created CDBGs in an effort to revitalize low-income areas in cities across the country.

The money was intended for infrastructure investments, housing rehabilitation, job creation, and public services in metropolitan cities and urban counties. The program was intended to be flexible, but more than $100 billion given away to local governments over the last 35 years has fallen short on both accountability and results. Buffalo, New York, has received more than $500 million in CDBGs over the last 30 years, with little to show for it, and Los Angeles handed out $24 million to a dairy that went bust 18 months later.

The CDBG formula for eligibility does not take a community’s average income into account. As a result, several very wealthy cities with robust tax bases, such as Greenwich, Connecticut, have received CDBG dollars. A September 2012 GAO report found that “some cities with higher unemployment rates received less funding per unemployed person than other cities with lower unemployment rates.” Even former President Obama recommended reducing CDBG funding because “the demonstration of outcomes [is] difficult to measure and evaluate.” Your FY 2019 budget included the elimination of the entire CDBG program.

Terminate Community Oriented Policing Services (COPS)

1-Year Savings: $275 million   5-Year Savings: $1.4 billion

A signature plan of the Clinton administration, COPS was intended to reduce rising crime rates in the early 1990s by providing federal grant money for the hiring of 100,000 police officers to patrol American streets. Two decades later, the program has failed to reach its stated goals and has fallen victim to hundreds of millions of dollars in waste, fraud, and abuse.

On top of the waste and mismanagement, COPS requires that recipient cities keep the program running on their own dime for at least one year after the grant money runs out, which creates another unfunded mandate for local governments already strapped for cash.

A July 2012 GAO report found substantial overlap among Department of Justice (DOJ) grant programs, which in many instances perform the same function. The GAO suggested that DOJ perform an assessment of the programs to find “where a consolidation of programs may be more efficient.” COPS would be a great place to start. A September 2010 CRS report found that the costs of the program outweighed the benefits by more than $1 billion.

COPS has also long been a prime repository for pork; since FY 1998, members of Congress have crammed 2,872 earmarks, costing taxpayers $1.8 billion, into the Commerce, Justice, Science, and Related Agencies Appropriations bills.

End Susan Harwood Training Grants

1-Year Savings: $11 million        5-Year Savings: $55 million

The Occupational Safety and Health Administration (OSHA) offers Harwood grants to nonprofit organizations to provide safety training to workers. Although the grants are competitively awarded, President George W. Bush repeatedly targeted this program for elimination for three reasons: it duplicates more cost-effective OSHA education activities; there was no data proving the program was successful; and, grantees found it difficult to get workers to attend the training programs. Two projects funded in FY 2012 provide more justification for termination: a combined $418,472 to four different organizations to teach employees how to avoid falling and $120,000 to Kansas State University for a program on “Grain Handling Operations.”

Eliminate Federal Subsidies for Amtrak

1-Year Savings: $1.9 billion       5-Year Savings: $9.7 billion

Since Amtrak was created in 1971, it has cost taxpayers more than $40 billion. The railroad was supposed to earn a profit but has continuously failed to do so. For example, a 2009 study found that taxpayers paid $32 in subsidies per Amtrak passenger in 2008. By booking a month in advance, it is possible to buy a round-trip plane ticket from New Orleans to Los Angeles and back for less than the $437.82 that Amtrak loses per passenger on a one-way trip between those same locations. To make matters worse, an August 2012 New York Times article reported that Amtrak had lost $834 million on food service alone since 2002, largely due to employee theft.

Unfortunately, the waste and abuse does not end with food sales. The Amtrak Office of Inspector General (OIG) has issued several reports detailing inadequate supervision, including a September 2012 report that investigated two employees who received fraudulent pay for hours they never worked. One employee was paid $5,600 in regular and overtime pay “when he was actually off Amtrak property officiating at high school sporting events.” Another employee was observed for 84 days, and it was discovered that “$16,500 of the $27,000, or 61 percent of the overtime wages he was paid were fraudulent.” The OIG concluded that, since it is likely that this employee had a history of fraudulent overtime pay, the amount of fraudulent pay “would be approximately $143,300 of the $234,928 that he was paid.”

Amtrak boasts that ridership continues to increase by 3.5 percent a year, with the majority of this increase coming from Amtrak’s Northeast corridor routes. Amtrak admits that those same routes are the only ones turning a “net profit.” None of the long-distance, lesser-used routes were projected to turn a profit. In fact, Amtrak stated that these lines cost the most to operate and bring in the least amount of revenue. Given this information, any well-managed privately owned business would have shut down these lines years ago. As a consequence of this mismanagement, Amtrak’s FY 2016 net operating loss was $227 million.

Even previous supporters of Amtrak have voiced skepticism. Former Amtrak spokesman and rail expert Joseph Vranich asserted that “Amtrak is a massive failure because it’s wedded to a failed paradigm. It runs trains that serve political purposes as opposed to being responsive to the marketplace. America needs passenger trains in selected areas, but it doesn’t need Amtrak’s antiquated route system, poor service and unreasonable operating deficits.” Even the so-called “Father of Amtrak,” Anthony Haswell, regrets his involvement, stating, “I feel personally embarrassed over what I helped to create.”

Eliminate the Legal Services Corporation (LSC)

1-Year Savings: $410 million      5-Year Savings: $2.1 billion

Established in 1974, the LSC functions as a nonprofit organization, but receives the bulk of its funding from the federal government. Although the LSC claims to be the largest provider of legal aid for the poor, questions exist as to whether the corporation has the systems in place to evaluate its ability to fulfill its mandate and ensure that taxpayer funds are used wisely. Further, the LSC has long been accused of having an ideological bias and funding causes unrelated to counseling the poor.

A 2007 GAO report criticized LSC’s governance and accountability, noting, “LSC has not kept up with evolving reforms aimed at strengthening internal control over an organization’s financial reporting process and systems.” A June 2010 GAO report took issue with LSC’s grant management systems and noted that while LSC “has taken steps” to address previous GAO recommendations, “several have yet to be fully addressed.”

The Sixth Amendment guarantees defendants the right to be represented by counsel, but it does not guarantee funds for private nonprofit organizations. If Congress seeks to ensure better counsel for the poor, a more appropriate method would be to improve the capabilities of court-appointed attorneys. Funneling taxpayer dollars into private hands like the nonprofits funded by the LSC invites corruption and the politicization of federal outlays.

Eliminate the Denali Commission

1-Year Savings: $30 million         5-Year Savings: $150 million

Congress created the Denali Commission in 1998 to build infrastructure in rural Alaska. Former President Obama targeted the commission’s federal funding for elimination in his FY 2012 budget. His administration argued that Denali projects are not funded through a competitive or merit-based system, and that at least 29 other federal programs could fulfill the commission’s mandate. The commission’s inspector general, Mike Marsh, stated in September 2013 that “I have concluded that [my agency] is a congressional experiment that hasn’t worked out in practice. … I recommend that Congress put its money elsewhere.”

A September 2014 GAO report found that the Denali Commission Office of Inspector General (OIG) provided extremely limited oversight of the commission’s major programs during FYs 2011-2013. According to the report, “analysis of the 12 inspections completed by the OIG found that the OIG provided oversight for $150,000 of the $167 million in grant funds disbursed during fiscal years 2011 through 2013.” The amount of funding inspected by the OIG added up to less than 1 percent of grants awarded by the Denali Commission over this period.

The Denali Commission has long been heavily earmarked. Since FY 2000, 27 projects worth $335.1 million have been earmarked by members of Congress for the Denali Commission.

While CAGW has hundreds of other reforms to save taxpayer dollars, these seven commonsense recommendations would save more than $14 billion over one year and $70 billion over five years, and we hope you will include them in the rescissions package.

Mr. President, thank you for your strong efforts to drain the growing Washington swamp. Your rescissions package will show taxpayers that your administration stands with them in rooting out waste and mismanagement in the federal government.

Most respectfully,

Tom Schatz
President, CAGW

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